Document:

Exhibit 10.11

 

LICENSE AGREEMENT

 

by and between

 

IRONWOOD PHARMACEUTICALS, INC.

 

and

 

ASTELLAS PHARMA INC.

 

November 10, 2009

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LICENSE GRANT

  	
  16

  
	
   

  	
  2.1.

  	
  License
  to Astellas

  	
  16

  
	
   

  	
  2.2.

  	
  License
  to Ironwood

  	
  16

  
	
   

  	
  2.3.

  	
  Joint
  Technology

  	
  17

  
	
   

  	
  2.4.

  	
  Right
  of Reference

  	
  17

  
	
   

  	
  2.5.

  	
  Extension
  of Rights to Affiliates and Third Parties

  	
  18

  
	
   

  	
  2.6.

  	
  Sublicensing

  	
  18

  
	
   

  	
  2.7.

  	
  Co-Promotion

  	
  18

  
	
   

  	
  2.8.

  	
  Expansion
  of Territory

  	
  19

  
	
   

  	
  2.9.

  	
  No
  Other Rights

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  DEVELOPMENT, REGULATORY, AND COMMERCIALIZATION

  	
  19

  
	
   

  	
  3.1.

  	
  Joint
  Steering Committee

  	
  19

  
	
   

  	
  3.2.

  	
  Development

  	
  23

  
	
   

  	
  3.3.

  	
  Regulatory
  Matters

  	
  24

  
	
   

  	
  3.4.

  	
  Manufacture
  of Products

  	
  26

  
	
   

  	
  3.5.

  	
  Commercialization
  in the Territory

  	
  26

  
	
   

  	
  3.6.

  	
  Publication
  Strategy

  	
  27

  
	
   

  	
  3.7.

  	
  Project
  Team

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CONSIDERATION

  	
  28

  
	
   

  	
  4.1.

  	
  Upfront
  Payment

  	
  28

  
	
   

  	
  4.2.

  	
  Milestones

  	
  28

  
	
   

  	
  4.3.

  	
  Royalties
  and Other Payments

  	
  29

  
	
   

  	
  4.4.

  	
  Quarterly
  Reports

  	
  31

  
	
   

  	
  4.5.

  	
  Records
  and Audits

  	
  31

  
	
   

  	
  4.6.

  	
  Taxes
  and Withholding

  	
  32

  
	
   

  	
  4.7.

  	
  Currency

  	
  35

  
	
   

  	
  4.8.

  	
  Confidentiality

  	
  35

  

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

ii

 

	
   

  	
  4.9.

  	
  Interest

  	
  35

  
	
   

  	
  4.10.

  	
  Set-Off

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
  35

  
	
   

  	
  5.1.

  	
  Confidentiality

  	
  35

  
	
   

  	
  5.2.

  	
  Restrictions

  	
  38

  
	
   

  	
  5.3.

  	
  Compliance
  with Law

  	
  38

  
	
   

  	
  5.4.

  	
  Nonsolicitation
  of Employees

  	
  39

  
	
   

  	
  5.5.

  	
  Standstill
  Agreement

  	
  39

  
	
   

  	
  5.6.

  	
  Export
  Restrictions

  	
  41

  
	
   

  	
  5.7.

  	
  Communications
  with other Linaclotide Partners

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  41

  
	
   

  	
  6.1.

  	
  Representations
  and Warranties of Each Party

  	
  42

  
	
   

  	
  6.2.

  	
  Additional
  Representations and Warranties of Ironwood

  	
  42

  
	
   

  	
  6.3.

  	
  Additional
  Representations and Warranties of Astellas

  	
  43

  
	
   

  	
  6.4.

  	
  Representation
  by Legal Counsel

  	
  44

  
	
   

  	
  6.5.

  	
  No
  Inconsistent Agreements

  	
  44

  
	
   

  	
  6.6.

  	
  Disclaimer

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  INTELLECTUAL PROPERTY

  	
  44

  
	
   

  	
  7.1.

  	
  Disclosure

  	
  44

  
	
   

  	
  7.2.

  	
  Ownership

  	
  44

  
	
   

  	
  7.3.

  	
  Intellectual
  Property Working Group

  	
  45

  
	
   

  	
  7.4.

  	
  Prosecution
  and Maintenance of Patent Rights

  	
  45

  
	
   

  	
  7.5.

  	
  Trademarks

  	
  47

  
	
   

  	
  7.6.

  	
  Enforcement
  of Technology Rights

  	
  48

  
	
   

  	
  7.7.

  	
  Third
  Party Claims

  	
  49

  
	
   

  	
  7.8.

  	
  Patent
  Marking

  	
  49

  
	
   

  	
  7.9.

  	
  Patent
  Certifications

  	
  50

  
	
   

  	
  7.10.

  	
  No
  Implied Licenses

  	
  50

  
	
   

  	
  7.11.

  	
  [**]

  	
  50

  
	
   

  	
  7.12.

  	
  Recordation
  of License

  	
  50

  

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

iii

 

	
  8.

  	
  TERM AND TERMINATION

  	
  50

  
	
   

  	
  8.1.

  	
  Term

  	
  50

  
	
   

  	
  8.2.

  	
  Termination
  for Cause

  	
  51

  
	
   

  	
  8.3.

  	
  Bankruptcy

  	
  52

  
	
   

  	
  8.4.

  	
  Termination
  for Convenience

  	
  53

  
	
   

  	
  8.5.

  	
  Change
  of Control

  	
  53

  
	
   

  	
  8.6.

  	
  Effects
  of Termination

  	
  54

  
	
   

  	
  8.7.

  	
  Survival
  of Certain Obligations

  	
  55

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  PRODUCT LIABILITY, INDEMNIFICATION, AND INSURANCE

  	
  56

  
	
   

  	
  9.1.

  	
  Indemnification
  by Ironwood

  	
  56

  
	
   

  	
  9.2.

  	
  Indemnification
  by Astellas

  	
  56

  
	
   

  	
  9.3.

  	
  Procedure

  	
  57

  
	
   

  	
  9.4.

  	
  Insurance

  	
  57

  
	
   

  	
  9.5.

  	
  Liability
  Limitations

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
  58

  
	
   

  	
  10.1.

  	
  Governing
  Law; Jurisdiction; Dispute Resolution

  	
  58

  
	
   

  	
  10.2.

  	
  Force
  Majeure

  	
  60

  
	
   

  	
  10.3.

  	
  Additional
  Approvals

  	
  61

  
	
   

  	
  10.4.

  	
  Waiver
  and Non-Exclusion of Remedies

  	
  61

  
	
   

  	
  10.5.

  	
  Notices

  	
  61

  
	
   

  	
  10.6.

  	
  Entire
  Agreement

  	
  62

  
	
   

  	
  10.7.

  	
  Amendment

  	
  62

  
	
   

  	
  10.8.

  	
  Assignment

  	
  62

  
	
   

  	
  10.9.

  	
  No
  Benefit to Others

  	
  62

  
	
   

  	
  10.10.

  	
  Counterparts

  	
  63

  
	
   

  	
  10.11.

  	
  Severability

  	
  63

  
	
   

  	
  10.12.

  	
  Further
  Assurance

  	
  63

  
	
   

  	
  10.13.

  	
  Publicity

  	
  63

  
	
   

  	
  10.14.

  	
  Relationship of the
  Parties

  	
  63

  

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

iv

 

LICENSE
AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is
entered into on this 10th day of November, 2009 (the “Effective Date”),
by and among Ironwood Pharmaceuticals, Inc., a Delaware corporation (“Ironwood”)
and Astellas Pharma Inc., a corporation organized under the laws of Japan (“Astellas”).
Ironwood and Astellas may be referred to in this Agreement individually as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

A.            Ironwood is developing and has rights to the Licensed
Compound (as defined below) which has uses or potential uses in the treatment
and prevention of disease in humans.

 

B.            Ironwood (formerly Microbia, Inc.) has entered into
a Collaboration Agreement with Forest Laboratories, Inc. (“Forest”),
effective as of September 12, 2007 (the “Forest Agreement”), under
which Ironwood exclusively licensed to Forest certain rights to the Licensed
Compound in the Forest Territory (each, as defined below) and Ironwood and
Forest agreed to collaborate on the development and commercialization of such
compound in the Forest Territory.

 

C.            Ironwood has entered into a License Agreement with
Laboratorios Almirall, S.A. (“Almirall”) effective as of April 30,
2009 (the “Almirall Agreement”), under which Ironwood exclusively
licensed to Almirall certain rights to the Licensed Compound in the Almirall
Territory (defined below) and Ironwood and Almirall agreed to collaborate on
the development and commercialization of such compound in the Almirall
Territory.

 

D.            Astellas is engaged in the research, development, and
commercialization of human pharmaceutical products.

 

E.             Ironwood desires to grant to Astellas and Astellas
desires to receive an exclusive license to develop, market, and distribute the
Product and the Licensed Compound in certain territories in Asia on the terms
and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual
promises and covenants set forth below and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:

 

1.                                      DEFINITIONS

 

For purposes of this Agreement, the
following terms, when used in this Agreement, have the meanings
assigned to them in this Section 1.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

1

 

1.1.          “Administrator”
is defined in Section 10.1.3(a).

 

1.2.          “Affiliate”
means, with respect to a Person, any Person that controls, is controlled by, or
is under common control with such first Person. For purposes of this definition
only, “control” means (a) to possess, directly or indirectly, the power to
direct the management or policies of a Person, whether through ownership of
voting securities or by contract relating to voting rights or corporate
governance, or (b) to own, directly or indirectly, more than 50% of the
outstanding voting securities or other ownership interests of such Person.

 

1.3.          “Agreement”
is defined in the Introduction.

 

1.4.          “Almirall
Agreement” is defined in Section C of the Recitals.

 

1.5.          “Almirall Patent
Rights” means any Patent Rights licensed to Ironwood under, and all rights
granted to Ironwood under such Patent Rights pursuant to, the Almirall
Agreement.

 

1.6.          “Almirall
Territory” means the current and any future member states of the European
Union (consisting of the following countries as of the Effective Date: Austria,
Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia,
Slovenia, Spain, Sweden, and the United Kingdom), Albania, Andorra, Lichtenstein,
Iceland, San Marino, Switzerland, Turkey, Norway and Russia, as well as other
countries of the former Yugoslavia and those other countries forming the
Commonwealth of Independent States.

 

1.7.          “Almirall” is
defined in Section C of the Recitals.

 

1.8.          “API
Manufacturing” means the Manufacture and supply of the Licensed Compound
that is to be included in a Product for Commercialization hereunder.

 

1.9.          “Applicable Law”
means all applicable statutes, ordinances, regulations, rules, or orders of any
kind whatsoever of any Regulatory Authority, as amended from time to time, in
the Territory.

 

1.10.        “Arbitrator”
is defined in Section 10.1.3(a).

 

1.11.        “Astellas
Indemnified Party” is defined in Section 9.1.

 

1.12.        “Astellas Know-How”
means (a) Know-How that Astellas Controls as of the Effective Date or that
comes into the Control of Astellas during the Term (other than Collaboration
Know-How) and that is (i) necessary or useful to manufacture, develop, or
commercialize the Licensed Compound or Product in an Oral Formulation, and (ii) used
or practiced by Astellas, its Affiliates, or Sublicensees in the Development,
Manufacture, 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

2

 

or Commercialization of the Licensed Compound or Product, and (b) Collaboration
Know-How (other than Joint Know-How) (i) to the extent necessary or useful
to Manufacture, Develop, or Commercialize the Licensed Compound or Product in
an Oral Formulation in the Field, including without limitation any method
specifically directed to making the Licensed Compound or Product, any
composition or formulations of the Licensed Compound or Products, or any method
necessary or useful to using or administering the Licensed Compound or Product,
and (ii) that is invented, conceived, or developed solely by employees of
Astellas or its Affiliates, or Third Parties acting on behalf of Astellas or
its Affiliates, and (iii) that is Controlled by Astellas.

 

1.13.        “Astellas Patent
Rights” means (a) Patent Rights that Astellas Controls as of the
Effective Date or that come into the Control of Astellas during the Term (other
than Collaboration Patent Rights and Joint Patent Rights) and that (i) claim
the Licensed Compound, or (ii) are practiced by Astellas, its Affiliates
or Sublicensees in the Development, Manufacture, or Commercialization of the
Licensed Compound or Product and which, but for a license granted thereto,
would be infringed by such Development, Manufacture, or Commercialization of
the Licensed Compound or Product in an Oral Formulation in the Field, and (b) Collaboration
Patent Rights (other than Joint Patent Rights) Controlled by Astellas to the
extent claiming Astellas Know-How.

 

1.14.        “Astellas Related
Party” is defined in Section 5.5.

 

1.15.        “Astellas
Sublicensable Patent Rights” means Astellas Patent Rights to the extent
such rights cover or recite the Licensed Compound or Product, any method of
making the Licensed Compound or Product, any composition or formulations of the
Licensed Compound or Product, or the method of using or administering the
Licensed Compound or Product (“Product Specific Patent Rights”)
excluding all patent applications included in the Astellas Patent Rights that
Astellas Controls as of the Effective Date except for patent applications
included in Product Specific Patent Rights which specifically claim the
Licensed Compound.  Patent applications included
in Product Specific Patent Rights Controlled by Astellas as of the Effective
Date which issue after the Effective Date shall be considered Astellas
Sublicensable Patent Rights as of the time such Product Specific Patent Rights
issue.

 

1.16.        “Astellas
Technology” means Astellas’s interest in (a) the Astellas Know-How,
and (b) the Astellas Patent Rights, and (c) all other (non
Patent-Right) intellectual property rights in any Astellas Know-How.

 

1.17.        “Astellas” is
defined in the Introduction.

 

1.18.        “Audited Party”
is defined in Section 4.5.

 

1.19.        “Auditing Party”
is defined in Section 4.5.

 

1.20.        “Authorized
Recipient” is defined in Section 5.1.1.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

3

 

1.21.        “Business Day”
means any day other than a Saturday, Sunday or a day on which banks are
required or permitted to be closed in either Boston, Massachusetts or Tokyo,
Japan or, for purposes of Section 10.5.1, at the place of delivery.

 

1.22.        “Calendar Quarter”
means each of the three consecutive month periods ending on March 31, June 30,
September 30, and December 31.

 

1.23.        “CC” means
chronic constipation.

 

1.24.        “Cessation of
Manufacture” is defined in Section 3.4.

 

1.25.        “Change of Control”
means any of the following: (i) the sale or disposition of all or
substantially all of the assets of a Party to a Third Party, (ii) the
acquisition by a Third Party, other than an employee benefit plan (or related
trust) sponsored or maintained by a Party or any of its Affiliates, of more
than 50% of such Party’s outstanding shares of voting capital stock (e.g.,
capital stock entitled to vote generally for the election of directors), (iii) the
appointment or election to the board of directors of a Party of members
constituting a majority of such board who were not appointed, approved or
recommended for election by the board of directors as constituted immediately
prior to the appointment or election of such majority, or (iv) the merger
or consolidation of a Party with or into another corporation, other than, in
the case of (ii) or (iv) of this Section 1.25, an acquisition or
a merger or consolidation of a Party in which holders of shares of such Party’s
voting capital stock immediately prior to the acquisition, merger or
consolidation have at least 50% of the ownership of voting capital stock of the
acquiring Third Party or the surviving corporation in such merger or
consolidation, as the case may be, immediately after the merger or
consolidation. Notwithstanding the foregoing, a Change of Control will not be
deemed to occur on account of an initial public offering, the acquisition of
securities of a Party by an institutional investor, or Affiliate thereof, that
acquires a Party’s securities in a transaction or series of related
transactions as a passive investment which does not affect the management of
such Party, or a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the corporate domicile of a Party.

 

1.26.        “Claim” is
defined in Section 10.1.3(a).

 

1.27.        “CMC Activities”
is defined in Section 3.2.2.

 

1.28.        “Collaboration
Know-How” means Know-How that is first invented, conceived, or developed by
or on behalf of either or both Parties’ (or their Affiliates’) employees or
Third Parties acting on such Parties’ behalf, in each case after the Effective
Date and in the course of such Party’s performance under this Agreement.

 

1.29.        “Collaboration
Patent Rights” means Patent Rights claiming Collaboration Know-How.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

4

 

1.30.        “Collaboration
Technology” means (a) Collaboration Know-How, (b) Collaboration
Patent Rights, and (c) all other (non Patent-Right) intellectual property
rights in Collaboration Know-How.

 

1.31.        “Combination
Product” is defined in Section 1.90.

 

1.32.        “Commercial Launch”
means the initial First Commercial Sale of a Product in the Territory.

 

1.33.        “Commercialization
Plan” means the strategic commercialization plan for the Product in the
Field in the Territory which sets forth, among other things (a) a
multi-year marketing strategy that includes plans for market research, health
economics, pricing and reimbursement, medical affairs and value added
initiatives, (b) a multi-year communications strategy that includes plans
for public relations, conferences and exhibitions and other external meetings,
internal meetings and communications, publications and symposia, internet
activities and core brand package, (c) a multi-year strategy for Phase IV
studies and lifecycle management activities, (d) a high level operating
plan for the implementation of such strategies on an annual basis, including
without limitation, information related to product positioning, core messages
to be communicated, share of voice requirements and pricing strategies, (e) a
level of detailing activity that would be Commercially Reasonable for a company
comparable to Astellas for a product having similar market potential in the
Territory, (f) a commercialization budget, and (g) other activities
to be conducted in connection with the Commercialization of the Product in the
Field in the Territory. The Commercialization Plan will be updated at least
once a year.

 

1.34.        “Commercialization”
means any and all activities of importing, marketing, promoting, distributing,
offering for sale, or selling a Product (directly or indirectly through
multiple levels of distribution), including for example pre-Commercial Launch
market development activities conducted in anticipation of Regulatory Approval
of a Product, seeking pricing and reimbursement approvals for a Product, if
applicable, preparing advertising and promotional materials, sales force
training, all interactions and correspondence with a Regulatory Authority
regarding Phase IV clinical trials. Commercialization does not include
Development or Manufacturing. When used as a verb, “Commercialize” means
to engage in Commercialization.

 

1.35.        “Commercially
Reasonable Efforts” means, for each Party, those efforts and resources
comparable to those normally used by such Party hereunder for a product or
compound owned by such Party or to which such Party has rights of the type such
Party has hereunder, taking into account, without limitation, [**], and other similar factors
reasonably determined by the Party to be relevant. Without limiting the
foregoing, Commercially Reasonable Efforts as it applies to the clinical
development of the Licensed Compound and Product hereunder means implementation
of the Development and Regulatory Plan [**], and subject to (i) any
amendment of such Development and 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

5

 

Regulatory Plan from time to time in accordance with Section 3.2.1
based on the results of studies conducted with the Licensed Compound and
Product, and (ii) regulatory, safety, and efficacy factors, [**] set forth therein. Without
limiting any of the foregoing, for all purposes of Section 4.3.4, “Commercially
Reasonable Efforts” shall take into account [**]. “Commercially
Reasonable” as used in this Agreement will be interpreted in a corresponding
manner.

 

1.36.        “Confidential
Information” means, with respect to a Party, all non-public information
(and all tangible and intangible embodiments thereof), which is Controlled by
such Party, is disclosed by such Party to the other Party pursuant to this
Agreement, and is designated as confidential in writing by the disclosing Party
whether by letter or by use of an appropriate stamp or legend, prior to or at
the time any such information is disclosed by the disclosing Party to the other
Party. In addition, any non-public information which is orally, electronically
or visually disclosed by a Party, or is disclosed in writing without an
appropriate letter, stamp or legend, will constitute Confidential Information
if the disclosing Party, within [**] after such disclosure,
delivers to the receiving Party a written document or documents describing the
information disclosed and referencing the place and date of such oral, visual,
electronic or written disclosure and the names of the Person(s) to whom
such disclosure was made; provided, however, that any non-public information
disclosed at a meeting of the JSC will constitute Confidential Information
unless otherwise specified if it should reasonably be deemed confidential under
the circumstances.

 

1.37.        “Control” or “Controlled”
means, with respect to any intellectual property right of a Party, that the
Party or its Affiliate has the right and ability to grant access and a license
or sublicense to such intellectual property right to the other Party as
provided in this Agreement without violating an agreement with or other rights
of any Third Party and without any such sublicense under Third Party rights or
the licensee Party’s activities under such sublicense resulting in a payment
obligation to such Third Party (other than an Affiliate of the licensor Party)
under the licensor’s agreement with such Third Party, unless the licensee Party
agrees to make and makes all such payments.

 

1.38.        [**].

 

1.39.        “Development and
Regulatory Plan” means the plan for the Development of the Licensed
Compound for Regulatory Approval and Post-Approval Research
prepared by Astellas and approved by the JSC and as amended or updated from
time to time in accordance with this Agreement.

 

1.40.        “Development
Material” means the Licensed Compound in bulk form that is intended to be
used solely for Development purposes.

 

1.41.        “Development”
means all activities performed by or on behalf of either Party in the
performance of any Development and Regulatory Plan for the Product in the Field
in the Territory. Development will include, without limitation, all activities
related to 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

6

 

research (including, without limitation, Post-Approval Research),
preclinical testing, test method development and stability testing, toxicology,
formulation, process development, manufacturing scale-up, quality
assurance/quality control, clinical studies including Phase I, Phase II, Phase
III and pricing studies, seeking Regulatory Approval and otherwise handling
regulatory affairs, statistical analysis and report writing performed pursuant to
the Development and Regulatory Plan with respect to the Product. When used as a
verb, “Develop” means to engage in Development.

 

1.42.        “Direct Costs” means the costs of [**] in Manufacturing the
Development Material and Licensed Compound, as applicable, as calculated in
accordance with United States generally accepted accounting principles as in
effect from time to time and consistently applied, and excluding, in any event
any [**].

 

1.43.        “Disclosing Party”
is defined in Section 5.1.1.

 

1.44.        “Effective Date”
is defined in the Introduction.

 

1.45.        “Excess Amount”
is defined in Section 4.3.4.

 

1.46.        “Failure To Supply”
is defined in Section 3.4.

 

1.47.        “Fair Market Value”
means with respect to a valuation required by any provision of this Agreement,
the [**]. In any case
where Fair Market Value must be determined but is not determined by good faith
negotiations between the Parties, pursuant to Section 8.5.2(a), the
determination will be made by [**]. In addition, but solely
for purposes of Section 8.6.2 (and not for purposes of Section 8.5.2(a)),
if Fair Market Value is determined prior to the First Commercial Sale, such
Fair Market Value will be [**].

 

1.48.        “Field” means
all human prophylactic, and therapeutic uses of a product in all formulations
and dosage forms for any and all indications, including but not limited to
IBS-C, CC, OIC, and other lower gastrointestinal disorders.

 

1.49.        “Final Award”
is defined in Section 9.1.

 

1.50.        “First Commercial
Sale” means, with respect to the Product and any country of the Territory,
the first sale of such Product under this Agreement for use in the Field to a
Third Party in such country, after such Product has been granted Regulatory
Approval for use in the Field by the competent Regulatory Authorities in such
country.

 

1.51.        “Force Majeure”
is defined in Section 10.2.

 

1.52.        “Forest Agreement”
is defined in Section B of the Recitals.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

7

 

1.53.        “Forest Patent
Rights” means any Patent Rights licensed to Ironwood under, and all rights
granted to Ironwood under such Patent Rights pursuant to, the Forest Agreement.

 

1.54.        “Forest Territory”
means the countries of North America, consisting of the United States, Canada,
and Mexico, and their respective territories and possessions (including Puerto
Rico, irrespective of political status).

 

1.55.        “Forest” is
defined in Section B of the Recitals.

 

1.56.        “FTE Rate”
means the agreed upon [**] directly associated with the activities of such employee. The JSC will
arrange for the finance departments of each Party to discuss and agree upon the
appropriate FTE Rate for the various functional areas of this collaboration and
to periodically review the appropriateness of and to adjust such rates.

 

1.57.        “Fully Absorbed
Cost” means Ironwood’s costs to Manufacture the Development Material and
Licensed Compound, or Astellas’s cost to Manufacture and supply Product, as
applicable, consisting of [**], all determined in accordance with United States generally accepted
accounting principles, or GAAP, as applicable, as in effect from time to time
and consistently applied.

 

1.58.        “GAAP” means
Japan generally accepted accounting principles, as in effect from time to time.

 

1.59.        [**]. For the avoidance of
doubt, [**].

 

1.60.        “Generic Product”
means: (a) any pharmaceutical product sold in an Oral Formulation by a
Third Party for use in the Field (other than a Product sold by Astellas, its
Affiliates or Sublicensees) that contains as an active ingredient the Licensed
Compound or (b) any pharmaceutical product (other than a Product that is
Developed or Commercialized by a Party pursuant to this Agreement) that is
included in an application made before a Regulatory Authority for marketing
approval in the Territory (i) as being “generic,” “comparable,” “interchangeable
with,” “essentially similar to,” or “bioequivalent to” a Product, or as having
any other similar designation with respect to such Product as provided under
Applicable Law, or (ii) in which the applicant of such application relies,
or seeks to rely, in whole or in part on clinical data included in an
application for Regulatory Approval of a Product.

 

1.61.        “Good Clinical
Practice” or “GCP” means the standards of good clinical practice as
are required by governmental agencies in countries in which the Products are
intended to be sold under this Agreement, and in which the Licensed Compound is
Manufactured by or on behalf of Ironwood, as applicable.

 

1.62.        “Good Laboratory
Practice” or “GLP” means the standards of good laboratory practice
as are required by governmental agencies in countries in which the Products are

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

8

 

intended to be sold under this Agreement, and in which the Licensed
Compound is Manufactured by or on behalf of Ironwood, as applicable.

 

1.63.        “Good
Manufacturing Practice” or “GMP” means the standards of good
manufacturing practice as are required by governmental agencies in countries in
which the Products are intended to be Manufactured or sold by under this
Agreement, and in which the Licensed Compound is Manufactured by or on behalf
of Ironwood, as applicable.

 

1.64.        “Group” is
defined in Section 5.5.8.

 

1.65.        “IBS-C” means
irritable bowel syndrome with the primary manifestation of constipation.

 

1.66.        “Impairment”
is defined in Section 8.5.2(b).

 

1.67.        “Indemnified Party”
is defined in Section 9.3.

 

1.68.        “Indemnifying
Party” is defined in Section 9.3.

 

1.69.        “Indirect Costs” means the costs of [**], all to the extent directly
related to, and only to the extent reasonably and fairly attributable to, the
Manufacture of the Development Materials and Licensed Compound supplied to
Astellas hereunder, as applicable.

 

1.70.        “Infringement”
is defined in Section 7.6.1.

 

1.71.        “Initial
Development and Regulatory Plan” is defined in Section 3.2.1.

 

1.72.        “Insolvency Event”
is defined in Section 8.3.

 

1.73.        [**].

 

1.74.        “Ironwood House
Marks” is defined in Section 7.5.3.

 

1.75.        “Ironwood
Indemnified Party” is defined in Section 9.2.

 

1.76.        “Ironwood Know-How”
means (i) Know-How that Ironwood Controls as of the Effective Date or that
otherwise comes into the Control of Ironwood during the Term (other than Joint
Know-How), including Know-How that has arisen or arises under the Forest
Agreement or the Almirall Agreement (whether solely owned or jointly owned by
Ironwood or licensed to Ironwood), to the extent necessary or useful to
Manufacture, Develop, or Commercialize the Licensed Compound or Product in
accordance with this Agreement, including without limitation any method of
making the Licensed Compound or Product, any composition or formulation of the
Licensed Compound or Product, or any method of using or administering the
Licensed Compound or Product, and (ii)

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

9

 

Collaboration Know-How (other than Joint Know-How) that is invented,
conceived or developed solely by employees of Ironwood or its Affiliates, or
Third Parties acting on behalf of Ironwood or its Affiliates.

 

1.77.        “Ironwood Patent
Rights” means (a) any Patent Rights claiming Ironwood Know-How, and (b) any
other Patent Rights that Ironwood Controls as of the Effective Date or that
otherwise come into the Control of Ironwood during the Term (other than Joint
Patent Rights and Patent Rights which are Astellas Patent Rights licensed to
Ironwood pursuant to this Agreement), including Patent Rights under the Forest
Agreement and the Almirall Agreement (including Almirall Patent Rights and
Forest Patent Rights to the extent licensed thereunder), to the extent such
rights (i) cover or recite the Licensed Compound or Product or their use
in the Field in the Territory, any method of making the Licensed Compound or
Product in or outside the Territory, any composition or formulation of the
Licensed Compound or Product or the use thereof in the Field in the Territory
or (ii) would otherwise be infringed, but for a license granted thereto,
by (A) the Development or Commercialization of the Licensed Compound or
Product in the Field in the Territory, or (B) the Manufacture of the
Licensed Compound or Product in or outside the Territory.

 

1.78.        “Ironwood
Technology” means Ironwood’s interest in (i) the Ironwood Know-How, (ii) the
Ironwood Patent Rights, and (iii) all other (non Patent-Right)
intellectual property rights in any Ironwood Know-How.

 

1.79.        “Ironwood” is
defined in the Introduction.

 

1.80.        “Joint Know-How”
means any Collaboration Know-How that is invented, conceived or developed
jointly by an employee of Ironwood or its Affiliates (or a Third Party acting
on any of their behalf) and an employee of Astellas or its Affiliates (or a
Third Party acting on any of their behalf).

 

1.81.        “Joint Patent
Right” means any Collaboration Patent Right that claims Joint Know-How and
names as the inventors one or more employees or agents of Ironwood or its
Affiliates together with one or more employees or agents of Astellas or its
Affiliates, where inventorship for purposes hereof shall be determined by U.S.
law.

 

1.82.        “Joint Technology”
means (i) Joint Know-How, (ii) Joint Patent Rights, and (iii) all
other (non Patent-Right) intellectual property rights in any Joint Know-How.

 

1.83.        “JSC” is
defined in Section 3.1.1.

 

1.84.       “Know-How”
means all inventions, discoveries, data, information (including scientific,
technical or regulatory information), processes, methods, techniques,
materials, technology, results, analyses, laboratory, pre-clinical and clinical
data, or other know-how, whether or not patentable, including without
limitation pharmacology, toxicology, drug stability, manufacturing and
formulation methodologies and techniques, clinical and 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

10

 

non-clinical safety and efficacy studies, marketing studies,
absorption, distribution, metabolism and excretion studies.

 

1.85.        “Launch Plan”
means the plan regarding the Commercial Launch of the Product in the Territory
attached hereto as Exhibit A.

 

1.86.        “Liability” is
defined in Section 9.1.

 

1.87.        “Licensed Compound”
means Ironwood’s proprietary guanylate cyclase C agonist polypeptide generally
referred to as “linaclotide” and having the chemical structure set forth on Schedule
1.87.

 

1.88.        “Manufacture,”
“Manufactured” or “Manufacturing” means all activities involved
in the production, packaging, and labeling of the Licensed Compound (including
Development Materials) or Product, as applicable, to be supplied, Developed,
and/or Commercialized under or pursuant to this Agreement.

 

1.89.        “Manufacturing and
Supply Agreement” is defined in Section 3.4.

 

1.90.        “Necessary License”
is defined in Section 4.3.4.

 

1.91.        “Net Sales” means, on a country-by-country basis, with
respect to any period for each country in the Territory, the gross amounts
invoiced by Astellas, its Affiliates, or its permitted Sublicensees as
applicable, to unrelated Third Parties for sales of the Product in the Field in
such country, less the following deductions to the extent included in the gross
invoiced sales price for the Product or otherwise directly paid or incurred by
Astellas, its Affiliates, or its permitted Sublicensees as applicable, with
respect to the sale of the Product in such country: (i) trade, quantity or
cash discounts credits, adjustments or allowances, including without
limitation, those granted pursuant to indigent patient programs or patient
discount programs or on account of price adjustments, billing errors, rejected
goods, or damaged goods, expired goods, returned goods, and amounts otherwise
repaid or credited by reason of defects, rejection, or recalls or retroactive
price reductions; (ii) rebates and chargebacks allowed, given or accrued
(including, but not limited to, cash, governmental and managed care rebates,
hospital or other buying group chargebacks, and governmental taxes in the
nature of a rebate based on usage levels or sales of the Product); (iii) sales,
excise, turnover, inventory, and similar taxes (not offset or refunded, except
in the case of consumption taxes) assessed on the sale of the Product; (iv) bad
debts reserved for on the basis utilized by Astellas, its Affiliates, or its
permitted Sublicensees as applicable, in its branded pharmaceutical business
generally or, if greater, bad debts actually written off, in each case which
are attributable to sales of Product; (v) freight and insurance charges;
and (vi) amounts paid or credited to customers for inventory management
services. Net Sales will be determined in accordance with GAAP for sales in
Japan and with the respective generally accepted accounting principles in each
other country in the Territory for sales in such other country. Without
limiting the generality of the foregoing, sales, transfers, or dispositions of
Product for charitable, promotional 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

11

 

(including
samples), pre-clinical, clinical, or regulatory purposes will be excluded from
Net Sales, as will sales or transfers of Product among a Party and its
Affiliates. In the event that a Product contains the Licensed Compound in
combination with one or more other product or active ingredient (a “Combination
Product”), Net Sales shall be calculated by first determining
Net Sales of such combination Product (in its entirety) pursuant to the
foregoing and then multiplying the Net Sales of the Combination Product by the
fraction A/(A+B), where A is the gross invoice price of the Licensed Compound
or Product if sold separately in a country and B is the gross invoice price of
the other product(s) included in the Combination Product if sold
separately in such country. In the event no such separate sales are made by
Astellas, its Affiliates or Sublicensees in a country, Net Sales of the
Combination Product shall be calculated by multiplying such Net Sales by a fraction fairly and
reasonably reflecting the relative value contributed by the Licensed Compound
to the total value of the Combination Product as determined by the Parties in
good faith.

 

1.92.        “New Drug
Application” or “NDA” means a new drug application filed with a
Regulatory Authority (not including pricing and reimbursement approval), that
is analogous to the new drug application with the United States Food and Drug
Administration described in 21 C.F.R. § 314.

 

1.93.        “Non-Required
Studies” is defined in Section 3.3.5.

 

1.94.        “OIC” means
opioid induced constipation.

 

1.95.        “Oral
Formulation” means any finished dosage form that is taken by mouth and that
[**] from the
formulation of the Product covered by Ironwood patent application numbers [**].

 

1.96.        “Order” is
defined in Section 5.1.3.

 

1.97.        “Party” and “Parties”
is defined in the Introduction.

 

1.98.        “Patent Expiration”
is defined in Section 3.4.

 

1.99.        “Patent Filing
Materials” is defined in Section 7.4.1(b).

 

1.100.      “Patent Right”
means any and all (a) U.S. or foreign patent applications, including,
without limitation, all provisional applications, substitutions, continuations,
continuations-in-part, divisions, renewals, and all patents granted thereon, (b) all
U.S. or foreign patents, reissues, reexaminations and extensions or
restorations by existing or future extension or restoration mechanisms,
including, without limitation, supplementary protection certificates or the
equivalent thereof, and (c) any other form of government-issued right
substantially similar to any of the foregoing.

 

1.101.      “Patent Term
Extension” is defined in Section 7.4.4.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

12

 

1.102.      “Person” means
any individual, corporation, company, limited liability company, partnership,
limited liability partnership, trust, estate, proprietorship, joint venture,
association, organization, or entity.

 

1.103.      “Pharmacovigilance
Agreement” is defined in Section 3.3.4.

 

1.104.      “Phase I” in reference to a clinical trial means a trial defined in
21 C.F.R. 312.21(a), as may be amended from time to time, or any foreign
equivalent thereto.

 

1.105.      “Phase II” in reference to a clinical trial means a trial defined in
21 C.F.R. 312.21(b), as may be amended from time to time, or any foreign
equivalent thereto.

 

1.106.      “Phase III” in
reference to a clinical trial means a trial defined in 21 C.F.R. 312.21(c), as
may be amended from time to time, or any foreign equivalent thereto.

 

1.107.      “Phase IV” in
reference to a clinical trial means a trial conducted for purposes of further
characterizing and supporting the Product for marketing but not for purposes of
seeking Regulatory Approval or otherwise fulfilling a requirement of a
Regulatory Authority.

 

1.108.      “Post-Approval
Research” means ongoing research and development of a Product after such
Product has received Regulatory Approval in a country of the Territory,
including, without limitation, Phase IV clinical studies and clinical studies
in support of indications within the Field or labeling changes for such Product
within the Field in such country during the Term of this Agreement.

 

1.109.      “Product Specific
Patent Rights” is defined in Section 1.15.

 

1.110.      “Product” means
any pharmaceutical product in finished form that contains the Licensed Compound
either as the sole active ingredient or in combination with one or more other
active ingredients and all present and future formulations, dosages, and dosage
forms thereof.

 

1.111.      “Receiving Party”
is defined in Section 5.1.1.

 

1.112.      “Regulatory
Approval” means the approval and authorization of a Regulatory Authority in
a country necessary to develop, manufacture, distribute, sell, or market a
Product in that country, including pricing and reimbursement approval.

 

1.113.      “Regulatory
Authority” means any international, national (e.g., the U.S. Food and Drug
Administration), regional, state, or local regulatory agency, department,
bureau, commission, council, or other governmental entity in each country of
the world involved in the granting of Regulatory Approval for a Product in the
Territory.

 

[**] = Portions of this exhibit have been omitted
pursuant to a confidential treatment request. An unredacted version of this
exhibit has been filed separately with the Commission.

 

13

 

1.114.      “Regulatory
Submission” means applications for Regulatory Approval, notification, and
other submissions made to or with a Regulatory Authority that are necessary or
reasonably desirable to Develop, Manufacture, or Commercialize the Product in
the Field in a particular country, whether obtained before or after a Regulatory
Approval in the country. Regulatory Submissions include, without limitation,
investigative new drug applications and NDAs, and amendments and supplements to
any of the foregoing and their foreign counterparts, applications for pricing
and reimbursement approvals, and all proposed labels, labeling, package
inserts, monographs, and packaging for the Product in the Territory.

 

1.115.      “Relevant Countries”
is defined in Section 8.6.1.

 

1.116.      “Representative”
is defined in Section 5.5.

 

1.117.      “Right of Reference”
is defined in Section 2.4.

 

1.118.      [**] means, on a country by
country and Product by Product basis, [**] in such country in the
Territory.

 

1.119.      “Senior Management” of a Party includes, at a minimum, each of the
Chief Executive Officer, Head of Research and Development, Head of Marketing,
and President or Chief Operating Officer of the pharmaceutical business or
division.

 

1.120.      [**].

 

1.121.      “Standstill Period”
is defined in Section 5.5.

 

1.122.      “Subject Technology”
is defined in Section 7.6.2.

 

1.123.      “Sublicense”
means an agreement pursuant to which Astellas grants a sublicense to a Third
Party under the Ironwood Technology pursuant to Section 2.6 of this
Agreement authorizing such Third Party to Manufacture and/or Commercialize the
Product for its own benefit (and not for the benefit of Astellas or its
Affiliates).  For the avoidance of doubt, an extension of rights pursuant to Section 2.5
shall not be deemed a “Sublicense” for purposes hereof.

 

1.124.      “Sublicensee”
means a Third Party that is granted a Sublicense.

 

1.125.      “Sued Party” is
defined in Section 7.7.2.

 

1.126.      “Target Party”
is defined in Section 8.5.2(a).

 

1.127.      “Tax Benefit Amount”
is defined in Section 4.6.1(a).

 

1.128.      “Tax” is
defined in Section 4.6.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

14

 

1.129.      “Technology”
means Know-How and Patent Rights.

 

1.130.      “Term” is
defined in Section 8.1.

 

1.131.      “Territory”
means Japan, South Korea, Taiwan, Thailand, Philippines, and Indonesia and any
other countries that may be added to the definition of “Territory” pursuant to Section 2.8.

 

1.132.      “Third Party”
means any Person other than Ironwood, Astellas and their respective Affiliates.

 

1.133.      “Trademark”
means all trade names, logos, common law trademarks, common law service marks,
trademark and service mark registrations, and applications therefore and all
other rights corresponding thereto throughout the world.

 

1.134.      “Transfer Price”
means, (i) for Development Material and for Licensed Compound provided for
samples that are provided by Astellas to third parties without charge, [**] and (ii) for Licensed
Compound provided for Commercial supply that meets the specifications set forth
in Exhibit B and is provided in accordance with this Agreement and
the Manufacturing and Supply Agreement, (a) [**] for such Licensed Compound [**], and (b) [**] for such Licensed Compound [**]. For the avoidance of
doubt, the Transfer Price does not include any value added tax, the payment of
which will be made by Astellas to the extent required under Applicable Law.

 

1.135.      “United States”
or “U.S.” means the United States of America, its territories and
possessions (including Puerto Rico, irrespective of political status).

 

1.136.      [**].

 

1.137.      “Useful License”
is defined in Section 4.3.4.

 

1.138.      “U.S.-Japan Tax
Treaty” is defined in Section 4.6.

 

1.139.      “Valid Claim”
means a claim of an issued and unexpired Patent Right in the Territory, which
claim has not been revoked or held unenforceable, unpatentable or invalid by a
decision of a court or other governmental agency of competent jurisdiction,
which is not appealable or has not been appealed within the time allowed for
appeal, and which has not been abandoned, disclaimed, denied or admitted to be
invalid or unenforceable through reissue, re-examination, or disclaimer or
otherwise.

 

1.140.      “Valuation Panel”
means a panel of [**]. In the event the Parties are required by the terms of this Agreement
to select a Valuation Panel, each Party will [**]. Each Party will [**] of the panel entered into
will be deemed the decision of the Valuation Panel. The Parties will instruct
the Valuation Panel to reach its decision as promptly as 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

15

 

practicable, and if possible within [**]. The costs of this
Valuation Panel will be [**] by the Parties.

 

1.141.      “Year” means
each 12 month period ending December 31st.

 

2.                                      LICENSE
GRANT

 

2.1.          License to
Astellas. Subject to the terms and conditions of this Agreement, Ironwood
hereby grants to Astellas, effective on the Effective Date, an exclusive
license (even as to Ironwood, provided that Ironwood shall have such rights
under the Ironwood Technology and its interest in the Joint Technology as are
necessary for Ironwood to perform its obligations hereunder), with the right to
sublicense as expressly provided in Section 2.5, under the Ironwood
Technology and Ironwood’s interest in the Joint Technology to Develop the
Product in an Oral Formulation pursuant to the Development and Regulatory Plan
for Commercialization in the Field in the Territory, to Commercialize the
Product in an Oral Formulation in the Field in the Territory, to Manufacture
the Product in an Oral Formulation (including, subject to the restrictions set
forth herein, the Licensed Compound) inside or outside of the Territory for
Commercialization in the Field in the Territory, and to use the Licensed
Compound, Ironwood Technology, and Joint Technology in connection with such
Development, Commercialization, and Manufacture of Products (including the
Licensed Compound). Notwithstanding the foregoing, Ironwood reserves the right
under the Ironwood Technology to develop the Product (x) outside the Field
in the Territory, and (y) in any field outside the Territory, and to
manufacture the Product inside or outside of the Territory, provided that
Ironwood shall have no right to, and shall not, and shall not permit any third
party to, (a) develop or manufacture (directly or indirectly) the Licensed
Compound or Products (whether in an Oral Formulation or any other formulation)
for sale or other commercialization in the Field in the Territory (other than
by Astellas pursuant to this Agreement), and (b) sell, offer for sale,
import, or otherwise commercialize the Licensed Compound or Products (whether
in an Oral Formulation or any other formulation) in the Field in the Territory
(other than sales of the Licensed Compound to Astellas pursuant to this
Agreement). In addition, Ironwood and its Affiliates will not assert any
Technology against Astellas or its Affiliates or Sublicensees on account of
their Manufacture, Development, and Commercialization of the Product in the
Field in the Territory in accordance with this Agreement.

 

2.2.          License to
Ironwood. Subject to the terms
and conditions of this Agreement, and only to the extent permitted under
Applicable Law (including antitrust laws and regulations), Astellas hereby
grants to Ironwood (i) a royalty-free non-exclusive license, during the
Term, under the Astellas Technology and Astellas’s interest in the Joint
Technology, with the right to sublicense, in each case to the extent necessary
for Ironwood to exercise its rights and perform its obligations under this
Agreement, all in accordance with the terms of this Agreement, and (ii) a
royalty-free, exclusive (subject to Astellas’s retained rights as set forth
below) license, with the right to freely sublicense 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

16

 

only Astellas Sublicensable Patent Rights (only to an Ironwood licensee
in connection with a license of rights in the Licensed Compound or Product, and
subject to Section 2.6.2(a) and 2.6.3, and provided that and only to
the extent such corresponding rights are granted to Astellas) without any duty
to account or compensate (which sublicenses shall survive the termination of
this Agreement except as set forth in Section 8.6) under Astellas’s
interest in the Astellas Technology and Astellas’s interest in the Joint
Technology solely to (A) develop, manufacture, and commercialize the Licensed
Compound and Product in an Oral Formulation outside of the Territory in the
Field, and (B) manufacture the Product in an Oral Formulation in the
Territory for purposes of commercialization in the Field outside the Territory.
For the avoidance of doubt, the licenses in this Section 2.2 will not
prohibit Astellas from, and Astellas expressly retains all rights required for,
conducting pre-clinical research inside or outside of the Field anywhere in the
world, and Manufacturing the Licensed Compound or Product outside of the
Territory for Development or Commercialization inside the Territory. Each Party
will use Commercially Reasonable Efforts to ensure that all Collaboration
Know-How and Collaboration Patent Rights invented, conceived, or developed by a
Third Party on behalf of such Party will be Controlled by such Party.

 

2.3.          Joint Technology.
Each  Party hereby grants the other
Party a world-wide, non-exclusive, perpetual, royalty-free, fully paid up,
freely sublicenseable right and license under its interest in the Joint
Technology to exploit compounds that are not guanylate cyclase C agonists
anywhere in the world, without compensating or accounting to the other Party on
account of the use and practice of such Joint Technology.

 

2.4.          Right of
Reference. Ironwood hereby grants to Astellas a “Right of Reference,”
as that term is defined in 21 C.F.R. § 314.3(b) and any foreign
counterpart to such regulation in the Field in the Territory to the data
included in the Ironwood Technology to the extent necessary or useful to
Develop the Licensed Compound or Product solely for IBS-C or CC, and Astellas
hereby grants to Ironwood (and Ironwood’s partners and/or licensees, as long as
such Ironwood partners and/or licensees grant a corresponding right of
reference, in connection with Astellas’s rights hereunder, to their
corresponding data to Astellas) such a Right of Reference to the data included
in the Astellas Technology to the extent necessary or useful to (i) manufacture
the Licensed Compound or Product in an Oral Formulation throughout the world
for purposes of commercialization in the Field outside the Territory, (ii) develop
the Licensed Compound or Product in an Oral Formulation in the Field outside
the Territory, or (iii) to commercialize the Licensed Compound or Product
in an Oral Formulation in the Field outside the Territory, in all cases solely
for IBS-C or CC, and in each case subject to the terms and conditions of this
Agreement. Each Party will provide a signed statement to this effect, if
requested by the other, in accordance with 21 C.F.R. § 314.50(g)(3) or any
foreign counterpart to such regulation, in the case of a request by either
Party, for the limited purpose of such Party exercising its rights or
performing its obligations under this Agreement. For the avoidance of doubt,
neither Party may publish or otherwise publicly disclose any data to which a
Right or Reference is granted under this Section 2.4, and 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

17

 

each Party will treat such data as the Confidential Information of the
other Party in accordance with the terms hereof.

 

2.5.          Extension of
Rights to Affiliates and Third Parties. Astellas may extend any or all of
its rights hereunder (i) to its Affiliates, and (ii) to Third Parties
performing manufacturing, development, or other services on behalf of Astellas
or its Affiliates (and the rights granted to Astellas in this Agreement shall
include the right to have any of such rights exercised for and on behalf of
Astellas by such Third Parties). In each such case such Affiliates and Third
Parties shall abide by the applicable terms and conditions of this Agreement
(and all references to Astellas herein shall be deemed to include such Third
Parties or Affiliates, as appropriate).

 

2.6.          Sublicensing.

 

2.6.1.          In addition to the
rights under Section 2.5, Astellas may grant sublicenses under the rights
granted to it under this Agreement [**]. In connection with any
such sublicense under this Section 2.6, (i) Astellas shall [**], and (ii) the terms of
such sublicense shall be consistent with the terms of this Agreement. Astellas
will notify Ironwood of the execution of each sublicense hereunder and provide
a copy of any such executed sublicense to Ironwood promptly following execution
thereof.

 

2.6.2.          In addition, to
the extent permitted under Applicable Law (including antitrust laws and
regulations), (a) each Party will require any licensee, in the case of
Ironwood, or Sublicensee, in the case of Astellas, whether within or outside
the Territory, of Technology with respect to the Licensed Compound or the
Product, to grant back to the granting Party rights to Technology arising out
of the use or exercise of the Technology licensed by such Party to the other
Party hereunder and developed by such licensee or Sublicensee relating to the
Licensed Compound or Product so that such Technology will be Controlled by the
granting Party for purposes and to the extent of the licenses to the other
Party provided by Sections 2.1 and 2.2 above and (b) Astellas will require
any Sublicensee to transfer ownership of all Regulatory Submissions and Regulatory
Approvals pertaining to the Licensed Compound or Product to Astellas upon a
termination of this Agreement to the extent necessary for Astellas to assign to
Ironwood such Regulatory Submissions and Regulatory Approvals under Section 8.6.1(c) hereunder.

 

2.6.3.          For the purposes
of the sublicense rights granted by Astellas to Ironwood in Section 2.2(ii),
the Astellas Patent Rights that Ironwood may sublicense will be limited at any
given time to the Astellas Patent Rights that are Astellas Sublicensable Patent
Rights at such time.

 

2.7.          Co-Promotion.
Notwithstanding Section 2.6 above, Astellas may use co-promotion partners
in connection with the Commercialization of Products in the Territory, 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

18

 

[**]. Astellas may
extend all rights under this Agreement to such partner [**] to Commercialize Products
through or with such partner, in which case such partners shall abide by the
applicable terms and conditions of this Agreement.

 

2.8.          Expansion of
Territory. Astellas shall have a right of first negotiation with respect to
a license for the Licensed Compound and Product for [**]. Ironwood shall not
initiate or pursue any discussions or negotiations with any Third Party
regarding such a license in such territories unless Ironwood (i) has first
offered to Astellas the right to negotiate such a license, and (ii) if
Astellas notifies Ironwood in writing within [**] of receipt of the notice
described in clause (i) of this Section that it desires to negotiate
the terms of such a license, negotiated the terms and conditions of such license
with Astellas in good faith for a period of [**]. If, at the end of such [**] period, the Parties are
unable to reach agreement on the terms of such a license or if Astellas has not
timely notified Ironwood that it desires to negotiate such a license in accordance
with this Section, then Ironwood shall be free to enter into such a license
with any Third Party without any further obligation to Astellas under this Section 2.8
with respect to such license.

 

2.9.          No Other Rights.
No rights, other than those expressly set forth in this Agreement are granted
to either Party hereunder, and no additional rights will be deemed granted to
either Party by implication, estoppel, or otherwise. All rights not expressly
granted by either Party to the other hereunder are reserved.

 

3.                                      DEVELOPMENT,
REGULATORY, AND COMMERCIALIZATION

 

3.1.                              Joint Steering
Committee.

 

3.1.1.       Overview. The
Parties will establish a joint steering committee (“JSC”) as a forum to
discuss and coordinate issues related to the Development and Commercialization
of Products in the Field in the Territory as described in more detail herein.
The JSC will serve as a forum for discussing data, information, and strategy
regarding the development and commercialization of the Product in the Territory
and outside of the Territory to the extent provided for in this Agreement. The
JSC will perform the functions assigned to it in this Section 3.1;
provided, however, that the functions and operations of the JSC may be altered
from time to time during the Term by the mutual agreement of the Parties. In
addition to the committee meetings, members of Senior Management from Ironwood
and Astellas will meet periodically as necessary or appropriate during the Term
(and in any event at least once per Year) in order to review significant issues
and developments in the Development and Commercialization of the Licensed
Compound or Product.

 

3.1.2.       Membership.
The JSC will consist of three senior representatives from each Party. Ironwood
and Astellas will each designate a co-chair for the JSC. The co-chairs will be
responsible for calling meetings and setting the agenda (which will include a
list of all participants expected at a meeting) and circulating such 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

19

 

agenda at least ten days prior to each meeting and distributing minutes
of the meetings within 30 days following such meeting (which minutes will be in
the English language), but will not otherwise have any greater power or
authority than any other member of the JSC. JSC members must have such
expertise as appropriate to the activities of the JSC, and from time to time
the JSC may invite personnel of the Parties having formulation, manufacturing,
commercial, marketing, and other expertise to participate in discussions of the
JSC as appropriate to assist in the activities of the JSC. Either Party may
also, from time to time, designate one or more consultants to such Party who
are under written obligations of confidentiality to such Party as JSC observers
who may attend JSC meetings in an observational capacity only.

 

3.1.3.       Responsibilities.
The JSC’s responsibilities will include, among others: (i) approving the
Development and Regulatory Plan and any amendments to such plan (other than
amendments required to comply with Applicable Laws or requirements imposed by
Regulatory Authorities), including, without limitation, approval of any
amendment to the Development and Regulatory Plan to undertake Development of a
Combination Product that includes the Licensed Compound and another active
pharmaceutical ingredient, (ii) approving (or establishing procedures to
approve) protocols for pre-clinical or clinical studies (including
Post-Approval Research) and any amendments or modifications to such protocols
or studies and amendments thereto (other than amendments required to comply
with Applicable Laws or requirements imposed by Regulatory Authorities), (iii) approving
any proposed amendment to the Launch Plan (other than amendments required to
comply with Applicable Laws or requirements imposed by Regulatory Authorities),
(iv) performing quarterly reviews of progress of pre-clinical and clinical
studies and proposed additional studies, (v) reviewing and commenting on
the Commercialization Plan (and amendments thereto) prepared and presented by
Astellas, (vi) reviewing and commenting on Regulatory Submissions relating
to the Product prepared by Astellas, (vii) facilitating the exchange of
data and information relating to the development of the Product in and outside
the Territory, (viii) receiving updates on the strategy for
Commercializing the Product in the Field in the Territory (including strategies
related to reimbursement, advertising and promotion, brand integrity, sales,
and launch sequence), (ix) receiving updates on the annual marketing plans
and activities for the Product in the Field in the Territory, (x) commenting
on the target product profile for the Product (including current and future
formulations, indications, and delivery forms, and key labeling claims, and
(xi) performing such other functions as are expressly assigned to it in this
Agreement. The JSC may appoint additional committees as agreed by the Parties.
For the avoidance of doubt, the JSC shall not have the authority to amend or
modify any term or condition, or take any action inconsistent with or in
violation of, this Agreement.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

20

 

3.1.4.                     Meetings. The JSC will
meet at such frequency as will be established by the Parties (but not less
frequently than four times per year prior to Commercial Launch and during the
first five years of Commercialization, if so requested by a Party). In addition,
the JSC will meet within seven Business Days of a proposal by either Party to
amend the Development and Regulatory Plan to consider such amendment. Meetings
of the JSC will alternate between the offices of the Parties, unless otherwise
agreed upon by the members of the JSC, or may be held telephonically or by
video conference. Meetings of the JSC will be effective only if at least one
representative of each Party is in attendance or participating in the meeting.
Members of the JSC may participate in and vote at meetings by telephone. Each
Party will be responsible for expenses incurred by its employees and its
members of the JSC in attending or otherwise participating in JSC meetings.
Each Party will use reasonable efforts to cause its representatives to attend
the meetings of the JSC. If a representative of a Party is unable to attend a
meeting, such Party may designate an alternate with equivalent experience and
authority as such representative to attend such meeting in place of the absent
representative.

 

3.1.5.                     Minutes. The minutes
of each JSC meeting must provide a description in reasonable detail of the
discussions held at the meeting and a list of any actions, decisions or
determinations approved by the JSC. Minutes of each JSC meeting shall be
submitted by the Party preparing such minutes to the other Party within ten
days of such meeting and the other Party shall notify such submitting Party in
writing whether it disagrees with the minutes and specifying in detail the
subject matter of, and the reason for, its disagreement. If the other Party has
not so notified the submitting Party within ten days, the minutes shall be
deemed approved. Otherwise the Parties shall cooperate to revise and approve
the minutes as expeditiously as feasible. No decision of the JSC will be
considered final until the minutes of the meeting at which such decision was
made are approved

 

3.1.6.                     Elevation and
Dispute Resolution. Each Party’s representatives on the JSC will
collectively have one vote on all matters that are within the responsibility of
such committee. The members of the JSC will use reasonable efforts to reach
consensus on all decisions. In the event that the members of the JSC are unable
to agree on a particular issue within ten Business Days after the JSC first
meets to consider the issue, the issue will be resolved as follows:

 

(a)                                  Commercialization
of the Product in the Territory and all related decisions shall be in Astellas’s
reasonable discretion, and if the unresolved issue relates to Commercialization,
such issue will be resolved by Astellas in its reasonable discretion giving
good faith consideration to Ironwood’s views on the issue. Notwithstanding the
foregoing sentence, all Commercialization Plans will be consistent with the
provisions of the Launch Plan.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

21

 

(b)                                 If the
unresolved issue relates to a proposed amendment to the Launch Plan, such
dispute will be resolved through arbitration pursuant to Section 10.1.3,
and the Arbitrators will be instructed solely to determine whether it is
Commercially Reasonable to amend the Launch Plan as so proposed (and, if so
determined, the Launch Plan shall be so amended), provided that Astellas may
unilaterally amend the Launch Plan to the extent required to comply with
Applicable Laws or requirements imposed by Regulatory Authorities, after
providing advance written notice to Ironwood with an explanation as to why such
modifications and amendments are required, and such amendment and modification
shall be deemed approved by the JSC.

 

(c)                                  If the
unresolved issue relates to Development, such issue will be referred to the
Parties’ respective Chief Scientific Officers or equivalent or their designees.
In the event such individuals are unable to resolve such issue within [**] Business Days, such issue
will be referred to the Chief Executive Officers of each Party or their
designees for resolution. Subject to the remaining provisions of this Section 3.1.6,
all matters relating to Development that are expressly within the scope of the
responsibilities of the JSC under Section 3.1.3, including, without
limitation, amendments and modifications to the Development and Regulatory
Plan, must be determined by consensus of the Parties, provided that (i) neither
Party shall withhold its consent unreasonably, and (ii) no consensus shall
be required with respect to Development activities (including any modifications
or amendments to the Development and Regulatory Plan, the Launch Plan, or study
protocols) that are required to comply with Applicable Laws or requirements
imposed by Regulatory Authorities, and Astellas may modify and amend the
Development and Regulatory Plan as necessary to comply with such Applicable
Laws or requirements, subject to the requirements of Section 3.2.1. If a
matter for which consensus cannot be reached is addressed by the then current
Development and Regulatory Plan, then such Development and Regulatory Plan and
the activities required thereunder will control despite any inability of the
Parties to reach consensus. Notwithstanding the foregoing, the Parties
acknowledge and agree that Astellas shall control the Development of the
Product in accordance with this Agreement and the then-effective Development
and Regulatory Plan and shall have the right to conduct the Development and
implement the Development and Regulatory Plan in its reasonable discretion in
accordance with this Agreement (including without limitation the provisions of
this Section 3.1.6, requiring that matters expressly within the
responsibility of the JSC be decided on a consensus basis) and the Development
and Regulatory Plan, as long as such activities will not adversely affect the
development or 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

22

 

commercialization of Products for the Forest Territory or the Almirall
Territory.

 

3.2.                              Development.

 

3.2.1.                     Product
Development and Regulatory Plan. The initial Development
and Regulatory Plan for the Product in the Field is set forth in Exhibit C
(the “Initial Development and Regulatory Plan”). Astellas will direct,
coordinate, and manage the Development of the Product in the Field, according
to the Development and Regulatory Plan. The Development and Regulatory Plan for
the Product will include, among other things, the indications in the Field for
which the Product is to be Developed and other exploratory indications in the
Field for which the Product may be developed, critical activities to be
undertaken, certain timelines, go/no go decision points and relevant decision
criteria and certain allocations of responsibilities between the Parties for
the various activities to be undertaken under the Development and Regulatory
Plan. During the Term, the JSC will review the Development and Regulatory Plan
at least once per year, and will amend the Development and Regulatory Plan as
necessary pursuant to such review. During the Term, Astellas may amend the
Development and Regulatory Plan on an ongoing basis as necessary, any
modifications being subject to approval by the JSC, [**] as necessary to comply with
Applicable Laws or requirements imposed by Regulatory Authorities, [**], and such amendment and
modification shall be deemed approved by the JSC. Any amendment to the Initial
Development and Regulatory Plan or any subsequent Development and Regulatory
Plan will contain least that level of detail and cover at least the same
matters as the Initial Development Plan.

 

3.2.2.                     Responsibility. Astellas will
implement and conduct the Development activities in accordance with the
Development and Regulatory Plan and Applicable Law. Upon written request from
Astellas, Ironwood will provide technology transfer activities relating to the
transfer of chemistry, manufacturing, and control technology for the Licensed
Compound (“CMC Activities”), as specified in the Development and
Regulatory Plan and as otherwise reasonably required or useful in connection
with the Development.

 

3.2.3.                     Development
Expenses. Astellas will be responsible for the payment of
all of the expenses incurred after the Effective Date in connection with the
Development of the Product exclusively for the Territory and pursuant to the
Development and Regulatory Plan. Ironwood will be responsible for Ironwood’s
internal costs, calculated at the FTE Rate, for CMC Activities that are
performed by Ironwood for the first 12 months after the date that Astellas
first requests in writing that Ironwood commence such CMC Activities, after
which such costs will be reimbursed by Astellas by payment within 60 days of
quarterly invoices from Ironwood to Astellas.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

23

 

3.2.4.                     Future
Development Activities. Astellas may make recommendations regarding
whether to Develop a Product for new indications or new formulations. If
approved by the JSC, such additional Development activities will become part of
the Development and Regulatory Plan.

 

3.2.5.                     Reports of
Development Activities. Each Party will report on Development
activities, if any, undertaken by it in accordance with Development and
Regulatory Plan in connection with meetings of the JSC, including by providing
a reasonably detailed summary of all results, data, and material inventions, if
any, obtained from such activities. In addition, each Party will, at its own
expense, make appropriate scientific and regulatory personnel available to the
other Party, either by telephone or in person as the Parties may mutually
agree, as reasonably required to keep the other Party informed of Development
activities.  In addition,
Ironwood will report on development activities relating to the Product
undertaken by it or its licensees outside the Territory, including by providing
a reasonably detailed summary of all results, data, and material inventions, if
any, obtained from such activities.

 

3.3.                              Regulatory
Matters.

 

3.3.1.                     Responsibility
For Regulatory Interactions. Regulatory strategy for
the Product in the Territory and all decision-making with respect thereto will
be determined by Astellas consistent with the Development and Regulatory Plan. Astellas
will use Commercially Reasonable Efforts to obtain in a timely manner
Regulatory Approvals with respect to the Product to the extent contemplated by
the Development and Regulatory Plan. Astellas will be solely responsible for
conducting all activities relating to obtaining Regulatory Approvals with
respect to the Product, including without limitation, preparing and submitting
Regulatory Submissions and attending meetings with Regulatory Authorities.
Notwithstanding anything contained in this Agreement to the contrary, Astellas
acknowledges and agrees that [**]. Astellas will provide Ironwood with advanced copies of any
substantive Regulatory Submissions made in the Territory reasonably in advance
of submission to a Regulatory Authority, and will not [**] to the extent they are
related to issues potentially affecting the [**] and are communicated to
Astellas in a reasonably prompt manner and in no event later than 30 Business
Days, or such shorter timeline as is reasonably determined by Astellas in order
to timely file such Regulatory Submission, from Astellas’s provision of such
copies. Astellas will not submit any Regulatory Submissions unless it has
complied with its obligations pursuant to the foregoing with respect to such
Regulatory Submissions.  In no event
shall Astellas be required to delay the filing of any Regulatory Submission
beyond the applicable timeline for comments. 
Ironwood [**] shall be responsible for any translations of Regulatory Submissions
provided by Astellas and shall bear all costs incurred in connection with the
provision, review (and translation, if applicable) of such Regulatory 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

24

 

Submissions pursuant to the foregoing. Ironwood will make available to
Astellas with respect to the Licensed Compound or Products any Regulatory
Submissions made pursuant to the Forest Agreement. Astellas will own all right,
title, and interest in all Regulatory Submissions and Regulatory Approvals for
Products in the Territory.

 

3.3.2.                     Regulatory
Cooperation. Astellas will keep Ironwood reasonably informed
regarding the status and progress of Development activity, including without
limitation, providing Ironwood with advance written notice of substantive
meetings scheduled with a Regulatory Authority related to the Licensed
Compound, such as Clinical Trial Consultation, Initial Meeting with PMDA, and
Reliability Inspections in Japan and their foreign counterparts. Astellas will
also provide to Ironwood copies of all Regulatory Submissions in the form
actually submitted to Regulatory Authorities. Subject to its agreements with
its applicable licensees, Ironwood will keep Astellas reasonably informed
regarding the status and progress of development activity, related to the
Licensed Compound outside the Territory. Ironwood will also provide to Astellas
copies of all Regulatory Submissions in the form actually submitted to
Regulatory Authorities for the Product outside the Territory.

 

3.3.3.                     Quality
Agreement. Reasonably promptly after the Effective Date, the
Parties will enter into an agreement governing the quality standards required
under this Agreement or by Third Party vendors (including Third Parties
performing API Manufacturing).

 

3.3.4.                     Adverse Events. Reasonably
promptly after the Effective Date, the Parties will enter into a
pharmacovigilance agreement, which upon such execution will be attached as Exhibit D
hereto and thereby incorporated into this Agreement by reference (the “Pharmacovigilance
Agreement”). The Parties will comply with the provisions of such agreement.
Astellas will be responsible for responding to all safety inquiries regarding
the Product in the Field in the Territory. Ironwood shall promptly, and otherwise  in accordance with the
Pharmacovigilance Agreement, inform Astellas of adverse events or safety
inquiries regarding the Product or the Licensed Compound outside the Territory.

 

3.3.5.                     Non-Required
Studies. Astellas [**], including, without limitation, [**], and due consideration will
be given [**], provided that[**]. Ironwood will use
Commercially Reasonable Efforts to ensure that [**] regarding any Non-Required
Studies intended to be undertaken by [**] and (ii) give due
consideration to [**] on such Non-Required Studies. For the avoidance of doubt, any
Non-Required Studies constitute Post-Approval Research under the Development
and Regulatory Plan. With respect to studies required for registration purposes
or imposed by a Regulatory Authority, [**] with respect to any such
proposed studies as provided by Section 3.3.1.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

25

 

3.4.                              Manufacture of
Products. Ironwood will be responsible for Manufacture of
Development Materials and for API Manufacturing; provided, however, that
nothing in this Agreement will prevent Ironwood from contracting with any Third
Parties to Manufacture Development Materials or to conduct API Manufacturing,
provided that such Third Parties shall comply with all requirements pursuant to
this Agreement and the Manufacturing and Supply Agreement and that Ironwood
shall be fully responsible for such Third Party’s compliance with such
requirements. Ironwood will perform all such Manufacturing activities in accordance
with GCP, GLP and GMP. Ironwood will supply Development Material and Licensed
Compound for Commercial supply to Astellas in bulk form ready for formulation,
packaging and labeling. Ironwood will be responsible for shipping the bulk
Development Material and other Licensed Compound to the locations designated by
Astellas. Development Material and Licensed Compound for Commercial supply will
be shipped to Astellas F.O.B. [**], and title to such
Development Material and other Licensed Compound will pass to Astellas upon
placement by Ironwood with a carrier for delivery to Astellas. Astellas will be
responsible, at its sole cost and expense, to complete the drug product
manufacturing, packaging, and labeling of the Licensed Compound. In furtherance
of the foregoing, the Parties will execute a manufacturing and supply agreement
promptly following the Effective Date, (a) under which Astellas will pay
Ironwood [**] for supplying
Development Material and Commercial supply of the Licensed Compound for the Product
to Astellas, [**], and (b) which will contain, at a minimum, such terms and
conditions as are described in Schedule 3.4 hereto and the last sentence
of Section 4.10 (“Manufacturing and Supply Agreement”).
Notwithstanding anything else contained herein, Astellas may not exercise its
right to Manufacture Development Materials or Licensed Compound pursuant to the
grant of rights under Section 2.1 unless (i) Ironwood has failed to
supply Development Materials or Licensed Compound for Commercialization to Astellas
under circumstances which, under the Manufacturing and Supply Agreement, would
permit Astellas to Manufacture Development Materials or Licensed Compound for
Commercialization, (“Failure To Supply”) in which event, Astellas shall
consult with Ironwood on the appointment of one or more Third Parties as
manufacturer of Licensed Compound and shall reasonably consider Ironwood’s
comments regarding such appointment, (ii) the expiration of the
last-to-expire of all, or the absence of any (including because Valid Claims
never issued or were otherwise invalidated), Valid Claims in the Ironwood
Patent Rights in Japan that cover the Licensed Compound (“Patent Expiration”),
(iii) Ironwood notifies Astellas that it intends to cease Manufacture of
Development Material or Licensed Compound for Commercialization (“Cessation
of Manufacture”), or (iv) an Insolvency Event affecting Ironwood.

 

3.5.                              Commercialization
in the Territory.

 

3.5.1.                     Responsibility. Astellas is
solely responsible for, and will bear all costs relating to, Commercializing
the Products in the Field in the Territory.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

26

 

3.5.2.                     Commercialization
Activities. Subject to the provisions of Section 3.5.3,
Astellas will use Commercially Reasonable Efforts to Commercialize the Product
in each country in the Territory, subject to compliance by Ironwood with its
obligations hereunder to the extent such compliance would be material to
Astellas’s performance of its Commercialization obligations hereunder. In
conducting the Commercialization activities, Astellas will comply with all Applicable
Law, applicable industry professional standards, and compliance policies of
Astellas which have been previously furnished to Ironwood, as the same may be
updated from time to time and provided to Ironwood.

 

3.5.3.                     Diligence. Astellas will
achieve the Commercial Launch of a Product in each country in the Territory
within three months of receiving Regulatory Approval (including, for the
avoidance of doubt, where required, all final pricing, reimbursement, and other
approvals required for Commercial Launch) in such country for such Product.
Astellas will use Commercially Reasonable Efforts to Commercialize a Product in
each country in the Territory in which Regulatory Approval has been received.

 

3.5.4.                     Commercialization
Expenses. As between the Parties, Astellas will book
(directly itself or indirectly through any of its Affiliates and Sublicensees)
all sales of Products and will have the sole responsibility for the sale,
invoicing, promotion, and distribution of the Product in the Territory.
Astellas will be solely responsible for all of its Commercialization expenses.

 

3.6.                              Publication
Strategy. Subject to Ironwood’s obligations to coordinate
worldwide publication strategy with Forest under the Forest Agreement and with
Almirall under the Almirall Agreement, Astellas will coordinate with Ironwood (i) its
publication strategy involving the Product and (ii) activities involving
the Product related to scientific conferences and other presentations. The
Parties intend that the provisions of this Section 3.6 apply to Astellas
and its Affiliates, licensees and Sublicensees. For the avoidance of doubt, no
Sublicensee will be permitted to publish or present materials regarding the
Product, and any Sublicense agreement hereunder will contain a provision
prohibiting such activities.

 

3.6.1.                     Prior Review. Ironwood and
Forest will be afforded the opportunity to review and approve any scientific
paper, abstract, or presentation with respect to the Product proposed for
publication, presentation, or distribution by Astellas or its Affiliates, which
review will be made and approval or disapproval communicated within ten days of
receipt of any such scientific paper, abstract or presentation, or such shorter
period as may reasonably be required by applicable publication deadlines
promptly communicated to Ironwood and/or Forest. If no comments are received
by, and no disapproval was communicated to, Astellas within such ten day
period, the respective paper, abstract, or presentation shall be deemed
approved. Astellas will not unreasonably reject comments furnished by 

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

27

 

Ironwood, will comply with Ironwood’s request to delete references to
its Confidential Information in any such publication, abstract, or presentation
and will delay publication for such reasonable period requested by Ironwood to
permit the filing of patent applications disclosed in material proposed for
such publication or presentation. Ironwood will provide to Astellas, solely for
informational purposes, prior to publication, any scientific paper, abstract,
or presentation with respect to the Product proposed for publication,
presentation, or distribution by Ironwood or its Affiliates and, to the extent
available to Ironwood and permitted under applicable agreements, its licensees.
In no event will Confidential Information of either Party be published without
the consent of that Party.

 

3.6.2.                     Clinical Study
Results. The Parties will (i) amongst each other, and (ii) with
Forest, to the extent required by Applicable Law or best industry practices,
coordinate the disclosure of the initiation and results of clinical studies
performed pursuant to the Development and Regulatory Plan by Astellas, or its
Affiliates with respect to the Licensed Compound or Product; provided that all
proposed disclosures and publications will be submitted for review by the JSC
and, by Ironwood, to the Joint Development Committee constituted under the
Forest Agreement, and due regard will be given to the comments of each Party,
the maintenance of confidentiality of Confidential Information of each Party
and allowing time for intellectual property registrations. Nothing set forth in
this Agreement will be deemed to limit or restrict (a) either Party from
disclosing the results of clinical trials (whether performed by the Parties or
by Third Parties) to the extent required by Applicable Law or best industry
practices, and (b) Astellas from disclosing the results of clinical trials
as reasonably determined by Astellas to be necessary in connection with
Regulatory Submissions and other regulatory activities regarding the Product in
the Territory.

 

3.7.                              Project Team. Each Party
will designate a project team that will coordinate and facilitate ongoing
communication between the Parties.

 

4.                                      CONSIDERATION

 

4.1.                              Upfront Payment. No later than
five Business Days after the Effective Date, Astellas will pay to Ironwood
$30,000,000 as an upfront, non-creditable, non-refundable fee and such fee will
not be reduced by the amount of any consumption tax or similar taxes required
to be paid by Astellas under any Applicable Law, subject, however, to Section 4.6.

 

4.2.                              Milestones. As additional
consideration hereunder, Astellas will pay to Ironwood the following one-time
milestone payments:

 

4.2.1.                     $[**] upon initiation (i.e.,
enrollment of the first study subject) of a Phase III study for the Product in
Japan;

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

28

 

4.2.2.                     $[**] upon the first filing of an
NDA for the Product with a Regulatory Authority in Japan; and

 

4.2.3.                     $[**] upon the first approval of
an NDA for the Product by a Regulatory Authority in Japan.

 

For the avoidance of doubt, each such milestone payment shall be owed
only once. Once Astellas has made any particular milestone payment under this Section 4.2,
Astellas will not be obligated to make any payment with respect to the
re-occurrence of the same milestone or the subsequent occurrence of a similar
milestone or event anywhere in the Territory and with respect to any Product.
In addition, if a milestone event occurs and any previous milestone event has
not occurred (such as, for example, an NDA being filed in Japan without the
initiation of a Phase III study in Japan), then all prior unpaid milestones
shall be paid at the same time as the milestone payment is made based on the
occurrence of such milestone. The milestone payment will not be reduced by the
amount of any consumption tax or similar taxes required to be paid by Astellas
under any Applicable Law, subject, however, to Section 4.6.

 

4.3.                              Royalties and
Other Payments.

 

4.3.1.                     Royalty. Astellas will
pay to Ironwood royalties based on the aggregate annual Net Sales of Products
sold by Astellas or its Affiliates in the Field in the Territory at the rates
set forth in the table below. The royalty payments will not be reduced by the
amount of any consumption tax or similar taxes required to be paid by Astellas
under any Applicable Law, subject, however, to Section 4.6.

 

	
  Aggregate Annual Net Sales in the
  Territory

  	
   

  	
  Royalty rate

  	
   

  
	
  $100,000,000 or less

  	
   

  	
  [**]

  	
  %

  
	
  $100,000,001 to $200,000,000

  	
   

  	
  [**]

  	
  %

  
	
  $200,000,001 to $300,000,000

  	
   

  	
  [**]

  	
  %

  
	
  $300,000,001 to $400,000,000

  	
   

  	
  [**]

  	
  %

  
	
  $400,000,001 to $500,000,000

  	
   

  	
  [**]

  	
  %

  
	
  More than $500,000,000

  	
   

  	
  [**]

  	
  %

  

 

For the avoidance of doubt, the above rates are incremental rates that
apply to the Net Sales indicated for each applicable rate only. For example, if
Astellas receives $40,000,000 of Net Sales of Products in each Calendar Quarter
in a given Year, then Astellas will pay a royalty of [**]% of $40,000,000) in each of
the first two Calendar Quarters, a royalty of [**]% of $20,000,000 plus [**]% of $20,000,000) in the
third Calendar Quarter, and a royalty of [**]% of $40,000,000) in the
fourth Calendar Quarter.

 

[**] = Portions of this exhibit have been
omitted pursuant to a confidential treatment request. An unredacted version of
this exhibit has been filed separately with the Commission.

 

29

 

4.3.2.       [**] for a particular Calendar
Quarter pursuant to Section 4.3.1 [**]:

 

(a)           the aggregate [**] by Astellas for [**];

 

(b)           in the event of
a Failure To Supply or an Insolvency Event affecting Ironwood, [**]; provided that such [**];

 

(c)           in the event of
a Manufacturing Cessation, [**];

 

(d)           in the event of
Patent Expiration, unless Astellas continues to procure Licensed Compound from
Ironwood (in which case Astellas may continue to make [**] at such time;

 

(e)           any amounts [**]; it being understood that
any such amounts [**].

 

In case that the [**].

 

[**], provided that the foregoing shall not limit or otherwise affect any
remedies Astellas may have on account of a failure by Ironwood to timely supply
Licensed Compound to Astellas in accordance with the terms and conditions of
this Agreement and the Manufacturing and Supply Agreement.

 

However, Astellas will in no event be obliged to [**].

 

4.3.3.       Occurrence of a
[**].
Notwithstanding any other provision of this Agreement, the [**] has occurred during the
applicable Calendar Quarter.

 

4.3.4.       Third Party
Rights. If Astellas obtains a license or similar rights from a Third Party
(including, but not limited to, pursuant to a settlement) (a) in the
absence of which it could not legally (including, without infringing any Third
Party patent rights) use or practice the Ironwood Technology (including the
Licensed Compound) in the Territory pursuant to this Agreement (“Necessary
License”), or (b) that is otherwise necessary or useful to Develop or
Commercialize the Licensed Compound pursuant to this Agreement (a “Useful
License”), then [**]; provided that, in no event (x) [**] and (y) [**]. For the avoidance of
doubt, the foregoing sentence shall not apply to a Necessary License.  If Ironwood does not [**] pursuant to this Section,
then Astellas shall have the right to [**], and Astellas shall
promptly notify Ironwood if it has made a [**]. If Astellas makes a [**], Ironwood may, [**] in accordance with this
Section. If (i) Ironwood does not bring such Claim within such period or (ii) the
Arbitrators find that Astellas has made a [**] in accordance with this Section and
Ironwood does not, [**], then Astellas will [**], with respect to the affected country or countries. If the Arbitrators
find that it would be [**]. To the extent [**]. For the avoidance 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

30

 

of doubt, nothing in this Section 4.3.4 shall prevent any [**], including, without
limitation, pursuant to Section 4.3.2.

 

4.4.          Quarterly
Reports. Within 30 days after the beginning of each Calendar Quarter beginning
with the Calendar Quarter in which the First Commercial Sale following receipt
of Regulatory Approval occurred, Astellas will deliver to Ironwood a report
setting forth for the previous Calendar Quarter the following information on a
Product-by-Product and country-by-country basis: (a) the gross sales and
Net Sales of each Product in the Territory, (b) the number of units sold
by Astellas, its Affiliates or Sublicensees and provided as samples without
charge to any Third Party, (c) the basis for any adjustments to the royalty
payable for the sale of each Product, (d) the royalty due hereunder for
the sales of each Product, and (e) the applicable exchange rate as
determined in accordance with this Agreement. The total royalty due for the
sale of Products during such Calendar Quarter will be remitted at the time such
report is made.  Within 45 days after the beginning of each Calendar Quarter beginning
with the Calendar Quarter in which Licensed Compound is first supplied by
Ironwood to Astellas, or at such other times as reasonably requested by
Astellas, Ironwood will deliver to Astellas a reasonably detailed report
setting forth its Fully Absorbed Costs and the calculation thereof.

 

4.5.          Records and
Audits. During the Term of this Agreement, Astellas will keep and maintain
accurate and complete records regarding Net Sales during the three preceding
Years and Ironwood will keep and maintain accurate and complete records
regarding the Fully Absorbed Cost covering the three preceding Years . Upon 15
days prior written notice from the other Party (the “Auditing Party”),
the Party required to maintain such records (as applicable, the “Audited
Party”) will permit an independent certified public accounting firm of
internationally recognized standing, selected by the Auditing Party and reasonably
acceptable to the Audited Party, to examine the relevant books and records of
the Audited Party and its Affiliates, as may be reasonably necessary to verify
the royalty reports submitted by Astellas in accordance with Section 4.4,
or Fully Absorbed Cost reported by Ironwood and the resulting Transfer Price
payments and royalty credits, as applicable. An examination by the Auditing
Party under this Section 4.5 will occur not more than once in any Year and
will be limited to the pertinent books and records for any Year ending not more
than 36 months before the date of the request. The accounting firm will be
provided access to such books and records at the Audited Party’s facility or
facilities where such books and records are normally kept and such examination
will be conducted during the Audited Party’s normal business hours. The Audited
Party may require the accounting firm to sign a standard non-disclosure
agreement before providing the accounting firm access to its facilities or
records. Upon completion of the audit, the accounting firm will provide both
the Auditing Party and the Audited Party a written report disclosing whether
the reports submitted by Astellas, or the Fully Absorbed Cost reported by
Ironwood and the resulting Transfer Price payments and royalty credits, as
applicable, are correct or incorrect and the specific details concerning any
discrepancies. No other information will be provided to the Auditing Party. If
the 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

31

 

report or information submitted by the Audited Party results in an
underpayment or overpayment, the Party owing underpaid or overpaid amount will
promptly pay such amount to the other Party, and, if, as a result of such
inaccurate report or information, such amount is more than five percent of the
amount that was owed the Audited Party will reimburse the Auditing Party for
the reasonable expense incurred by the Auditing Party in connection with the
audit.

 

4.6.          Taxes and
Withholding. Other than as
set forth in Sections 4.6.1 and 4.6.2 below, the Parties expect that the
Convention between the Government of the United States of America and the
Government of Japan for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income, entered into force on March 30,
2004 (the “U.S.-Japan Treaty”), shall apply to eliminate any Japanese
withholding tax on all payments made by Astellas to Ironwood under this
Agreement (including without limitation the Upfront Payment, Milestones and
Royalty payments), and, as a result, Astellas will make all such payments free
and clear of any withholding tax (including interest, penalties, and additions
thereto) (a “Tax”). Astellas acknowledges that, prior to the Effective
Date, Ironwood has provided to Astellas all documentation reasonably necessary
evidencing Ironwood’s eligibility for benefits under the U.S.-Japan Treaty
regarding withholding taxes on payments due under this Agreement, including but
not limited to the documents described on Schedule 4.6.  Subject to Ironwood’s compliance with the
foregoing Astellas will timely file all documentation reasonably necessary to
comply with the U.S.-Japan Treaty in accordance with the rules and
regulations prescribed by the Japanese tax authorities. If, however, after the Effective Date, the paying Party
reasonably believes that a deduction or withholding of a Tax on any payment
made under this Agreement is required by any applicable law, then the paying
Party will promptly (i) notify the other Party of such requirement; (ii) pay
to the relevant authorities the full amount required to be deducted or withheld
promptly upon the earlier of determining that such deduction or withholding is
required or receiving notice that such amount has been assessed; and (iii) forward
to the other Party an official receipt (or a certified copy), or other
documentation reasonably acceptable to the other Party evidencing such payment
to such authorities. The paying Party is solely responsible for ensuring the
timely payment of any such Tax that might be required and any related tax
information reporting with respect to any payments under the Agreement that may
be deemed to arise in the Territory.

 

4.6.1.                                                     Change in
Status Under the U.S.-Japan Treaty.

 

(a)           Assignment by
Astellas or Astellas Change of Ownership. Notwithstanding Section 10.8,
Astellas may not delegate to any of its Affiliates its obligation to pay
Ironwood an amount or amounts due in accordance with Section 4.1, Section 4.2,
and/or Section 4.3 of this Agreement, except as provided in this Section 4.6.1(a).
Astellas may, on written notice to Ironwood, delegate any or all of the
foregoing obligations to any of its Affiliates, whether or not created or
organized in the United 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

32

 

States or under the law of the United States or of any State within the
United States; provided, however, that if, as a result of such
delegation (or as a result of any change of ownership of Astellas), a deduction
or withholding of Tax on any payment to Ironwood under Section 4.1, Section 4.2,
and/or Section 4.3 is required by any applicable law (other than the law
of the United States or any State within the United States) that would not have
been required absent such delegation (or change of ownership of Astellas), then
Astellas (including its successors, transferees, and assigns) will pay (or
authorize payment) to Ironwood such additional amount as is necessary to ensure
that the net amount actually received by Ironwood (free and clear of any Tax,
including any Tax imposed on or with respect to the additional amount, whether
assessed against Astellas or Ironwood) will equal the full amount Ironwood
would have received had no such deduction or withholding been required. For
purposes of this Section 4.6.1(a), the term “Tax” will not include taxes
imposed upon or measured by the net income of Ironwood, in each case imposed by
the jurisdiction in which Ironwood’s principal place of business is located or
by any jurisdiction in which Ironwood conducts business through an office,
branch or permanent establishment. Ironwood will make Commercially Reasonable
Efforts to assist Astellas in obtaining an exemption from, or refund of, any
deduction or withholding of Tax on any payment to Ironwood under Section 4.1,
Section 4.2, and/or Section 4.3 pursuant to the foregoing. In the
event that Astellas (including its successors, transferees, and assigns) makes
an additional payment to Ironwood under this paragraph and Astellas’s deduction
or withholding of Tax results in a Tax Benefit Amount (as defined below) for
any taxable year, Ironwood will so notify Astellas and, within 12 months of the
close of the taxable year, promptly pay to Astellas the Tax Benefit
Amount.  “Tax Benefit Amount”
means the amount, if any, that is equal to the excess of the United States
federal, state or other income taxes that would have been imposed on Ironwood
had there been no deduction or withholding giving rise to an additional payment
over the United States federal, state or other income taxes actually imposed on
Ironwood when there is such deduction or withholding.

 

(b)           Assignment by Ironwood or Ironwood Change.
Notwithstanding Section 10.8,
Ironwood may not assign to any of its Affiliates its right to receive an amount
or amounts due from Astellas in accordance with Section 4.1, Section 4.2,
and/or Section 4.3 of this Agreement,
except as provided in this Section 4.6.1(b). Ironwood may, on written
notice to Astellas, assign any or all of the foregoing rights to any of its
Affiliates, whether or not created or organized in the United States or under
the law of the United States or of any State within the United States; provided,
however, that if, as a result of such assignment (or as a result
of any 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

33

 

change of ownership of Ironwood), a
deduction or withholding of Tax on any payment to Ironwood under Section 4.1,
Section 4.2, and/or Section 4.3
is required by any applicable law and Astellas is the paying Party, then such
payment obligation(s) by Astellas (including its successors, transferees,
and assigns) hereunder shall be reduced by the amount(s) required to be
deducted or withheld. For any Taxes withheld or to be withheld, each Party
agrees to timely deliver all certificates and forms as may be necessary and
appropriate to file Tax returns as would be necessary with respect to such
Taxes.

 

4.6.2.                                                     Change in Applicable Law. In the case of
any change in applicable law that eliminates a previously available exemption
from Japanese withholding tax on any
payment to Ironwood under Section 4.1, Section 4.2, and/or Section 4.3, including without limitation any amendment,
renegotiation or termination of the U.S.-Japan Treaty, the following
provisions will be effective for any payment(s) occurring on or after the
effective date of such change:

 

(a)           Upfront Payment
and Milestones. With respect to the Upfront Payment under Section 4.1
and any Milestone payments under Section 4.2 only, Astellas (including its
successors, transferees, and assigns) will pay (or authorize payment) to
Ironwood such additional amount as is necessary to ensure that the net amount
actually received by Ironwood (free and clear of any Tax, including any Tax
imposed on or with respect to the additional amount, whether assessed against
Astellas or Ironwood) will equal the full amount Ironwood would have received
had no such deduction or withholding been required. For purposes of this Section 4.6.2(a),
the term “Tax” will not include taxes imposed upon or measured by the net
income of Ironwood, in each case imposed by the jurisdiction in which Ironwood’s
principal place of business is located or by any jurisdiction in which Ironwood
conducts business through an office, branch or permanent establishment.
Ironwood will make Commercially Reasonable Efforts to assist Astellas in
obtaining an exemption from, or refund of, any deduction or withholding of Tax
on any payment to Ironwood under Section 4.1 or Section 4.2 pursuant
to the foregoing. In the event that Astellas (including its successors,
transferees, and assigns) makes an additional payment to Ironwood under this
paragraph and Astellas’s deduction or withholding of Tax results in a Tax
Benefit Amount for any taxable year, Ironwood will so notify Astellas and,
within 12 months of the close of the taxable year, promptly pay to Astellas the
Tax Benefit Amount.

 

(b)           Royalty
Payments. With respect to royalties payable to Ironwood
under Section 4.3 only, Astellas may
reduce its payment obligation under 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

34

 

Section 4.3 by the amount
required to be deducted or withheld. For any Taxes withheld or to be withheld,
each Party agrees to timely deliver all certificates and forms as may be
necessary and appropriate to file Tax returns as would be necessary with
respect to such Taxes.

 

4.7.          Currency. With the
exception of the royalty rate determination in Section 4.3.1, all amounts payable and
calculations hereunder will be in United States dollars. Net Sales will be
translated into United States dollars, based on the average TTM rate published by Tokyo
Mitsubishi UFJ Bank for the applicable Calendar Quarter for which such Net
Sales are reported. If, due to restrictions or prohibitions imposed by
national or international authority, payments cannot be made as provided in
this Section 4, the Parties will consult with a view to finding a prompt
and acceptable solution, and the paying Party will deal with such monies as the
other Party may lawfully direct at no additional cost or expense to the paying
Party.

 

4.8.          Confidentiality. All financial
information of a Party which is subject to review under this Section 4
will be deemed to be Confidential Information subject to the provisions of Section 5.1,
and such Confidential Information will not be disclosed to any Third Party or
used for any purpose other than verifying payments to be made by one Party to
the other hereunder; provided, however, that such Confidential Information may
be disclosed to Third Parties only to the extent necessary to enforce a Party’s
rights under this Agreement.

 

4.9.          Interest. Any payment
under this Section 4 that is more than [**] past due will be subject to
interest at an annual percentage rate of [**] (as published in the “Money
Rates” table of the Eastern Edition of The Wall Street Journal during the
period such amount is overdue) [**] if a Party does not make
payment within 30 days of its receipt of notice that such amount is past due.
Likewise, any overpayment that is not refunded within [**] after the date such
overpayment was made will thereafter be subject to interest at an annual
percentage rate of [**] (as published in the “Money Rates” table of the Eastern Edition of The
Wall Street Journal during period such amount is overdue) [**]; provided, however, that if
the overpayment is due to errors in reports provided by the overpaid Party,
such interest will accrue from the date the overpayment was made.
Notwithstanding the preceding, if a Party contests any amounts due hereunder in
good faith and promptly notifies the other Party of such dispute, interest will
not accrue as to amounts being so contested until [**] following the presentation
of such notice to the other Party.

 

4.10.        [**]. Without limiting anything in Section 4.3, Astellas shall [**]. The Manufacturing and
Supply Agreement shall provide that [**] pursuant to the
Manufacturing and Supply Agreement.

 

5.                                      COVENANTS

 

5.1.          Confidentiality.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

35

 

5.1.1.       Confidential
Information. Except to the extent expressly permitted by this
Agreement and subject to the provisions of Sections 5.1.2 and 5.1.3, at
all times during the Term and for [**] years following the
expiration or termination of this Agreement or, if later, compliance with Section 5.1.5
hereof, each Party (a “Receiving Party”) (a) will keep completely
confidential and will not publish or otherwise disclose any Confidential Information
furnished to it by the other Party (a “Disclosing Party”), except to
those of the Receiving Party’s employees, Affiliates, marketing partners,
consultants, manufacturing partners, or representatives who have a need to know
such information (collectively, “Authorized Recipients”) to perform such
Party’s obligations or exercise such Party’s rights hereunder and/or to
potential Sublicensees and/or, in the case of Ironwood being the Receiving
Party, to Forest and
to Almirall to the extent necessary to comply with its obligations or conduct
activities under the Forest Agreement and the Almirall Agreement, in each case under an
obligation of confidentiality no less protective than the terms hereof, and (b) will
not use Confidential Information of the Disclosing Party directly or indirectly
for any purpose other than performing its obligations or exercising its rights
hereunder. The Receiving Party will be liable for any breach by any of its
Authorized Recipients of the restrictions set forth in this Agreement.

 

5.1.2.       Exceptions to
Confidentiality. The Receiving Party’s obligations set forth in
this Agreement will not extend to any Confidential Information of the
Disclosing Party:

 

(a)           that is or
hereafter becomes part of the public domain through no wrongful act, fault or
negligence on the part of a Receiving Party or its Authorized Recipients;

 

(b)           that is
received from a Third Party without restriction and without breach of any
agreement or fiduciary duty between such Third Party and the Disclosing Party;

 

(c)           that the
Receiving Party can demonstrate by competent evidence was already in its
possession without any limitation or restriction on use or disclosure prior to
its receipt from the Disclosing Party;

 

(d)           that is
generally made available to Third Parties by the Disclosing Party without any
restriction imposed by the Disclosing Party on disclosure, whether such
restriction is by contract, fiduciary duty or by operation of law; or

 

(e)           that the
Receiving Party can demonstrate by competent evidence was independently
developed by the Receiving Party without any reference to Confidential
Information.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

36

 

5.1.3.       Authorized
Disclosure. Each Party and its Authorized Recipients may
disclose Confidential Information to the extent that such disclosure is (a) made
in response to a valid order, governmental inquiry, or request (each an “Order”)
of a court of competent jurisdiction or other agency, as applicable; provided,
however, that the Receiving Party must first have given notice to the
Disclosing Party and given the Disclosing Party a reasonable opportunity to
quash such Order or to obtain a protective order requiring that the
Confidential Information and/or documents that are the subject of such Order be
held in confidence by such court or Agency or, if disclosed, be used only for
the purposes for which the Order was issued; and provided further that if an
Order is not quashed or a protective order is not obtained, the Confidential
Information disclosed in response to such Order will be limited to that
information that is legally required to be disclosed in such response to such
Order, and (b) required by Applicable Law. In addition, Astellas and its
Authorized Recipients may disclose Confidential Information to the extent that
such disclosure is reasonably deemed necessary by Astellas in connection with
Regulatory Submissions or other regulatory activities regarding the Product in
the Territory.

 

5.1.4.       Notification. The Receiving
Party will notify the Disclosing Party immediately, and cooperate with the
Disclosing Party as the Disclosing Party may reasonably request, upon the
Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s
Confidential Information.

 

5.1.5.       Destruction of
Confidential Information. Upon the expiration or earlier termination
of this Agreement, the Receiving Party will (a) destroy all tangible
embodiments of Confidential Information of the Disclosing Party, including any
and all copies thereof, and those portions of any documents, memoranda, notes,
studies, and analyses prepared by the Receiving Party or its Authorized
Recipients that contain or incorporate such Confidential Information and
provide written certification of such destruction to the Disclosing Party in a
form reasonably acceptable to the Disclosing Party, provided that the legal department
of the Receiving Party will have the right to retain one copy of any such
tangible embodiments (i) for archival purposes, and (ii) as may be
required to comply with Applicable Law, provided such copy will continue to be
maintained on a confidential basis subject to the terms of this Agreement, and (b) immediately
cease, and will cause its Authorized Recipients to cease, use of such
Confidential Information as well as any information or materials that contain
or incorporate from such Confidential Information.

 

5.1.6.       Use of Name and
Disclosure of Terms. Each Party will keep the existence and the terms
of this Agreement confidential and will not disclose such information to any
other Person through a press release or otherwise, or mention or otherwise use
the name, insignia, symbol, trademark, trade name, or logotype of the other
Party or its Affiliates in any manner without the prior written consent 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

37

 

of the other Party in each instance (which will not be unreasonably
withheld) except as otherwise expressly permitted in this Agreement. The
restrictions imposed by this Section 5.1.6 will not prohibit either Party
from making any disclosure (a) pursuant to Section 7.12, or (b) that
is required by Applicable Law, rule, or regulation or the requirements of a
national securities exchange or another similar regulatory body including
disclosing such information in any clinical trial database maintained by or on
behalf of a Party or to (i) potential investors and advisors, (ii) attorneys
and consultants, and (iii) Affiliates and potential Sublicensees and
marketing partners, under an obligation of confidentiality. Further, the
restrictions imposed on each Party under this Section 5.1.6 are not
intended, and will not be construed, to prohibit a Party from identifying the
other Party in its internal business communications, provided that any
Confidential Information in such communications remains subject to this Section 5.1.6.

 

5.1.7.       Remedies. The Parties
acknowledge and agree that the restrictions set forth in this Section 5.1
are reasonable and necessary to protect the legitimate interests of the Parties
and that neither Party would have entered into this Agreement in the absence of
such restrictions, and that any breach or threatened breach of any provision of
this Section 5.1 will result in irreparable injury to the other Party for
which there will be no adequate remedy at law. In the event of a breach or
threatened breach of any provision of Section 5.1 by a Party, the other
Party will be authorized and entitled to obtain from any court of competent
jurisdiction injunctive relief, whether preliminary or permanent, specific
performance and an equitable accounting of all earnings, profits and other
benefits arising from such breach, which rights will be cumulative and in
addition to any other rights or remedies to which such Party may be entitled in
law or equity. The breaching Party agrees to waive any requirement that the
non-breaching Party (i) post a bond or other security as a condition for
obtaining any such relief and (ii) show irreparable harm, balancing of
harms, consideration of the public interest or inadequacy of monetary damages
as a remedy. Nothing in this Section 5.1.7 is intended, or will be
construed, to limit the Parties’ rights to equitable relief or any other remedy
for a breach of any provision of this Agreement.

 

5.2.          Restrictions. During [**], without the prior written
consent of the other Party, and [**]], neither Party nor such
Party’s Affiliates will (i) [**], (ii) [**], or (iii) at any time
prior to Regulatory Approval of the Product, [**]. Nothing in this Section 5.2
shall limit either Party’s or its Affiliates’[**], and, except as expressly
set forth in subclauses (ii) and (iii) above, [**], with respect to any [**]. For the avoidance of
doubt, if this Agreement is terminated with respect to certain countries in the
Territory, the restrictions pursuant to this Section 5.2 shall terminate
with respect to such countries.

 

5.3.          Compliance with
Law. Each Party hereby covenants and agrees to comply with all Applicable
Law applicable to its activities connected with the Development, 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

38

 

Manufacture, and Commercialization (as applicable) of Products. Without
limiting the generality of the foregoing:

 

5.3.1.       Patient
Information. Each Party agrees to abide by all laws, rules,
regulations, and orders of all applicable supranational, national, federal,
state, provincial, and local governmental entities concerning the
confidentiality or protection of patient identifiable information and/or
patients’ protected health information, as defined by any other applicable
legislation in the course of their performance under this Agreement.

 

5.3.2.       Debarment. Each Party
agrees that it will not use, in any capacity, in connection with any of its
obligations to be performed under this Agreement any individual who has been
debarred under the FD&C Act or the Generic Drug Enforcement Act or
analogous law.

 

5.4.          Nonsolicitation
of Employees. During the Term of this Agreement and for a period
of [**] thereafter,
each Party agrees that neither it nor any of its Affiliates will recruit,
solicit or induce any employee of the other Party that is involved in the
activities conducted pursuant to this Agreement to terminate his or her
employment with such other Party and become employed by or consult for such
other Party, whether or not such employee is a full-time employee of such other
Party, and whether or not such employment is pursuant to a written agreement or
is at-will. For purposes of the foregoing, “recruit”, “solicit” or “induce”
does not include (a) circumstances where an employee of one Party
initiates contact with the other Party or any of its Affiliates with regard to
possible employment, or (b) general solicitations of employment not
specifically targeted at employees of a Party or any of its Affiliates, including
responses to general advertisements. In addition, during the Term of this
Agreement and for a period of [**] thereafter, neither Party
may hire or employ any such employee of the other Party (including personnel
who were employees of such other Party within a period of [**] or less from the date of the
proposed hiring or employment) without the prior written consent of such other
Party, unless such other Party had previously terminated the employment of such
former employee.

 

5.5.          Standstill
Agreement. During [**] following the termination
or expiration of this Agreement (the “Standstill Period”), neither
Astellas nor any of its Representatives (as defined below) (each an “Astellas
Related Party”) will, in any manner, directly or indirectly:

 

5.5.1.       make, effect,
initiate, directly participate in or cause

 

(a)           any acquisition
of beneficial ownership of any securities of Ironwood or any securities of any
Affiliate of Ironwood, if, after such acquisition, the Astellas Related Parties
would beneficially own more than ten percent of the outstanding common stock of
Ironwood; or

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

39

 

(b)           any acquisition
of all or substantially all of the assets of Ironwood or of any Affiliate of
Ironwood; provided this subsection (b) will not apply to the acquisition
by the Astellas Related Parties of a license or other rights to Ironwood assets
or technology under terms negotiated by the Parties; or

 

(c)           any tender
offer, exchange offer, merger, business combination, recapitalization,
restructuring, liquidation, dissolution or extraordinary transaction involving
Ironwood or any Affiliate of Ironwood, or involving any securities or assets of
Ironwood or any securities or assets of any Affiliate of Ironwood; or

 

(d)           any “solicitation”
of “proxies” (as those terms are used in the proxy rules of the Securities
and Exchange Commission) or consents with respect to any securities of
Ironwood; or

 

5.5.2.       form, join or
participate in a Group with respect to the beneficial ownership of any
securities of Ironwood; or

 

5.5.3.       act, alone or
in concert with others, to seek to control the management, board of directors
or policies of Ironwood; or

 

5.5.4.       take any action
that might require Ironwood to make a public announcement regarding any of the
types of matters set forth in Section 5.5.1(a); or

 

5.5.5.       agree or offer
to take, or encourage or propose (publicly or otherwise) the taking of, any
action referred to in Sections 5.5.1(a), 5.5.1(b), 5.5.1(c), or 5.5.1(d); or

 

5.5.6.       assist, induce
or encourage any other person to take any action of the type referred to in Sections
5.5.1(a), 5.5.1(b), 5.5.1(c), or 5.5.1(d); or

 

5.5.7.       enter into any
discussions, negotiations, arrangement or agreement with any other person
relating to any of the foregoing; or

 

5.5.8.       request or
propose, publicly or to shareholders of Ironwood or its Affiliates, that
Ironwood or any of Ironwood’s Representatives (as defined below) amend, waive
or consider the amendment or waiver of any provision set forth in this Section 5.5.

 

Notwithstanding the foregoing, the provisions of this Section 5.5
will not apply to (i) the exercise by any of the Astellas Related Parties
of any rights available to shareholders generally pursuant to any transaction
described in this Section 5.5, provided that such Astellas Related Party
has not then either directly or as a

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

40

 

member of a Group made, effected, initiated or caused such transaction
to occur, or (ii) any activity by any of the Astellas Related Parties
after Ironwood or any other Third Party unrelated to any of the Astellas
Related Parties has made any public announcement of its intent to solicit or
engage in any transaction of the type referred to in this Section 5.5;
provided however, with respect to subpart (ii), if any of the Astellas Related
Parties or such Third Party terminates or announces its intent to terminate
such transaction and such Astellas Related Party (A) has not previously
made any public announcement of its intent to solicit or engage in any
transaction of the type referred to in this Section 5.5, or (B) in
the event that such public announcement has been made by any of the Astellas
Related Parties, such Astellas Related Party has terminated or announced its
intent to terminate such transaction, then the provisions of this Section 5.5
will again be applicable.

 

For purposes of this Section, a “Representative” of a Party will
be deemed to include each person or entity that is or becomes (i) an
Affiliate of such Party, or (ii) an officer, director, employee, Astellas,
attorney, advisor, accountant, agent or representative of such Party or of any
of such Party’s Affiliates, provided such person is acting on behalf of such
Party or such Party’s Affiliate. “Group” means two or more persons
acting as a partnership, limited partnership, syndicate or other group for the
purpose of acquiring, holding or disposing of securities of Ironwood.

 

5.6.          Export
Restrictions. Astellas will not knowingly sell, export, or
distribute, directly or indirectly, any Product to any location outside of the
Territory or take any action that Astellas reasonably believes will result in
such export. Ironwood will not knowingly sell, export, or distribute, or permit
any Third Party to do any of the foregoing, directly or indirectly (including
through Forest), any Product or the Licensed Compound to any location within
the Territory or take any action that Ironwood reasonably believes will result
in any of the foregoing (except for the supply of Licensed Compound and Product
to Astellas pursuant to the terms and conditions of this Agreement and the
Manufacturing and Supply Agreement).

 

5.7.          Communications
with other Linaclotide Partners. Except and to the extent
required by this Agreement or otherwise with the prior consent of Ironwood,
Astellas will not communicate with any other Third Parties that have licensed
Ironwood’s rights to the Licensed Compound about the subject matter of this
Agreement or any activities under this Agreement or the license agreement
between Ironwood and such Third Parties. Ironwood shall be responsible under
this Agreement for the performance of any acts contemplated in this Agreement
to be undertaken by Forest and/or Almirall and Ironwood shall ensure compliance
by Forest and/or Almirall with any corresponding obligations of Forest and/or
Almirall under the Forest Agreement and the Almirall Agreement, as applicable.

 

6.                                      REPRESENTATIONS
AND WARRANTIES

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

41

 

6.1.          Representations
and Warranties of Each Party. As of the Effective Date,
each of Astellas and Ironwood hereby represents and warrants to the other Party
hereto as follows:

 

(a)           it is a
corporation or entity duly organized and validly existing under the laws of the
state or other jurisdiction of its incorporation or formation;

 

(b)           the execution,
delivery and performance of this Agreement by such Party has been duly
authorized by all requisite corporate action and does not require any
shareholder action or approval;

 

(c)           it has the
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder;

 

(d)           the execution,
delivery and performance by such Party of this Agreement and its compliance
with the terms and provisions does not and may not conflict with or result in a
breach of any of the terms and provisions of or constitute a default under (i) a
loan agreement, guaranty, financing agreement, agreement affecting a product or
other agreement or instrument binding or affecting it or its property; (ii) the
provisions of its charter or operative documents or bylaws; (iii) any
order, writ, injunction or decree of any court or governmental authority
entered against it or by which any of its property is bound; or (iv) any
other agreement with any Third Party; and

 

(e)           it has the full
right, power and authority to grant all of the right, title and interest in the
licenses granted to the other Party under this Agreement.

 

6.2.          Additional
Representations and Warranties of Ironwood. Ironwood hereby represents
and warrants to Astellas that as of the Effective Date (and, only as expressly
provided in subclause (i) below, thereafter):

 

(a)           Ironwood has
the sole right, title and interest in and to the Ironwood Patent Rights listed
in Schedule 6.2(a) to this Agreement and Ironwood has the rights
with respect to all Ironwood Technology that it purports to grant to Astellas
hereunder;

 

(b)           Ironwood is not
subject to any agreement with a Third Party that includes a royalty or similar
payment obligation to, or other restriction or limitation in favor of, such
Third Party (including, for this purpose, to current or former officers,
directors, employees, consultants or personnel of Ironwood or any predecessor)
with respect to its rights to practice the 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

42

 

Ironwood Technology in the Territory and its right and ability to
perform its obligations under this Agreement;

 

(c)           No Ironwood
Patent Rights are subject to, or were developed pursuant to any funding
agreement with any government or government agency;

 

(d)           Ironwood is not
in breach of any material provisions of any agreements with Third Parties
relating to the Ironwood Patent Rights and the execution of this Agreement and
Ironwood’s performance of its obligations hereunder and the consummation of the
transactions contemplated herein will not result any such breach;

 

(e)           Ironwood has
not received any written or oral claim of ownership, inventorship or patent
infringement from any Third Party (including without limitation, by current or
former officers, directors, employees, consultants, or personnel of Ironwood or
any predecessor) with respect to the Ironwood Technology, and Ironwood is not
aware of any reasonable basis for any such claim;

 

(f)            There are no
challenges, oppositions, interferences, or other proceedings pending or, to
Ironwood’s knowledge, threatened with respect to the Ironwood Technology;

 

(g)           Ironwood has no
knowledge of any Third Party Patent Rights in the Territory that would be
infringed by the Development or Commercialization of Products in the Territory;

 

(h)           Ironwood has
not brought any claim against any Third Party relating to the infringement,
misappropriation, or other violation of any Ironwood Technology; and

 

(i)            To Ironwood’s
knowledge all data, study results, and other information relating to the
Licensed Compound and the Product presented by Ironwood to Astellas prior to
the Effective Date and during the Term of the Agreement is, as of the time such
data, study results, and other information were or are presented to Astellas,
complete in all material respects and accurate.

 

6.3.          Additional
Representations and Warranties of Astellas. Astellas hereby represents
and warrants to Ironwood that as of the Effective Date, except as set forth on Schedule
6.3, Astellas has no products currently under Phase II or later development
or commercialization for diagnostic, prophylactic or therapeutic uses in IBS-C,
CC or OIC indications.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

43

 

6.4.          Representation
by Legal Counsel. Each Party hereto represents that it has been
represented by legal counsel in connection with this Agreement and acknowledges
that it has participated in the drafting. In interpreting and applying the
terms and provisions of this Agreement, the Parties agree that no presumption
will exist or be implied against the Party which drafted such terms and
provisions.

 

6.5.          No Inconsistent
Agreements. Neither Party has in effect and after the
Effective Date neither Party may enter into any oral or written agreement or
arrangement that would be inconsistent with its obligations under this Agreement
or limit the ability of either Party to grant the licenses set forth in Section 2
of this Agreement.

 

6.6.          Disclaimer. THE FOREGOING
WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
NONINFRINGEMENT, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR ANY IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE ALL OF WHICH ARE HEREBY
SPECIFICALLY EXCLUDED AND DISCLAIMED. EACH PARTY HEREBY DISCLAIMS (WITHOUT
LIMITING ANY EXPRESS WARRANTIES HEREUNDER) ANY REPRESENTATION OR WARRANTY THAT
THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY PRODUCT UNDER THIS
AGREEMENT WILL BE SUCCESSFUL. Nothing in this Section 6.6 shall be deemed
to disclaim or otherwise affect any warranties, rights, or remedies under the
Manufacturing and Supply Agreement.

 

7.                                      INTELLECTUAL
PROPERTY

 

7.1.          Disclosure.  During the Term, the Parties will promptly
disclose to one another all Collaboration Know-How (whether patentable or not).

 

7.2.          Ownership.

 

7.2.1.       Ownership of
Technology. Determinations as to which Party has invented any
Patent Rights or Know-How will be made in accordance with the standards of
inventorship under U.S. patent law. Subject to the license grants under Section 2
of this  Agreement, as between the
Parties, Ironwood will own all Ironwood Technology and Astellas will own all
Astellas Technology.  Each Party
will own an undivided one-half interest in and to the Joint Technology. In the
event inventorship and ownership of any Collaboration Technology cannot be
resolved by the Parties with advice of their respective intellectual property
counsel, such dispute will be resolved through arbitration pursuant to Section 10.1.3,
provided such arbitration panel will include at least a single arbitrator who
is a specialist in U.S. chemical and pharmaceutical patent law and in chemical
and pharmaceutical patents.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

44

 

7.2.2.       Employee
Assignment. To the extent permissible under Applicable Law,
each Party will cause each employee and contractor conducting work on such
Party’s behalf under this Agreement to be bound by an obligation that (i) compels
prompt disclosure to the Party of Technology licensed by such Party to the
other Party hereunder, as applicable, conceived or reduced to practice by such
employee or contractor during any performance under this Agreement, (ii) automatically
assigns to the Party all right, title and interest in and to all such
Technology, and (iii) obligates such persons to similar obligations of
confidentiality as set forth in this Agreement. Each Party will require each
employee and contractor conducting work on such Party’s behalf under this
Agreement to maintain records in sufficient detail and in a good scientific
manner appropriate for patent purposes to properly reflect all work done.

 

7.3.          Intellectual
Property Working Group.  The
Parties will promptly establish an intellectual property working group
comprised of at least one senior patent attorney from each Party, together with
research and development personnel and such other representatives of the
Parties as the Parties may determine to be appropriate from time to time, to
discuss patent issues arising under this Agreement.

 

7.4.          Prosecution and
Maintenance of Patent Rights.

 

7.4.1.       Patent
Prosecution and Maintenance.

 

(a)           Each of
Ironwood and Astellas will be primarily responsible, at its own expense, for
the preparation, filing, prosecution and maintenance of the Ironwood Patent
Rights and the Astellas Patent Rights, respectively.

 

(b)           Subject to the
remaining provisions of this Section 7.4.1, each Party will provide the
other with advance copies of, and a reasonable opportunity to comment upon,
proposed patent filings, related prosecution strategies and proposed
correspondence with patent offices or other Third Parties relating to Ironwood Patent
Rights in the Territory, in the case of Ironwood, and Astellas Patent Rights,
in the case of Astellas (collectively, “Patent Filing Materials”), and
will consider comments received in good faith and will not unreasonably reject
such comments.

 

(c)           Astellas
acknowledges that Ironwood may share advanced copies of Patent Filing Materials
relating to the Astellas Sublicensable Patent Rights with Forest to the extent
required under the Forest Agreement, provided that Forest is under an
obligation to keep such Patent Filing Materials in confidence. However,
Ironwood shall not provide Forest advance copies of Patent Filing Materials for
Astellas Patent Rights other than the Astellas Sublicensable Patent Rights.
Except as expressly permitted in the foregoing, Ironwood shall not disclose any
non-public 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

45

 

Patent Filing Materials for Astellas Patent Rights to any Third Party
(including Almirall).

 

(d)           Ironwood will
not be obligated to provide Astellas with advance copies of Patent Filing
Materials for (x) Forest Patent Rights other than Patent Rights that are “Joint
Patent Rights” as defined in the Forest Agreement or (y) Almirall Patent
Rights, in each of clause (x) and (y), that are included in the Ironwood
Patent Rights.

 

(e)           Patent Filing
Materials which relate to the validity of Collaboration Patent Rights, to the
extent such Collaboration Patent Rights are necessary or useful in the
Territory to Manufacture, Develop or Commercialize a Collaboration Compound or
Product in the Territory, that are made during the course of an action before a
national or regional patent office in the Territory or national court in the
Territory will require the mutual approval of both Parties.

 

(f)            A Party
providing comments in accordance with this Section will provide such
comments expeditiously and in any event in reasonably sufficient time to meet
any filing deadline communicated to it by the other Party. The Party receiving
any Patent Filing Materials will maintain such information in confidence,
except for patent applications that have been published and official
correspondence that is publicly available.

 

7.4.2.       Joint Patent
Rights. Absent an agreement by the intellectual property working group to the
contrary, Astellas will be responsible for such activities in the Territory,
with the costs of such activities to be shared equally by the Parties, and
Ironwood will be responsible for such activities outside the Territory, with
the costs of such activities to be borne by Ironwood. Irrespective of which
Party is responsible for filing, prosecuting and maintaining Joint Patent
Rights, Astellas and Ironwood will equally share the costs for filing,
prosecuting and maintaining Joint Patent Rights in the Territory.

 

7.4.3.       Reversion
Rights. If a Party decides not to file, prosecute or maintain as applicable,
any Ironwood Patent Right, Astellas Patent Right that is a Collaboration Patent
Right, or Joint Patent Right, to the extent such Patent Right is licensed to
the other Party hereunder, it will give the other Party reasonable notice to
that effect sufficiently in advance of any deadline for any filing with respect
to such Patent Right to permit the other Party to carry out such activity.
After such notice, the other Party may, subject to the Forest Agreement and the
Almirall Agreement, file, prosecute and maintain the Patent Right, and perform
such acts as may be reasonably necessary for the other Party to file, prosecute
or maintain such Patent Right, at its sole cost and expense. If such other
Party does so elect, then the Party which has elected not to pursue such
filing, prosecution or 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

46

 

maintenance will provide such cooperation to the other Party, including
the executing and filing of appropriate instruments, as may be reasonably
requested, to facilitate the transition of such prosecution and maintenance
activities.

 

7.4.4.       Patent Term
Extensions. The Parties agree to cooperate in the selection of
the appropriate Ironwood Patent Rights, Astellas Patent Rights or Joint Patent
Rights as listed in the patent information section of the Product NDA for
filing to obtain a patent term extension pursuant to all applicable laws and
regulations (“Patent Term Extension”), including without limitation
supplementary protection certificates and any other extensions that are now or
become available in the future wherever applicable to Patent Rights that are
applicable to the Product.

 

7.5.          Trademarks.

 

7.5.1.       Product
Trademark. All Products will be sold in the Territory under
the Trademarks selected by Astellas in its sole discretion. The Parties
acknowledge and agree that trademarks developed or used in connection with the
Forest Agreement and the Almirall Agreement may not be used by the Parties in
the Territory unless agreed to by Ironwood and Forest, or Ironwood and
Almirall, as applicable, in writing. If so requested by Astellas, Ironwood
shall not unreasonably withhold such consent, and shall encourage Forest and
Almirall to grant such consent. Astellas shall solely own such Trademarks and
is responsible for the filing, prosecution and maintenance of such Trademarks
in the applicable country or countries within the Territory. Ironwood may
reference Astellas and the Product name and display the Trademarks and logos
embodying the Trademarks, as provided by Astellas ,on its website and similar
promotional material for the purpose of general product and company promotion,
but not, in any event, for the purpose of Commercializing the Product. Other
than as set forth in the foregoing sentence, Ironwood shall have no rights to
use the Trademarks except to the extent expressly agreed by Astellas in
writing.

 

7.5.2.       Trademark Use. The manner of
use of the Trademarks will be determined by Astellas in its reasonable
discretion. Neither Party will use a trademark confusingly similar to one of
the Trademarks with any of its other products or, except as otherwise provided
herein.

 

7.5.3.       Party Name on
Product Promotional Material. Subject to Applicable Law,
all Product promotional material in the Territory will include Ironwood’s
trade name, trademark, and other logos reasonably requested by Ironwood (the “Ironwood
House Marks”) in a manner that has equal prominence with Astellas’s marks,
provide that the Ironwood House Marks and such use thereof do not infringe or
otherwise violate any rights of any Third Party in the Territory. To effectuate
the purposes of this Agreement, Ironwood hereby grants to Astellas a royalty
free license, to use and display the Ironwood House Marks in connection 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

47

 

with the Commercialization of a Product in the Field in accordance with
this Agreement. All goodwill arising from the use of such Ironwood House Marks
will inure to the benefit of Ironwood. All goodwill arising from the use of the
Trademarks will inure to the benefit of Astellas.

 

7.6.          Enforcement of
Technology Rights.

 

7.6.1.       Notice. If Ironwood
or Astellas becomes aware that any Ironwood Technology, Astellas Technology, or
Collaboration Technology (including Joint Technology) is infringed, or
misappropriated by a Third Party, in the Territory in the Field or is subject
to a declaratory judgment action arising from such infringement (any of the
foregoing, being an “Infringement”), Ironwood or Astellas, as the case
may be, will promptly notify the other Party.

 

7.6.2.       Enforcement. Astellas has
the first right (but not the obligation) to enforce any Ironwood Technology,
Astellas Technology, and Collaboration Technology (including Joint Technology),
to the extent either Party has the legal power to enforce such Technology (“Subject
Technology”), against an Infringement in the Territory, provided that
Astellas may not admit the invalidity or unenforceability of any Ironwood
Technology without first consulting with Ironwood and obtaining Ironwood’s
prior written consent. If Astellas exercises its right to enforce any Subject
Technology against an infringer pursuant to this Section 7.6.2, (i) Ironwood
shall reasonably cooperate with Astellas with respect to such enforcement,
including by joining any lawsuit or proceeding as a party where such joinder is
required under applicable law to enforce the Subject Technology, and (ii) Astellas
shall pay all expenses incurred in connection with such enforcement, including
reasonable expenses incurred by Ironwood in connection with its cooperation in
such enforcement. In the event that Astellas declines to enforce the Subject
Technology against an Infringement within 90 days (or such shorter period as
may be required to comply with legal or regulatory deadlines which relate to
such Infringement) of becoming aware thereof, Ironwood will have the right to
so enforce the Subject Technology at its own expense. Irrespective of which
Party controls an action pursuant to this Section, the Parties will collaborate
with respect to such action and the comments of the other Party will not be
unreasonably rejected with respect to strategic decisions and their
implementation with respect to such action. In furtherance of the foregoing,
the Party responsible for any such action will keep the other Party reasonably
informed, in person or by telephone, regarding the status and costs of such
action or proceeding prior to and during any such enforcement. Neither Party
will settle any such action without the written consent of the other Party,
such consent not to be unreasonably withheld. Neither Party will incur any
liability to the other as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding any such Subject
Technology invalid, not infringed, not misappropriated or unenforceable.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

48

 

7.6.3.       Costs and
Recoveries. Any proceeds of any awards, judgments or
settlements obtained in connection with an Infringement in the Territory shall [**].  If Astellas exercises its first right to
enforce the Subject Technology against such Infringement, as set forth in Section 7.6.2,
then [**], for purposes
of this Agreement. If Astellas declines to enforce the Subject Technology
against such Infringement, and Ironwood exercises its rights and enforces the
Subject Technology against such Infringement, as set forth in Section 7.6.2,
then [**].

 

7.7.          Third Party
Claims.

 

7.7.1.       Third Party
Claims - Course of Action. If the Development, Commercialization or
Manufacture of a Product under this Agreement is alleged by a Third Party to
infringe a Third Party’s patent right(s) or misappropriate a Third Party’s
trade secret, the Party becoming aware of such allegation will promptly notify
the other Party thereof, in writing, reasonably detailing the claim.

 

7.7.2.       Third Party
Suit. If a Third Party sues a Party (the “Sued Party”) alleging that
the Sued Party’s or the Sued Party’s Affiliates’ or Sublicensees’, Development,
Manufacture or Commercialization of the Licensed Compound or the Product
infringes or will infringe said Third Party’s patent right(s) or
misappropriates said Third Party’s trade secret, then upon the Sued Party’s
request and in connection with the Sued Party’s defense of any such Third Party
suit, the other Party will provide reasonable assistance to the Sued Party for
such defense and will join such suit if deemed a necessary party. The Sued
Party will keep the other Party, if such other Party has not joined in such
suit, reasonably informed on a quarterly basis, in person or by telephone,
prior to and during the pendency of any such suit. The Sued Party will not
admit the invalidity of any Patent Right licensed to a Party hereunder, nor
settle any such suit, without written consent of the other Party, such consent
not to be unreasonably withheld. Subject to the Parties’ respective indemnity
obligations pursuant to Section 9.1 and 9.2, and without limiting anything
in Section 4.3.4, all litigation expenses, including settlement costs,
royalties paid in settlement of any such suit, and the payment of any damages
to the Third Party, will be paid by the Sued Party. Notwithstanding the
foregoing, if the Sued Party seeks an indemnification pursuant to Section 9.1
or Section 9.2, then the provisions of such Section 9.1 or Section 9.2,
and the provisions of Section 9.3 will apply and will control and will
supersede this Section 7.7.2. to the extent it is inconsistent with Section 9.1,
Section 9.2, or Section 9.3.

 

7.8.          Patent Marking. Each Party
agrees to mark and have its Affiliates and all Sublicensees mark all Products
(or their containers or labels) sold pursuant to this Agreement in accordance
with and as required by the applicable statutes or regulations in the country
or countries of manufacture and sale thereof.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

49

 

7.9.          Patent
Certifications. Each Party will immediately give written notice to
the other of any certification of which it becomes aware has been filed
pursuant to any foreign equivalent to 21 U.S.C. § 355(b)(2)(A) or
§ 355(j)(2)(A)(vii) (or any amendment or successor statute thereto)
claiming that any of its Patent Rights licensed to the other Party hereunder
are invalid or that infringement will not arise from the manufacture, use or
sale in the Territory of such Third Party product by a Third Party. If Astellas decides not to bring infringement proceedings against
the Third Party making such a certification with respect to any Product,
Astellas will give notice to Ironwood of its decision not to bring suit within
ten Business Days after receipt of notice of such certification (or, if the
time period permitted by law is less than 20 Business Days, within half of the
time period permitted by law for Astellas to commence such action) and Ironwood
may then, but will not be obligated to, bring suit against the Third Party that
filed the certification. Any suit by either Party may be in the name of either
or both Parties, as may be required by law. For this purpose, the Party not
bringing suit will execute such legal papers necessary for the prosecution of
such suit as may be reasonably requested by the Party bringing suit.

 

7.10.        No Implied
Licenses.  Except
as expressly set forth in this Agreement, no right or license under any
Ironwood Technology or Astellas Technology (or any other Astellas Technology)
is granted or will be granted by implication as a result of the respective
rights of the Parties under this Agreement. All such rights or licenses are or
will be granted only as expressly provided in this Agreement.

 

7.11.        [**]. In furtherance of this
Agreement, it is expected that Astellas and Ironwood will, from time to time, [**]. Such disclosures are made
with the understanding that they will [**].

 

7.12.        Recordation of
License. The Parties agree and acknowledge that notwithstanding anything in Section 5.1.6
Astellas shall have the right to record or file this Agreement or, to the
extent permitted, a summary of the terms of this Agreement disclosing the least
amount of the terms of this Agreement as is necessary to effect such recordation
or filing with any patent office or similar authority in the Territory if
Astellas reasonably determines that such recordation is beneficial or required
to give effect to or protect its rights under this Agreement. Ironwood shall
provide all such cooperation and assistance, and perform all such acts and
execute and deliver all such documents, as Astellas may reasonably request in
connection with such recordation or filing.

 

8.                                      TERM AND
TERMINATION

 

8.1.          Term. The term of
this Agreement will commence on the Effective Date and, unless earlier
terminated as provided in this Section 8, will continue in full force and
effect until the later of (i) the last-to-expire Valid Claim in the
Ironwood Patent Rights in the Territory that covers the Licensed Compound has
expired or was invalidated, and (ii) Astellas is no longer Developing or
Commercializing any Products in the Territory (the 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

50

 

“Term”), following which all
licenses granted by each Party to the other pursuant to Section 2 of this
Agreement will become fully paid up, irrevocable, perpetual licenses.

 

8.2.          Termination for
Cause.

 

8.2.1.       Termination for
Material Breach by Ironwood.

 

(a)           Fundamental
Breach. This Agreement may be terminated by Ironwood, with the consequences
set forth in Section 8.6.1, by written notice by Ironwood, in the event of
a material breach by Astellas of its material obligations hereunder relating to
the Development and Commercialization of Products (A) which material
breach (x) (i) substantially adversely impacts the Development and
Commercialization of Products in the Territory in a manner that essentially
precludes successful Development and Commercialization of Products in the
Territory as contemplated in this Agreement, and (ii) is of a nature and
severity so that other remedies at law or in equity would be inadequate, or (y) has
or, unless abated will have, a material adverse effect on the successful
development and commercialization of the Licensed Compound or Product outside
of the Territory [**], as applicable, and (B) which material breach remains uncured for
[**] measured from
the date written notice of such breach is given to Astellas, which notice will
specify the nature of the breach and demand its cure; provided, however, that
if such breach is not capable of being cured within the stated period and
Astellas uses Commercially Reasonable Efforts to cure such breach during such
period and presents a reasonable remediation plan for such breach, this
Agreement may not be terminated by Ironwood and the cure period will be
extended for such period provided in the remediation plan as long as Astellas
continues to use Commercially Reasonable Efforts to pursue the cure as provided
in such remediation plan; and provided further that if Astellas disputes the
alleged breach in good faith, such cure period shall be tolled until such
dispute is finally resolved in favor of Ironwood.

 

(b)           Other Material
Breach. This Agreement may be terminated by Ironwood, with the consequences
set forth in Section 8.6.2, by written notice by Ironwood if Astellas
materially breaches a material term of this Agreement, which breach remains
uncured for [**] measured from the date written notice of such breach is given to
Astellas, which notice will specify the nature of the breach and demand its
cure; provided, however, that if such breach is not capable of being cured
within the stated period and Astellas uses Commercially Reasonable Efforts to
cure such breach during such period and presents a mutually agreeable
remediation plan for such breach, this Agreement will not terminate and the
cure period will be extended for such period provided in the remediation plan
as long as 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

51

 

Astellas continues to use Commercially Reasonable Efforts to pursue the
cure as provided in such remediation plan; and provided further that if
Astellas disputes the alleged breach in good faith, such cure period shall be
tolled until such dispute is finally resolved in favor of Ironwood.

 

(c)           In the event of
a material breach under Section 8.2.1(a) or Section 8.2.1(b),
Ironwood shall only be entitled to terminate this Agreement in accordance with
such Sections at Ironwood’s election, (i) in its entirety or only with
respect to Japan if such breach relates to and affects Japan, or (ii) only
for the affected country or countries in all other cases.

 

8.2.2.       Termination for
Material Breach by Astellas. This Agreement may be
terminated by written notice by Astellas if Ironwood materially breaches a
material term of this Agreement, which breach remains uncured for [**] measured from the date
written notice of such breach is given to Ironwood, which notice will specify
the nature of the breach and demand its cure; provided that if Ironwood
disputes the alleged breach in good faith, such cure period shall be tolled
until such dispute is finally resolved in favor of Astellas.  For the avoidance of doubt, (i) nothing
in the foregoing shall limit any other rights or remedies Astellas may have on
account of any breach by Ironwood either in addition to or in lieu of
termination, including specific performance, injunctive relief, damages, and
other equitable or legal remedies, and any rights or remedies pursuant to this
Agreement, and (ii) nothing herein shall require Astellas to terminate
this Agreement.

 

8.2.3.       Non-Exclusive
Remedy. A termination by either Party in accordance with this Section 8.2
shall be a non-exclusive remedy and shall not preclude the terminating Party
from seeking any other legal or equitable remedy, subject to the limitations
set forth in Section 9.5 and the other applicable terms and conditions of
this Agreement.

 

8.3.          Bankruptcy. This
Agreement may be terminated by written notice by either Party at any time
during the Term of this Agreement if the other Party will file in any court or
agency, pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of that Party or of
its assets, or if the other Party proposes a written agreement of composition
or extension of its debts, or if the other Party will be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition is not dismissed within 60 days after the filing thereof, or if the
other Party proposes or is a Party to any dissolution or liquidation, or if the
other Party makes an assignment for the benefit of its creditors (each of the
foregoing an “Insolvency Event”).

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

52

 

8.4.          Termination for
Convenience. Prior to its expiration, this Agreement may be
terminated (a) in its entirety, or (b) with respect to any country
for which Ironwood has not consented to a sublicense pursuant to Section 2.6,
at any time by Astellas effective upon at least [**] prior written notice to
Ironwood for any reason. If Astellas terminates for a material safety issue,
Astellas will provide all assistance reasonably requested by Ironwood for at
least [**] after the
effective date of such termination to identify, further characterize, and fully
document such safety issue, and will provide such other assistance as may be
reasonably useful or necessary for Ironwood to continue with the development or
commercialization of the Licensed Compound. Notwithstanding the foregoing
sentence, Astellas will not be required to undertake any Development,
Manufacturing, or Commercialization activities after providing notice of
termination for a material safety issue under this Section 8.4.

 

8.5.          Change of
Control.

 

8.5.1.       Change of
Control Notice. Astellas will notify Ironwood in writing,
referencing this Section 8.5.1 of this Agreement, immediately upon any
Change of Control of Astellas, and will provide such notice where possible at
least 60 days prior to the Change of Control.

 

8.5.2.       Consequences of
a Change of Control.

 

(a)           In the event
that Astellas is subject to a Change of Control which could reasonably be
expected to lead to an Impairment (as defined below), Astellas will notify
Ironwood at least [**] prior to the closing of such transaction, and Ironwood may elect, in
its sole discretion, to (i) continue this Agreement in accordance with its
terms, (ii) terminate this Agreement on [**] notice, during which period
this Agreement would continue in effect in accordance with its terms, such
notice to be delivered within [**] after the [**] is determined pursuant to
this Section 8.5.2(a). Within [**] following Ironwood’s
receipt of notice from Astellas of a Change of Control that could reasonably be
expected to lead to an Impairment, Ironwood will provide notice to Astellas
requesting a determination of the [**] upon a termination of this
Agreement pursuant to this Section 8.5.2(a), and the failure to so request
[**] will be deemed
the election to continue this Agreement in accordance with its terms. Such
determination must be made by the Parties in good faith, and if such
determination is not made within [**] of the request, then as
determined by [**]. In connection with such termination, [**].

 

(b)           For purposes of
this Section 8.5.2, an “Impairment” will only be deemed to occur if
(a) it is reasonably anticipated that the entity resulting from such
Change of Control will be unable to perform its obligations in 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

53

 

accordance with the terms of this Agreement, [**], (b) the product line
of the entity that survives following the Change of Control includes [**].

 

8.6.          Effects of
Termination.

 

8.6.1.       If this
Agreement is terminated by Ironwood under Sections 8.2.1(a), 8.3 or 8.5, or by
Astellas under Section 8.4, then the following provisions will be
effective, but only for the country or countries for which such termination is
effective (the “Relevant Countries”), as applicable, upon such
termination (subject to, in the case of a termination pursuant to Section 8.5,
any payments due under Section 8.5 having been made):

 

(a)           All licenses
granted by Ironwood to Astellas hereunder will automatically terminate for the
Relevant Countries.

 

(b)           All licenses granted by Astellas to
Ironwood hereunder will become fully paid up, irrevocable, perpetual,
royalty-free licenses for the Relevant Countries in the event of a termination
pursuant to Sections 8.2.1(a), 8.3, or 8.4.  In the event of a termination pursuant to
Sections 8.2.1(b) or 8.5, such licenses shall be subject to [**].

 

(c)           Astellas will (i) transfer
to Ironwood all Regulatory Submissions and Regulatory Approvals in the Relevant
Countries pertaining to the Licensed Compound or Product Controlled by
Astellas, provided that Astellas shall retain all rights relating thereto
reasonably necessary for Astellas to continue to exercise its rights hereunder
and Manufacture, Develop, and Commercialize the Product in all countries in the
Territory that are not Relevant Countries, and (ii) assign to Ironwood all
right, title, and interest in and to all of Astellas’s interest in any
Trademark (including, without limitation, the goodwill symbolized by such
Trademark) exclusively used to brand the Product in the Relevant Countries.

 

(d)           Astellas will
grant to Ironwood an exclusive and fully sublicensable (only to an Ironwood
licensee in connection with a license of rights in the Licensed Compound or
Product) license, in the Relevant Countries, under the Astellas Technology and
Astellas’s interest in the Joint Technology to Develop and Commercialize the
Licensed Compound or the Product in an Oral Formulation in the Field. For the
avoidance of doubt, the license in this Section 8.6.1(d) will not
restrict Astellas from, and Astellas expressly retains all rights required for,
conducting any research inside or outside of the Field anywhere in the world.
The license pursuant to this Section 8.6.1(d) shall be fully paid up,
irrevocable, perpetual, and royalty-free in the event of a termination pursuant to Sections 8.2.1(a), 8.3,
or 8.4.  In the event of a termination pursuant
to or Sections 8.2.1(b) or 8.5, such licenses shall be subject to [**].

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

54

 

(e)           Astellas will
offer for sale to Ironwood all Development Material, Licensed Compound, and
Product that it has in inventory at the time of such termination and that
Astellas can or will not use in any countries in the Territory that are not
Relevant Countries, which Ironwood may purchase from Astellas at the Transfer
Price plus, for any finished Product, Astellas’s cost of finishing such
Product,

 

(f)            If termination
is effective for the entire Territory, Astellas will furnish Ironwood with
reasonable cooperation to assure a smooth transition of any clinical or other
studies in progress related to the Licensed Compound or Product which Ironwood
determines to continue in compliance with Applicable Law and ethical guidelines
applicable to the transfer or termination of any such studies.

 

(g)           For the
avoidance of doubt, until termination is effective, both Parties will continue
to perform their obligations under this Agreement.

 

8.6.2.       If this Agreement
is terminated by Ironwood under Section 8.2.1(b), then the provisions of Section 8.6.1(a) through
8.6.1(g) will apply in connection with such termination, subject to
Ironwood [**].

 

8.6.3.       If Astellas
terminates this Agreement pursuant to Sections 8.2.2 or 8.3, all licenses
granted by Ironwood to Astellas, and all licenses granted by Astellas to
Ironwood (together with all sublicenses granted by Ironwood pursuant to such
licenses), will terminate and neither Party will have any further liability to
the other except to the extent of provisions which survive the termination of
this Agreement by their respective terms and obligations accrued but remaining
outstanding as of the effectiveness of termination.

 

8.6.4.       Notwithstanding
anything to the contrary set forth in this Agreement but subject to the
limitations set forth in Section 9.5 and the other applicable terms and
conditions of this Agreement, termination pursuant to this Agreement on account
of a default will not be deemed to relieve a defaulting party from any
liability under this Agreement on account of such default.

 

8.7.          Survival of
Certain Obligations. Survival. The following Sections of this
Agreement will, to the extent applicable, survive expiration or termination and
will continue in full force and effect: 1 (Definitions), 2.3 (Joint
Technology), 2.9 (No Other Rights), 4.5 (Records and Audits) (for a period of
one year from termination or expiration), 4.8 (Confidentiality), 4.10 [**], 5.1 (Confidentiality), 5.2
(Restrictions) (for [**] after termination, in accordance with the terms of such Section), 5.4
(Nonsolicitation of Employees) (for [**] after termination, in
accordance with the terms of such Section), 5.5 (Standstill Agreement) (for
three years after termination, in accordance with the terms of such Section),
6.6 (Disclaimer), 7.2.1 (Ownership of Technology), 7.10 (No Implied Licenses),
7.11 [**], 8.7
(Survival), 8.5.2 (Consequences of a Change of Control), 8.6 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

55

 

(Effects of Termination), 8.7 (Survival of Certain Obligations), 9.1
through 9.3 (Indemnification, Procedure) (solely with respect to claims
concerning events prior to termination), 9.5 (Liability Limitations), and 10
(Miscellaneous).  In addition, expiration
or termination of this Agreement will not relieve the Parties of any obligation
accruing before such expiration or termination. Any expiration or early
termination of this Agreement will be without prejudice to the rights of either
Party against the other accrued or accruing under this Agreement before
termination.  Notwithstanding anything to
the contrary set forth in this Agreement but subject to the limitations set
forth in Section 9.5 and the other applicable terms and conditions of this
Agreement, termination pursuant to this Agreement on account of a default will
not be deemed to relieve a defaulting party from any liability under this
Agreement on account of such default.

 

9.                                      PRODUCT
LIABILITY, INDEMNIFICATION, AND INSURANCE

 

9.1.          Indemnification
by Ironwood. Ironwood will indemnify, defend and hold harmless
Astellas, its Affiliates, Sublicensees, distributors, and each of its and their
respective employees, officers, directors agents (each, a “Astellas
Indemnified Party”) from and against any and all losses, damages,
liabilities, settlements, penalties, fines, and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) (collectively, “Liability”)
that the Astellas Indemnified Party is required to pay to one or more Third
Parties to the extent resulting from or arising out of (i) any Ironwood
representation or warranty set forth in this Agreement being untrue in any
material respect, (ii) any material breach by Ironwood of any of its
covenants or obligations hereunder, except to the extent caused by the
negligence or willful misconduct of Astellas or any Astellas Indemnified Party,
or by breach of this Agreement by Astellas, (iii) any recall or withdrawal
of the Product in the Field in the Territory, to the extent attributable to
acts of Ironwood, and (iv) any use of the Ironwood House Marks in
accordance with this Agreement. Additionally, Ironwood will [**]. As used in this Section “Final
Award” means (i) any damages and other amounts awarded by a court of
competent jurisdiction issued in a final, non-appealable order, and will also
include (ii) the reasonable attorney’s fees and expenses incurred in
obtaining the judgment or in connection with such settlement.  For the avoidance of doubt, the Parties agree
that any amounts required to be paid pursuant to a settlement in connection
with an [**]. The foregoing
sentence shall not limit Ironwood’s obligations under this Section 9.1
with respect to other settlements.

 

9.2.          Indemnification
by Astellas. Astellas will indemnify, defend and hold harmless
Ironwood, its Affiliates, sublicensees, distributors and each of its and their
respective employees, officers, directors and agents (each, an “Ironwood
Indemnified Party”) from and against any and all Liabilities that the
Ironwood Indemnified Party is required to pay to one or more Third Parties, and
all reasonable attorney’s fees and expenses incurred by an Ironwood Indemnified
Party in connection therewith, to the extent resulting from or arising out of (i) any
Astellas representation or warranty set forth in this Agreement being untrue in
any material respect, (ii) any material breach by Astellas of any of its
covenants or obligations hereunder, and (iii) the Development of the
Product by Astellas hereunder 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

56

 

or the Commercialization of the Product by Astellas in the Field in the
Territory hereunder, except to the extent caused by (A) any material breach
of Ironwood of any of its covenants or obligations hereunder or any failure of
Ironwood to supply the Licensed Compound in accordance with this Agreement and
the Manufacturing and Supply Agreement, or (B) the infringement of any
Technology rights of Third Party related to the use of the Licensed Compound in
the Product; or (iv) any recall or withdrawal of the Product in the Field
in the Territory, to the extent attributable to acts of Astellas; except in
each case, to the extent caused by the negligence or willful misconduct of
Ironwood or any Ironwood Indemnified Party, or by breach of this Agreement by
Ironwood.

 

9.3.          Procedure. Each Party
will notify the other in the event it becomes aware of a claim for which
indemnification may be sought hereunder or for which Liability is shared
pursuant to this Section 9. In case any proceeding (including any
governmental investigation) is instituted involving any Party in respect of
which indemnity may be sought pursuant to this Section 9, such Party (the “Indemnified
Party”) will promptly notify the other Party (the “Indemnifying Party”)
in writing and the Indemnifying Party and Indemnified Party will meet to
discuss how to respond to any claims that are the subject matter of such
proceeding. The Indemnifying Party, upon request of the Indemnified Party, will
retain counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party and will pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, the Indemnified Party will
have the right to retain its own counsel, but the fees and expenses of such
counsel will be at the expense of the Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party will have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both Parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
All such fees and expenses incurred pursuant to Section 9.1 or 9.2 will be
reimbursed as they are incurred. The Indemnifying Party will not be liable for
any settlement of any proceeding unless effected with its written consent. The
Indemnifying Party will not, without the written consent of the Indemnified
Party, effect any settlement of any pending or threatened proceeding in respect
of which the Indemnified Party is, or arising out of the same set of facts could
have been, a party and indemnity could have been sought hereunder by the
Indemnified Party, unless such settlement includes an unconditional release of
the Indemnified Party from all liability on claims to which the indemnity
relates that are the subject matter of such proceeding. Notwithstanding
anything to the contrary in the foregoing, with respect to any claim that is
subject to the IP Indemnity Astellas shall have the right to control the
defense of such claim.  In no event shall
Ironwood settle any claim that is subject to the IP Indemnity without Astellas’s
prior written consent.

 

9.4.          Insurance. Each Party
further agrees to use Commercially Reasonable Efforts to obtain and maintain,
during the Term of this Agreement, commercial general liability insurance,
including products liability insurance, with reputable and financially secure 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

57

 

insurance carriers to cover its indemnification obligations under
Sections 9.1 or 9.1, as applicable, or self-insurance, with limits of not
less than [**] million
dollars per occurrence and [**] million dollars in the aggregate ($[**] in the aggregate from and
after Commercial Launch).

 

9.5.          Liability
Limitations. NOTWITHSTANDING THE FOREGOING, IN NO EVENT WILL
EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT,
SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES UNDER THIS AGREEMENT, EXCEPT TO THE
EXTENT THE DAMAGES RESULT FROM A PARTY’S WILLFUL MISCONDUCT AND EXCEPT FOR A
PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 9.

 

10.                               MISCELLANEOUS.

 

10.1.        Governing Law;
Jurisdiction; Dispute Resolution.

 

10.1.1.     Governing Law. The
interpretation and construction of this Agreement will be governed by the laws
of the State of New York, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.

 

10.1.2.     Dispute
Resolution. In the event of a dispute arising out of or relating to this Agreement, either
Party will provide written notice of the dispute to the other, in which event
the dispute will be referred to the executive officers designated below or
their successors, for attempted resolution by good faith negotiations within [**] days after such notice is
received. The designated officers are initially as follows:

 

For
Ironwood:       Its Chief Executive Officer
or his designate

For
Astellas:          Its Chief Executive Officer
or his designate

 

In the event the designated executive officers do not resolve such
dispute within the allotted [**] days, either Party may, after the expiration of the [**] period, seek to resolve the
dispute through arbitration in accordance with Section 10.1.3.
Notwithstanding the preceding, the Parties acknowledge that the failure of the
JSC to reach consensus as to any matter, which failure does not involve a
breach by a Party of its obligations hereunder, will not be deemed a dispute
which may be referred for resolution by arbitration hereunder.

 

10.1.3.     Arbitration.

 

(a)           Claims. Any claim,
dispute, or controversy of whatever nature arising between the Parties out of
or relating to this Agreement that is not resolved under Section 10.1.2
within the required [**] time period, 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

58

 

including without limitation, any action or claim based on tort,
contract, or statute (including any claims of breach or violation of statutory
or common law protections from discrimination, harassment and hostile working
environment), or concerning the interpretation, effect, termination, validity,
performance and/or breach of this Agreement (“Claim”), will be resolved
by final and binding arbitration before a panel of three experts with relevant
industry experience (the “Arbitrators”). One Arbitrator will be chosen
by Ironwood and one Arbitrator will be chosen by Astellas within 15 days from
the notice of initiation of arbitration. The third Arbitrator will be chosen by
mutual agreement of the Arbitrator chosen by Ironwood and the Arbitrator chosen
by Astellas within 15 days of the date that the last of such Arbitrators were
appointed. The Arbitrators will be administered by the International Chamber of
Commerce (the “Administrator”) in accordance with its then existing
arbitration rules or procedures regarding commercial or business disputes.
The arbitration will be held in Tokyo, Japan, if requested by Ironwood and in
New York, New York, if requested by Astellas. The Arbitrators will be
instructed by the Parties to complete the arbitration within 90 days after
selection of the final Arbitrator.

 

(b)           Arbitrators’
Award. The Arbitrators will, within 15 calendar days after the conclusion of
the arbitration hearing, issue a written award and statement of decision
describing the essential findings and conclusions on which the award is based,
including the calculation of any damages awarded. The decision or award
rendered by the Arbitrators will be final and non-appealable, and judgment may
be entered upon it in accordance with applicable law in the State of New York
or any other court of competent jurisdiction. The Arbitrators will be
authorized to award compensatory damages, but will NOT be authorized (i) to
award non-economic damages, such as for emotional distress, pain and suffering
or loss of consortium, (ii) to award punitive damages, or (iii) to
reform, modify or materially change this Agreement or any other agreements
contemplated hereunder; provided, however, that the damage limitations
described in parts (i) and (ii) of this sentence will not apply if
such damages are statutorily imposed.

 

(c)           Costs. Each Party
will bear its own attorney’s fees, costs, and disbursements arising out of the
arbitration and the costs of the arbitrator selected by it, and will pay an
equal share of the fees and costs of the third arbitrator; provided, however,
the Arbitrators will be authorized to determine whether a party is the
prevailing party, and if so, to award to that prevailing party reimbursement
for its reasonable attorneys’ fees, costs and disbursements (including, for
example, expert witness fees and 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

59

 

expenses, photocopy charges, travel expenses, etc.), and/or the fees
and costs of the Administrator and the Arbitrators.

 

(d)           Compliance with
this Agreement. Unless the Parties otherwise agree in writing,
during the period of time that any arbitration proceeding is pending under this
Agreement, the Parties will continue to comply with all those terms and
provisions of this Agreement that are not the subject of the pending
arbitration proceeding.

 

(e)           Injunctive or
Other Equity Relief. Nothing contained in this Agreement will deny any
Party the right to seek injunctive or other equitable relief from a court of
competent jurisdiction in the context of a bona fide emergency or prospective
irreparable harm, and such an action may be filed and maintained
notwithstanding any ongoing arbitration proceeding.

 

10.2.        Force Majeure. No liability
will result from, and no right to terminate will arise, in whole or in part,
based upon any delay in performance or non-performance, in whole or in part, by
either of the Parties to this Agreement to the extent that such delay or
non-performance is caused by an event of Force Majeure. “Force Majeure”
means an event that is beyond a non-performing Party’s reasonable control,
including an act of God, act of the other Party, war, riot, civil commotion,
terrorist act, malicious damage, epidemic, quarantine, fire, flood, storm,
natural disaster or compliance with any law or governmental order, rule,
regulation or direction, whether or not it is later held to be invalid or
inapplicable. The Force Majeure Party will within ten days of the occurrence of
the Force Majeure event, give written notice to the other Party stating the
nature of the Force Majeure event, its anticipated duration and any action
being taken to avoid or minimize its effect. Any suspension of performance will
be of no greater scope and of no longer duration than is reasonably required
and the Force Majeure Party will use reasonable effort to remedy its inability
to perform; provided, however, if the suspension of performance continues or is
anticipated to continue for 30 days after the date of the occurrence, the
unaffected Party will have the right but not the obligation to perform on
behalf of the Force Majeure Party for a period of such Force Majeure and such
additional period as may be reasonably required to assure a smooth and
uninterrupted transition of such activities. If such failure to perform would
constitute a material breach of this Agreement in the absence of such event of
Force Majeure, and continues for one year from the date of the occurrence and
the Parties are not able to agree on appropriate amendments within such period,
such other Party will have the right, notwithstanding the first sentence of
this Section 10.2, to terminate this Agreement immediately by written
notice to the Force Majeure Party, in which case neither Party will have any
liability to the other except for those rights and liabilities that accrued
prior to the date of termination and the consequences of termination pursuant
to this Agreement, as if such termination was a termination as to which such
consequences applied.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

60

 

10.3.        Additional
Approvals. Astellas and Ironwood will cooperate and use
respectively all reasonable efforts to make all other registrations, filings
and applications, to give all notices and to obtain as soon as practicable all
governmental or other consents, transfers, approvals, orders, qualifications
authorizations, permits and waivers, if any, and to do all other things
necessary or desirable for the consummation of the transactions as contemplated
hereby. Neither Party will be required, however, to divest or out-license
products or assets or materially change its business if doing so is a condition
of obtaining any governmental approvals of the transactions contemplated by
this Agreement.

 

10.4.        Waiver and
Non-Exclusion of Remedies. A Party’s failure to enforce, at any time
or for any period of time, any provision of this Agreement, or to exercise any
right or remedy will not constitute a waiver of that provision, right or remedy
or prevent such Party from enforcing any or all provisions of this Agreement
and exercising any rights or remedies. To be effective any waiver must be in
writing. The rights and remedies provided in this Agreement are cumulative and
do not exclude any other right or remedy provided by law or otherwise available
except as expressly set forth in this Agreement.

 

10.5.        Notices.

 

10.5.1.     Notice
Requirements. Any notice, request, demand, waiver, consent,
approval or other communication permitted or required under this Agreement must
be in writing, must refer specifically to this Agreement and will be deemed
given only if delivered by hand or sent by facsimile transmission (with
transmission confirmed) or by internationally recognized overnight delivery
service that maintains records of delivery, addressed to the Parties at their
respective addresses specified in Section 10.5.2 or to such other address
as the Party to whom notice is to be given may have provided to the other Party
in accordance with this Section 10.5.1. Such Notice will be deemed to have
been given as of the date delivered by hand or transmitted by facsimile (with
transmission confirmed) or on the second Business Day (at the place of
delivery) after deposit with an internationally recognized overnight delivery
service. This Section 10.5.1 is not intended to govern the day-to-day
business communications necessary between the Parties in performing their
obligations under the terms of this Agreement.

 

10.5.2.     Address for
Notice.

 

For
Ironwood:

 

Ironwood
Pharmaceuticals, Inc.

320
Bent Street

Cambridge,
MA 02141

Fax:         617-494-0908

Attn:       Vice President, Business
Development

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

61

 

With
a copy to:

 

Ropes &
Gray LLP

One
International Place

Boston,
MA 02110

Fax:         617-951-7050

Attn:       Marc Rubenstein

 

For
Astellas:

 

Astellas
Pharma Inc.

3-11,
Nihonbashi-Honcho 2-chome

Chuo-ku,
Tokyo 103-8411, Japan

Fax:
+81 3-3244-3245

Attn:
Vice President, Licensing & Alliances

 

10.6.        Entire
Agreement. This Agreement, together with the Manufacturing
and Supply Agreement, constitutes the entire agreement between the Parties with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior agreements, whether written or oral, with respect to the subject matter
of this Agreement. Each Party confirms that it is not relying on any
representations, warranties or covenants of the other Party except as specifically
set out in this Agreement. Nothing in this Agreement is intended to limit or
exclude any liability for fraud. All Exhibits or Schedules referred to in this
Agreement are intended to be and are hereby specifically incorporated into and
made a part of this Agreement. In the event of any inconsistency between any
such Exhibits or Schedules and this Agreement, the terms of this Agreement will
govern.

 

10.7.        Amendment. Any amendment
or modification of this Agreement must be in writing and signed by authorized
representatives of both Parties.

 

10.8.        Assignment. Neither Party
may assign its rights or delegate its obligations under this Agreement, in
whole or in part without the prior written consent of the other Party, except
that each Party will always have the right, without such consent, (a) to
perform any or all of its obligations and exercise any or all of its rights
under this Agreement through any of its Affiliates, and (b) on written
notice to the other Party, assign any or all of its rights and delegate or
subcontract any or all of its obligations hereunder to any of its Affiliates.
Notwithstanding the foregoing, each Party will remain responsible for any
failure to perform on the part of any such Affiliates. Any attempted assignment
or delegation in violation of this Section 10.8 will be void.

 

10.9.        No Benefit to
Others. The provisions of this Agreement are for the sole benefit of the
Parties and their successors and permitted assigns, and they will not be
construed as 

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

62

 

conferring any rights in any other persons except as otherwise
expressly provided in this Agreement.

 

10.10.      Counterparts. This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original and all of which taken together will be deemed to constitute
one and the same instrument. An executed signature page of this Agreement
delivered by facsimile transmission will be as effective as an original
executed signature page.

 

10.11.      Severability. To the
fullest extent permitted by applicable law, the Parties waive any provision of
law that would render any provision in this Agreement invalid, illegal or
unenforceable in any respect. If any provision of this Agreement is held to be
invalid, illegal or unenforceable, in any respect, then such provision will be
given no effect by the Parties and will not form part of this Agreement. To the
fullest extent permitted by applicable law and if the rights or obligations of
any Party will not be materially and adversely affected, all other provisions
of this Agreement will remain in full force and effect and the Parties will use
their best efforts to negotiate a provision in replacement of the provision
held invalid, illegal or unenforceable that is consistent with applicable law
and achieves, as nearly as possible, the original intention of the Parties.

 

10.12.      Further
Assurance. Each Party will perform all further acts and
things and execute and deliver such further documents as may be necessary or as
the other Party may reasonably require to implement or give effect to this
Agreement.

 

10.13.      Publicity. Notwithstanding Section 5.1.6,
it is understood that the Parties will issue a press release announcing the
execution of this Agreement in such form as the Parties mutually agree. The
Parties will consult with each other reasonably and in good faith with respect
to the text and timing of any subsequent press releases relating to this
Agreement or the activity hereunder prior to the issuance thereof, provided
that a Party may not unreasonably withhold consent to such releases, and that
either Party may issue such press releases as it determines, based on advice of
counsel, are reasonably necessary to comply with laws or regulations or for
appropriate market disclosure or which are consistent with information
disclosed in prior releases properly made hereunder.

 

10.14.      Relationship of
the Parties. The status of a Party under this Agreement will be
that of an independent contractor. Nothing contained in this Agreement will be
construed as creating a partnership, joint venture, or agency relationship
between the Parties or, except as otherwise expressly provided in this
Agreement, as granting either Party the authority to bind or contract any
obligation in the name of or on the account of the other Party or to make any
statements, representations, warranties, or commitments on behalf of the other
Party. All Persons employed by a Party or any of its Affiliates are employees
of such Party or its Affiliates and not of the other Party or such other Party’s
Affiliates and all costs and obligations incurred by reason of any such
employment will be for the account and expense of such Party or its Affiliates,
as applicable.

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

63

 

IN WITNESS WHEREOF, duty authorized representatives
of the Parties have duly executed this Agreement to be effective as of the
Effective Date.

 

 

	
  IRONWOOD
  PHARMACEUTICALS, INC.

  	
   

  	
  ASTELLAS
  PHARMA INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Peter Hecht

  	
   

  	
  By:

  	
  /s/
  Yoshihiko Hatanaka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Peter
  Hecht

  	
   

  	
  Name:

  	
  Yoshihiko
  Hatanaka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
  Title:

  	
  Senior
  Corporate Executive

  

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

64

 

EXHIBIT A

 

LAUNCH PLAN

 

[**]

 

EXHIBIT B

 

PRODUCT SPECIFICATION

 

[**]

 

EXHIBIT C

 

INITIAL DEVELOPMENT AND
REGULATORY PLAN

 

[**]

 

EXHIBIT D

 

PHARMACOVIGILANCE AGREEMENT

 

SCHEDULE 1.87

 

LICENSED COMPOUND

 

[**]

 

SCHEDULE 3.4

 

MANUFACTURING
AND SUPPLY – MINIMUM TERMS

 

[**]

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

65

 

SCHEDULE 4.6

 

TAX TREATY DOCUMENTATION

 

·                  Attachment Form for Limitation on Benefits
Article

·                  Application Form for Income Tax
Convention

·                  U.S. Treasury Residency Certification

 

SCHEDULE 5.2

 

[**]

 

SCHEDULE 6.2(a)

 

IRONWOOD PATENT RIGHTS

 

[**]

 

SCHEDULE 6.3

 

ASTELLAS PRODUCTS

 

[**]

 

[**] = Portions of this exhibit have been omitted pursuant to a
confidential treatment request. An unredacted version of this exhibit has been
filed separately with the Commission.

 

66Exhibit
10.12

 

INDEMNIFICATION
AGREEMENT

 

THIS INDEMNIFICATION
AGREEMENT (this “Agreement”) is
made as of
[                      ],
2009, by and between Ironwood Pharmaceuticals, Inc., a Delaware
corporation (the “Company”) and
[              ]
(“Indemnitee”).

 

RECITALS

 

WHEREAS, although the
Certificate of Incorporation and the Bylaws of the Company provide for
indemnification of the officers and directors of the Company and Indemnitee may
also be entitled to indemnification pursuant to the General Corporation Law of
the State of Delaware (“DGCL”),
the DGCL expressly contemplates that contracts may be entered into between the
Company and its directors and officers with respect to indemnification of such
directors and officers;

 

WHEREAS, Indemnitee’s
continued service to the Company substantially benefits the Company;

 

WHEREAS, the Board of
Directors of the Company (the “Board”)
has determined that it is in the best interest of the Company and that it is
reasonably prudent and necessary for the Company to contractually obligate
itself to indemnify, and to advance expenses on behalf of, Indemnitee to the
fullest extent permitted by applicable law in order to induce Indemnitee to
serve or continue to serve the Company free from undue concern that Indemnitee
will not be so indemnified or that any indemnification obligation will not be
met;

 

WHEREAS, this Agreement
is a supplement to and in furtherance of (a) the Certificate of
Incorporation and Bylaws of the Company and (b) the certificate of
incorporation, bylaws, partnership agreement or other organizational document,
as the case may be, of any Enterprise (as defined below), and any resolutions
adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to
diminish or abrogate any rights of Indemnitee thereunder; and

 

WHEREAS, Indemnitee does
not regard the protection available under the Company’s Certificate of
Incorporation, Bylaws and insurance or any other Enterprise’s certificate of
incorporation, bylaws, partnership agreement or other organizational document,
as the case may be, and insurance, as adequate in the present circumstances,
and may not be willing to serve as a director or officer without adequate
protection, and the Company desires Indemnitee to serve in such capacity.  Indemnitee is willing to serve, continue to
serve and to take on additional service for or on behalf of the Company and
certain other Enterprises on the condition that Indemnitee be so indemnified.

 

NOW, THEREFORE, in
consideration of the promises and the covenants contained herein, the Company
and Indemnitee do hereby covenant and agree as follows:

 

1

 

AGREEMENT

 

1.             Services to the Company and Certain Other
Enterprises.  Indemnitee will serve or continue to serve as
a director and/or officer of the Company or other Enterprises for so long as
Indemnitee is duly elected or appointed or until Indemnitee tenders a
resignation.

 

2.             Definitions. 
As used in this Agreement:

 

(a)           “Change
of Control” means

 

(1)           any “person” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act), becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the total voting power represented by the Company’s then
outstanding voting securities (excluding for this purpose any such voting
securities held by the Company, or any affiliate, parent or subsidiary of the
Company or any employee benefit plan of the Company) pursuant to a transaction
or a series of transactions which the Board does not approve;

 

(2)           a merger or consolidation of the
Company, whether or not approved by the Board, which results in the holders of
voting securities of the Company outstanding immediately prior thereto failing
to continue to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

 

(3)           the sale or disposition of all or
substantially all of the Company’s assets (or consummation of any transaction
having similar effect) provided that the sale or disposition is of more than
two-thirds (2/3) of the assets of the Company; or

 

(4)           the date a majority of members of
the Board is replaced during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the members of the
Board before the date of the appointment or election.

 

(5)           In any case, a Change of Control under this Section 2(a) must
also meet the requirements of a change in ownership or effective control, or a
sale of a substantial portion of the Company’s assets in accordance with
Section 409A(a)(2)(A)(v) of the Internal Revenue Code of 1986, as
amended, and the applicable provisions of Treasury Regulation § 1.409A-3.

 

(b)           “Corporate
Status” describes the status of a person who is or was a director,
officer, employee, agent or fiduciary of the Company or of any other
Enterprise.

 

(c)           “Disinterested
Director” means a director of the Company who is not and was not a
party to the Proceeding in respect of which indemnification is sought by
Indemnitee.

 

2

 

(d)           “Enterprise”
means (i) the Company, (ii) any other corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other
enterprise which is an affiliate or wholly or partially owned subsidiary of the
Company and of which Indemnitee is or was serving as a director, trustee,
general partner, managing member, officer, employee, agent or fiduciary and
(iii) any other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee
is or was serving at the request of the Company.

 

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

 

(f)            “Expenses”
includes all reasonable attorneys’ fees, retainers, court costs, transcript
costs, fees of experts, witness fees, travel expenses, duplicating costs,
printing and binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding.  Expenses
shall include such fees and expenses, and costs incurred in connection with any
appeal resulting from any Proceeding, including without limitation the premium,
security for, and other costs relating to any cost bond, supersedeas bond, or
other appeal bond or its equivalent. 
Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

 

(g)           “Independent
Counsel” means, at any time, any law firm, or a member of a law
firm, that (i) is experienced in matters of corporation law and
(ii) is not, at such time, or has not been in the five years prior to such
time, retained to represent: (1) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
Indemnitee under this Agreement, or of other indemnities under similar
indemnification agreements), or (2) any other party to the Proceeding
giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees
and expenses of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto and to be jointly and severally liable therefor.

 

(h)           “Proceeding”
includes any threatened, pending or completed action, suit, arbitration,
mediation, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding,
whether brought by or in the right of the Company or otherwise and whether of a
civil, criminal, administrative or investigative nature, including without
limitation any such proceeding pending as of the date of this Agreement, in
which Indemnitee was, is or will be involved as a party or otherwise by reason
of the fact that Indemnitee is or was an officer or director of the Company, by
reason of any action taken by Indemnitee or of any action on Indemnitee’s part
while acting as director or officer of the Company, or by reason of the fact
that Indemnitee is or was serving as a director, trustee, general partner,
managing member, officer, employee, agent or fiduciary of any other 

 

3

 

Enterprise, in each case
whether or not serving in such capacity at the time any Expense, judgment, fine
or amount paid in settlement is incurred for which indemnification,
reimbursement, or advancement of Expenses can be provided under this Agreement.

 

3.             Indemnity in Third-Party Proceedings.  The Company shall be liable to
indemnify Indemnitee in accordance with the provisions of this Section 3
if Indemnitee is, or is threatened to be made, a party to or a participant (as
a witness or otherwise) in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee
shall be indemnified against all Expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with such Proceeding or any claim, issue or matter
therein, if Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company and, in the case of a criminal Proceeding, had no reasonable cause to
believe that Indemnitee’s conduct was unlawful.

 

4.             Indemnity in Proceedings by or in the
Right of the Company.  The Company shall be liable to indemnify
Indemnitee in accordance with the provisions of this Section 4 if
Indemnitee is, or is threatened to be made, a party to or a participant (as a
witness or otherwise) in any Proceeding by or in the right of the Company to
procure a judgment in its favor. 
Pursuant to this Section 4, Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with such Proceeding (or any claim, issue or matter
therein) if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company; provided,
however that no indemnification for Expenses shall be made under this
Section 4 in respect of any claim, issue or matter as to which Indemnitee
shall have been finally adjudged by a court of competent jurisdiction to be
liable to the Company, unless and only to the extent that any court in which
the Proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnification.

 

5.             Indemnification for Expenses of a Party
Who is Wholly or Partly Successful. 
Notwithstanding any other provisions of this Agreement, to the extent
that Indemnitee is a party to (or a participant in) and is successful, on the
merits or otherwise, in any Proceeding, the Company shall be liable to
indemnify Indemnitee against all Expenses actually and reasonably incurred by
him in connection therewith.  If Indemnitee
is not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, the Company shall be liable to indemnify Indemnitee against
all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s
behalf in connection with each successfully resolved claim, issue or
matter.  For purposes of this
Section and without limitation, the termination of any claim, issue or
matter in such a Proceeding by dismissal, with or without prejudice, shall be
deemed to be a successful result as to such claim, issue or matter.

 

6.             Indemnification For Expenses of a Witness. 
Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness in
any Proceeding to which Indemnitee is not a party, the Company shall be liable
to 

 

4

 

indemnify Indemnitee
against all Expenses actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection therewith.

 

7.             Additional Indemnification

 

(a)           Notwithstanding any limitation in
Sections 3, 4, or 5, the Company shall be liable to indemnify Indemnitee to the
fullest extent permitted by law if Indemnitee is a party to, or threatened to
be made a party to, any Proceeding (including a Proceeding by or in the right
of the Company to procure a judgment in its favor) against all Expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Indemnitee in connection with the Proceeding; provided, however,
that no indemnity shall be made under this Section 7(a) on account of
Indemnitee’s conduct which has been adjudicated to constitute a breach of
Indemnitee’s duty of loyalty to the Company or its shareholders or to
constitute an act or omission not in good faith or involving intentional
misconduct or a knowing violation of the law.

 

(b)           For purposes of Section 7(a), the
meaning of the phrase “to the fullest extent permitted by law” shall include,
but not be limited to:

 

(1)           to the  fullest extent permitted by the provision of
the DGCL that authorizes or contemplates additional indemnification by
agreement, or the corresponding provision of any amendment to or replacement of
the DGCL; and

 

(2)           to the fullest extent authorized
or permitted by any amendments to or replacements of the DGCL adopted after the
date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.

 

8.             Exclusions. 
Notwithstanding any provision in this Agreement, the Company shall not
be obligated under this Agreement to make any indemnity payment in connection
with any claim made against Indemnitee:

 

(a)           for which payment has actually been
received by or on behalf of Indemnitee under any insurance policy or other
indemnity provision, except with respect to any excess beyond the amount
actually received under any insurance policy or other indemnity provision;

 

(b)           for an accounting of profits made from the
purchase and sale (or sale and purchase) by Indemnitee of securities of the
Company within the meaning of Section 16(b) of the Exchange Act or
similar provisions of state statutory law or common law; provided, however,
that notwithstanding any limitation on the Company’s obligation to provide
indemnification set forth in this Section 8(b) or elsewhere,
Indemnitee shall be entitled to receive advancement of Expenses hereunder with
respect to any such claim unless and until a court having jurisdiction over the
claim shall have made a final judicial determination (as to which all rights of
appeal therefrom have been exhausted or lapsed) that Indemnitee has violated
said statute; or

 

(c)           in connection with any Proceeding (or any
part of any Proceeding) initiated by Indemnitee, including any Proceeding (or
any part of any Proceeding) initiated by Indemnitee against the Company or its
directors, officers, employees or other indemnitees, 

 

5

 

unless (i) such
indemnification is expressly required to be made by applicable law,
(ii) the Proceeding was authorized by the Board, (iii) such
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under the DGCL, or (iv) such
indemnification is required to be made pursuant to Section 13.

 

9.             Advancement of Expenses; Defense of Claim.

 

(a)           Notwithstanding any provision of this
Agreement to the contrary, the Company shall be obligated to advance any and
all Expenses incurred by Indemnitee in connection with any Proceeding within
thirty (30) days after the receipt by the Company of a statement or statements
requesting such advances from time to time, whether prior to or after final
disposition of any Proceeding.  Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by a written
undertaking by or on behalf of Indemnitee to repay any Expenses advanced to the
extent and only to the extent that it is ultimately determined that Indemnitee
is not entitled to be indemnified by the Company.  Any advances (i) shall be unsecured and
interest free;  (ii) shall be made
without regard to Indemnitee’s ability to repay the advances and without regard
to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement; and (iii) shall include any and all
reasonable Expenses incurred pursuing an action to enforce this right of
advancement, including Expenses incurred preparing and forwarding statements to
the Company to support the advances claimed. 
The Company will be entitled to participate reasonably in the Proceeding
at its own expense.

 

10.           Procedure for Notification and Requests
for Advancement and Indemnification.

 

(a)           Notification. 
To obtain advancement of Expenses and/or indemnification under this
Agreement, Indemnitee shall, not later than sixty (60) days after receipt by
Indemnitee of notice of the commencement of any Proceeding, except for
Proceedings pending as of the date of this Agreement, submit to the Company
written notification of the Proceeding; with regard to Proceedings pending as
of the date of this Agreement, Indemnitee shall submit to the Company written
notification not later than thirty (30) days after the date of this
Agreement.  The omission to notify the
Company will relieve the Company of its advancement or indemnification
obligations under this Agreement only to the extent the Company can establish
that such omission to notify resulted in actual prejudice to it, and the
omission to notify the Company will, in any event, not relieve the Company from
any liability which it may have to indemnify Indemnitee otherwise than under
this Agreement.  The Secretary of the
Company shall, promptly upon receipt of notification from Indemnitee pursuant
to this Section 10(a), advise the Board in writing that Indemnitee has
provided such notification.

 

(b)           Expense Request. 
Subject to Section 9, to obtain advancement of Expenses under this
Agreement, Indemnitee shall submit to the Company a written request therefor,
together with such invoices or other supporting information as may be
reasonably requested by the Company and reasonably available to Indemnitee,
and, only to the extent required by applicable law which cannot be waived, an
unsecured written undertaking to repay amounts advanced.  The Company shall make advance payment of
Expenses to Indemnitee no later than thirty (30) days after receipt of the
written request for advancement (and each 

 

6

 

subsequent request for
advancement) by Indemnitee.  If, at the
time of receipt of any such written request for advancement of Expenses, the
Company has director and officer insurance policies in effect, the Company will
promptly notify the relevant insurers in accordance with the procedures and
requirements of such policies.  The
Company shall thereafter keep such director and officer insurers informed of
the status of the Proceeding or other claim, as appropriate to secure coverage
of Indemnitee for such claim.

 

(c)           Indemnification Request. 
In order to obtain indemnification under this Agreement, Indemnitee
shall, anytime at Indemnitee’s discretion following notification by Indemnitee
of the commencement of any Proceeding pursuant to Section 10(a) of
this Agreement and consistent with the time period for the duration of this
Agreement as set forth in Section 15 of this Agreement, submit to the
Company a written request for indemnification pursuant to this Section 10(c),
including therein or therewith such documentation and information as is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification.  No determination of Indemnitee’s entitlement
to indemnification shall be made until such written request for a determination
is submitted by Indemnitee to the Company pursuant to this
Section 10(c).  The failure to
submit a written request to the Company will relieve the Company of its
indemnification obligations under this Agreement only to the extent the Company
can establish that such failure to make a written request resulted in actual
prejudice to it, and the failure to make a written request will not relieve the
Company from any liability which it may have to indemnify Indemnitee otherwise
than under this Agreement.  The Secretary
of the Company shall, promptly upon receipt of such a request for
indemnification, advise the Board in writing that Indemnitee has requested
indemnification.  Upon submission of a
written request for indemnification by Indemnitee pursuant to this
Section 10(c), Indemnitee’s entitlement to indemnification shall be
determined according to Section 11 of this Agreement.

 

11.           Procedure Upon Application for
Indemnification.

 

(a)           Upon receipt of Indemnitee’s written
request for indemnification pursuant to Section 10(c), a determination
with respect thereto shall be made in the specific case by one of the following
three methods, which shall be at the election of the Board:  (i) by a majority vote of the
Disinterested Directors, even though less than a quorum, (ii) by a
committee of Disinterested Directors designated by a majority vote of the
Disinterested Directors, even though less than a quorum, or (iii) if there
are no Disinterested Directors or if the Disinterested Directors so direct, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee.  Notwithstanding
the above, if a determination with respect to Indemnitee’s right to
indemnification is to be made following a Change of Control, such determination
shall be made in the specific case by Independent Counsel in a written opinion
to the Board, a copy of which shall be delivered to Indemnitee.  If it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten
(10) days after such determination. 
Indemnitee shall reasonably cooperate with the person, persons or entity
making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination.  Any costs 

 

7

 

or expenses (including
attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating
with the Disinterested Directors or Independent Counsel, as the case may be,
making such determination shall be advanced and borne by the Company
(irrespective of the determination as to Indemnitee’s entitlement to
indemnification) and the Company is liable to indemnify and hold Indemnitee
harmless therefrom.

 

(b)           In the event the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 11(a) hereof, the Independent Counsel shall be selected as
provided in this Section 11(b).  The
Independent Counsel shall be selected by the Board and the Board shall provide
written notice to the Indemnitee of the identity of the Independent Counsel so
selected.  Indemnitee may, within ten
(10) days after such written notice of selection shall have been received,
deliver to the Company a written objection to such selection; provided, however,
that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as
defined in Section 2 of this Agreement, and the objection shall set forth
with particularity the factual basis of such assertion.  Absent a proper and timely objection, the
person so selected shall act as Independent Counsel.  If a written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent
Counsel unless and until such objection is withdrawn or a court of competent
jurisdiction has determined that such objection is without merit.  If, within twenty (20) days after submission
by Indemnitee of a written request for indemnification pursuant to
Section 10(c) hereof, no Independent Counsel shall have been selected
and not objected to, either the Company or Indemnitee may petition a court of
competent jurisdiction for resolution of any objection which shall have been
made by the Indemnitee to the Company’s selection of Independent Counsel and/or
for the appointment as Independent Counsel of a person selected by the Court or
by such other person as the Court shall designate, and the person with respect
to whom all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 11(a) hereof.  Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 13(a) of this Agreement,
Independent Counsel shall be discharged and relieved of any further
responsibility in such capacity (subject to the applicable standards of
professional conduct then prevailing). 
The Company shall pay all reasonable fees and expenses incident to the
procedures of this Section 11(b), regardless of the manner in which such
Independent Counsel was selected or appointed.

 

12.           Presumptions and Effect of Certain
Proceedings.

 

(a)           In making a determination with respect to
entitlement to indemnification hereunder, the person or persons or entity
making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a notice and a
request for indemnification in accordance with Section 10 of this Agreement.  Anyone seeking to overcome this presumption
shall have the burden or proof and the burden of persuasion by clear and
convincing evidence.  Neither the failure
of the Company (including by the Board) or of Independent Counsel to have made
a determination prior to the commencement of any judicial proceeding or
arbitration pursuant to this Agreement that indemnification is proper in the
circumstances because Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Company (including by the Board) or by
Independent Counsel

 

8

 

that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that Indemnitee has not met the applicable standard of conduct.

 

(b)           If the person, persons or entity
empowered or selected under Section 11 of this Agreement to determine
whether Indemnitee is entitled to indemnification shall not have made a
determination within sixty (60) days after receipt by the Company of
Indemnitee’s written request for indemnification pursuant to Section 10(c) of
this Agreement, the requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be entitled to such
indemnification, absent (i) a misstatement by Indemnitee of a material
fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional thirty (30) days,
if the person, persons or entity making the determination with respect to
entitlement to indemnification in good faith requires such additional time for
the obtaining or evaluating of documentation and/or information relating
thereto.

 

(c)           The termination of any Proceeding
or of any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right of
Indemnitee to indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which Indemnitee reasonably believed to be in
or not opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful.

 

(d)           Reliance as Safe
Harbor.  For purposes of any
determination of good faith, Indemnitee shall be deemed to have acted in good
faith if Indemnitee’s action or failure to act is based on the records or books
of account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the officers of the Enterprise in the course of their
duties, or on the advice of legal counsel for the Enterprise or on information
or records given or reports made to the Enterprise by an independent certified
public accountant or by an appraiser or other expert selected by the Enterprise.  The provisions of this Section 12(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in
which Indemnitee may be deemed or found to have met the applicable standard of
conduct set forth in this Agreement.

 

(e)           Actions of Others.  The knowledge and/or actions, or failure to
act, of any other director, partner, managing member, officer, agent, employee
or trustee of the Enterprise shall not be imputed to Indemnitee for purposes of
determining Indemnitee’s right to indemnification under this Agreement.

 

13.           Remedies of Indemnitee.

 

(a)           In the event that (i) a
determination is made pursuant to Section 11 of this Agreement that
Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to Section 9
or 10(b) of this Agreement, (iii) payment of indemnification is not
made pursuant to Section 5, 6, 7 or the last 

 

9

 

sentence of Section 11(a) of this
Agreement within ten (10) days after receipt by the Company of a written
request therefor, or (iv) payment of indemnification pursuant to
Section 3 or 4 of this Agreement is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification, or (v) Indemnitee determines in its sole discretion that
such action is appropriate or desirable, Indemnitee shall be entitled to seek
an adjudication by a court of competent jurisdiction as to Indemnitee’s
entitlement to such indemnification or advancement of Expenses.  Alternatively, Indemnitee, at Indemnitee’s
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association.  The Company shall not
oppose Indemnitee’s right to seek any such adjudication or award in
arbitration.

 

(b)           In the event that a determination
shall have been made pursuant to Section 11(a) of this Agreement that
Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration, commenced pursuant to this Section 13, shall be conducted in
all respects as a de novo trial, or arbitration, on the merits, and Indemnitee
shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration
commenced pursuant to this Section 13, in the event that the person,
persons or entity empowered or selected under Section 11 of this Agreement
to determine whether Indemnitee is entitled to indemnification has not made
such a determination within the time period provided for under
Section 12(b) of this Agreement, the Company shall stipulate and may
not contest that Indemnitee acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or Proceeding, had no
reasonable cause to believe Indemnitee’s conduct was unlawful.

 

(c)           If a determination shall have
been made pursuant to Section 11(a) of this Agreement that Indemnitee
is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration commenced pursuant to
this Section 13, absent (i) a misstatement by Indemnitee of a
material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification under
applicable law.

 

(d)           In the event that Indemnitee is a
party to a judicial proceeding or arbitration pursuant to this Section 13
concerning Indemnitee’s rights under, or to recover damages for breach of, this
Agreement, Indemnitee shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any and all Expenses actually and
reasonably incurred by him in such judicial adjudication or arbitration.  If it shall be determined in said judicial
adjudication or arbitration that Indemnitee is entitled to receive part but not
all of the indemnification or advancement of Expenses sought, Indemnitee shall
be entitled to recover from the Company (who shall be liable therefor), and
shall be indemnified by the Company against, any and all Expenses reasonably
incurred by Indemnitee in connection with such judicial adjudication or
arbitration.

 

(e)           The Company shall be precluded
from asserting in any judicial proceeding or arbitration commenced pursuant to
this Section 13 that the procedures and presumptions of this Agreement are
not valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all the provisions of
this Agreement.  

 

10

 

The Company shall be liable to indemnify
Indemnitee against any and all Expenses and, if requested by Indemnitee, shall
(within ten (10) days after receipt by the Company of a written request
therefore) advance such Expenses to Indemnitee that are incurred by Indemnitee
in connection with any judicial adjudication or arbitration involving
Indemnitee for indemnification or advancement of Expenses from the Company
under this Agreement or under any directors’ and officers’ liability insurance
policies maintained by the Company, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advancement of Expenses
or insurance recovery, as the case may be.

 

14.           Non-Exclusivity; Survival of Rights;
Insurance.

 

(a)           The rights of indemnification and
to receive advancement of Expenses as provided by this Agreement shall not be
deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Company’s or any other Enterprise’s
Certificate of Incorporation, Bylaws or similar organizational documents, any
agreement, a vote of stockholders or a resolution of directors, or
otherwise.  No amendment, alteration or
repeal of this Agreement or of any provision hereof shall limit or restrict any
right of Indemnitee under this Agreement in respect to any action taken or omitted
by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment,
alteration or repeal.  To the extent that
a change in Delaware law, whether by statute or judicial decision, permits
greater indemnification or advancement of Expenses than would be afforded
currently under the Company’s or any other Enterprise’s Certificate of
Incorporation, Bylaws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.  No right or
remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise.  The assertion
or employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other right or remedy.

 

(b)           To the extent that the Company
maintains an insurance policy or policies providing liability insurance for
directors, partners, managing members, officers, employees, agents or trustees
of the Company or of any other Enterprise, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, partner, managing member,
officer, employee, agent or trustee under such policy or policies.  If, at the time of the receipt of a notice of
a claim pursuant to Section 10(a) hereof, the Company has director
and officer liability insurance in effect, the Company shall give prompt notice
of the commencement of such Proceeding to the insurers in accordance with the
procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of
Indemnitee, all amounts payable as a result of such Proceeding in accordance
with the terms of such policies.

 

(c)           The Company shall not be liable
under this Agreement to make any payment of amounts otherwise indemnifiable (or
for which advancement is provided hereunder) hereunder if and only to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.

 

11

 

(d)           The Company’s obligation
hereunder to indemnify, or advance Expenses to, Indemnitee who was, is or will
be serving as a director, partner, managing member, officer, employee, agent or
trustee of any other Enterprise shall be reduced by any amount Indemnitee has
actually received as indemnification or advancement of Expenses from such other
Enterprise.

 

15.           Duration of Agreement.  This
Agreement shall continue until and terminate upon the later of: (a) ten
(10) years after the date that Indemnitee shall have ceased to serve as a
director of the Company or as a director, partner, managing member, officer,
employee, agent or trustee of any other Enterprise; or (b) one (1) year
after the final termination (i) of any Proceeding (including any rights of
appeal) then pending in respect of which Indemnitee requests indemnification or
advancement of Expenses hereunder and (ii) of any judicial proceeding or
arbitration pursuant to Section 13 of this Agreement (including any rights
of appeal) involving Indemnitee.  This
Agreement shall be binding upon the Company and its successors and assigns and
shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and
administrators.

 

16.           Severability.  If
any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby and shall remain enforceable to the
fullest extent permitted by law; (b) such provision or provisions shall be
deemed reformed to the extent necessary to conform to applicable law and to
give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that is not
itself invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested thereby.

 

17.           Enforcement.

 

(a)           The Company expressly confirms
and agrees that it has entered into this Agreement and assumed the obligations
imposed on it hereby in order to induce Indemnitee to continue to serve as a
director or officer of the Company, and the Company acknowledges that
Indemnitee is relying upon this Agreement in serving as a director or officer
of the Company.

 

(b)           This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject hereof
and supersedes any and all prior agreements and understandings, oral, written
and implied, between the parties hereto with respect to the subject matter
hereof.

 

18.           Modification and Waiver.  No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by the parties hereto. 
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a wavier of any other provisions of this Agreement nor shall
any waiver constitute a continuing waiver.

 

19.           Notice by Indemnitee. 
Indemnitee agrees promptly to notify the Company in writing upon being
served with any summons, citation, subpoena, complaint, indictment, 

 

12

 

information
or other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.  The failure of Indemnitee to so notify the
Company shall not relieve the Company of any obligation which it may have to
Indemnitee under this Agreement or otherwise.

 

20.           Notices.  All notices, requests, demands
and other communications under this Agreement shall be in writing and shall be
deemed to have been duly given (a) if delivered by hand and receipted for
by the party to whom said notice or other communication shall have been
directed, (b) when sent by confirmed electronic mail or facsimile if sent
during normal business hours of the recipient, and if not so confirmed, then on
the next business day, (c) if mailed by certified or registered mail with
postage prepaid, on the third business day after the date on which it is so
mailed, or (d) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification:

 

(a)           If to Indemnitee, at the address
indicated on the signature page of this Agreement, or such other address
as Indemnitee shall provide in writing to the Company,

 

(b)           If to the Company to:                                          Ironwood
Pharmaceuticals, Inc.

320 Bent Street

Cambridge, MA 02141

Attention:

Fax:

E-Mail:

 

or
to any other address as may have been furnished to Indemnitee in writing by the
Company.

 

21.           Contribution.  To
the fullest extent permissible under applicable law, if the indemnification
provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute
to the amount incurred by Indemnitee, whether for judgments, fines, penalties,
excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in
connection with any claim relating to an indemnifiable event under this
Agreement, in such proportion in order to reflect (i) the relative
benefits received by the Company and Indemnitee as a result of the event(s) and/or
transaction(s) giving cause to such Proceeding; and/or (ii) the
relative fault of the Company (and its directors, officer, employees and
agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

 

22.           Applicable Law and Consent to Jurisdiction.  This
Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. 
Except with respect to any arbitration commenced by Indemnitee pursuant
to Section 13(a) of this Agreement, the Company and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding
arising out of or in connection with this Agreement shall be brought only in
the Chancery Court of the State of Delaware (the “Delaware Court”), and not in any other state or federal court
in the United States of America or any court in any other country
(ii) consent to submit to the exclusive jurisdiction of the Delaware Court
for purposes of any 

 

13

 

action
or proceeding arising out of or in connection with this Agreement,
(iii) appoint, to the extent such party is not a resident of the State of
Delaware, irrevocably RL&F Service Corp., One Rodney Square, 10th Floor,
10th and King Streets, Wilmington, Delaware 19801 as its agent in the State of
Delaware as such party’s agent for acceptance of legal process in connection
with any such action or proceeding against such party with the same legal force
and validity as if served upon such party personally within the State of
Delaware, (iv) waive any objection to the laying of venue of any such
action or proceeding in the Delaware Court, and (v) waive, and agree not
to plead or to make, any claim that any such action or proceeding brought in
the Delaware Court has been brought in an improper or inconvenient forum.

 

23.           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall for
all purposes be deemed to be an original, but all of which together shall
constitute one and the same Agreement. 
This Agreement may also be executed and delivered by facsimile signature
and in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.

 

24.           Headings.  The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.

 

[Remainder of this
page intentionally blank]

 

14

 

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

 

	
   

  	
  IRONWOOD PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  E-mail:

  	
   

  

 

15

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