Document:

Exhibit 10.16

 

	
CONFIDENTIAL
    	
EXECUTION VERSION
    
	
 
    

COMMON STOCK PURCHASE AGREEMENT

 

by and between

 

CYCLERION THERAPEUTICS, INC.,

 

and

 

THE INVESTORS NAMED HEREIN

 

Dated as of January 7, 2019

 

 

This COMMON STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of January 7, 2019, is entered into by and between Cyclerion Therapeutics, Inc., a Massachusetts corporation (the “Company”), and the Persons named on the signature pages hereto under the heading “Investors”, including those Persons who become parties to this Agreement after the date hereof as “Investors” by signing a counterpart signature page hereto pursuant to Section 1.2 (together, the “Investors”).  Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 9 hereof.

 

BACKGROUND

 

A.                                       Pursuant to the terms of that certain Separation Agreement to be entered into by and between the Company and Ironwood Pharmaceuticals, Inc., a Delaware corporation (“Ironwood”), in substantially the form made available in the Company’s electronic data room as of the date hereof (including such agreement, the schedules thereto and the “Transaction Agreements” attached as exhibits thereto (and their respective schedules and exhibits), as the foregoing may be amended from time to time after the date hereof, collectively, the “Separation Agreement”), Ironwood intends to separate into two separate, publicly traded companies, one for each of (i) the New Ironwood Pharmaceutical Business (as defined in the Separation Agreement), which shall be owned and conducted, directly or indirectly, by Ironwood and its subsidiaries and (ii) the Cyclerion Pharmaceutical Business (as defined in the Separation Agreement), which shall be owned and conducted, directly or indirectly, by the Company, if any (the “Separation”).

 

B.                                       The Company and the Investors have agreed that, pursuant to the terms of this Agreement, the Investors will purchase shares of the Common Stock of the Company (“Common Stock”) immediately following the consummation of the Distribution. The shares of Common Stock to be sold to the Investors pursuant to this Agreement are referred to herein as the “Shares”.

 

C.                                       The Company and the Investors intend that, for U.S. federal income tax purposes, the Separation and the Distribution, taken together, will qualify as a reorganization within the meaning of Section 368(a)(1)(D) of the Code, and except for cash received in lieu of any fractional shares, the Distribution will qualify as tax-free under Section 355(a) of the Code to the stockholders of Ironwood and as tax-free to Ironwood under Section 361(c) of the Code (the “Intended Tax Treatment”).

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants herein contained, the parties hereto, intending to be bound, hereby agree as follows:

 

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1.                               Sale and Purchase of the Shares; Additional Investors; Aggregate Sales Cap.

 

1.1.                            Sale and Purchase of Shares.  Upon the terms and subject to the conditions herein contained, the Company shall sell to the Investors, and each Investor, severally and not jointly, shall purchase from the Company, at the Closing, the number of Shares determined by dividing (i) the amount set forth in the column entitled “Investor Commitment Amount” opposite such Investor’s name on Schedule I attached hereto (the “Investor Commitment Amount”) by (ii) the Purchase Price, rounded up to the nearest whole share.  The “Purchase Price” shall be determined by dividing (i) the Pre-Money Valuation by (ii) the Shares Deemed Outstanding as of immediately prior to the Closing, rounded to the nearest 1/10 of one cent.

 

1.2.                            Additional Investors.  During the period beginning on the date hereof and ending on the Closing Date, the Company may join, in its sole discretion, on substantially the same terms and conditions as those contained in this Agreement, additional parties as Investors hereto (each, an “Additional Investor”), and designate any such Additional Investor as a Specified Investor.  Any such Additional Investor shall become a party to this Agreement as an “Investor” hereunder by signing a counterpart signature page hereto, and the name, address, and Investor Commitment Amount of such Additional Investor, shall be added to Schedule I. The Parties hereto acknowledge that the Investors do not intend to form a “group” under the Securities Act or the Exchange Act, and to the knowledge of the Investors and the Company no such “group” has been formed.

 

1.3.                            Aggregate Sales Cap.  Notwithstanding anything to the contrary contained herein, in no event shall the Testing Shares exceed the Ownership Cap.  In the event that the Testing Shares to be issued to the Investors at Closing pursuant to this Agreement would exceed the Ownership Cap, then each Investor’s Investor Commitment Amount shall be reduced on a pro rata basis so as to reduce the aggregate number of Shares to be issued to the Investors at Closing pursuant to this Agreement to the point at which the Testing Shares would not exceed the Ownership Cap, and no party hereto shall have any further obligation with respect to the excess of (x) each Investor’s original Investor Commitment Amount, over (y) each Investor’s Investor Commitment Amount as determined after the application of this Section 1.3.

 

2.                              Closing; Payment of Purchase Price; Use of Proceeds.

 

2.1.                            Closing.  Upon the closing of the transactions contemplated in Section 1 hereof following the satisfaction or waiver of the conditions specified in Section 5 (the “Closing”), the Company shall issue to each Investor the number of Shares determined pursuant to the provisions of Section 1, against payment of the aggregate Purchase Price for such Shares by wire transfer to a bank account designated by the Company.  The Closing shall take place at the offices of Ropes & Gray LLP, Prudential Tower, 800 Boylston Street, Boston, Massachusetts 02199 immediately following the Distribution (and after the satisfaction or waiver of the other conditions specified in Section 5 (other than conditions that by their nature must be satisfied on the Closing Date)), and the Company shall provide each Investor with written notice of the anticipated Closing Date at least five (5) Business Days prior to such date, provided that the Closing may occur at such other location or time as the Company and the Required Investors may agree. The date on which the Closing occurs is hereinafter referred to as the “Closing Date”.

 

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2.2.                            Use of Proceeds.  The Company shall use the proceeds from the sale of Shares hereunder to fund working capital and other general corporate purposes.

 

3.                              Representations and Warranties of the Investors.  Each Investor, severally and not jointly, hereby represents and warrants to the Company as follows:

 

3.1.                            Organization.  Such Investor is duly formed or organized, validly existing and in good standing under the laws of its jurisdiction of organization or formation, and has all requisite corporate, limited liability company, partnership or trust (as the case may be) power and authority to enter into the Transaction Documents to which it is a party and perform its obligations thereunder.

 

3.2.                            Authorization; Enforceability.   Such Investor has full right, power, authority and capacity to enter into each of the Transaction Documents to which it is a party and to consummate the transactions contemplated by each such Transaction Document.  The execution, delivery and performance of each of the Transaction Documents to which it is a party has been duly authorized by all necessary action on the part of such Investor and its equityholders.  This Agreement has been duly executed and delivered by such Investor, and the other Transaction Documents and instruments referred to herein to which it is a party will be duly executed and delivered by such Investor at Closing, and each such agreement constitutes or at Closing will constitute a valid and binding obligation of such Investor enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general equitable principles.

 

3.3.                            Brokers.  There is no investment banker, broker, finder, financial advisor or other person that has been retained by or is authorized to act on behalf of such Investor and who is entitled to any fee or commission in connection with the transactions contemplated by this Agreement other than such fees or commissions for which the Company will be solely responsible.

 

3.4.                            Investment Representations and Warranties.  Such Investor understands that the offer and sale of Shares by the Company to the Investors as contemplated hereby has not been, nor (except pursuant to the provisions of Section 8) will be, registered under the Securities Act and is being made in reliance upon federal and state exemptions for transactions not involving a public offering which depend upon, among other things, the bona fide nature of the investment intent and the accuracy of such Investor’s representations as expressed herein.

 

3.5.                            Acquisition for Own Account.  Such Investor is acquiring the Shares for its own account for investment and not with a view toward distribution in a manner which would violate the Securities Act; it being understood that by making the representation contained in this Section 3.5, such Investor is not contractually agreeing to hold any of the Shares for any minimum period of time.

 

3.6.                            Ability to Protect Its Own Interests and Bear Economic Risks.  Such Investor acknowledges that it can bear the economic risk and complete loss of its investment in

 

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the Shares and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

 

3.7.                            Investor Status.  Such Investor is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act.   Such Investor is not party to any voting agreements or similar arrangements with respect to the Shares.  With regard to acquiring, holding, voting, or disposing of any stock of Ironwood or the Company, including the Shares, such Investor (a) has not acted in concert with any Person; (b) is not, and has never been, a member or beneficiary of a trust, partnership, limited partnership, syndicate, or other group with any agreement, understanding, or arrangement, whether formal or informal; and (c) has no plan or intention to enter into an arrangement described in clause (a) or clause (b).

 

3.8.                            Foreign Investors. If such Investor is not a United States person (as defined by Section 7701(a)(30) of the Code), such Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares.Consents.  The execution, delivery and performance by such Investor of the Transaction Documents require no consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person.

 

3.10.                     No Violations.  Such Investor is not in violation of its organizational documents and the execution, delivery and performance by such Investor of, and compliance with, each of the Transaction Documents, and the consummation by such Investor of the transactions contemplated by each of the Transaction Documents (including, without limitation, the issuance and sale of the Shares) will not (a) result in a violation of the organizational documents of such Investor, (b) violate or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any agreement, lease, mortgage, license, indenture, instrument or other contract to which such Investor is a party, (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to such Investor or by which any property or asset of such Investor is bound or affected, (d) result in a violation of any rule or regulation of FINRA or any Trading Markets or (e) result in the creation of any Encumbrance upon any of such Investor’s assets, in each case (other than with respect to foregoing clause (a)) except for such violations, defaults, rights of termination, acceleration or cancellation, or Encumbrances that would not have a material adverse effect on such Investor’s ability to perform its obligation under the Transaction Documents.

 

3.11.                     Access to Information.  Such Investor has been given access to Company documents, records and other information it has requested, and has had adequate opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents,

 

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accountants, and representatives concerning the Company’s business, operations, financial condition, assets, liabilities and all other matters relevant to its investment in the Shares.  Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth and accuracy of the Company’s representations and warranties contained in this Agreement.

 

3.12.              Restricted Securities.  Such Investor understands that the Shares will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Shares may be resold without registration under the Securities Act only in certain limited circumstances, and such Investor further understands that the Shares will be subject to the transfer restrictions and legending requirements specified in Section 7.

 

3.13.              Sufficient Funds. Such Investor has sufficient funds available to it to pay its full Investor Commitment Amount at Closing.

 

3.14.              Ownership of Ironwood and Company Stock.

 

(a)                          Any acquisition or disposition of any shares of Ironwood stock by such Investor or any Investor Tax Affiliate of such Investor on or after May 1, 2018, was made in the ordinary course of Investor’s business to realign such Investor’s (or its Investor Tax Affiliates’) portfolio in order to reflect such Investor’s or its Investor Tax Affiliates’ investment objectives, strategies, policies (including risk policies), or restrictions, or changes in assets under management (“Investment Policies,” and such acquisitions and dispositions, “Investment Trades”).

 

(b)                          Neither such Investor nor any of its Investor Tax Affiliates has changed any of its Investment Policies as a result of, or in connection with, the Separation, and in no instance were such Investment Policies based on the investment decision of one or more other existing or prospective shareholders of Ironwood or the Company.

 

(c)                           10% Shareholders

 

(i)                                     Except as set forth on Schedule I, such Investor, together with its Investor Tax Affiliates and Investor Commission Affiliates, (A) has not at any time since May 1, 2018, been a 10% Shareholder, (B) has no plan or intention as of the date of such Investor’s entrance into this Agreement to become a 10% Shareholder, and (C) will, as of the Closing, have no plan or intention to become a 10% Shareholder.

 

(ii)                                  Solely for purposes of this clause (c), if such Investor is a mutual fund (a “Fund”), shares of Company stock owned by its Investor Commission Affiliates will not be taken into account in determining whether such Investor is a 10% Shareholder to the

 

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extent that, except as set forth on Schedule I, all of the following requirements are satisfied:

 

(A)                               The Investor is managed by a separate management team that makes investment decisions for the Investor that are unrelated to the investment decisions made by any other management team for or on behalf of any other Person (for the avoidance of doubt, members of a management team are separate from other employees, officers, and directors of a Person provided no such employee, officer, or director participates, or is expected to participate, in the day-to-day investment decisions of the management team);

 

(B)                               The Investment Policies of such Investor are materially different than the Investment Policies applicable to shares owned beneficially by each of such Investor’s Investor Commission Affiliates;

 

(C)                               Such Investor would satisfy the requirements of this Section 3.14, without regard to any reference to “Investor Commission Affiliate” in each clause of this Section 3.14, other than this clause (c)(ii); and

 

(D)                               The same Persons do not own, for U.S. federal income tax purposes, 50 percent or more of the equity of such Investor and of any Person (including another Fund) or account, the securities of which are treated as beneficially owned by such Investor Commission Affiliate pursuant to the rules and regulations of the Commission.

 

(d)                         Such Investor’s investment in the Shares is based solely on the Investment Policies of itself and its Investor Tax Affiliates and is being made without regard to (i) the Investment Policies of any Person other than such Investor and its Investor Tax Affiliates, (ii) any effect such Investor’s investment may or may not have on any other Person’s decision to invest in Shares, or (iii) any ownership or prospective ownership of stock of Ironwood or the Company by any other Person.  Neither such Investor nor any of its Investor Tax Affiliates has had any discussions or negotiations with any other Investor or any of any other Investor’s Investor Tax Affiliates regarding the terms of purchase and sale of Shares pursuant to this Agreement.

 

(e)                          Neither the Investor nor any of its Investor Tax Affiliates, alone or acting together, is seeking to obtain a seat on the board of directors of Ironwood or the Company or to otherwise actively participate in the management or operations of the Company, or has any plan or intention to do so; and no shares of Company stock, including the Shares, will have been acquired or held with the purpose of or with the effect of changing or influencing the control of the Company or in connection with or as

 

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a participant in any transaction having that purpose or effect, or that would otherwise be inconsistent with an investment “solely for the purpose of a passive investment” within the meaning of 31 Code of Federal Regulations Section 800.223.

 

(f)                           Neither such Investor nor any of its Investor Tax Affiliates has a current plan or intention to sell, exchange, or otherwise dispose of any stock of Ironwood or the Company as of the date of such Investor’s entrance into this Agreement and will not have any such plan or intention with respect to any stock of the Company as of the Closing. For purposes of this clause (f) and for the avoidance of doubt, Investor anticipates that it may dispose of some or all of such shares in the future.

 

(g)                          Any acquisitions or dispositions of Ironwood or Company stock by such Investor or any of its Investor Tax Affiliates occurring after the date hereof will be Investment Trades based solely on market conditions or investment considerations existing at such time.

 

(h)                         If such Investor is a Specified Investor, such Investor is not acting as an agent, directly or indirectly, for Ironwood or the Company or the management of either of them, and is not soliciting, arranging, or negotiating acquisitions of Shares by any other Person for its own benefit or on behalf of Ironwood or the Company or the management of either company.

 

(i)                             If such Investor is a Specified Investor, such Investor has negotiated the terms of its Shares purchase solely on its own behalf and is not acting as an agent or other representative directly or indirectly for any other Person to acquire any Shares.

 

3.15.             No Solicitation.  The Shares were not offered or sold to such Investor by any form of general advertising or general solicitation as contemplated under Rule 502(c) in Regulation D promulgated under the Securities Act or otherwise.

 

3.16.             Bad Actor Disqualifications.  Such Investor: (i) if a natural person, represents on its behalf; or (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock corporation or other entity, represents on its behalf and the behalf of its officers, directors and principal stockholders, that it is not subject to any “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii).

 

3.17.             OFAC.  Neither such Investor nor, as of the date hereof to the knowledge of the Investor, any director, officer, agent, employee or person acting on behalf of the Investor is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

4.                              Representations and Warranties by the Company.  The Company represents and warrants to the Investors, subject to exceptions for the disclosures in (x) the schedules included in the Separation Agreement or (y) the Information Statement filed as Exhibit 99.1 to the Form 10 and the other exhibits thereto (other than any information in the “Risk Factors” or

 

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“Cautionary Statement Concerning Forward-Looking Statements” sections of such Form 10), as follows:

 

4.1.                     Capitalization.

 

(a)                          As of the Closing Date, all of the issued and outstanding shares of capital stock of the Company will be duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance with all federal and state securities laws.

 

(b)                          No Person is entitled to pre-emptive rights with respect to any securities of the Company.  Except as set forth in the Form 10 and as contemplated by the Separation Agreement (including with respect to options and restricted stock units, as contemplated by the formulae and terms and conditions contained therein, as they may be amended from time to time), there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company is or may be obligated to issue any amounts of equity securities of any kind.

 

(c)                           As of the date hereof, Ironwood is sole shareholder of the Company.  At the Closing, the sole equity securities outstanding shall be those distributed to the shareholders of Ironwood pursuant to the Distribution, the Shares issued to Investors hereunder, and the options to purchase securities and restricted stock units granted to employees, directors or other service providers of the Company or Ironwood (as contemplated by the formulae and terms and conditions contained in Form 10 and the Separation Agreement, as they may be amended from time to time).

 

(d)                          The Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof.

 

(e)                           Except as may be provided in the Separation Agreement or the Transaction Documents, there are no voting agreements, buy-sell agreements or right of first purchase agreements between the Company, on the one hand, and any of the stockholders of the Company, on the other hand, relating to the securities of the Company held by them.

 

(f)                            The issuance and sale of the Shares hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors).

 

(g)                           The Company does not have outstanding any stockholder rights plans or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

 

(h)                          As of the Closing Date, the rights, preferences, privileges and restrictions of the Common Stock will be as stated in the Articles of Organization and Bylaws of the Company.

 

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4.2.                            Issuance of Securities.  As of the Closing Date, the Shares being purchased by the Investors hereunder will be duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable and will be free and clear of any Encumbrances or restrictions on transfer other than restrictions under the Transaction Documents, the Articles of Organization and Bylaws, under applicable state and federal securities laws, or any Encumbrances created by an Investor on its Shares.  The sale of the Shares hereunder is not subject to any preemptive rights, rights of first refusal or other similar rights or provisions contained in the Articles of Organization, Bylaws or any agreement to which the Company is a party. Assuming the accuracy of the representations and warranties of each Investor in Section 3 hereof, the Shares will be issued in compliance with all applicable federal and state securities laws.

 

4.3.                            Incorporation and Good Standing of the Company.  The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to own, lease and operate its properties and to conduct its business as currently conducted and as described in the Form 10 and to enter into and perform its obligations under this Agreement.  The Company is duly qualified to transact business and is in good standing in the Commonwealth of Massachusetts and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except whether the failure to so qualify or be in good standing would not have a Material Adverse Effect.

 

4.4.                            Subsidiaries.  The Company has no Subsidiaries.

 

4.5.                            Consents.  The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Shares require no consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than (a) notification to any Trading Market on which any of the securities of the Company are listed or designated in connection with the issuance and sale of the Shares hereunder, (b) the filings required to comply with the Company’s registration obligations pursuant to Section 8 and (c) compliance with applicable U.S. federal and state securities laws, which compliance will have occurred within the appropriate time periods.

 

4.6.                            Authorization; Enforcement.

 

(a)                         The Company has all requisite corporate power and has taken all necessary corporate action required for (a) the due authorization, execution, delivery and performance by the Company of each of the Transaction Documents, (b) the authorization of the performance of all obligations of the Company under each of the Transaction Documents, and (c) the authorization, issuance and delivery of the Shares. This Agreement has been duly executed and delivered by the Company, and the other Transaction Documents and instruments referred to herein to which it is a party will be at Closing duly executed and delivered by the Company, and at Closing each such agreement constitutes or will constitute a valid and binding obligation of the Company

 

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enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and to general equitable principles.

 

(b)                         On or prior to the date hereof, the Board of Directors of the Company (the “Board”) has duly adopted resolutions, among other things, authorizing and approving each of the Transaction Documents and the transactions contemplated thereby.

 

4.7.                            No Violations.  The Company is not in violation of its articles of organization or bylaws and the execution, delivery and performance by the Company of, and compliance with, each of the Transaction Documents, and the consummation by the Company of the transactions contemplated by each of the Transaction Documents (including, without limitation, the issuance and sale of the Shares) will not (a) result in a violation of its articles of organization or bylaws, (b) violate or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any agreement, lease, mortgage, license, indenture, instrument or other contract to which the Company is a party, (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, (d) result in a violation of any rule or regulation of FINRA or any Trading Markets or (e) result in the creation of any Encumbrance upon any of the Company’s assets, in each such case (other than with respect to foregoing clause (a)) except for such violations, defaults, rights of termination, acceleration or cancellation, or Encumbrances that would not have a Material Adverse Effect.

 

4.8.                            Material Contracts.  Each Material Contract of the Company (as of the Closing Date) will be as disclosed in the Effective Form 10.  Except as would not have a Material Adverse Effect, as of the Closing Date: (i) each Material Contract will be the legal, valid and binding obligation of the Company enforceable against the Company and, to the knowledge of the Company as of the date hereof, any other party thereto, in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors’ rights generally and by general equitable principles; and (ii) there shall not have occurred any breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any Person, or any combination thereof, would constitute a breach, violation or default by the Company under any such Material Contract or, to the knowledge of the Company, by any other Person to any such Material Contract.  From May 1, 2018 until the date hereof, the Company has not been notified that any party to any Material Contract intends to cancel, terminate or not renew any Material Contract, whether in connection with the transactions contemplated hereby or otherwise.

 

4.9.                            Voting Rights.  Other than as provided by the Transaction Documents or any agreement or other document listed as an exhibit to the Form 10, there are no provisions in its articles of organization or bylaws or any instrument or contract to which the Company is a

 

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party which (a) is reasonably likely to affect or restrict the voting rights of the Investors with respect to the Shares in their capacity as stockholders of the Company, (b) is reasonably likely to adversely affect the Company’s or the Investors’ right or ability to consummate the transactions contemplated by, or comply with the terms of, the Transaction Documents, or (c) as of the date hereof entitle any party to nominate or elect any director of the Company or require any of the Company’s stockholders to vote for any such nominee or other person as a director of the Company.

 

4.10.                     No Integrated Offering.  Neither the Company, nor any other Person acting on the Company’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising with respect to the Shares nor have any of such Persons made any offers or sales of any security of the Company or solicited any offers to buy any security of the Company under circumstances that would require registration of the Shares under the Securities Act or cause this offering of Shares to be integrated with any prior offering of securities of the Company for purposes of the Securities Act or any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

4.11.                     Offering; Exemption.  Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3 of this Agreement, no registration under the Securities Act or any applicable state securities law is required for the offer and sale of Shares by the Company to the Investors as contemplated hereby.

 

4.12.                     Form 10; Financial Statements.

 

(a)                          The Form 10 complies as to form in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable. As of the date that the Form 10 shall have been declared effective by the Commission, the Form 10 will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(b)                          The pro forma financial statements of the Company included in the Form 10 present fairly, in all material respects, the financial position of the business of the Company as of the dates indicated.  Such pro forma financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto and except in the case of unaudited financial statements, which may be subject to normal recurring year-end adjustments and may not contain certain footnotes as permitted by applicable rules of the Commission.

 

(c)                           As of the Closing Date, the Company will maintain a system of internal accounting controls that the Company believes will be sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit

 

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preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.

 

(d)                          The Company will be in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.  As of the Closing Date, the Company will have established disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Company and designed such disclosure controls and procedures in a manner that the Company believes ensures that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act will be recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

 

4.13.                     Undisclosed Liabilities.  There are no liabilities of the Company that would be required to be reflected in its unaudited balance sheet as of September 30, 2018 in accordance with GAAP, other than liabilities:

 

(a)                                 reflected or reserved for in the unaudited balance sheet as of September 30, 2018 included in the Form 10;

 

(b)                                 created under, or incurred in connection with, the Transaction Documents;

 

(c)                                  executory obligations under Material Contracts; or

 

(d)                                 which would not in the aggregate have a Material Adverse Effect.

 

4.14.                     Litigation.  Except as set forth in the Form 10, (a) there is no action, suit, proceeding, inquiry or (to the knowledge of the Company) investigation (an “Action”) brought by or before any Governmental Entity now pending or, to the knowledge of the Company, threatened against or affecting the Company, which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect or materially and adversely affect the consummation of the transactions contemplated by the Transaction Documents or the performance by the Company of its obligations thereunder, and (b) the Company is not in default in any material respect with respect to any judgment, order or decree of any Governmental Entity.  Neither the Company, nor to the Company’s knowledge, any director or officer of the Company, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, in each case, involving the Company or Ironwood and its subsidiaries.  There has not been, and to the knowledge of the Company there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.

 

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4.15.                     Taxes.  The Company has filed all income and other material federal, foreign, state, local and other tax returns that are required to be filed or has properly requested extensions thereof and has paid all material taxes required to be paid and, if due and payable, any related or similar assessment, fine or penalty levied against it, except as may be being contested in good faith and by appropriate proceedings or reserved for on the Company’s books.  The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 4.12 hereof in respect of all taxes for all periods prior to the date of the most recent financial statement referred to therein as to which the tax liability of the Company has not been finally determined.

 

4.16.                     Employee Matters.

 

(a)                          (i) No director or officer or other employee of the Company will become entitled to any retirement, severance or similar benefit or enhanced or accelerated benefit (including any acceleration of vesting) or lapse of repurchase rights or obligations with respect to any employee benefit plan subject to ERISA or other benefit under any compensation plan or arrangement of the Company (each, an “Employee Benefit Plan”) solely as a result of the issuance of Shares pursuant to this Agreement; and (ii) no payment made or to be made to any current or former employee or director of the Company, or any of its controlled Affiliates by reason of the issuance of Shares pursuant to this Agreement (whether alone or in connection with any other event, including, but not limited to, a termination of employment) will constitute an “excess parachute payment” within the meaning of Section 280G of the Code.  As of the date hereof, no executive officer of the Company (as defined in Rule 501(f) of the Securities Act) set forth in the Form 10 has notified the Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company.

 

(b)                          As of the date hereof, no officer or employee of the Company, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and, to the knowledge of the Company, the continued employment of each such officer or employee does not subject the Company to any material liability with respect to any of the foregoing matters.

 

(c)                           The Company is in compliance in all material respects with all applicable federal, state, local and foreign statutes, laws (including, without limitation, common law), judicial decisions, regulations, ordinances, rules, judgments, orders and codes respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, and no work stoppage or labor strike against the Company is pending or, to the knowledge of the Company, threatened, nor is the Company involved in or, to the knowledge of the Company, threatened with any labor dispute, grievance or litigation relating to labor matters involving any employees of the Company, except for any of the foregoing which would not have a Material Adverse Effect.  As of the date hereof, to the Company’s knowledge, there are no material suits,

 

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actions, disputes, claims (other than routine claims for benefits), investigations or audits pending or, to the knowledge of the Company, threatened in connection with any Employee Benefit Plan.  None of the Company’s employees is a member of a union that relates to such employee’s relationship with the Company, and the Company is not a party to a collective bargaining agreement.

 

4.17.                     Compliance with Laws.  The Company (i) is not in violation of any applicable federal, state, local, foreign or other law, statute, regulation, rule, ordinance, code convention, directive, order, judgment or other legal requirement (collectively, “Laws”) of any Governmental Entity, except in any such case for any violation as would not, individually or in the aggregate, have a Material Adverse Effect and (ii) as of the date hereof, to the knowledge of the Company, is not being investigated with respect to, or has been threatened in writing to be charged with or given notice of any violation in any material respect of, any applicable Law.

 

4.18.                     Brokers.  Except as set forth in Schedule 4.18, there is no investment banker, broker, finder, financial advisor or other person that has been retained by or is authorized to act on behalf of the Company and who is entitled to any fee or commission in connection with the sale of Shares pursuant to this Agreement.

 

4.19.                     Environmental Matters.  The Company (A) is in compliance with any and all applicable federal, state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”); (B) has received and is in compliance with all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business; and (C) as of the date hereof, has not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, except in any such case of clauses (A), (B) or (C), for any such failure to comply, or failure to receive required permits, licenses or approvals, or liability as would not, individually or in the aggregate, have a Material Adverse Effect.

 

4.20.                     Intellectual Property Matters.  Except as set forth in the Form 10 and the Separation Agreement, as of the Closing Date, (a) the Company will be the owner of, or will have obtained valid and enforceable licenses for, the registered Intellectual Property; (b) to the knowledge of the Company, there will be no third parties who have rights to any Intellectual Property, except for customary reversionary rights of third-party licensors with respect to Intellectual Property that is exclusively licensed to the Company; (c) to the knowledge of the Company, there will be no material infringement by third parties of any Intellectual Property; (d) there will be no pending or, to the knowledge of the Company, threatened material action, suit, proceeding or claim by others: (i) challenging the Company’s rights in or to any Intellectual Property; (ii) challenging the validity or ownership of any Intellectual Property; or (iii) asserting that the Company infringes, misappropriates or otherwise violates, or would, upon the commercialization of any product or service infringe, misappropriate or violate any patent, trademark, trade name, service name, copyright, trade secret or other proprietary rights of others; and (e) to the knowledge of the Company, (x) the patent applications within the Intellectual

 

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Property will be prepared, filed and prosecuted in good faith in all material respects and (y) all inventors will be properly identified on such patent applications and all patents within the Intellectual Property in all material respects.  Following the consummation of the Separation, the Company will have written agreements with its employees and contractors involved in the creation of Intellectual Property that oblige each employee or contractor, as applicable, to: (i) assign to the Company all Intellectual Property created or provided in the course of their employment or engagement (except for certain exceptions as may be agreed to with such persons for inventions not related to the discovery research or development of products containing a soluble guanylate cyclase stimulator); and (ii) keep Intellectual Property, as applicable, confidential and to safeguard it from unauthorized access, use, copying and disclosure.  As of the Closing Date, the Intellectual Property will constitute all material inventions, patent applications, patents, trademarks, trade names, service names, copyrights, trade secrets, know-how and other intellectual property that are necessary to operate the business of the Company as conducted as of the Closing Date, other than the Ironwood name and mark.

 

4.21.                     Related-Party Transactions.  Except for the transactions contemplated hereby and as set forth in the Form 10 and the Separation Agreement, as of the Closing Date, there will be no business relationships or related-party transactions involving the Company or any other person of the type required to be disclosed in the Form 10 pursuant to Item 404 of Regulation S-K promulgated by the Commission.

 

4.22.                     Title to Property and Tangible Assets.  Except as set forth in the Form 10 and the Separation Agreement, as of the Closing Date, the Company will have good title to all of the real and tangible personal property and other tangible assets owned by the Company, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, adverse claims and other defects (“Liens”), except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties.

 

4.23.                     Absence of Changes.  From December 31, 2017 to the date hereof, except as set forth in Form 10 or as contemplated by the Transaction Documents, there has not been:

 

(1)                         any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company or any repurchase, redemption or other acquisition by the Company of any outstanding shares of its capital stock;

 

(2)                         any material change or amendment to a contract filed as an exhibit to the Form 10 that is material to the Company;

 

(3)                         material alteration in its method of accounting, except as required by GAAP;

 

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(4)                          any agreement or commitment by the Company to do any of the foregoing; or

 

(5)                          any change, development, occurrence or event that has had or would reasonably be expected to have a Material Adverse Effect.

 

4.24.                     Foreign Corrupt Practices Act. As of the date hereof, neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any domestic government official, “foreign official” (as defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (collectively, the “FCPA”)) or employee from corporate funds; (iii) violated or is in violation of any provision of the FCPA or, to the knowledge of the Company, any applicable non-U.S. anti-bribery statute or regulation; (iv) failed to disclose any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (v) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any domestic government official, such foreign official or employee; and the Company has conducted its business in compliance in all material respects with the FCPA and has policies and procedures designed to comply, and which are reasonably expected to continue to comply, with the FCPA in all material respects.

 

4.25.                     Money Laundering Laws. The operations of the Company are conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, and to the knowledge of the Company, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and as of the date hereof, no action or suit by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

 

4.26.                     OFAC. Neither the Company nor, as of the date hereof to the knowledge of the Company, any director, officer, agent, employee or person acting on behalf of the Company is currently subject to any U.S. sanctions administered by OFAC; and the Company will not directly or indirectly use the proceeds herefrom, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other person or entity, for the purpose of financing the activities of or business with any person, or in any country or territory, that currently is subject to any U.S. sanctions administered by OFAC or in any other manner that will result in a violation by any person (including any person participating in the transaction whether as underwriter, advisor, investor or otherwise) of U.S. sanctions administered by OFAC.

 

4.27.                     Regulatory Permits.  Except as set forth in the Form 10 and the Separation Agreement, as of the Closing Date, (a) the Company will have such permits, licenses,

 

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certificates, approvals, clearances, authorizations or amendments thereto (the “Regulatory Permits”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business of the Company as currently conducted and as described in the Form 10, including, without limitation, any Investigational New Drug Application (“IND”) as required by the United States Food and Drug Administration (“FDA”) or authorizations issued by federal, state, local or foreign agencies or bodies engaged in the regulation of pharmaceuticals and biological products such as those being developed by the Company (collectively, “Regulatory Authorities”), and (b) the Company will be in compliance in all material respects with the requirements of the Regulatory Permits, and all of the Regulatory Permits will be valid and in full force and effect, in each case in all material respects. As of the date hereof, the Company has not received any notice of proceedings relating to the revocation, termination, modification or impairment of any of the Regulatory Permits.

 

4.28.                     Preclinical and Clinical Data and Regulatory Compliance.  The preclinical tests and clinical trials (collectively, “Studies”) that are described in, or the results of which are referred to in, the Form 10 were and, if still pending, are being conducted in all material respects in accordance with the protocols, procedures and controls designed and approved for such Studies and each description of the results of such Studies is accurate and complete in all material respects, and as of the date hereof the Company has no knowledge of any other studies the results of which are inconsistent in any material respect with, or otherwise call into question, the results described in the Form 10.  Except as set forth in the Form 10, as of the date hereof, the Company has not received any written notice of, or correspondence from, any Regulatory Authority or institutional review board requiring the termination, suspension or material modification of any Studies that are described or referred to in the Form 10 and the Company has operated and currently is in compliance in all material respects with applicable laws, rules, regulations and policies of the Regulatory Authorities, including current Good Laboratory Practices and current Good Clinical Practices.

 

4.29.                     Insurance.  Except as set forth in the Form 10 and the Separation Agreement, as of the Closing Date, (i) the Company will be insured by reputable institutions with policies in such amounts and with such deductibles and covering such risks as the Company reasonably believes are generally deemed adequate and customary for its business including, but not limited to, policies covering real and personal property owned or leased by the Company and policies covering the Company for product liability claims and clinical trial liability claims and, (ii) to the Company’s knowledge, the Company will be able (a) to renew its existing insurance coverage as and when such policies expire and (b) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not have a Material Adverse Effect.  As of the date hereof, the Company has not been denied any insurance coverage which it has sought or for which it has applied.  Without limiting the generality of the foregoing, as of the Closing Date the Company will carry director and officer insurance with customary coverage limits reasonable for a Company of its size.

 

4.30.                     Investment Company.  The Company is not, and will not be, immediately following receipt of payment for the Shares being purchased pursuant to this Agreement,

 

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required to register as an “investment company” within the meaning of the Investment Company  Act of 1940, as amended.

 

4.31.                             Accountants.  Ernst & Young LLP, who expressed its opinion with respect to the financial statements included in the Form 10, is (a) an independent registered public accounting firm as required by the Securities Act, the Exchange Act and the rules of the Public Company Accounting Oversight Board (“PCAOB”), (b) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X under the Securities Act and (c) a registered public accounting firm as defined by the PCAOB whose registration has not been suspended or revoked and who has not requested such registration to be withdrawn.

 

4.32.                                 Disclosure.  As of the Closing Date, the Company will have made disclosures so that, to the Company’s knowledge, the Investors will not be in possession of any material, non-public information with respect to the Company provided to the Investors by the Company or its officers or directors or any other representative acting on the Company’s behalf. The Company understands and confirms that the Investors will rely on the representations contained in the first sentence of this Section 4.32 in effecting transactions in securities of the Company.

 

4.33.                             No Other Representations and Warranties. The representations and warranties set forth in this Section 4 are the only representations and warranties made by the Company (or any of its Affiliates) with respect to the transactions contemplated by this Agreement. Except for the representations and warranties expressly set forth in this Section 4, none of the Company or its Affiliates makes any other express or implied representation or warranty with respect to the Company or any of its Affiliates, and each of the Company and its Affiliates hereby disclaim all liability and responsibility for any and all projections, forecasts, estimates, plans or prospects (including the reasonableness of the assumptions underlying such forecasts, estimates, projections, plans or prospects), management presentations, financial statements, internal ratings, financial information, appraisals, statements, promises, advice, data or information made, communicated or furnished (orally or in writing, including electronically) to any Investor or any of its Affiliates or representatives, including omissions therefrom.

 

5.                                      Conditions of Parties’ Obligations.

 

5.1.                            Conditions of the Investors’ Obligations at the Closing.  The obligations of the Investors to purchase the Shares set forth on Schedule I attached hereto at the Closing (except where otherwise specified) are subject to the fulfillment prior to the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Required Investors in their sole discretion.

 

(a)                                 Representations and Warranties.  The representations and warranties of the Company contained in Section 4 of this Agreement shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and

 

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warranties), except where the failure of such representations and warranties to be so true and correct does not constitute, individually or in the aggregate, a Material Adverse Effect.

 

(b)                                 Performance.  The Company shall have performed in all material respects all covenants and agreements contained in this Agreement required to be performed by the Company on or prior to the Closing.

 

(c)                                  Supporting Documents.  The Investors at the Closing shall have received the following:

 

(1)                                 A good standing certificate of the Company from the secretary of state of the state of the Company’s jurisdiction of incorporation, if good standing certificates are issuable in its jurisdiction of incorporation;

 

(2)                                 Copies of resolutions of the Board, certified by the Secretary of the Company, authorizing and approving the execution, delivery and performance of the Transaction Documents and all other documents and instruments to be delivered pursuant hereto and thereto;

 

(3)                                 A copy of the Articles of Organization and Bylaws of the Company, certified by the Secretary of the Company; and

 

(4)                                 A certificate of incumbency executed by the Secretary of the Company certifying the names, titles and signatures of the officers authorized to execute the documents referred to in subparagraphs (2) and (3) above.

 

(d)                                 Trading Market Listing. The Common Stock shall be listed on a  Trading Market.

 

(e)                                  No Material Adverse Effect.  Since the date hereof, except as set forth in the Form 10 or the Separation Agreement, or as contemplated by the Transaction Documents, there shall not have occurred a Material Adverse Effect.

 

(f)                                   Form 10 Effectiveness.  The Form 10 shall have been declared effective by the Commission (the “Effective Form 10”); provided, however, that in the event the Effective Form 10 contains any change or changes (taking into account, without limitation, any change or changes to the Material Contracts and pro forma financial statements disclosed therein, but excluding any change or changes in the Effective Separation Agreement (which is addressed in clause (g) below) from the draft Form 10 made available in the Company’s electronic data room as of the date hereof, and such change or changes, individually or in the aggregate, affect the business, assets and/or liabilities of the Company (taken as a whole) and are required changes from such draft Form 10 in order to ensure that the Effective Form 10 does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under

 

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which they were made, not misleading (other than with respect to any amendment(s): (w)  to the provisions referred to in Schedule 5.1 hereto, (x) to which the Investor Consent was obtained for purposes of clause (g) below, (y) relating to any (i) forecasts, estimates, expectations, timetables or similar forward looking considerations, and for the avoidance of doubt, including any such information in the “Risk Factors” or “Cautionary Statement Concerning Forward-Looking Statements” sections of such Form 10, (ii) results of any research, surveys, studies or trials conducted or (iii) approvals, denials or other responses to INDs or other applications by or on behalf of the Company from Governmental Entities or other third parties or (z) without limiting the Investors’ rights with respect to the condition precedent in Section 5.1(e), relating to changes occurring in the ordinary course of business or otherwise as are reasonably anticipated in connection with the Separation, Distribution or the transactions contemplated thereby (including, for example purposes only, disclosures as to new contracts or new patent applications entered into or applied for in the ordinary course of business, the removal of references to expired contracts or denied patent applications in the ordinary course of business, or the inclusion of references to a IRS private letter ruling or other correspondence received after the date hereof)), this Section 5.1(f) shall not be deemed satisfied unless the Investor Consent was obtained with respect to such amendment(s); provided, further, however, that the Investors shall not unreasonably withhold such consent. “Investor Consent” means, with respect to any amendment or other action requiring consent hereunder, either (a) the written consent by the Required Investors to such amendment or action, or (b) the failure of at least the Required Investors to respond in writing affirmatively denying such consent within three Business Days of receipt of the Company’s written request for such consent.

 

(g)                                  Distribution.  Ironwood and the Company shall have completed the Distribution substantially on the terms described in the Separation Agreement as incorporated into the Effective Form 10 (the “Effective Separation Agreement”); provided, however, that in the event the Effective Separation Agreement contains any change or changes from the draft Separation Agreement made available in the Company’s electronic data room as of the date hereof, and such change or changes, individually or in the aggregate, affect the business, assets and/or liabilities of the Company (taken as a whole) and such changes from such draft Separation Agreement require amendments to the draft Form 10 in order to ensure that the Effective Form 10 does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading (other than with respect to any amendment(s): (w) to the provisions referred to in Schedule 5.1 hereto, (x) to which the Investor Consent was obtained for purposes of clause (f) above, (y) relating to any (i) change in forecasts, estimates, expectations, timetables or similar forward looking considerations, (ii) results of any research, surveys, studies or trials conducted or (iii) approvals, denials or other responses to INDs or other applications by or on behalf of the Company from Governmental Entities or other third parties, or (z) without limiting the Investors’ rights with respect to the condition precedent in Section 5.1(e), relating to changes occurring in the ordinary course of business or otherwise as are reasonably

 

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anticipated in connection with the Separation, Distribution or the transactions contemplated thereby (including, for example purposes only, new contracts or new patent applications added to Separation Agreement schedules entered into or applied for in the ordinary course of business, the removal of references to expired contracts or denied patent applications in the ordinary course of business, or the inclusion of references to a IRS private letter ruling or other correspondence received after the date hereof)), this Section 5.1(g) shall not be deemed satisfied unless the Investor Consent was obtained  with respect to such amendment(s); provided, further, however, that the Investors shall not unreasonably withhold such consent.

 

(h)                                 KPMG Opinion.  The Company shall have received an opinion from KPMG that the Separation and Distribution will qualify for the Intended Tax Treatment, a copy of which shall have been delivered to the Investors.

 

(i)                                     Minimum Sale of Shares.  The sale of Shares at the Closing (for the avoidance of doubt, excluding any sale of Shares to Ironwood or its subsidiaries ) shall result in aggregate proceeds to the Company of at least $              (taking into account the effect of Section 1.3).

 

(j)                                    Compliance Certificate.  The Company shall have delivered to the Investors a Compliance Certificate, executed by the Chief Executive Officer of the Company, dated as of the Closing Date to the effect that the conditions specified in subsections (a) and (b) of this Section 5.1 have been satisfied.

 

5.2.                            Conditions of the Company’s Obligations.  The obligations of the Company under Section 1 hereof with respect to each Investor (on a several, and not joint, Investor-by-Investor basis) are subject to the fulfillment prior to or on the Closing Date of all of the following conditions with respect to such Investor, any of which may be waived in whole or in part by the Company.

 

(a)                                 Covenants; Representations and Warranties.  (i)  The Investors shall have performed in all material respects all covenants and agreements contained in this Agreement required to be performed by the Investors on or prior to the Closing, (ii) the representations and warranties of the Investors contained in Section 3.7 and Section  3.14 shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties), except where the failure of such representations and warranties to be so true and correct could not, individually or in the aggregate, reasonably be expected to affect the Intended Tax Treatment, and (iii) the representations and warranties of the Investors contained in Section 3 of this Agreement shall be true and correct as of immediately prior to the Closing as though such representations and warranties were made, as written herein, as of immediately prior to the Closing (subject to the specified time periods, as applicable, qualifying such representations and warranties), except where the failure of such representations and warranties to be so true

 

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and correct does not constitute, individually or in the aggregate, material adverse effect on such Investor’s ability to perform its obligation under the Transaction Documents.

 

(b)                                 Form 10 Effectiveness.  The Form 10 shall have been declared effective by the Commission.

 

(c)                                  Distribution.  Ironwood and the Company shall have completed the Distribution substantially on the terms described in the Separation Agreement.

 

5.3.                            Conditions of Each Party’s Obligations.  The respective obligations of each party to consummate the transactions at the Closing contemplated hereunder are subject to the absence of any statute, rule, regulation, injunction, order or decree, enacted, enforced, promulgated, entered, issued or deemed applicable to this Agreement or the transactions contemplated hereby by any court, government or governmental authority or agency or legislative body, domestic, foreign or supranational, in each case of the foregoing authorities, agencies or bodies, of competent jurisdiction, prohibiting or enjoining the transactions contemplated by this Agreement.

 

6.                                      Covenants.

 

6.1.                            Separation and Distribution.  The Company shall use commercially reasonable efforts to consummate the Separation and Distribution as soon as practicable following the date hereof.  The Company shall consult with the Required Investors’ as to proposed material changes to the Form 10 and the Separation Agreement from the drafts of such documents attached hereto; provided, that such consultation shall not imply any requirement on the Company to incorporate any comments from the Required Investors as to any such changes (without limiting the conditions in Sections 5.1(f) and 5.1(g)).

 

6.2.                            Furnishing of Information.  In order to enable the Investors to sell the Shares under Rule 144, for a period of twelve (12) months from the consummation of the Closing, the Company shall use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the consummation of the Closing pursuant to the Exchange Act.

 

6.3.                            Integration.  The Company shall use its commercially reasonable efforts such that neither it nor any of its Affiliates shall sell, offer for sale or solicit offers to buy any security that will be integrated with the offer or sale of the Shares hereunder that would require the registration under the Securities Act of the sale of Shares hereunder to the Investors.

 

6.4.                            Delivery of Shares After Closing. The Company shall deliver or cause to be delivered to each Investor evidence of the book-entry issuance of the Shares purchased by such Investor within three (3) Trading Days of the Closing Date.

 

6.5.                            Form D; Blue Sky.   The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon the written request of any Investor. The Company, on or before the Closing Date, shall take

 

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such action as the Company shall reasonably determine is necessary (if any) in order to obtain an exemption for or to qualify the Shares solely with respect to the sale contemplated by this Agreement to the Investors (and without any obligation on the Company as to any resales) under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification) and shall provide evidence of such actions promptly upon the written request of any Investor.

 

7.                                      Transfer Restrictions; Restrictive Legend.

 

7.1.                            Transfer Restrictions.  Each Investor understands that the Company (or its transfer agent) may, as a condition to the transfer of the Shares, require that the request for transfer be accompanied by an opinion of counsel reasonably satisfactory to the Company, to the effect that the proposed transfer does not result in a violation of the Securities Act or by Rule 144 under the Securities Act, unless such transfer is covered by an effective registration statement.  It is understood that the certificates evidencing the Shares may bear substantially the following legend:

 

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

The Company acknowledges and agrees that an Investor may from time to time pledge, and/or grant a security interest in, some or all of the legended Shares in compliance with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan with a nationally recognized NYSE-member prime broker.  Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge.  No notice shall be required of such pledge, but Investor must notify the Company as promptly as practicable prior to any such subsequent transfer or foreclosure.  Each Investor acknowledges  that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Shares or for any agreement, understanding or arrangement between any Investor and its pledgee or secured party.  The Company will use commercially reasonable efforts (and in any event, at the appropriate Investor’s expense) to execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder Each Investor acknowledges and agrees that, except as otherwise provided in Section 7.2, any Shares subject to a pledge or security interest as contemplated by this Section 7.1 shall continue to bear the legend set forth in this Section 7.1 and be subject to the restrictions on transfer set forth in this Section 7.1.

 

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7.2.                            Unlegended Certificates.  Subject to the receipt of standard written documentation provided by the holder pursuant to Rule 144 and a representation that the holder is not an Affiliate of the Company, the Company shall be obligated to promptly reissue unlegended certificates upon the request of any holder thereof (x) at such time as the holding period under Rule 144 or another applicable exemption from the registration requirements of the Securities Act for a transfer of such Shares to the public has been satisfied or (y) at such time as  a registration statement is available for the transfer of such Shares.

 

8.                                      Registration Rights.

 

8.1.                            Registration Statements.

 

(a)                                 Filing of Registration Statement. As soon as reasonably practicable following the Closing Date, but no later than five (5) Business Days after the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 or, if the Company is not required to file an Annual Report on Form 10-K for the year ended December 31, 2018, within five (5) Business Days after the Closing Date, the Company shall prepare and confidentially submit to the Commission one draft Registration Statement on Form S-1, covering the resale of all of the Registrable Securities, and shall use commercially reasonable efforts to cause such Registration Statement to be declared effective as promptly as reasonably practicable thereafter. The Company shall not register additional shares of Common Stock (other than a registration on Form S-8 or any successor form) until such Registration Statement is declared effective or, if earlier, until the Registrable Securities no longer constitute Registrable Securities. Such Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 8.2(c) to the Investors and their counsel prior to its filing or other submission. Without the consent of the Required Investors, the Company shall not provide piggyback registration rights on such Registration Statement until the earlier of (i) the date on which at least 90% of the Registrable Securities covered by such Registration Statement, as amended from time to time, no longer constitute Registrable Securities, or (ii) one (1) year from the date hereof.

 

(b)                                 Expenses. The Company shall pay all Company expenses associated with effecting the registration of the Registrable Securities, including filing and printing fees, the Company’s counsel (but excluding any fees of any counsel to the Investors) and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws and listing fees, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

 

(c)                                  Effectiveness.

 

(1)                                 The Company shall use commercially reasonable efforts to have the Registration Statement filed pursuant to Section 8.1(a) declared effective as soon as practicable after the initial confidential submission. The Company shall

 

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respond promptly to any and all comments made by the staff of the Commission on such Registration Statement, and shall submit to the Commission, with five (5) Business Days after the Company learns that no review of such Registration Statement will be made by the staff of the Commission or that the staff of the Commission has no further comments on such Registration Statement, as the case may be, a request for acceleration of the effectiveness of such Registration Statement to a time and date not later than three (3) Business Days after the submission of such request. The Company shall notify the Investors by e-mail as promptly as reasonably practicable, and in any event, within twenty-four (24) hours, after such Registration Statement is declared effective and shall simultaneously provide or make available to the Investors copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.

 

(2)              The Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company; provided, that such delays in accordance with this clause (A) shall not exceed more than seventy-five (75) days (which need not be consecutive days) in the aggregate in any twelve (12) month period, or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus, in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify each Investor in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of an Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable. In the event of the Company’s breach of its obligations with respect to clause (A) of this Section 8.1(c)(2), each Investor shall be entitled to a payment (with respect to the Registrable Securities of each such Investor), as compensation and not as a penalty, of 0.25% of the Liquidated Damages Multiplier per 60-day period, which shall accrue daily, for the first 60 days following the 75th day, increasing by an additional 0.25% of the Liquidated Damages Multiplier per 60-day period, which shall accrue daily, for each subsequent 60 days (i.e., 0.5% for 61-120 days, 0.75% for 121-180 days and 1.0% thereafter), up to a maximum of 1.00% of the Liquidated Damages Multiplier per 60-day period (the “Liquidated Damages”). The Liquidated Damages payable pursuant to the immediately preceding sentence shall be payable within twenty Business Days after the end of each such 60-day

 

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period. Any Liquidated Damages shall be paid to each Investor in immediately available funds. The accrual of Liquidated Damages to an Investor shall cease at the earlier of (i) the cessation of such suspension, (ii) when such Investor no longer holds Registrable Securities, or (iii) the expiration of any obligation to maintain such Registration Statement or Prospectus pursuant hereto, and any payment of Liquidated Damages shall be prorated for any period of less than 60 days in which the payment of Liquidated Damages ceases. The Company may request a waiver of the Liquidated Damages, which may be granted by the Required Investors on behalf of all of the Investors, and notwithstanding the failure to obtain such waiver, each Investor may individually grant or withhold its consent to such request in its discretion.  “Liquidated Damages Multiplier”  means the product of the Purchase Price times the number of Registrable Securities purchased by such Investor that may not be disposed of without restriction and without the need for current public information pursuant to any section of Rule 144 (or any similar provision then in effect) under the Securities Act. The Investors acknowledge and agree that the Investor’s actual harm caused by a breach of the Company’s obligations with respect to clause (A) of this Section 8.1(c)(2) would be impossible or very difficult to accurately estimate or prove, and that the Liquidated Damages are a reasonable estimate of the anticipated or actual harm that might arise from such breach. The Company’s payment of the Liquidated Damages is the Company’s sole liability and entire obligation, and the Investor’s exclusive remedy, for any such breach.

 

8.2.                            Company Obligations.  The Company shall use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company shall:

 

(a)                                 use commercially reasonable efforts to cause such Registration Statement, or a successor Registration Statement, including on Form S-3 if the Company becomes eligible to use such form, to become effective and to remain continuously effective (other than during an Allowed Delay) for a period (the “Effectiveness Period”) that will terminate upon the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement, as amended from time to time, no longer constitute Registrable Securities, and (ii) one (1) year from the date hereof;

 

(b)                                 use commercially reasonable efforts to prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

(c)                                  (i) provide copies to and permit counsel designated by the Investors to review and provide comments on each Registration Statement no fewer than two (2) Business Days prior to their filing with the Commission and all amendments and

 

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supplements thereto no fewer than one (1) Business Day prior to their filing with the Commission, and (ii) consider comments from the Required Investors for incorporation in such Registration Statements or amendments and supplements thereto in good faith;

 

(d)                                 furnish or otherwise make available (including via EDGAR) to the Investors (i) promptly after the same is prepared and publicly distributed, filed with the Commission, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the Commission or the staff of the Commission, and each item of correspondence from the Commission or the staff of the Commission, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought or plans to seek confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;

 

(e)                                  use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness, and (ii) if such order is issued, obtain the withdrawal of any such order and to notify the Investors of the issuance of such order and the resolution thereof, if applicable;

 

(f)                                   use commercially reasonable efforts to register or qualify (unless an exemption from the registration or qualification exists) or cooperate with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such domestic jurisdictions as are reasonably requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company will not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify, but for this Section 8.2(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject, but for this Section 8.2(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

(g)                                  use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on the securities exchange, interdealer quotation system or other market on which the Common Stock is then listed;

 

(h)                                 promptly notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state

 

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any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and, subject to Section  8.1(c)(2) hereof, promptly prepare, file with the Commission and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(i)                                     otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the Commission pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and

 

(j)                                    with a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the Commission that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees to use commercially reasonable efforts to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, for a period of twelve (12) months from the consummation of the Closing; (ii) file with the Commission in a timely manner all reports required of the Company under the Exchange Act; and (iii) furnish to each Investor upon request (including via EDGAR), as long as such Investor owns any Registrable Securities, (A) a written statement by the Company whether it has complied with the reporting requirements of the Exchange Act, (B) a copy (or a link to a website containing the same) of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the Commission that permits the selling of any such Registrable Securities without registration under Rule 144.

 

8.3.                            Obligations of the Investors.

 

(a)                                 Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities and other Company securities held by it and the intended method of disposition of the Registrable Securities held by it, as the Company may reasonably request (and in any event within two (2) Business Days of the Company’s request), to respond to requests by the Commission, FINRA or any state securities commission or as may be required to be disclosed by applicable securities laws and shall execute such documents in connection with such registration as the Company may reasonably request. At least two (2) Business Days prior to the first anticipated filing

 

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date of any Registration Statement, the Company shall notify each Investor of the information the Company requires from such Investor if such Investor elects to have any of the Registrable Securities included in the Registration Statement.

 

(b)                                 Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section  8.1(c)(2), or (ii) the happening of an event pursuant to Section 8.2(h) hereof, such Investor shall use its commercially reasonable efforts to promptly discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

 

8.4.                            Indemnification.

 

(a)                                 Indemnification by the Company.  In consideration of each Investor’s execution and delivery of this Agreement and in addition to all of the Company’s other obligations under the Transaction Documents to which it is a party, subject to the provisions of this Section 8.4, the Company shall indemnify and hold harmless each Investor, each of its directors, officers, shareholders, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who controls the Investor (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) (each, an “Investor Party”), from and against all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (including all judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation) (collectively, “Damages”) that any Investor Party may suffer or incur as a result of or relating to any action, suit, claim or proceeding (including for these purposes a derivative action brought on behalf of the Company) instituted against such Investor Party arising out of or resulting from (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Securities are registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or any other disclosure document produced by or on behalf of the Company including any report and other document filed under the Exchange Act or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading; provided, however, that the foregoing indemnity will not apply to any Damages to the extent, but only to the extent, that such Damages arise out of or result from any untrue statement or omission contained in any information relating to such Investor furnished in writing by an Investor Party to the Company expressly for inclusion in a Registration Statement.

 

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(b)                                 Indemnification by the Investors.  In consideration of each Investor’s execution and delivery of this Agreement and in addition to all of the Investor’s other obligations under the Transaction Documents to which it is a party, subject to the provisions of this Section 8.4, each Investor shall indemnify and hold harmless the Company, each of its directors, officers, shareholders, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title), each Person, if any, who controls the Company (within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act) (each, a “Company Party”), from and against all Damages that any Company Party may suffer or incur as a result of or relating to any action, suit, claim or proceeding (including for these purposes a derivative action brought on behalf of the Company) instituted against such Company Party to the extent arising out of or resulting from (i) any untrue statement of a material fact in any Registration Statement under which such Registrable Securities were registered or sold under the Securities Act (including any final, preliminary or summary Prospectus contained therein or any amendment thereof or supplement thereto or any documents incorporated by reference therein) or (ii) any omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or preliminary Prospectus, in light of the circumstances under which they were made) not misleading, in each case to the extent that such untrue statement or omission is contained in any information relating to such Investor furnished in writing by an Investor Party to the Company expressly for inclusion in a Registration Statement.

 

(c)                                  Promptly after receipt by an indemnified party under this Section  8.4 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 8.4, give the indemnifying party notice of the commencement thereof.  The indemnifying party will have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) will have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action.  The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Section 8.4, unless and to the extent such failure prejudices the indemnifying party’s ability to defend such action. If the indemnifying party assumes the defense of a claim pursuant to this Section 8.4(c), (x) the indemnifying party shall not be subject to any liability for any settlement made without its prior written consent, and (y) the indemnifying party shall not settle such claim unless the settlement includes an unconditional release of the indemnified party from all liability

 

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with respect to all claims that are the subject of the proceeding.  If such defense is not assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its prior written consent, but such consent may not be unreasonably withheld.

 

(d)                                 To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 8.4 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 8.4 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 8.4, then, and in each such case, such parties shall contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party will be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Investor will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Investor pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  The parties agree that it would not be equitable to allocate any such liabilities pro rata or by any method of allocation other than as provided in this clause (d).

 

(e)                                  The obligations of the Company and each Investor under this Section 8.4 will survive the completion of any offering or sale of Registrable Securities pursuant to a Registration Statement under this Agreement or otherwise.

 

9.                                      Definitions.  Unless the context otherwise requires, the terms defined in this Section 9 shall have the meanings specified for all purposes of this Agreement.

 

Except as otherwise expressly provided, all accounting terms used in this Agreement, whether or not defined in this Section 9, shall be construed in accordance with GAAP.

 

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“10% Shareholder” means, as of any time of determination, a Person who owns or has acquired ten percent (10%) or more of any class of outstanding stock of Ironwood or of the Company, including, for the avoidance of doubt, the Shares.

 

“Action” has the meaning assigned to it in Section 4.14 hereof.

 

“Additional Investor” has the meaning assigned to it in Section 1.2 hereof.

 

“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act.

 

“Agreement” has the meaning assigned to it in the introductory paragraph hereof.

 

“Allowed Delay” has the meaning assigned to it in Section 8.1(c)(2) hereof.

 

“Articles of Organization” means the Company’s Amended and Restated Articles  of Organization in the form attached as an exhibit to the Form 10.

 

“Board” has the meaning assigned to it in Section 4.6(b) hereof.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in the City of New York.

 

“Bylaws” means the Company’s Amended and Restated Bylaws in the form attached as an exhibit to the Form 10.

 

“Closing” has the meaning assigned to it in Section 2.1 hereof.

 

“Closing Date” has the meaning assigned to it in Section 2.1 hereof.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” has the meaning assigned to it in the recitals hereof.

 

“Company” has the meaning assigned to it in the introductory paragraph hereof.

 

“Company Party” has the meaning assigned to it in Section 8.4(b) hereof.

 

“Confidentiality Agreement” means, with respect to each Investor, the confidentiality agreement referred to opposite such Investor’s name on Schedule I in the column entitled “Other Information”.

 

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“control,” “controlled,” “controlled by” and “under common control with” means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of a majority of such Person’s outstanding voting equity or by contract, and with respect to “controlled Affiliates” includes Affiliates controlled by such Person.

 

“Cushion Shares” shall mean the number of shares of Company stock, if any, reasonably determined by Ironwood and the Company, after consultation with their tax advisors, to be necessary in order to preserve, and to avoid creating risk to, the Intended Tax Treatment.

 

“Damages” has the meaning assigned to it in Section 8.4(a) hereof.

 

“Distribution” has the meaning given to such term in the Separation Agreement.

 

“Effective Form 10” has the meaning assigned to it in Section 5.1(f) hereof.

 

“Effectiveness Period” has the meaning assigned to it in Section 8.2(a) hereof. 

 

“Effective Separation Agreement” has the meaning assigned to it in Section 5.1(g) hereof.

 

“Employee Benefit Plan” has the meaning assigned to it in Section 4.16(a) hereof.

 

“Encumbrances” means any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or other encumbrance.

 

“Environmental Laws” has the meaning assigned to it in Section 4.19 hereof.

 

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

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“FCPA” has the meaning assigned to it in Section 4.24 hereof.

 

“FDA” has the meaning assigned to it in Section 4.27 hereof.

 

“FINRA” means the Financial Industry Regulatory Authority, Inc.

 

“Form 10” means that certain Registration Statement on Form 10, confidentially submitted by the Company with the Commission in connection with the Distribution and in substantially the form made available in the Company’s electronic data room as of the date hereof, as may be amended from time to time after the date hereof.

 

“Fund” has the meaning assigned to it in Section 3.14(c)(ii) hereof.

 

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“GAAP” means U.S. generally accepted accounting principles consistently applied.

 

“Good Clinical Practices” means the international ethical and scientific quality standards for designing, conducting, recording, and reporting trials that involve the participation of human subjects.  In the United States, Good Clinical Practices are established through FDA guidance (including ICH E6).

 

“Good Laboratory Practices” means the current Good Laboratory Practice (or similar standards) for the performance of laboratory activities for pharmaceutical products as are required by applicable Regulatory Authorities.  In the United States, Good Laboratory Practices are established through FDA regulations (including 21 CFR Part 58), FDA guidance, FDA current review and inspection standards and current industry standards.

 

“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

 

“IND” has the meaning assigned to it in Section 4.27 hereof.

 

“Intellectual Property” means all inventions, patent applications, patents, trademarks, trade names, service names, copyrights, trade secrets, know-how and other intellectual property that is used in connection with, and is material to, the business of the Company.

 

“Intended Tax Treatment” has the meaning assigned to it in the recitals hereto.

 

“Investment Policies,” has the meaning assigned to it in Section 3.14(a) hereof.

 

“Investment Trades” has the meaning assigned to it in Section 3.14(a) hereof.

 

“Investor Commission Affiliate” means (a) any fund that, with respect to such Investor, is (i) under common management and investment control, (ii) under common management and funded primarily by the same employer (or by a group of related employers that are under common control) or (iii) part of the same group of “investment companies,” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, or (b) any other Person whose ownership of securities is aggregated with that of such Investor for purposes of any filings with the Commission.

 

“Investor Commitment Amount” has the meaning assigned to it in Section 1.1  hereof.

 

“Investor Consent” has the meaning assigned to it in Section 5.1(f) hereof.

 

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“Investor Party” has the meaning assigned to it in Section 8.4(a) hereof.

 

“Investors” has the meaning assigned to it in the introductory paragraph of this Agreement and shall include any Affiliates of the Investors and any transferees of Investors who are obligated to execute and deliver this Agreement in connection with such transfer.

 

“Investor Tax Affiliate” means, with respect to an Investor, any entity or individual whose ownership of stock would be attributable to or aggregated with such Investor under Section 355(e)(4)(C) of the Code.

 

“knowledge” or any similar phrase means (a) with respect to the Company, the actual knowledge of the principal executive officer, principal financial officer and chief scientific officer of the Company and (b) with respect to each Investor, the actual knowledge of the  persons included in the “Knowledge Group” listed opposite such Investor’s name on Schedule I in the column entitled “Other Information”.

 

“Laws” has the meaning assigned to it in Section 4.17 hereof.

 

“Liens” has the meaning assigned to it in Section 4.22 hereof.

 

“Liquidated Damages” has the meaning assigned to it in Section 8.1(c)(2) hereof.

 

“Liquidated Damages Multiplier” has the meaning assigned to it in Section  8.1(c)(2) hereof.

 

“Material Adverse Effect” means (a) any material adverse effect on the ability of the Company to consummate the issuance of Shares contemplated by this Agreement or (b) any material adverse effect on the financial condition, business or results of operations of the Company; provided that none of the following will constitute a Material Adverse Effect: any event, effect, circumstance, change, occurrence, fact or development resulting from or relating to (i) general business, industry or economic conditions, (ii) local, regional, national or international political or social conditions, including the engagement (whether new or continuing) by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, any natural or man-made disaster or acts of God, acts of terrorism or sabotage, (iii) changes in financial, banking or securities markets (including any disruption thereof and any decline in the price of any security or any market index),  (iv) changes in GAAP or regulatory accounting requirements or interpretations thereof that apply to the Company (including the proposal or adoption of any new law, statute, code, ordinance, rule or regulation, or any change in the interpretation or enforcement of any existing law, statute, code, ordinance, rule or regulation), (v) changes in Laws, (vi) the negotiation, execution, or delivery of this Agreement or any of the other Transaction Documents or the Separation Agreement or the filing of the Form 10, or the announcement, pendency or consummation of any

 

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of the transactions contemplated hereby or thereby, including the impact thereof on relationships with third parties (such as (A) any loss of existing employees, consultants or independent contractors, (B) any loss of, or reduction in business by or revenue from, existing customers, or (C) any disruption in or loss of vendors, suppliers, distributors, partners, contractors or similar third parties), (vii) the taking of, or the failure to take, any action expressly required by this Agreement or any of the other Transaction Documents or consented to, in writing by the Required Investors, (viii) any costs or expenses incurred or accrued by the Company in connection with this Agreement or the transactions contemplated hereby, or (ix) any failure by the Company (in the aggregate or otherwise) to meet estimates, expectations, projections or forecasts or revenue or earnings predictions for any period (provided that the exception set forth in this clause (x) shall not prevent or otherwise affect any determination that the underlying reasons for any such failure constitutes or contributed to a Material Adverse Effect), except to  the extent that such event, effect, circumstance, change, occurrence, fact or development arising from or related to the matters in clauses (i), (ii), (iv) and (v) disproportionately affects the Company as compared to other businesses operating in the industries or markets in which the Company operates.

 

“Material Contract” means all written and oral contracts, agreements, deeds, mortgages, leases, subleases, licenses, instruments, notes, commitments, commissions, undertakings, arrangements and understandings which are required to be filed as exhibits by the Company with the Commission pursuant to Items 601(b)(4) and 601(b)(10) of Regulation S-K promulgated by the Commission.

 

“Maximum Company Liability” means an amount equal to the Purchase Price multiplied by the number of Shares sold to the Investors pursuant to this Agreement.

 

“Money Laundering Laws” has the meaning assigned to it in Section 4.25 hereof.

 

“OFAC” has the meaning assigned to it in Section 3.17 hereof.

 

“Option” shall mean options to purchase or otherwise acquire Common Stock granted under the Company’s equity compensation plans.

 

“Options Deemed Outstanding” means the aggregate number of shares of Common Stock issuable pursuant to the exercise of Options then outstanding (assuming for this purpose that all such Options are fully vested, and excluding for this purposes RSUs (as defined in the Form 10)) multiplied by the Treasury Stock Ratio.

 

“Ownership Cap” means a number of shares of Common Stock equal to 46% of the total shares of Common Stock then outstanding (after giving effect to the issuance of the Shares at Closing).

 

“PCAOB” has the meaning assigned to it in Section 4.31 hereof.

 

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“Person” means and includes all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures, limited liability companies and other entities and governments and agencies and political subdivisions.

 

“Pre-Money Valuation” means $250,000,000.

 

“Prospectus” means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the Securities Act.

 

“Purchase Price” has the meaning assigned to it in Section 1 hereof.

 

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” means, collectively, the Shares and any other securities issued or issuable with respect to or in exchange for the Shares, whether by merger, charter amendment or otherwise; provided that a security shall cease to be a Registrable Security upon (A) a sale pursuant to a Registration Statement or Rule 144 under the Securities Act (in which case, only such security sold by the Investor shall cease to be a Registrable Security); or (B) becoming eligible for sale without volume restrictions by the applicable Investor pursuant to Rule 144 (but only if such shares are permitted to be unlegended under Section 7.2).

 

“Registration Statement” means any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Regulatory Authorities” has the meaning assigned to it in Section 4.27 hereof.

 

“Regulatory Permits” has the meaning assigned to it in Section 4.27 hereof.

 

“Required Investors” means, prior to the Closing, Investors entitled to acquire at least a majority of the Shares to be issued hereunder based on the total Investor Commitment Amounts at such time, and following the Closing, Investors holding at least a majority of the Shares then beneficially owned by all Investors.

 

“Requisite Notice” has the meaning assigned to it in Section 11 hereof.

 

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“Securities Act” or “Act” means the Securities Act of 1933, as amended.

 

“Separation” has the meaning assigned to such term in the recitals hereto.

 

“Separation Agreement” has the meaning assigned to such term in the recitals hereto.

 

“Shares” has the meaning assigned to such term in the recitals hereto.

 

“Shares Deemed Outstanding” means a number equal to the sum of: (i) all shares of Common Stock of the Company then outstanding, (ii) all RSUs (as defined in the Form 10) then outstanding, and (iii) all Options Deemed Outstanding, in each case after giving effect to the Distribution but excluding the Shares to be issued pursuant to this Agreement.

 

“Specified Investor” means the Investor or Investors identified on Schedule II.

 

“Studies” has the meaning assigned to such term in Section 4.28 hereof.

 

“Subsidiary” means any corporation, association trust, limited liability company, partnership, joint venture or other business association or entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such Person.

 

“Testing Shares” means the aggregate number of Shares issued to the Investors at the Closing pursuant to this Agreement plus any Cushion Shares.

 

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the Nasdaq Global Market, or the Nasdaq Global Select Market.

 

“Transaction Documents” means this Agreement and any other agreement between the Company and an Investor that expressly identifies itself as a Transaction Document.

 

“Treasury Stock Ratio” means the number determined by subtracting (a) the number (rounded to the nearest 1/10000) determined by dividing (i) the aggregate value of the exercise price of all Options then outstanding with an exercise price less than the Purchase Price by (ii) the aggregate value of all shares of Common Stock (such value to be determined for this purpose by multiplying the number of such shares of Common Stock by the Purchase Price) issuable upon exercise of all such Options (assuming for this purpose that all such Options are fully vested), from (b) 1.0000; provided, however, that the Treasury Stock Ratio shall not be less than zero.

 

10.                               Survival.  The representations, warranties, covenants, indemnities and agreements contained in this Agreement and in the other Transaction Documents shall survive the Closing of

 

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the transactions contemplated by this Agreement, subject as applicable to the last sentence of Section 11.

 

11.                               Indemnification of Investors.  Subject to the provisions of this Section 11, from and after the consummation of the Closing, the Company will indemnify and hold each Investor Party harmless from any and all actual out-of-pocket costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (subject to the other provisions of this Section 11) that any such Investor Party may suffer or incur as a result of or relating to (a) any action instituted against an Investor or Investor Party in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Investor or Investor Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Investor’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Investor may have with any such stockholder or any violations by the Investor of state or federal securities laws or any conduct by such Investor which constitutes fraud, gross negligence, willful misconduct or malfeasance) or (b) the Separation Agreement, the Separation and/or the Distribution.  Promptly after receipt by any Investor Party (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to this Section 11, such Indemnified Person shall promptly notify the Company in writing (the “Requisite Notice”) and the Company shall assume sole control of the defense thereof as part of its own defense, and the fees and expenses thereof shall be borne by the Company; provided, however, that (x) the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually prejudiced by such failure to notify and (y) the Company’s counsel shall not be entitled to have sole control over the defense of any such proceeding if there is an actual conflict of interest between the Company and such Indemnified Person under applicable principles of legal ethics which require both the Indemnified Person and the Company to consent to joint representation in such proceeding and the Company shall, in such case, be responsible for the reasonable fees and expenses of such additional counsel. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the Company’s counsel shall control the defense, and the fees and expenses of such additional counsel shall be at the expense of such Indemnified Person.  If the Indemnified Person refuses to allow the Company’s counsel to control the defense, or does not reasonably cooperate with the Company in connection with such defense (in each case, excluding situations where there is an actual conflict of interest as referred to above) after notice and a ten day cure period for curing such compliance, the Company shall have no obligation of indemnification or defense hereunder. Notwithstanding anything to the contrary contained herein, the Company’s aggregate cumulative liability under this Section 11 shall not exceed the Maximum Company Liability.  For the avoidance of doubt, the Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned (provided that for the avoidance of doubt the Company shall be permitted to withhold consent as to any such settlement that is reasonably likely to prejudice the Company or its Affiliates in a related proceeding). Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld,

 

39

 

delayed or conditioned, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or is reasonably likely to be a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release (without admission of liability) of such Indemnified Person from all liability arising out of such proceeding and such settlement does not contain non-monetary obligations that materially adversely affect such Indemnified Person.  The Company’s obligations under this Section 11 shall terminate on the second anniversary of the consummation of the Closing; provided, however, that the Company’s obligations which terminate pursuant to this sentence shall not terminate with respect to any claim with respect to which the Company has been given the applicable Requisite Notice from the Indemnified Person prior to the second anniversary of the Closing Date.

 

12.                               Enforcement; Specific Performance. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investors and the Company will be entitled to specific performance, injunctive and other equitable relief under the Transaction Documents.  The parties agree that monetary damages will not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation (i) security or the posting of any bond in connection with such relief, or (ii) the defense that a remedy at law would be adequate.

 

13.                               Miscellaneous.

 

13.1.                     Waivers and Amendments.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only in writing executed by the Company and the Required Investors; provided, that (i) such written consent must also be executed by any Investor that is materially, disproportionately and adversely affected, and (ii) no amendment or waiver may increase the obligations of any Investor without the prior written consent of such Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Shares purchased under this Agreement at the time outstanding, each future holder of all such Shares, and the Company. Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or terminated orally or by course of dealing, but only by an instrument in writing.

 

13.2.                     Notices.  Any notices, requests, demands and other communications required or permitted in this Agreement shall be effective if in writing and (i) delivered personally, (ii) sent by facsimile or e-mail or (iii) delivered by overnight courier, in each case, addressed as follows:

 

If to the Company to:

 

Cyclerion Therapeutics, Inc.

301 Binney Street

Cambridge, MA 02142

Attention:                                         General Counsel

 

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Facsimile:

E-mail:

 

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

 

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:                                         Paul Kinsella

Facsimile:                                         (617) 235-0822

E-mail:                                                        paul.kinsella@ropesgray.com

 

and

 

Hughes Hubbard & Reed LLP

One Battery Park Plaza, 12th floor

New York, NY 10004-1482

Attention:                                         Ken Lefkowitz

Facsimile:                                         (212) 299-6557

E-mail:                                                        ken.lefkowitz@hugheshubbard.com

 

If to any Investor:

 

To the address set forth on Schedule I hereto;

 

or at such other address as the Company or such Investor each may specify by written notice to the other parties hereto.  Any party may change the address to which notices, requests, consents or other communications hereunder are to be delivered by giving the other parties notice in the manner set forth in this Section 13.2.  Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by facsimile or e-mail (or, if delivered or transmitted after normal business hours at the location of recipient, on the next Business Day), one Business Day after the date when sent by overnight delivery services or seven days after the date so mailed if by certified or registered mail.

 

13.3.                     Cumulative Rights.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

13.4.                     Successors and Assigns; Syndication.  All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and permitted assigns of the Investors and the successors of the Company, whether so expressed or not. Prior to the Closing Date, the Investors may transfer and assign any portion of their rights and obligations to acquire Shares at the Closing under this Agreement to a Person or Persons only with the prior written consent of the Company; provided that each such transferee shall become a party to this Agreement as an “Investor” hereunder, and Schedule I shall be updated accordingly to include such transferee and reflect the number of

 

41

 

Shares to be acquired by such transferee at the Closing pursuant to the terms and conditions of this Agreement. Following the Closing Date, (a) an Investor may transfer and assign the portion of its rights and obligations under this Agreement under Section 8 (but no other Section) to a transferee of all or a portion of the Shares purchased under this Agreement by such Investor, and (b) an Investor may transfer and assign all of its rights and obligations under this Agreement to its Affiliate in connection with the transfer of all or a portion of the Shares purchased under this Agreement by such Investor to such Affiliate. Any Investor Tax Affiliate or Investor Commission Affiliate transferee of Shares shall be required to make the representations and warranties contained in Section 3.14 (both as of the date of this Agreement and as of the date of such transfer) as to itself for the benefit of the Company prior to effecting such transfer. Any attempt to assign or transfer any right hereunder in violation of this Section 13.4 shall be void ab initio.

 

13.5.                     Headings.  The headings of the Sections and paragraphs of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement.

 

13.6.                     Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflict of law principles.

 

13.7.                     Fees and Expenses.  Each party shall bear its own fees and expenses incurred in connection with the transactions contemplated hereby.

 

13.8.                     Jurisdiction.  Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state court located in the Commonwealth of Massachusetts, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.2 shall be deemed effective service of process on such party.

 

13.9.                     Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, ANY OTHER AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY WAY CONNECTED

 

42

 

WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN TORT OR CONTRACT OR OTHERWISE.  The Company acknowledges that it has been informed by the Investors that the provisions of this Section 13.9 constitute a material inducement upon which the Investors are relying and will rely in entering into this Agreement.  Any Investor or the Company may file an original counterpart or a copy of this Section 13.9 with any court as written evidence of the consent of the Investors and the Company to the waiver of the right to trial by jury.

 

13.10.              Termination.  This Agreement will terminate in its entirety immediately upon the termination of the Separation Agreement (without regard to the other “Transaction Agreements” referred to therein) prior to the Closing; provided, that if the Closing has not occurred on or before              , 2019, the Required Investors or the Company may terminate this Agreement in its entirety by written notice; provided, however that such termination shall not relieve any party from liability for a willful breach of any of its obligations under this Agreement occurring prior to such termination.

 

13.11.              Counterparts; Effectiveness.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document.  All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument.  This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

 

13.12.              Entire Agreement.  The Transaction Documents and the Confidentiality Agreements contain the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and such agreements supersede and replace all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and thereof.

 

13.13.              No Presumption.  With regard to each and every term and condition of this Agreement and the other Transaction Documents, the parties understand and agree that the same has been mutually negotiated, prepared and drafted, and if at any time the parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party actually prepared, drafted or requested any term or condition of this Agreement.

 

13.14.              Severability.  If any provision of this Agreement shall be found by any court of competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to the extent that it is found to be invalid or unenforceable.  Such provision shall, to the maximum extent allowable by law, be modified by such court so that it becomes enforceable, and, as modified, shall be enforced as any other provision hereof, all the other provisions hereof continuing in full force and effect.

 

13.15.              Waiver of Conflicts. Each party to this Agreement acknowledges that Ropes & Gray LLP, counsel for the Company, has in the past performed and may continue to perform legal services for certain of the Investors in matters unrelated to the transactions

 

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described in this Agreement. Accordingly, each party to this Agreement hereby (a) acknowledges that they have had an opportunity to ask for information relevant to this disclosure; and (b) gives its informed consent to Ropes & Gray LLP’s representation of certain of the Investors in such unrelated matters and to Ropes & Gray’s representation of the Company in connection with this Agreement and the transactions contemplated hereby.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
THE   COMPANY
    
	
 
    	
 
    
	
 
    	
CYCLERION   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature Page to Common Stock Purchase Agreement]

 

 

	
Investors:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Common Stock Purchase Agreement]Exhibit 10.1

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated
as of January 28, 2019, by and between Iconix Brand Group, Inc., a Delaware corporation (the “Company”), and John T.
McClain (the “Executive”).

 

WITNESSETH

 

WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, pursuant to the terms as provided herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive hereby agree as follows:

 

1.             Engagement of Executive; Duties. During the Term (as defined below), the Executive shall have the titles of Chief
Financial Officer and Executive Vice President of the Company, and shall have the authorities, duties and responsibilities customarily
exercised by an individual serving in these positions in a corporation of the size and nature of the Company and such other authorities,
duties and responsibilities as may be from time to time reasonably delegated to him by the Chief Executive Officer of the Company
(the “CEO”) or the Board of Directors of the Company (the “Board”). The Executive shall faithfully and
diligently discharge his duties hereunder and use his best efforts to implement the policies established by the CEO and the Board
from time to time. The Executive shall comply with the Company’s policies in effect from time to time and about which he
has written notice, including, without limitation, policies relating to stock ownership guidelines, clawback provisions, hedging
and pledging of securities and insider trading.

 

2.             Time. The Executive shall devote all of his professional time to the business affairs of the Company; provided,
however, that nothing in this Agreement shall preclude the Executive from devoting a reasonable amount of time required for serving
as a director on the board of directors of Lands’ End, Inc. and Seritage Growth Properties and such other organizations or
corporations that the CEO or the Board may approve; provided that in no event shall (a) Executive serve on the board of
directors of a corporation or organization that competes with the Company, (b) Executive’s service for such corporation or
organization otherwise creates, or could create, a conflict of interest with the business of the Company or (c) Executive’s
service for such corporation or organization materially interferes with the performance of the Executive’s duties hereunder.

 

3.             Term. The Executive’s employment with the Company shall commence effective on February 11, 2019 (the “Commencement
Date”) and shall continue until terminated in accordance with the terms of this Agreement. Executive’s employment
by the Company shall be at-will, and the Company may terminate such employment at any time.

 

     

     

    

 

		4.	Compensation.

 

		(a)	Base Salary. The Executive’s base salary
for the Term shall be at a rate of not less than five hundred twenty five thousand dollars ($525,000) per annum (pro-rated
for the applicable number of days employed during each calendar year in the Term), less any applicable federal, state and/or
local tax withholdings, and paid semi-monthly in accordance with the Company’s payroll practices and policies then in effect,
with such increases as may be determined by the Board or the Compensation Committee of the Board (the “Compensation Committee”)
upon annual consideration of the matter (such base salary, as increased from time to time, the “Base Salary”).

 

		(b)	Annual Bonus. During the Term, the Executive shall be entitled to participate in the Company’s executive bonus
program as in effect from time to time. The Executive shall earn an annual bonus for each complete calendar year of the Term (“Annual
Bonus”), with the annual target bonus opportunity of at least 75% of the Executive’s Base Salary, and the annual maximum
bonus opportunity of 150% of the Executive’s Base Salary. The actual amount of Annual Bonus to be paid for each calendar
year, if any, shall be determined with reference to the Company’s performance compared to pre-determined financial goals
and other metrics established annually by the Compensation Committee. Annual Bonus earned with respect to a calendar year shall
be paid in the calendar year immediately following the calendar year to which it relates. In the event that the Annual Bonus payment
for a calendar year, if any, is based in whole or in part on the results of the audit by the Company’s independent public
accountants of the Company’s financial statements for such calendar year, such Annual Bonus shall be paid as soon as reasonably
practicable following the completion of such audit, but in all events in the calendar year immediately following the calendar year
to which it relates.

 

		(c)	2019 Inducement Cash Bonus. As an inducement to accept the Company’s offer of employment and to enter into this
Agreement, the Company shall pay the Executive a one-time payment of fifty thousand dollars ($50,000) (less any applicable federal,
state and/or local tax withholdings), as soon as reasonably practicable after the date on which the Company timely files its annual
report in respect of the Company’s 2018 financial year on Form 10-K with the U.S. Securities and Exchange Commission (the
“2018 10-K”); provided that in the event that the 2018 10-K is complete in all material respects but the Company
does not file the 2018 10-K for any reason prior to March 31, 2019, then such amount shall be payable to Executive on March 31,
2019.

 

		(d)	Sign-On Inducement Awards in Lieu of 2019 LTIP.

 

		(i)	As an inducement to accept the Company’s offer
of employment and enter into this Agreement, and in lieu of Executive’s eligibility to participate in the Company’s
2019 long-term incentive plan or any similar incentive plan effected in 2019 by the Company, on or as soon as reasonably practicable
after the Commencement Date, the Company shall grant to the Executive restricted stock units (“RSUs”) equal to a number
of shares of Common Stock with a value on the date of grant of two hundred sixty two thousand five hundred dollars ($262,500)
(the “Sign-On RSU Award”). The number of RSUs to be issued shall be determined by dividing $262,500 by the closing
price of the Company’s Common Stock on the date of grant. The RSUs shall be subject to the terms and conditions of a restricted
stock unit award agreement, which shall provide that one-third of RSUs granted thereunder shall vest on the Commencement Date,
and the remaining two-thirds of the RSUs shall vest on the first anniversary of the Commencement Date, subject to the Executive’s
continued employment with the Company through such vesting date. Notwithstanding anything to the contrary contained herein, in
the event the Executive’s employment with the Company under this Agreement is terminated prior to the first anniversary
of the Commencement Date, then all unvested RSU’s issued under the Sign-On RSU Award shall be forfeited immediately for
no consideration due to the Executive and all vested RSU’s issued under the Sign-On RSU Award Agreement shall be immediately
returned to the Company by the Executive; provided that in the event of a termination of this Agreement by the Company
without Cause and unrelated to the Company’s or the Executive’s performance, as reasonably determined by the Board,
all unvested Sign-On RSUs shall vest on the first anniversary of the Commencement Date.

 

     

     

    

 

		(ii)	As an inducement to accept the Company’s offer of employment and enter into this Agreement, and in lieu of Executive’s
eligibility to participate in the Company’s 2019 long-term incentive plan or any similar incentive plan effected in 2019
by the Company, in addition to the Sign-On RSU Award, on or as soon as reasonably practicable after the Commencement Date, the
Company shall grant to the Executive performance stock units (“PSUs”) equal to a number of shares of Common Stock with
a value on the date of grant of two hundred sixty two thousand five hundred dollars ($262,500) (the “Sign-On PSU Award”).
The number of PSUs to be issued shall be determined by dividing $262,500 by the closing price of the Company’s Common Stock
on the date of grant. The PSUs issued under the Sign-On PSU Award shall be subject to the terms and conditions a performance stock
unit award agreement, which shall set forth, among other things, the applicable performance targets and performance period.

 

		(e)	Annual Equity Awards in Future Years After 2019.
Commencing in 2020, the Company shall grant to the Executive PSUs and/or RSUs or other such cash or equity-based long term incentives
as deemed appropriate by the Compensation Committee. An aggregate target of one hundred percent (100%) of the Executive’s
then-current base salary shall serve as the annual guideline for aggregate Fair Market Value of future year PSUs, future year
RSUs or such other long-term incentive awards that may be granted pursuant to the Company’s long-term incentive plans then
in effect. All such grants shall be subject to substantially the same terms and conditions, other than amount and vesting dates,
as pertain to the annual equity awards to be granted to other executives of the Company, with such changes therein as the Compensation
Committee deems appropriate.

 

		(f)	General Employee Benefits. During the Term, the Executive shall be eligible to receive the employee benefits generally
available to other executive officers of the Company from time to time, including, but not limited to, major medical, dental, life
insurance, short-term disability insurance, long-term disability insurance, and pension, including any 401(k) or other profit sharing
plan, in all cases, subject to the Executive’s satisfaction of the eligibility requirements of the applicable employee benefit
plans or programs and subject to applicable law and the terms and conditions of such plans or programs; provided, however,
that the Company may amend, modify or terminate any such plans or programs at any time in its discretion. During the Term, the
Executive shall be covered as an insured under the Company’s officers and directors liability insurance and all other applicable
insurance policies which pertain to officers of the Company.

 

		(g)	Reimbursement of Expenses. During the Term, the Company shall reimburse the Executive for the reasonable business expenses
incurred by him in the performance of his duties hereunder, including, without limitation, expenses related to mobile devices and
laptop computers and such other expenses incurred in connection with business-related travel or entertainment in accordance with
the Company’s policy, provided that such expenses are incurred and accounted for in accordance with the Company’s
policy.

 

		(h)	Paid-Time Off. During the Term, the Executive shall be entitled to 26 days of paid-time off per calendar year (pro-rated
for partial years), as well as holidays and floating holidays, in accordance with Company’s accrual and other policies then
in effect.

 

     

     

    

 

		5.	Termination of Employment.

 

		(a)	General.

 

		(1)	The Executive’s employment under this Agreement
may be terminated at any time by either the Executive or the Company.

 

		(2)	This Agreement and the Executive’s employment shall terminate upon the death of the Executive.

 

		(3)	If the Executive is unable to perform the essential duties and functions of his employment because of a disability, even with
a reasonable accommodation, for one hundred eighty (180) days within any three hundred sixty-five (365)-day period (“Disability”),
the Company shall have the right and may elect to terminate the services of the Executive by a Notice of Disability Termination.
The Executive shall not be terminated following a Disability except pursuant to this Section 5(a)(3). For purposes of this Agreement,
a “Notice of Disability Termination” shall mean a written notice that sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s employment under this Section 5(a)(3). For
purposes of this Agreement, no such purported termination shall be effective without such Notice of Disability Termination. This
Agreement and the Executive’s employment shall terminate on the day such Notice of Disability Termination is received by
the Executive.

 

		(b)	Definitions. For the purposes of this Agreement:

 

		(1)	Termination for “Cause” shall mean termination of the Executive’s employment because of the occurrence of
any of the following as determined by the Board:

 

		(i)	the Executive’s material breach of his obligations under this Agreement, including, for the avoidance of doubt, his willful
failure to substantially perform his obligations under this Agreement (other than any such failure resulting from the Executive’s
incapacity due to a Disability); provided, however, that the Company shall have provided the Executive with written
notice of such breach and the Executive has been afforded thirty (30) days to cure same to the extent capable of cure;

 

		(ii)	the Executive’s indictment or conviction of or
plea of guilty or nolo contendere to, a felony or any other crime involving moral turpitude or dishonesty;

 

		(iii)	the Executive’s willfully engaging in misconduct in the performance of his duties for the Company (including theft, fraud,
embezzlement and securities law violations or a violation of the Company’s Code of Conduct or other material written policies)
that is injurious to the Company or any of its affiliates, monetarily or otherwise; or

 

		(iv)	the Executive’s willfully engaging in misconduct other than in the performance of his duties for the Company (including
theft, fraud, embezzlement and securities law violations) that is materially injurious to the Company or, in the good faith determination
of the Board, is potentially materially injurious to the Company, monetarily or otherwise.

 

For purposes of this Section 5(b)(1),
no act, or failure to act, on the part of the Executive shall be considered to have been “willfully” performed or omitted,
unless done, or omitted to be done, by him in bad faith and without reasonable belief that his action or omission was in, or not
opposed to, the best interest of the Company (including reputationally).

 

     

     

    

 

		(2)	“Good Reason” shall mean the occurrence of any of the following events without the Executive’s consent:

 

		(i)	the failure by the Company to timely comply with its material obligations and agreements, including without limitation any
of the financial obligations contained in Section 5, contained in this Agreement;

 

		(ii)	a material diminution of the authorities, duties or responsibilities of the Executive set forth in Section 1 above (other than
temporarily while the Executive is physically or mentally incapacitated and unable to properly perform such duties, as determined
by the Board in good faith);

 

		(iii)	the loss of any of the titles of the Executive with the Company set forth in Section 1 above;

 

		(iv)	the re-location of the Executive to an office more than fifty (50) miles from the Company’s current headquarters or that
results in a material increase in Executive’s commute; or

 

		(v)	a change in the reporting structure so that the Executive reports to someone other than the CEO,

 

provided, however,
that, within ninety (90) days of any such events having occurred, the Executive shall have provided the Company with written notice
that such events have occurred and afforded the Company thirty (30) days to cure same. The parties agree that a termination for
Good Reason shall be treated as an involuntary separation under Code Section 409A (as hereinafter defined in Section 8(a) below).

 

		(c)	Compensation Upon Termination.

 

		(i)	Termination for Cause or without Good Reason. If the Executive’s employment shall be terminated by the Company
for Cause, by the Executive without Good Reason or a result of the Executive’s death or a Disability, the Executive shall
receive from the Company: (a) any earned but unpaid Base Salary through the Date of Termination, paid in accordance with the Company’s
standard payroll practices; (b) reimbursement for any unreimbursed expenses properly incurred and paid in accordance with Section
4(g) through the Date of Termination; (c) payment for any accrued but unused paid-time off in accordance with the Company’s
policies then in effect; (d) such vested accrued benefits, and other payments, if any, as to which the Executive (and his eligible
dependents) may be entitled under, and in accordance with the terms and conditions of, the employee benefit arrangements, plans
and programs of the Company as of such date of termination, other than any severance pay plan ((a) through (d), the “Amounts
and Benefits”), and (e) all vested shares in respect of the Executive’s equity awards then held by him, including those
described in this Agreement, and the Company shall have no further obligation with respect to such equity awards. For the avoidance
of doubt, any portion of the equity awards that remains unvested on the Date of Termination shall be forfeited as of the Date of
Termination.

 

		(ii)	Termination without Cause or for Good Reason. If, prior to the expiration of the Term, the Executive resigns from his
employment hereunder for Good Reason or the Company terminates the Executive’s employment hereunder without Cause (other
than a termination by reason of death or Disability), and the Executive has not received and is not entitled to any payment under
Section 5(d)(iii) hereof, then the Company shall pay or provide the Executive the Amounts and Benefits and, subject to Section
8 hereof:

 

     

     

    

 

		1.	an amount equal to fifteen (15) months of Executive’s applicable Base Salary, which amount shall be payable semi-monthly
in equal installments during the Non-Compete Term (as defined below), (less any applicable federal, state and/or local tax withholdings),
in accordance with the Company’s payroll practices and policies then in effect; provided that such semi-monthly installment
payments shall cease immediately as of the date that Executive commences an employment relationship or full-time consulting arrangement
with a subsequent employer (and by accepting receipt of any severance payments or other benefits pursuant to this Section 5(c),
such Executive agrees to immediately notify the Company of the commencement of such employment relationship or consulting arrangement
by a subsequent employer);

 

		2.	any Annual Bonus earned but unpaid for the calendar year preceding the calendar year in which the Executive’s termination
of employment occurs (the “Prior Year Bonus”), payable at such time as bonuses for such prior calendar year are paid
to the Company’s executives generally, and, in any event, at such time as otherwise required under the terms of this Agreement
to the extent required to avoid the adverse tax consequences under Code Section 409A;

 

		3.	a pro-rata portion of the Executive’s Annual Bonus for the calendar year in which the Executive’s termination occurs
based on target performance for such calendar year (determined by multiplying the amount of such Annual Bonus which would be due
for the full calendar year by a fraction, the numerator of which is the number of days during the calendar year of termination
that the Executive is employed by the Company and the denominator of which is 365), payable at such time as bonuses for such calendar
year are paid to the Company’s executives generally (the “Pro Rata Bonus”) and, in any event, at such time as
otherwise required under the terms of this Agreement to the extent required to avoid the adverse tax consequences under Code Section
409A. In the event that the Company has not established an executive bonus plan covering the calendar year during which the Executive’s
employment terminates, the Pro-Rata Bonus due to the Executive shall be based upon the target Annual Bonus opportunity for the
calendar year preceding the calendar year in which such termination occurs;

 

		4.	subject to the Executive’s (a) timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), with respect to the Company’s group health insurance plans in which the Executive
participated immediately prior to the Date of Termination (“COBRA Continuation Coverage”), and (b) continued payment
by Executive of premiums for such plans at the “active employee” rate (excluding, for purposes of calculating cost,
an employee’s ability to pay premiums with pre-tax dollars), the Company shall provide COBRA Continuation Coverage for the
Executive and his eligible dependents (which payment will be reported as taxable income) until the earliest of (x) the Executive
or his eligible dependents, as the case may be, ceasing to be eligible under COBRA, (y) fifteen (15) months following such date
of termination, and (z) the Executive becoming eligible for coverage under the health insurance plan of a subsequent employer (the
benefits provided under this sub-section (4), the “Medical Continuation Benefits”); and

 

		5.	unvested amounts subject to equity awards granted hereunder shall vest if and to the extent provided for in the applicable
equity award agreement and as otherwise provided in this Agreement.

 

     

     

    

 

		(iii)	Termination Following Change in Control. If the Company terminates Executive’s employment without Cause or Executive
terminates Executive’s employment for Good Reason, in either case, within 18 months after a Change in Control, then the Company
shall pay to Executive, in a lump sum, in cash, within 15 days after the date of Executive’s termination, an amount equal
to two times the sum of (a) the applicable Base Salary, and (b) the average Annual Bonus awarded to the Executive for the two calendar
years immediately prior to such Change in Control, provided, however, that if the Change in Control occurs during
2019, the amount of clause (b) shall equal 75% of the applicable Base Salary. In addition to the foregoing, upon a termination
of Executive’s employment as set forth above, (x) Executive shall be entitled to receive the payments and benefits in the
amounts contemplated, and on the dates specified, by sub-sections 5(d)(ii)(2), 5(d)(ii)(4) and 5(d)(ii)(5).

 

For purposes of this Agreement, a “Change in
Control” shall mean any of the following (provided that any such event also constitutes a change in control event for purposes
of Section 409A of the Code, to the extent required to avoid the adverse tax consequences thereunder):

 

		1.	any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant
to which shares of the Company’s Common Stock would be converted into cash, securities or other property, other than a merger
of the Company in which the holders of the Company Common Stock immediately prior to the merger have the same proportionate ownership
of Common Stock of the surviving corporation immediately after the merger;

 

		2.	any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company;

 

		3.	any approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;

 

		4.	the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals (the
“Continuing Directors”) who (x) at the date of this Agreement were directors or (y) become directors after the date
of this Agreement and whose election or nomination for election by the Company’s stockholders, was approved by a vote of
at least two-thirds of the directors then in office who were directors at the date of this Agreement or whose election or nomination
for election was previously so approved); or

 

		5.	(A) the acquisition of beneficial ownership (“Beneficial Ownership”), within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), of an aggregate of 25% or more of the voting power
of the Company’s outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the Exchange
Act) who beneficially owned less than 10% of the voting power of the Company’s outstanding voting securities on the effective
date of this Agreement, (B) the acquisition of Beneficial Ownership of an additional 15% of the voting power of the Company’s
outstanding voting securities by any person or group who beneficially owned at least 10% of the voting power of the Company’s
outstanding voting securities on the effective date of this Agreement, or (C) the execution by the Company and a stockholder of
a contract that by its terms grants such stockholder (in its, hers or his capacity as a stockholder) or such stockholder’s
Affiliate (as defined in Rule 405 promulgated under the Securities Act of 1933 (an “Affiliate”)) including, without
limitation, such stockholder’s nominee to the Board (in its, hers or his capacity as an Affiliate of such stockholders),
the right to veto or block decisions or actions of the Board; provided, however, that notwithstanding the foregoing,
the events described in items (A), (B) or (C) above shall not constitute a Change in Control hereunder if the acquiror is (aa)
a trustee or other fiduciary holding securities under an employee benefit plan of the Company or one of its affiliated entities
and acting in such capacity, (bb) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of voting securities of the Company or (cc) a person or group meeting the requirements
of clauses (i) and (ii) of Rule 13d-1(b)(1) under the Exchange Act.

 

     

     

    

 

		(iv)	Payments of Compensation Upon Termination. For the avoidance of doubt, in the event the Executive shall be entitled
to receive payments and benefits pursuant to any one of sub-sections 5(d)(i), (ii) or (iii), Executive shall be entitled to no
payments or benefits under any other of such sub-sections, except as expressly set forth in sub-section 5(d)(iii) with respect
to payments and benefits contemplated by sub-section 5(d)(ii). Notwithstanding anything herein to the contrary, the time of payment
of any bonus amount shall not be changed by reason of Section 5 of this Agreement in any manner that would result in adverse tax
consequences under Code Section 409A.

 

		(d)	Release. Notwithstanding any provision to the contrary in this Agreement, the Company’s obligation to pay or provide
the Executive with the payments and benefits (other than the Amounts and Benefits) under Section 5(c) shall be conditioned on the
Executive’s executing and not revoking a waiver and general release (the “Release”). The Company shall provide
the Release to the Executive within seven (7) days following the applicable Date of Termination. In order to receive the payments
and benefits (other than the Amounts and Benefits) under Section 5(d), the Executive will be required to sign the Release within
twenty-one (21) or forty-five (45) days after the date it is provided to him, whichever is applicable under applicable law, and
not revoke it within the seven (7) day period following the date on which it is signed by him. Notwithstanding anything to the
further contrary contained herein, (i) all payments delayed pursuant to this Section, except to the extent delayed pursuant to
Section 8(b), shall be paid to the Executive in a lump sum on the first Company payroll date on or following the sixtieth (60th)
day after the Date of Termination, and any remaining payments due under this Agreement shall be paid or provided in accordance
with the normal payment dates specified for them herein and (ii) all distributions with respect to the equity awards delayed pursuant
to this Section, except to the extent delayed pursuant to Section 8(b) and except as otherwise provided in Section 5(c), shall
be distributed to the Executive on the sixtieth (60th) day after the Date of Termination.

 

		6.	Confidentiality; Non-Competition; Non-Solicitation;
Non-Disparagement; Cooperation.

 

		(a)	The Executive shall not divulge to anyone, either during or at any time after the Term, any information constituting a trade
secret or other confidential information acquired by him concerning the Company, any subsidiary or other affiliate of the Company,
except in the performance of his duties hereunder, including but not limited to its licensees, revenues, business systems and processes
to the extent such information (i) is not generally known by the public and (ii) is treated as confidential information by the
Company or any of its affiliates (“Confidential Information”). The Executive acknowledges that any Confidential Information
is of great value to the Company and its affiliates, and upon the termination of his employment, the Executive shall redeliver
to the Company all Confidential Information and other related data in his possession. Notwithstanding any other provision of this
Agreement to the contrary, Confidential Information does not include information that enters the public domain, other than through
breach of the Executive’s obligations under this Agreement. Notwithstanding the foregoing, nothing in this Section 6(a) or
in this Agreement shall interfere with or prohibit the Executive from enjoying the full protection and benefit of the Defend Trade
Secrets Act and in any event, (I) the Executive shall not be held criminally or civilly liable under any federal or state trade
secret law for the disclosure of a trade secret that: (A) is made (i) in confidence to a federal, state, or local government
official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected
violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal; and (II) if the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law,
the Executive may disclose a trade secret to his attorney and use the trade secret information in the court proceeding, provided
the Executive, to the extent permitted by law, files any document containing the trade secret under seal and does not disclose
the trade secret except pursuant to court order.

 

		(b)	The Executive hereby agrees that during the period commencing on the date hereof and ending fifteen (15) months after the applicable
date of termination for whatever reason (the “Non-Compete Term”), he shall not, directly or indirectly, in any location
in which the Company, its subsidiaries or affiliates or a licensee thereof operates or sells its products (the “Territory”),
engage, have an interest in or render any services to any business (whether as owner, manager, operator, licensor, licensee, lender,
partner, stockholder, joint venturer, employee, consultant or otherwise) that derives 75% or more revenues from licensing revenue
and has greater than $75 million in revenue during the time of the Executive’s employment by the Company or at the termination
of his employment. Notwithstanding the foregoing, nothing herein shall prevent the Executive from passively owning stock in a publicly
traded corporation whose activities compete with those of the Company, its subsidiaries and affiliates, provided that such stock
holdings are not greater than five percent (5%) of such corporation.

 

     

     

    

 

		(c)	The Executive shall not, during the Non-Compete Term, intentionally take any action which constitutes an interference with
or a disruption of any of the Company’s business activities including, without limitation, the solicitation of the Company’s
or any subsidiary’s customers, suppliers, lessors, lessees, licensors, or licensees, to terminate or diminish its relationship
with the Company or any of the Company’s subsidiaries; provided that the restrictions described in this Section 6(c)
shall apply during the Non-Compete Term only with respect to persons who are as of the Date of Termination, or who have been during
the final two (2) years of the Term, customers, suppliers, lessors, lessees, licensors or licensees.

 

		(d)	The Executive shall not, during the Non-Compete Term, directly or indirectly, hire, offer to hire, entice, solicit or in any
other manner persuade or attempt to persuade any officer, employee or agent of the Company or any subsidiary (but only those persons
who had such status at any time while the Executive was employed by the Company or any subsidiary), to discontinue or alter his,
her or its relationship with the Company or any subsidiary. Nothing in this Agreement shall prohibit the Executive from publishing
or advertising any general solicitation for employment not targeted at any Company employee covered by this Section 6(d), and it
shall not be a violation of this Agreement for the Executive to hire or encourage any other person who responds to such general
solicitation.

 

		(e)	At no time during or after the Term shall (i) the Executive, directly or indirectly, disparage the Company, any of its subsidiaries
or affiliates, or any past or present employees, directors, officers, partners, members, managers, shareholders, products or services
of any of the foregoing or (ii) the Company or any of its subsidiaries or controlled affiliates, or any of its present employees,
directors or officers (the “Company Parties”), directly or indirectly, disparage the Executive; provided, however,
nothing in this Agreement shall restrict the Executive or the Company Parties, as applicable, (x) from giving truthful testimony
or statements in connection with any judicial proceeding or other governmental investigation or proceeding or (y) from communicating
in any way with any governmental entity regarding any incident that Executive or any Company Party, as applicable, in good faith
believes constitutes a violation of law.

 

		(f)	Upon the receipt of reasonable notice from the Company (including the Company’s outside counsel), the Executive agrees
that while employed by the Company and thereafter, the Executive will respond and provide information with regard to matters of
which the Executive has knowledge as a result of the Executive’s employment with the Company, and will provide reasonable
assistance to the Company and its representatives and affiliates (the “Company Group”) in defense of any claims that
may be made against the Company Group (or any member thereof), and will provide reasonable assistance to the Company Group in the
prosecution of any claims that may be made by the Company Group (or any member thereof), to the extent that such claims may relate
to matters related to the Executive’s period of employment with the Company (or any predecessors). Any request for such cooperation
shall take into account the Executive’s other personal and business commitments and shall occur at mutually convenient dates
and times. The Executive also agrees to promptly inform the Company (to the extent the Executive is legally permitted to do so)
if the Executive is asked to assist in any investigation of the Company Group (or any member thereof) or their actions, regardless
of whether a lawsuit or other proceeding has then been filed with respect to such investigation, and shall not do so unless legally
required. If the Executive is required to provide any services pursuant to this Section 6(f) following the Term, upon presentation
of appropriate documentation, the Company shall promptly reimburse the Executive for reasonable out-of-pocket expenses incurred
in connection with the performance of such services and in accordance with the Company’s expense policy for its senior officers.

 

		(g)	Without intending to limit the remedies available to the Company, the Executive acknowledges that a breach of any of the covenants
contained in this Section 6 may result in material and irreparable injury to the Company, or its affiliates or subsidiaries, for
which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat the Company and its affiliates shall be entitled to a temporary restraining order and/or
a preliminary or permanent injunction restraining the Executive from engaging in activities prohibited by this Section 6 or such
other relief as may be required specifically to enforce any of the covenants in this Section 6. If for any reason it is held that
the restrictions under this Section 6 are not reasonable or that consideration therefor is inadequate, such restrictions shall
be interpreted or modified to include as much of the duration and scope identified in this Section as will render such restrictions
valid and enforceable.

 

     

     

    

 

		(h)	In the event of any violation of the provisions of this Section 6, the Executive acknowledges and agrees that the post-termination
restrictions contained in this Section 6 shall be extended by a period of time equal to the period of such violation, it being
the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during
any period of such violation.

 

7.             Indemnification. The Company shall indemnify, defend and hold harmless the Executive against any and all expenses
reasonably incurred by him in connection with or arising out of (a) the defense of any action, suit or proceeding in which he is
a party, or (b) any claim asserted or threatened against him, in either case by reason of or relating to his being or having been
an employee, officer or director of the Company, whether or not he continues to be such an employee, officer or director at the
time of incurring such expenses, except insofar as such indemnification is prohibited by law. Such expenses shall include, without
limitation, the fees and disbursements of attorneys, amounts of judgments and amounts of any settlements, provided that such expenses
are agreed to in advance by the Company. The foregoing indemnification obligation is independent of any similar obligation provided
in the Company’s Certificate of Incorporation or Bylaws, and shall apply with respect to any matters attributable to periods
prior to the date of this Agreement, and to matters attributable to Executive’s employment hereunder, without regard to when
asserted. The Company shall include the Executive in the directors and officers liability insurance policy provided for other directors
and officers of the Company, at the Company’s expense. Notwithstanding the foregoing, nothing contained in this Agreement
shall constitute an indemnification by the Company of the Executive for any liability to third parties arising from his allegedly
not being permitted to be employed by the Company, contractually or otherwise, and Executive hereby represents to the Company that
no such prohibition exists. The obligations of the Company contained in this Section shall survive any termination or expiration
of this Agreement.

 

8.             Section 409A of the Code.

 

		(a)	It is intended that the provisions of this Agreement comply with, or be exempt from, Section 409A of the Internal Revenue Code
of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”), and
all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties
under Code Section 409A. If any provision of this Agreement (or of any award of compensation, including equity compensation or
benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A, the Company shall, upon the
specific request of the Executive, use its reasonable business efforts to in good faith reform such provision to comply with Code
Section 409A; provided, that to the maximum extent practicable, the original intent and economic benefit to the Executive
and the Company of the applicable provision shall be maintained, but the Company shall have no obligation to make any changes that
could create any additional economic cost or loss of benefit to the Company. The Company shall timely use its reasonable business
efforts to amend any plan or program in which the Executive participates to bring it in compliance with Code Section 409A. Notwithstanding
the foregoing, the Company and its affiliates shall have no liability to the Executive or any other person or entity with regard
to any failure to comply with Code Section 409A.

 

		(b)	A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing
for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “Separation
from Service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references
to a “resignation,” “termination,” “termination of employment” or like terms shall mean Separation
from Service. If the Executive is deemed on the date of termination of his employment to be a “specified employee”,
within the meaning of that term under Section 409A(a)(2)(B) of the Code and using the identification methodology selected by the
Company from time to time, or if none, the default methodology, then with regard to any payment, the providing of any benefit or
any distribution of equity made subject to this Section to the extent required to be delayed in compliance with Section 409A(a)(2)(B)
of the Code, and any other payment, the provision of any other benefit or any other distribution of equity that is required to
be delayed in compliance with Section 409A(a)(2)(B) of the Code, but only to the extent required to avoid the adverse tax consequences
under Code Section 409A, such payment, benefit or distribution shall not be made or provided prior to the earlier of (i) the expiration
of the six-month period measured from the date of the Executive’s Separation from Service or (ii) the date of the Executive’s
death. On the first day of the seventh month following the date of Executive’s Separation from Service or, if earlier, on
the date of his death, (x) all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single
sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining
payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified
for them herein as if no such delay had occurred and (y) all distributions of equity delayed pursuant to this Section 9 shall be
made to the Executive.

 

     

     

    

 

		(c)	With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted
by Code Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that the
foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b)
of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect and (iii) such
payments shall be made on or before the last day of the Executive’s taxable year following the taxable year in which the
expense was incurred.

 

		(d)	Each payment payable hereunder shall be treated as a separate payment in a series of payments within the meaning of, and for
purposes of, Code Section 409A.

 

		9.	Section 280G of the Code.

 

		(a)	Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution by the
Company or any of its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this
Section 9) (all such payments and benefits, including the payments and benefits under Section 5 hereof, being hereinafter referred
to as the “Total Payments”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest
or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and
penalties, collectively the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided
by reason of Section 280G of the Code in such other plan, arrangement or agreement, the payments under this Agreement shall be
reduced in the order specified below, to the extent necessary so that no portion of the Total Payments is subject to the Excise
Tax but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state
and local income taxes on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal
exemptions attributable to such reduced Total Payments) is greater than or equal to (ii) the net amount of such Total Payments
without such reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments and
the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments and after taking into
account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments). The payments
and benefits under this Agreement or otherwise shall be reduced in the following order: (A) reduction of any cash severance
payments otherwise payable to the Executive that are exempt from Section 409A of the Code; (B) reduction of any other cash payments
or benefits otherwise payable to the Executive that are exempt from Section 409A of the Code, but excluding any payments attributable
to any acceleration of vesting or payments with respect to any equity award that are exempt from Section 409A of the Code; (C)
reduction of any other payments or benefits otherwise payable to the Executive on a pro-rata basis or such other manner that complies
with Section 409A of the Code, but excluding any payments attributable to any acceleration of vesting and payments with respect
to any equity award that are exempt from Section 409A of the Code; and (D) reduction of any payments attributable to any acceleration
of vesting or payments with respect to any equity award that are exempt from Section 409A of the Code, in each case beginning with
payments that would otherwise be made last in time.

 

		(b)	Subject to the provisions of Section 9(c) hereof, all determinations required to be made under this Section 9, including whether
and when Total Payments should be reduced, the amount of such Total Payments, Excise Taxes and all other related determinations,
as well as all assumptions to be utilized in arriving at such determinations, shall be made by a nationally recognized certified
public accounting firm as may be designated by the Executive, subject to the Company’s approval which will not be unreasonably
withheld or delayed (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment
or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change of Control, the Company, subject to Executive’s approval, which
shall not be unreasonably withheld or delayed, may appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company
and the Executive.

 

     

     

    

 

		(c)	As a result of uncertainty in the application of Section 280G and Section 4999 of the Code at the time of the initial calculation
by the Accounting Firm hereunder, it is possible that the cash severance payment made by the Company will have been less than the
Company should have paid pursuant to Section 5 hereof (the amount of any such deficiency, the “Underpayment”), or more
than the Company should have paid pursuant to Section 5 hereof (the amount of any such overage, the “Overpayment”).
In the event of an Underpayment, the Company shall pay the Executive the amount of such Underpayment not later than five business
days after the amount of such Underpayment is subsequently determined, provided, however, such Underpayment shall not be paid later
than the end of the calendar year following the calendar year in which the Executive remitted the related taxes. In the event of
an Overpayment, the amount of such Overpayment shall by paid to the Company by the Executive not later than five business days
after the amount of such Overpayment is subsequently determined.

 

		10.	Miscellaneous.

 

		(a)	This Agreement shall be deemed to be a contract made under the laws of the State of New York and for all purposes shall be
construed in accordance with those laws (without regard to principles of conflicts of laws). Except with respect to disputes or
controversies to be submitted to arbitration pursuant to Section 10(b), the Company and the Executive unconditionally consent to
submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York (or if federal jurisdiction
does not exist, the New York State Supreme Court, County of New York) for any actions, suits or proceedings arising out of or relating
to this Agreement and the transactions contemplated hereby (and agree not to commence any action, suit or proceeding relating thereto
except in such courts).

 

		(b)	Any dispute or controversy arising under or in connection with this Agreement or the Executive’s employment with the
Company (or the termination thereof), other than any dispute relating to Section 6 hereof, but excluding any dispute or controversy
arising out of the administration of any equity grant or other benefit plan, which the parties hereto agree shall be resolved as
set forth in the applicable grant agreements, shall be settled exclusively by arbitration, conducted before a single arbitrator
in New York, New York (applying New York law) in accordance with the Commercial Arbitration Rules and Procedures of the American
Arbitration Association then in effect. The decision of the arbitrator shall be final and binding upon the parties hereto. Judgment
may be entered on the arbitrator’s award in any court having jurisdiction. The parties acknowledge and agree that in connection
with any such arbitration and regardless of outcome (a) each party shall pay all its own costs and expenses, including without
limitation its own legal fees and expenses, and (b) joint expenses shall be borne equally among the parties. EACH PARTY HERETO
WAIVES RIGHT TO TRIAL BY JURY, TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY OR THE TERMINATION THEREOF, OR THIS AGREEMENT, OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT OF THIS AGREEMENT (WHETHER ARISING IN CONTRACT, EQUITY, TORT OR
OTHERWISE).

 

		(c)	The Company may make such provisions and take such actions as it may deem necessary or appropriate for the withholding of any
taxes that it is required by law or regulation of any governmental authority, whether Federal, state or local, to withhold in connection
with any benefit or payment hereunder. The Executive shall be responsible for the payment of all individual tax liabilities relating
to any such benefits.

 

		(d)	Executive may not delegate his duties or assign his rights hereunder. No rights or obligations of the Company under this Agreement
may be assigned or transferred by the Company other than pursuant to a merger or consolidation in which the Company is not the
continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of the assets or businesses of the Company and assumes
the liabilities, obligations and duties of the Company under this Agreement, either contractually or by operation of law. For the
purposes of this Agreement, the term “Company” shall include the Company and, subject to the foregoing, any of its
successors and assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.

 

     

     

    

 

		(e)	The invalidity or unenforceability of any provision hereof shall not in any way affect the validity or enforceability of any
other provision. This Agreement reflects the entire understanding between the parties.

 

		(f)	This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect
to the employment of the Executive by the Company (and the termination thereof) and contains all of the covenants and agreements
between the parties with respect to such employment (or the termination thereof) in any manner whatsoever. Any modification or
termination of this Agreement will be effective only if it is in writing signed by the party to be charged.

 

		(g)	This Agreement may be executed by the parties in one or more counterparts, each of which shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other parties hereto.

 

[Signature Page
Follows]

 

     

     

    

 

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

 

	Iconix Brand Group, Inc.	 	Executive
	 	 	 
	By:  	/s/ Robert C. Galvin	 	By:  	/s/ John T. McClain	 
	Robert C. Galvin

President and Chief Executive Officer	 	John T. McClain

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