Document:

Exhibit 10.1

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

EXECUTION COPY

 

LICENSE AGREEMENT

 

This
LICENSE AGREEMENT (the “Agreement”) is entered into on June 11,
2010 (the “Effective Date”)
between TRANZYME, INC., a Delaware
corporation, with its principal place of business at 4819 Emperor Blvd, Suite
400, Durham, NC 27703 (“Tranzyme”),
and NORGINE B.V., a limited
liability company under the laws of the Netherlands, with its principal offices
at Hogehilweg 7, 1101 CA Amsterdam ZO, The Netherlands (“Norgine”). 
Tranzyme and Norgine are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Tranzyme is a clinical-stage
biopharmaceutical company developing novel small molecule drugs for both acute
(hospital-based) and chronic disorders with high unmet medical needs;

 

WHEREAS, Norgine and its Affiliates together possess
expertise in the development, marketing, and commercialization of
pharmaceutical products;

 

WHEREAS, Tranzyme and its Affiliates together
control certain intellectual property covering TZP-101 (as defined below), a
ghrelin agonist, and is engaged in the development of TZP-101 for the treatment
of gastrointestinal motility disorders including postoperative ileus,
gastroparesis and impaired gastric emptying; and

 

WHEREAS, Norgine desires to obtain exclusive rights
to develop, manufacture and commercialize TZP-101 for the Licensed Territory
(as defined below), and Tranzyme desires to grant Norgine such rights, all as
set forth below.

 

NOW THEREFORE, in consideration of the
foregoing premises and the mutual promises, covenants and conditions contained
in this Agreement, the Parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

As
used in this Agreement, the following initially capitalized terms, whether used
in the singular or plural form, shall have the meanings set forth in this
Article 1.

 

1.1                               “Acquisition” has the meaning set forth in Section 15.5(a).

 

1.2                               “Affiliate” means, with respect to a particular Party, a
corporation, partnership or other business entity that controls, is controlled
by or is under common control with such Party. 
For the purposes of this definition, the word “control” (including, with
correlative meaning, the terms “controlled by” or “under the common control
with”) means the actual power, either directly or indirectly through one or
more intermediaries, to direct or cause the direction of the

 

1

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

management
and policies of such entity, whether by the ownership of fifty percent (50%) or
more of the voting stock of such entity, or by contract or otherwise.

 

1.3                               “Clinical Manufacturing Costs” means the out-of-pocket costs
incurred by a Party or by the Parties jointly to one or more Third Parties in
connection with the manufacture, supply, testing, shipment, release and other
activities relating to the procurement of the Product(s), placebos and
comparator drugs used in the Development of the Products.  Clinical Manufacturing Costs excludes
internal costs; this means that if a Party procures or has procured the Product
from a Third Party manufacturer, the Clinical Manufacturing Costs shall mean
the costs incurred by such Party in connection with the procurement, testing,
storage, shipping and releasing such Product but shall exclude the internal
costs incurred by such Party in connection with the management of the
contractual relationship with such Third Party manufacturer.

 

1.4                               “Clinical Supply” has the meaning set forth in Section
7.3(b).

 

1.5                               “Commercialization”, with a correlative meaning for “Commercialize”,
“Commercialized” and “Commercializing”, means all non-Development activities
undertaken before and after obtaining Regulatory Approvals relating
specifically to the pre-launch, launch, promotion, detailing, medical education
and medical liaison activities, marketing, pricing, reimbursement, sale, and
distribution of a Product, including: (a) strategic marketing, sales force
detailing, advertising, medical education and liaison, national account
managers, and market and product support; (b) any commercialization studies for
use in generating data to be submitted to Regulatory Authorities (and all
associated reporting requirements) for marketing, label expansion and other
commercial purposes once Regulatory Approval for Product for the first
Indication has been obtained and which is not required by the Regulatory
Authority as a condition of Regulatory Approval, and (c) all customer support,
Product distribution, invoicing and sales activities.

 

1.6                               “Combination
Product” has the meaning given to it in Section 1.57.

 

1.7                               “Commercialization Plan” has the meaning set forth in Section
6.2(b).

 

1.8                               “Commercially Reasonable Efforts” means, (a) with respect to
Norgine, those efforts consistent with the exercise of prudent scientific and
business judgment, in an active and ongoing program as would be applied
customarily by Norgine to a product at a similar stage of development and with
similar market potential, and (b) with respect to Tranzyme, those efforts
consistent with the exercise of prudent scientific and business judgment, in an
active and ongoing program as would be applied customarily by Tranzyme to a
product at a similar stage of development and with similar market
potential.  Commercially Reasonable
Efforts requires that a Party, at a minimum, assign responsibility for such
obligations to qualified employees, set annual goals and objectives for
carrying out such obligations, and allocate resources designed to meet such
goals and objectives.

 

1.9                               “Competing Product” has the meaning set forth in Section
2.6(b).

 

1.10                        “Confidential Information” means that, unless otherwise
expressly specified in this Agreement, with respect to a Party, all reports and
other Information of such Party that is disclosed to the other Party under this
Agreement, whether in oral, written, graphic, or electronic

 

2

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

form.  All Information disclosed by either Party
pursuant to the Confidential Disclosure Agreement between the Parties dated
June 3, 2009 shall be deemed to be such Party’s Confidential Information
disclosed hereunder.  For clarity the
existence of this Agreement and the terms of this Agreement shall be the
Confidential Information of both Parties.

 

1.11                        “Control” means, with respect to any material, Information,
or Patents, that a Party (a) owns or (b) has a license to such material,
Information, or Patents and, in each case, has the ability to grant to the
other Party access, a license, or a sublicense (as applicable) to the foregoing
on the terms and conditions set forth in this Agreement without violating the
terms of any then-existing agreement or other arrangement with any Third Party,
and the terms “Controlled” and “Controlling” shall be construed accordingly.

 

1.12                        “Core Studies” has the meaning set forth in Section 4.1.

 

1.13                        “Core Studies Development Plan” has the meaning set forth in
Section 4.2(a).

 

1.14                        “Cumulative Mean Unit Price” has the meaning set forth in
Section 8.2(b)(i).

 

1.15                        “Defending Party” has the meaning set forth in Section 9.5.

 

1.16                        “Develop” or “Development”
means all pre-Regulatory Approval development and regulatory activities
regarding TZP-101 and/or a Product in a country of the Territory conducted with
the aim of obtaining such Regulatory Approval (excluding activities conducted
solely for the purpose of obtaining pricing or reimbursement approval),
including activities relating to preparing and conducting preclinical testing,
toxicology testing, human clinical studies, and regulatory activities (e.g., regulatory applications) with
respect to TZP-101 and/or such Product for the purpose of conducting the
foregoing activities.

 

1.17                        “Development Plan” shall mean, collectively, the Core Studies
Development Plan, the Norgine Independent Studies Development Plan and the
Tranzyme Independent Studies Development Plan.

 

1.18                        “Dollar” means a U.S. dollar, and “$” shall be interpreted
accordingly.

 

1.19                        “EMEA” means the European Medicines Agency or its successors.

 

1.20                        “Equity Documents” shall mean the stock purchase agreement
and other related agreements to be executed by the Parties in the form attached
hereto as Exhibit D.

 

1.21                        “Euro” means the official currency of the Netherlands, and “€”
shall be interpreted accordingly.

 

1.22                        “Europe” means the countries that are members of the European
Union (as its membership may be altered from time to time) or any successor
organization thereto (the member countries of the European Union as of the Effective
Date are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia,
Finland, France (including Monaco), Germany, Greece, Hungary, Ireland, Italy
(including San Marino and Vatican City), Latvia, Lithuania, Luxembourg, Malta,
The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia,

 

3

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

Spain,
Sweden, and the United Kingdom) and Albania, Andorra, Armenia, Azerbaijan,
Belarus, Bosnia and Herzegovina, Croatia, Georgia, Iceland, Kazakhstan, Kosovo,
Kyrgyzstan, Liechtenstein, Macedonia, Moldova, Norway, Russia, Serbia,
Switzerland, Tajikistan, Turkmenistan, Turkey, Ukraine, and Uzbekistan.

 

1.23                        “Existing Inventory” has the meaning set forth in Section
7.3(a).

 

1.24                        “FD&C Act” means the U.S. Federal Food, Drug and Cosmetic
Act, as amended.

 

1.25                        “FDA” means the U.S. Food and Drug Administration or its
successor.

 

1.26                        “Field” means the prevention, treatment or palliation of any
and all human diseases and conditions.

 

1.27                        “First Commercial Sale” means the first sale to a Third Party
of a Product in a given regulatory jurisdiction.

 

1.28                        “First Launch Milestone” has the meaning set forth in Section
8.2(a).

 

1.29                        “Generic Competing Product” means, with respect to a given
Product in a given jurisdiction in the Licensed Territory, any pharmaceutical
product that:  (a) is marketed for sale
in such jurisdiction by a Third Party (not otherwise licensed or authorized by
Norgine); (b) contains TZP-101 as an active pharmaceutical ingredient in an
equivalent formulation and mode of administration; and (c) such product, as and
to the extent required, is approved through an abbreviated process (including,
with respect to the European Union approvals issued pursuant to Article 10(1)
of Directive 2001/83/EC where the Third Party has provided EMEA with scientific
data to substantiate a claim of biosimilarity to the Product in question, or,
outside the European Union, any counterparts thereof).

 

1.30                        “Good Clinical Practices” or “GCP”
means a set of ethical and scientific quality requirements which must be
observed for designing, conducting, recording and reporting clinical trials in
a given country or group of countries that involve the participation of human
subjects including:  (a) in relation to
clinical trials in the European Union, Directive 2001/20/EC, Directive
2001/83/EC and Directive 2005/28/EC as well as ICH-GCP and any other guidelines
for good clinical practice for trials on medicinal products in Europe as
amended and applicable from time to time; (b) in relation to clinical trials in
the U.S., 21 C.F.R. Parts 50 (Protection of Human Subjects), 56 (Institutional
Review Boards) and 312 (Investigational New Drug Application), as may be
amended from time to time; and any other guidelines for good clinical practice
for trials on medicinal products in the U.S. as amended and applicable from
time to time; and (c) in relation to clinical trials in any other country, the
equivalent Laws in that country as amended and applicable from time to
time.  For clarity, Development
activities conducted with the aim of supporting Regulatory Approval in more
than one (1) jurisdiction shall meet the requirement of GCP for each of such
jurisdictions.

 

1.31                        “Good Laboratory Practices” or “GLP”
means the quality system concerned with the organizational process and the
conditions under which laboratory studies are planned, performed, monitored,
recorded and reported, in a given country or group of countries including:  (a) in relation to such studies in the
European Union, Directive 2004/10/EC as may be amended

 

4

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

or
replaced from time to time as well as any “Rules Governing Medicinal Products
in the European Community” Vol III, ISBN 92.825 9619-2 (ex OECD principles of
GLP) as amended and applicable from time to time; (b) in relation to the U.S.,
21 C.F.R. Part 58 (Good Laboratory Practice for Nonclinical Laboratory Studies)
as amended and applicable from time to time; and (c) in relation to any other
country, the equivalent Laws in that country as amended and applicable from
time to time.  For clarity, Development
activities conducted with the aim of supporting Regulatory Approval in more
than one (1) jurisdiction shall meet the requirement of GLP for each of such
jurisdictions.

 

1.32                        “Good Manufacturing Practices,” “cGMP” or “GMP” means all applicable standards relating to
manufacturing practices for fine chemicals, active pharmaceutical ingredients,
intermediates, bulk products or finished pharmaceutical products, for supply in
a given country or group of countries including:  (a) in the case of the European
Union, (i) Directive 2003/94/EC or any other applicable European Community
legislation or regulation from time to time, and (ii) the Rules Governing Medicinal Products in the European
Community, Volume IV Good Manufacturing Practice for Medicinal Products,  each as may be applicable and as amended from time to
time; (b) in the case of the U.S., the principles detailed in the U.S. Current Good Manufacturing
Practices, 21 C.F.R. Parts 210, 211, 601 and 610, each as may be applicable and
as amended from time to time; (c) in relation to any other
country, the equivalent Laws in that country as amended and applicable from
time to time; and (d) the principles detailed in the ICH Q7A guidelines.

 

1.33                        “Governmental Authority” means any multi-national, federal,
state, local, municipal, provincial or other government authority of any nature
(including any governmental division, prefecture, subdivision, department,
agency, bureau, branch, office, commission, council, court or other tribunal).

 

1.34                        “ICC” has the meaning set forth in Section 14.3.

 

1.35                        “ICH-GCP” — the ICH Harmonised Tripartite Guideline for Good
Clinical Practice (CPMP/ICH/135/95).

 

1.36                        “IND” means (a) an Investigational New Drug Application as
defined in the FD&C Act and applicable regulations promulgated hereunder by
the FDA, or (b) the equivalent application to the equivalent agency in any
other regulatory jurisdiction outside the U.S., the filing of
which is necessary to commence or conduct clinical testing of a pharmaceutical
product in humans in such jurisdiction.

 

1.37                        “Independent Studies” has the meaning set forth in Section
4.1(a).

 

1.38                        “Independent Studies Development Plan” has the meaning set
forth in Section 4.2(d).

 

1.39                        “Indication” means any human disease or condition which can
be treated, prevented, palliated or cured or the progression of which can be
delayed and for which a Product is specifically developed in order to obtain
Regulatory Approval for use of such Product pursuant to an approved label
claim.  For clarity (and without
exclusion of other Indications), [***] shall each be deemed a separate
Indication for the purpose of this Agreement.

 

5

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

1.40                        “Information” means any data, results, technology, business information, technical information and other information
of any type whatsoever, in any tangible or intangible form, including, without
limitation, know-how, practices, techniques, methods, processes, inventions,
developments, specifications, formulations, formulae, materials or compositions
of matter of any type or kind (patentable or otherwise), software, algorithms,
marketing reports, expertise, technology, test data (including pharmacological,
biological, chemical, biochemical, toxicological, preclinical and clinical test
data), analytical and quality control data, stability data, other study data
and procedures, case report forms, data analyses, and information contained in
submissions to and information from ethical committees and Regulatory
Authorities.  Information includes any
rights including trade secrets, copyright, database rights or design rights
protecting such Information.

 

1.41                        “Initial Development Plan” has the meaning set forth in
Section 4.2(a).

 

1.42                        “Initial Unit Price” has the meaning set forth in Section
8.2(a).

 

1.43                        “Joint Development Committee” or “JDC”
has the meaning set forth in Section 3.4(a).

 

1.44                        “Joint Inventions” has the meaning set forth in Section 9.1.z

 

1.45                        “Joint Patent” has the meaning set forth in Section 9.1.

 

1.46                        “Joint Steering Committee” or “JSC”
means the committee formed by the Parties as described in Section 3.1.

 

1.47                        “Launch Milestone” has the meaning set forth in Section 8.2.

 

1.48                        “Launch Milestone Adjustment” has the meaning set forth in
Section 8.2(b)(ii).

 

1.49                        “Laws” means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, domestic or foreign.

 

1.50                        “Licensed Territory” means Europe, Oceania, South Africa, the
Middle East and North Africa.

 

1.51                        “Licensed Territory Development Plan” has the meaning set
forth in Section 4.2(a).

 

1.52                        “Losses” has the meaning set forth in Section 11.1.

 

1.53                        “MAA” or “Marketing Authorization
Application” means any filing, application or submission filed with
EMEA (or, if the decentralized procedure is followed, the national Regulatory
Authority for a particular country in the European Union, such as MHRA in the
United Kingdom or BfArM in Germany) to obtain permission to market and sell a
pharmaceutical product in the European Union (or, if the decentralized
procedure is followed, a particular country in the European Union) (but
excluding always any form of pricing or

 

6

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

reimbursement
approval) or any comparable application filed with the Regulatory Authority in
or for a country or group of countries outside the European Union to obtain
permission to market and sell a pharmaceutical product in that country or
within that group of countries.

 

1.54                        “Major Market” shall mean any of [***].

 

1.55                        “Manufacturing Costs” means the cost incurred in the
manufacture of Product for registration batch, validation batch, or for other
Commercialization purposes, including, but not limited to (a) direct labor; (b)
product quality assurance/control costs; (c) facility and equipment
depreciation costs; (d) facility and equipment validation and control costs;
(e) shipping costs; and (f) applicable overhead reasonably allocable to Product
(excluding general and administrative expenses).  Manufacturing Costs shall expressly exclude
Clinical Manufacturing Costs.

 

1.56                        “Middle East” means Bahrain, Iran, Iraq, Israel, Jordan,
Kuwait, Lebanon, Oman, Palestinian territories, Qatar, Saudi Arabia, Syria, the
United Arab Emirates and Yemen, as their boundaries are defined as of the
Effective Date and including any successors of the foregoing countries to the
extent within the boundaries of the countries set forth above as of the
Effective Date.

 

1.57                        “Net
Sales” means, with respect to a particular time period, the total amounts
invoiced by Norgine, its Affiliates and their respective sublicensees for sales
of Products made during such time period to unaffiliated Third Parties, less
the following deductions to the extent actually allowed or incurred with
respect to such sales:

 

(a)                                  normal and
customary discounts, including trade, cash and quantity discounts, administrative fees incurred directly in such discounting, and rebates
actually granted to customers and distributors;

 

(b)                                  credits, reasonable
price adjustments or allowances actually granted for damaged, outdated,
spoiled, returned or rejected Products, including, without limitation, in
connection with recalls; and

 

(c)                                  chargeback
payments and rebates (or the equivalent thereof) for the Products granted to
group purchasing organizations, managed health care organizations or to
federal, state/provincial, local and other governments, including their
agencies, or to trade customers;

 

(d)                                  reasonable and
customary freight, shipping insurance and other transportation expenses
directly related to the sale of the Products;

 

(e)                                  Taxes in the Licensed Territory, as adjusted by any refunds; and

 

In addition, Norgine may deduct from invoiced sales in
a particular quarter any amounts due and payable for Product which are
recognized by Norgine as being actual, uncollectable amounts in that quarter,
where collectability is determined in accordance with IFRS consistently applied
to all Norgine products.

 

7

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

Notwithstanding
the foregoing, amounts billed by Norgine, its Affiliates, or their respective
sublicensees for the sale of Products among Norgine, its Affiliates or their
respective sublicensees for resale shall not be included in the computation of
Net Sales hereunder.  For purposes of determining
Net Sales, the Products shall be deemed to be sold when invoiced and a “sale”
shall not include reasonable transfers or dispositions, at no cost, as samples
or for charitable purposes, or transfers or dispositions at no cost for
preclinical, clinical or regulatory purposes.

 

Such
amounts shall be determined from the books and records of Norgine maintained in
accordance with IFRS, consistently applied.

 

If
one or more Products is sold as part of a Combination Product (as defined
below), the Net Sales from the Combination Product shall be determined by
multiplying the Net Sales (as determined above) of the Combination Product,
during the applicable royalty reporting period, by the fraction, A/(A+B), where
A is the gross selling price of the Product(s) when sold separately in finished
form and B is the gross selling price of the Combination Product when sold
separately in finished form, in each case in the applicable country during the
applicable royalty reporting period or, if sales of both the Product(s) and the
other components did not occur in such country in such period, then in the most
recent royalty reporting period in which sales of both occurred.  If such average sale price cannot be
determined for both the Product(s) and all other components included in such
Combination Product, Net Sales for the purposes of determining royalty payments
shall be determined by the Parties in good faith.  For purposes of this Section 1.57 the term “Combination Product” means any therapeutic medical product
that includes both (i) one or more Product(s) and (ii) one or more other active
ingredient(s).

 

1.58                        “Non-breaching Party” has the meaning set forth in Section
13.2(a).

 

1.59                        “North Africa” means Egypt, Libya, Tunisia, Algeria, and
Morocco.

 

1.60                        “Norgine Abandoned Patents” has the meaning set forth in
Section 9.3(b)(i)(2).

 

1.61                        “Norgine Competing Product” has the meaning set forth in
Section 2.6(a).

 

1.62                        “Norgine Development Activities” has the meaning set forth in
Section 4.4(a).

 

1.63                        “Norgine Indemnitees” has the meaning set forth in Section
11.1.

 

1.64                        “Norgine Independent Studies” has the meaning set forth in
Section 4.1(a).

 

1.65                        “Norgine Independent Studies Development Plan” has the
meaning set forth in Section 4.2(a).

 

1.66                        “Norgine Know-How” means all Information that is Controlled
by Norgine or its Affiliates as of the Effective
Date or during the Term and is necessary for the Development, manufacture
and/or Commercialization of TZP-101 and/or the Product in the Field in
accordance with the terms of this Agreement. 
For clarity, Norgine Know-How excludes Information contained within the
Norgine Patents.

 

8

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

1.67                        “Norgine Patent” means any Patent that is (a) Controlled by
Norgine or its Affiliates as of the Effective
Date or at any time during the Term (including Norgine Sole Patents but
excluding Norgine’s interest in any Joint Patents), and (b) necessary for the
Development, manufacture and/or Commercialization of TZP-101 and/or Products in
the Field.

 

1.68                        “Norgine Prosecuted Patents” has the meaning set forth in
Section 9.3(b)(i)(1).

 

1.69                        “Norgine
Sole Inventions” has the meaning given to it in Section 9.1.

 

1.70                        “Norgine Sole Patents” has
the meaning given to it in Section 9.1.

 

1.71                        “Norgine
Technology” means the Norgine Patents and Norgine Know-How.

 

1.72                        “Norgine Withholding Tax Action” has the meaning set forth in
Section 8.11(c).

 

1.73                        “Notified Party” has the meaning set forth in Section
13.2(a).

 

1.74                        “Oceania” means Australia and New Zealand.

 

1.75                        “Patent List” has the meaning set forth in Section 10.2(b).

 

1.76                        “Patent Term Extension” has the meaning set forth in Section
9.3(e).

 

1.77                        “Patents” means (a) all
national, regional and international patent applications, including provisional
patent applications, (b) all patent applications filed either from the patent
applications the subject of (a) or from an application claiming priority from
any of these, including divisionals, continuations, continuations-in-part,
provisionals, converted provisionals, and continued prosecution applications,
(c) any and all patents that have issued or in the future issue from the
foregoing patent applications in (a) and (b), including author certificates,
inventor certificates, utility models, petty patents and design patents and
certificates of invention, (d) any and all extensions or restorations by
existing or future extension or restoration mechanisms, including
revalidations, reissues, re-examinations and extensions (including any
supplementary protection certificates and the like) of the foregoing patents or
patent applications in (a), (b) and (c), and (e) any similar rights, including
so-called pipeline protection, or any importation, revalidation, confirmation
or introduction patent or registration patent or patent of additions to any such
foregoing patent applications and patents.

 

1.78                        “Pharmacovigilance Agreement” has the meaning set forth in
Section 5.3.

 

1.79                        “Phase 3 Clinical Trial” means a clinical trial on sufficient
numbers of patients, which trial(s) are designed to (a) establish that a drug
is safe and efficacious for its intended use; (b) define warnings, precautions
and adverse reactions that are associated with the drug in the dosage range to
be prescribed; and (c) support approval of an application to a Regulatory
Authority for the commercial marketing of such drug.

 

1.80                        “Product” means any pharmaceutical product comprising TZP-101
as an active ingredient irrespective of its formulation.

 

9

 

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

1.81                        “Product Infringement” has the meaning set forth in Section 9.4(a).

 

1.82                        “Product Trademark” has the meaning set forth in Section 6.6.

 

1.83                        “Region” means each of the following: (a) Europe; (b) Oceania;
(c) South Africa; (d) the Middle East; and (e) North Africa.

 

1.84                        “Regulatory Approval” means, with
respect to a Product in any country or jurisdiction, all approvals (including
pricing and reimbursement approvals), registrations, licenses or authorizations
from the relevant Regulatory Authority in a country or jurisdiction that is
specific to Product and necessary to market and sell such Product in such
country or jurisdiction.

 

1.85                        “Regulatory Authority” means, in a particular country or
regulatory jurisdiction, any applicable Governmental Authority involved in
granting Regulatory Approval and/or, to the extent required in such country or
regulatory jurisdiction, pricing or reimbursement approval of a Product in such
country or regulatory jurisdiction, including (a) the FDA, and (b) the
EMEA, and in each case, including any successor thereto.

 

1.86                        “Regulatory Filings” means, with respect to
the Products, any submission to a Regulatory Authority of any appropriate
regulatory application specific to TZP-101 or a Product, and shall include,
without limitation, any submission to a regulatory advisory board and any
supplement or amendment thereto.  For the
avoidance of doubt, Regulatory Filings shall include any IND, MAA or the
corresponding application in any other country or group of countries.

 

1.87                        “Retained Territory” means  all
countries and territories outside the Licensed Territory.

 

1.88                        “Revised Launch Milestone” has the meaning set forth in Section 8.2(b)(i).

 

1.89                        “Royalty Term” has the meaning set forth in Section 8.4.

 

1.90                        “SEC” has the meaning set forth in Section 12.4(a).

 

1.91                        “Sole Inventions” has the meaning set forth in Section 9.1.

 

1.92                        “Sublicense Agreement” has the meaning set forth in Section 2.1(c).

 

1.93                        “Taxes” means taxes (other than income taxes), duties,
tariffs or other governmental charges levied on the sale of Products,
including, without limitation, consumption
taxes.

 

1.94                        “Term” means the term of this Agreement, as determined in
accordance with Article 13.

 

1.95                        “Territory” means the Licensed Territory or the Retained
Territory, as applicable.

 

10

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

1.96                        “Third Party” means any person or entity other than Tranzyme
or Norgine or an Affiliate of either of them.

 

1.97                        “Third Party Claim” has the meaning set forth in Section 11.1.

 

1.98                        “Third Party  Development Costs”
means the out-of-pocket amounts paid to Third Parties (excluding consultants
engaged by a Party on an on-going basis) incurred as an expense in accordance
with generally accepted accounting principles and in accordance with the
Development Plan (including the budget contained therein) on behalf of a Party,
its Affiliates, licensees or sublicensees in carrying out preclinical testing,
toxicology testing, human clinical trials, and post-approval marketing studies,
but excluding Clinical Manufacturing Costs, Manufacturing Costs and costs
associated with seeking, obtaining or maintaining Regulatory Approval in a
particular country within the Territory.

 

1.99                        “Tranzyme Competing Product” has the meaning set forth in Section 2.6(b).

 

1.100                 “Tranzyme Development Activities” has the meaning set forth
in Section 4.3(a).

 

1.101                 “Tranzyme Know-How” means all Information that is Controlled
by Tranzyme or its Affiliates as
of the Effective Date or during the Term and is necessary for the
Development, manufacture and/or Commercialization of TZP-101 and/or the
Products in the Field in accordance with the terms of this Agreement.  For clarity, Tranzyme Know-How excludes
Information contained within the Tranzyme Patents.

 

1.102                 “Tranzyme Indemnitees” has the meaning set forth in Section 11.2.

 

1.103                 “Tranzyme Independent Studies” has the meaning set forth in Section 4.1.

 

1.104                 “Tranzyme Independent Studies Development Plan” has the
meaning set forth in Section 4.2(d).

 

1.105                 “Tranzyme Other-Product Patent” means (a) the Patents
set forth on Part A of Exhibit A
and (b) any other Patent that becomes Controlled by Tranzyme or its
Affiliates after the Effective Date (including Tranzyme Sole Patents but
excluding Tranzyme’s interest in any Joint Patents) that: (i) is necessary
for Norgine and/or its Affiliates to have rights under in order to Develop,
manufacture, use and/or Commercialize TZP-101 and/or Products in the Field; and
(ii) covers any of Tranzyme’s proprietary technology: (A) that is
generally applicable or can be applied to Tranzyme’s discovery or development
program in addition to the development program relating to TZP-101 and Product,
or (B) that is applicable or can be applied to one or more compounds or
products in addition to TZP-101 or Product, or (C) that covers the
composition of matter of, or the method of discovering, making or using, any
compounds or products (or any design, component, formulation or part thereof)
in addition to TZP-101 or Product.

 

1.106                 “Tranzyme
Patent” means the Tranzyme Product- Specific
Patents and Tranzyme Other-Product Patents.  The Tranzyme
Patents existing as of the Effective Date are set forth on Exhibit A
attached hereto.

 

11

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

1.107                 “Tranzyme Product-Specific Patent” means (a) the Patents
set forth on Part B of Exhibit A
and (b) any other Patent that becomes Controlled by Tranzyme or its
Affiliates at any time after the Effective Date (including Tranzyme Sole
Patents but excluding Tranzyme’s interest in any Joint Patents) that: (i) is
necessary for Norgine and/or its Affiliates to have rights under in order to
Develop, manufacture, use and/or Commercialize TZP-101 and/or Products in the
Field; and (ii) is not a Tranzyme Other-Product Patent.

 

1.108                 “Tranzyme Prosecuted Patents” has the meaning given to it in Section 9.3(a)(i).

 

1.109                 “Tranzyme
Sole Invention” has the meaning given to it in Section 9.1.

 

1.110                 “Tranzyme
Sole Patent” has the meaning given to it in Section 9.1.

 

1.111                 “Tranzyme Technology” means the Tranzyme Patents and Tranzyme
Know-How.

 

1.112                 “TZP-101” means Tranzyme’s proprietary ghrelin agonist known
as TZP-101 (ulimorelin), having
the chemical structure set forth on Exhibit B,
including any salt, ester, solvate, polymorphic form, stereoisomer, metabolite,
and pro-drug thereof.

 

1.113                 “TZP-101 Divisionals” has the meaning set forth in Section 9.3(a)(i).

 

1.114                 “TZP-101 Specific Claims” has the meaning set forth in Section 9.3(a)(i).

 

1.115                 “Unit” has the meaning set forth in Section 8.2(c).

 

1.116                 “U.S.” means the United States of America and its territories
and possessions.

 

1.117                 “Valid Claim”  means, with
respect to any country: (a) a claim of an issued and unexpired patent (as
may be extended through supplementary protection certificate or patent term
extension or the like) included within Patents to the extent such claim has not
been revoked, held invalid or unenforceable by a patent office, court or other
governmental agency of competent jurisdiction in a final and non-appealable
judgment (or judgment from which no appeal was taken within the allowable time
period) and which claim has not been disclaimed, denied or admitted to be
invalid or unenforceable through reissue, re-examination or disclaimer or
otherwise; and (b) a claim of a pending patent application included within
Patents which claim was filed and is being prosecuted in good faith and has not
been abandoned or finally disallowed without the possibility of appeal or
refiling of the application, provided that no more than eight (8) years
have passed since the earliest priority date for such application.

 

ARTICLE 2

 

LICENSES AND EXCLUSIVITY

 

2.1                               License
to Norgine under Tranzyme Technology.

 

(a)                                  License.  Subject to the terms of this Agreement,
Tranzyme and its Affiliates hereby grant Norgine (i) an exclusive (even as to Tranzyme and its Affiliates except as provided in Section 2.1(b) below),
royalty-bearing license (with the right to grant sublicenses at

 

12

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

one
or more tier(s) subject to Section 2.1(c) below) under the
Tranzyme Technology, (a) to research, have researched, Develop, have
Developed, use and have used TZP-101 and Product in the Field in the Licensed
Territory and (b) to sell, offer for sale, have sold, import and otherwise
Commercialize or have Commercialized Product in the Field in the Licensed
Territory; (ii) a nonexclusive, worldwide, royalty-free license (with the
right to grant sublicenses at one or more tier(s) subject to Section 2.1(c) below),
under the Tranzyme Technology, to manufacture and have manufactured TZP-101 and
Product worldwide solely for research, Development, use or Commercialization of
such Products in the Field in the Licensed Territory under the license granted
to Norgine under Section 2.1(a)(i); (iii) an exclusive (even as to
Tranzyme and its Affiliates except as provided in Section 2.1(b) below),
royalty free license (with the right to grant sub-licenses at one or more tier(s) subject
to Section 2.1(c) below) under Tranzyme’s interest in the Joint
Inventions to (a) research, have researched, Develop, have Developed and
use and have used TZP-101 and Product in the Field in the Licensed Territory
and (b) sell, offer for sale, have sold, import and otherwise
Commercialize or have Commercialized the Products in the Field in the Licensed
Territory; and (iv) a nonexclusive, worldwide, royalty-free license (with
the right to grant sublicenses at one or more tier(s) subject to Section 2.1(c) below),
under the Joint Inventions, to manufacture and have manufactured TZP-101 and
Product worldwide solely for Development, use or Commercialization of such
Product in the Field in the Licensed Territory under the license granted to
Norgine under Section 2.1(a)(i). Norgine shall not have the right to
conduct or have conducted research and/or Development activities in the
Retained Territory for the generation of data in support of Regulatory Filings
to the Regulatory Authorities in the Licensed Territory except as expressly
permitted under this Agreement or with the prior written consent of
Tranzyme.  For clarity, the licenses
granted to Norgine by Tranzyme and its Affiliates under this Section 2.1(a) shall
not include any rights for Norgine to research, Develop, make, have made, use,
sell, offer for sale, distribute, import, export and otherwise commercialize
any other proprietary compound of Tranzyme (including any proprietary compound
which Tranzyme licenses to a Third Party) that is not TZP-101.

 

(b)                          Tranzyme
Retained Rights.  Tranzyme
shall retain all rights under the Tranzyme Technology that are not subject to a
license grant to Norgine in Section 2.1(a) above subject to Section 2.3
of this Agreement.  In addition and
notwithstanding the rights granted to Norgine in Section 2.1(a), Tranzyme
retains the right, directly or through any Third Party, to: (i) conduct
the activities assigned to it under the Development Plan (including without limitation
the conduct of Development activities in the Licensed Territory in accordance
with the Development Plan); (ii) with the prior written consent of
Norgine, to conduct or have conducted research, Development activities in the
Licensed Territory for the generation of data in support of regulatory
submissions to the Regulatory Authorities in the Retained Territory in addition
to those activities set forth in Section 2.1(b)(i); and (iii) formulate,
process, manufacture and have manufactured TZP-101 and/or Product worldwide for
use in connection with the research and Development and/or Commercialization of
the Product in the Retained Territory.

 

(c)                                  Sublicenses. 
Norgine may grant sublicenses to Affiliates and Third Parties under its
rights under Section 2.1(a) without the prior written consent of Tranzyme but, in the case of
sublicenses to Third Parties, with prior written notification to Tranzyme.  Norgine shall ensure that each
agreement under which it grants a sublicense under the license set forth in Section 2.1(a) (each,
a “Sublicense Agreement”), is entered
into on terms which are consistent with the terms of this Agreement and Norgine
shall remain responsible for all of its obligations

 

13

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

hereunder
and if the acts or omissions of any such sub-license cause Norgine to be in
breach of this Agreement Norgine shall be responsible therefor (with all the
express consequences provided for under this Agreement) regardless of any
remedy which Norgine may have against the sub-licensee for breach of the
Sublicense Agreement.

 

2.2                               License
to Tranzyme under Norgine Technology.  Norgine hereby
grants Tranzyme (a) [***] license under the Norgine Technology and Norgine’s
interest in the Joint Inventions to perform Tranzyme’s obligations under this Agreement
anywhere in the world; (b) [***], under Norgine Sole Inventions and
Norgine’s interest in the Joint Inventions to research, have researched,
Develop, have Developed, use, have used, sell, offer for sale, have sold and
import any Product in the Retained Territory; (c) [***], under Norgine
Sole Inventions and Norgine’s interest in the Joint Inventions, to manufacture
and have manufactured Product worldwide solely for research, Development, use
or Commercialization of such Product in the Field in the Retained
Territory.  Except as expressly set forth
above Tranzyme shall not acquire any license or other right to use the Norgine
Technology or Norgine’s interest in the Joint Inventions hereunder.  Should Tranzyme wish to acquire either (i) rights
to use the Norgine Technology or (ii) rights under Norgine’s interest in
the Joint Inventions or Joint Patents, in each case other than in relation to
Product in the Retained Territory, such rights under the Norgine Technology or
Norgine’s interest in the Joint Inventions or Joint Patents shall be the
subject of a separate agreement to be negotiated and executed by the Parties at
some time in the future.  The Parties
shall negotiate in good faith to agree on the terms for the use of such rights,
and if the Parties cannot agree on such terms, such rights shall be granted on
terms to be determined in accordance with the dispute resolution mechanism set
forth in Article 14.

 

2.3                               Limitations
to Injectable TZP-101.  Norgine  covenants that, notwithstanding the scope of the licenses
granted to Norgine under (i) Tranzyme Technology and (ii) Tranzyme’s
interest in the Joint Patent pursuant to Section 2.1(a) above to all
Products in the Field, during the Term it will not, and shall ensure that none
of its Affiliates will, either by itself or through collaborating with or
granting rights to a Third Party, use, research, Develop, manufacture, import,
export, sell or otherwise Commercialize in the Licensed Territory Product that
is not formulated for intravenous, subcutaneous and/or intramuscular
administration.  For clarity, Norgine may
use, research, Develop, manufacture, import or export Product that is not
formulated for intravenous, subcutaneous and/or intramuscular administration so
long as the purpose of such activity is to Develop, manufacture or
Commercialize Product formulated for intravenous, subcutaneous or intramuscular
administration, such as to generate pre-clinical or non-clinical data relating
to TZP-101 for use in an MAA for  Product
formulated for intravenous, subcutaneous or intramuscular administration.

 

2.4                               No
Implied Licenses; Rights Limited to Licenses Granted.  Except as set forth herein,
neither Party acquires any license or other intellectual property interest, by
implication or otherwise, under any trademarks, Information or Patents
owned or Controlled by the other Party. 
Norgine covenants that it will not, and will ensure that its Affiliates
and sublicensees will not, use or practice any Tranzyme Technology outside the
scope of the license granted to it under Section 2.1 above.  Tranzyme covenants that it will not, and it
will not permit any of its Affiliates and sublicensees to, use or practice any
Norgine Technology outside the scope of the license granted to it under Section 2.2.

 

14

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

2.5                               Cross-Territorial Restrictions.  Norgine hereby
covenants and agrees that it shall not, and will ensure that its Affiliates and
sublicensees will not, either directly or indirectly, actively promote, market,
distribute, import, sell or have sold Product into countries in the Retained
Territory. As to such countries in the Retained Territory: (a) Norgine
shall refrain, and will ensure that its Affiliates and sublicensees shall
refrain, from establishing or maintaining any branch, warehouse or distribution
facility for Product in such countries other than is necessary to allow for the
exportation of Product manufactured in the Retained Territory into the Licensed
Territory; (b) Norgine shall not, and will ensure that its Affiliates and
sublicensees will not, engage in any advertising or promotional activities
relating to Product directed primarily to customers or other buyers or users of
the Product located in such countries; and (c) Norgine shall not, and will
ensure that its Affiliates and sublicensees will not, solicit orders from any
prospective purchaser located in such countries.  If Norgine receives any order from a
prospective purchaser located in a country in the Retained Territory, Norgine
shall immediately refer that order to Tranzyme. 
Norgine shall not accept any such orders.  Norgine may not deliver or tender (or cause
to be delivered or tendered) any Product outside of the Licensed
Territory.  Norgine shall not, and will
ensure that its Affiliates and sublicensees will not, restrict or impede in any
manner Tranzyme’s exercise of its retained rights in the Retained
Territory.  Tranzyme hereby covenants and
agrees that it shall not, and will ensure that its Affiliates or its
sublicensees will not, either directly or indirectly, promote, market, distribute,
sell or have sold Product in the Licensed Territory.  As to such countries in the Licensed
Territory, (a) Tranzyme shall refrain, and will ensure that its Affiliates
and sublicensees shall refrain, from establishing or maintaining any branch,
warehouse or distribution facility for the Product in such countries other than
is necessary to allow for the Development and/or exportation of Product
manufactured in the Licensed Territory into the Retained Territory; (b) Tranzyme
shall not, and will ensure that its Affiliates and sublicensees will not,
engage in any advertising or promotional activities relating to the Product
directed primarily to customers or other buyers or users of the Product located
in such countries; and (c) Tranzyme shall not, and will ensure that its
Affiliates and sublicensees will not, solicit orders from any prospective
purchaser located in such countries.  If
Tranzyme receives any order from a prospective purchaser located in a country
in the Licensed Territory, Tranzyme shall immediately refer that order to
Norgine.  Tranzyme shall not accept any
such orders.  Tranzyme may not deliver or
tender (or cause to be delivered or tendered) any Product outside of the
Retained Territory.  Tranzyme shall not,
and will ensure that its Affiliates and sublicensees will not, restrict or
impede in any manner Norgine’s exercise of its rights in the Licensed
Territory.

 

2.6                               Exclusivity

 

(a)                                  Norgine.  On a Region-by-Region basis, prior to the end
of the Royalty Term in an applicable Region within the Licensed Territory,
Norgine shall not, and shall ensure that none of its Affiliates will, either by
itself or through collaborating with or granting rights to a Third Party,
[***].

 

(b)                                  Tranzyme.  On a Region-by-Region basis, prior to the end
of the Royalty Term in an applicable Region within the Licensed Territory,
Tranzyme shall not, and shall ensure that none of its Affiliates will, either
by itself or through collaborating with or granting rights to a Third Party,
commercialize in such Region in the Field in the Licensed Territory [***] (such
product, a “Tranzyme Competing Product”, and
together with Norgine Competing

 

15

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Product,
“Competing Product”); provided that
Tranzyme’s exclusivity obligation under this Section 2.6(b) in the
Licensed Territory shall expire completely on the date when Product is no
longer sold in the Licensed Territory by Norgine, its Affiliates or any of its
sublicensees (should this occur prior to expiry of the Royalty Terms in the
Licensed Territory).

 

(c)                                  Acquisition
by a Third Party.[***]

 

ARTICLE 3

 

OVERVIEW; MANAGEMENT

 

3.1                               Joint
Steering Committee.

 

(a)                                  Formation
and Role.  The Parties
agree to establish a Joint Steering Committee (or “JSC”) for the overall coordination and oversight of
the Parties’ activities under this Agreement, promptly after the Effective
Date.  The role of the Joint Steering
Committee shall be:

 

(i)                                    to (A) review,
coordinate, discuss and approve the overall strategy for conducting Development
of and seeking Regulatory Approval for Products in the Licensed Territory and
Retained Territory in the Field and (B) review and discuss Commercializing
Products in the Licensed Territory in the Field;

 

(ii)                                to review,
discuss and approve the Development Plan and/or associated budget, any proposed
amendments or revisions to the Development Plan and any corresponding change to
the associated budget;

 

(iii)                            to facilitate
the exchange of information between the Parties under this Agreement regarding
the strategy for implementing the joint Development activities and to discuss
those activities that a Party may conduct independently for its Territory;

 

(iv)                               to oversee the
activities performed by the JDC;

 

(v)                                   to review,
discuss and approve the Commercialization Plan, and any proposed amendments or
revisions to such plan;

 

(vi)                               to seek to
resolve any issues arising under this Agreement;

 

(vii)                           to establish
such additional joint subcommittees as it deems necessary to achieve the
objectives and intent of this Agreement;

 

(viii)                       to review,
discuss and approve publications pursuant to this Agreement;  and

 

(ix)                              to perform such
other functions as appropriate to further the purposes of this Agreement, as
determined by the Parties in writing.

 

(b)                                  JSC
Membership.  Tranzyme
and Norgine shall each designate an equal

 

16

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

number
of representatives (each of whom shall be a senior executive of the applicable
Party) to serve on the Joint Steering Committee by written notices to the other
Party.  Initially, each Party shall
designate three (3) such representatives. 
The Joint Steering Committee may elect to vary the number of
representatives from time to time during the Term.  Either Party may designate substitutes for
its representatives if one (1) or more of such Party’s designated
representatives is unable to be present at a meeting.  From time to time each Party may replace its
representatives by written notice to the other Party specifying the prior
representative(s) and their replacement(s).  The Chairperson of the JSC shall be appointed
each twelve (12) months, with Tranzyme appointing the initial Chairperson.  The Chairperson
shall be responsible for (a) calling meetings, (b) preparing and
issuing minutes of each such meeting within thirty (30) days thereafter, and (c) preparing
and circulating an agenda for the upcoming meeting, but shall have no special
authority over the other members of the Joint Steering Committee, and shall
have no additional voting rights or powers beyond those held by the other JSC
members.

 

3.2                               JSC
Decisions and Actions.

 

(a)                                  Decision
Making.  The JSC shall act by
consensus. Each Party will have, collectively, one (1) vote on behalf of
that Party. If the JSC cannot reach consensus within twenty (20) days with
respect to any matter that comes before it, then it shall refer the matter to
one senior executive of each Party (i.e., the Chief Executive Officer (or
equivalent position) of such Party or an executive of such Party who reports
directly to the Chief Executive Officer (or equivalent position)) for
resolution.  If such senior executives
cannot agree on the matter within thirty (30) days after such matter has been
referred to them, then, except as provided in Section 3.2(b), either Party
may submit such matter for dispute resolution pursuant to Section 14.3.

 

(b)                                  Final
Decision Making Authority.

 

(i)                                    The following
matters shall require the unanimous consent of the JSC: (A) changes to the
Core Studies Development Plan, and (B) material changes to the budget for
the Core Studies Development (where material, for the purposes of this provision
means increase or decrease to the budget set forth in the Core Studies
Development Plan at the Effective Date by more than ten per cent (10%)).

 

(ii)                                Matters
pertaining to Regulatory Filings, Regulatory Approval, launch and
Commercialization for Product in a Party’s territory or Independent Studies
conducted by a Party, as well as matters pertaining to the activities in
connection therewith, shall be determined by such Party at its sole discretion,
subject to the terms and conditions of this Agreement, provided that neither
Party may make such determination in a manner that would adversely affect the
other Party’s rights to, or activities relating to, Product in Licensed
Territory, insofar as Norgine is concerned, and Retained Territory, insofar as Tranzyme
is concerned.  The JSC shall be a forum
for the Parties to exchange information relating to such matters and shall not
serve as a decision making body for such matters.

 

3.3                               Meetings.  The JSC shall meet at least quarterly during
the Term unless the Parties mutually agree in writing to a different frequency
for such meetings.  No later than ten (10) business
days prior to any regularly scheduled meeting of the JSC, the chairperson of
the JSC shall prepare and circulate an agenda for such meeting and, as soon as
practicable, materials for

 

17

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

the
meeting; provided, however, that either Party may propose additional topics to
be included on such agenda, either prior to or in the course of such
meeting.  The JSC may meet in person, by
videoconference or by teleconference. 
Each Party will bear the expense of its respective JSC members’
participation in JSC meetings.  Meetings
of the JSC shall be effective only if at least one (1) representative of
each Party is present or participating in such meeting.  The chairperson of the JSC will be
responsible for preparing reasonably detailed written minutes of all JSC
meetings that reflect, without limitation, material decisions made at such
meetings.  The JSC chairperson shall send
draft meeting minutes to each member of the JSC for review and approval within
ten (10) business days after each JSC meeting.  The JSC shall formally approve the minutes of
each meeting at the immediately subsequent meeting, and the minutes for the
last JSC meeting will be deemed approved unless one or more members of the JSC
objects to the accuracy of such minutes within ten (10) business days of
receipt.

 

3.4                               Joint
Development Committee

 

(a)                                  The Parties
will also establish a Joint Development Committee (“JDC”),
composed of three representatives of each Party selected by the Parties that
have knowledge and expertise in the development of products similar to Product
to oversee the Development of the Product hereunder and to coordinate the
global development of Product.  The
initial JDC chairperson shall be appointed by Norgine and shall serve in such
capacity for one (1) year. 
Thereafter, the member of the JDC who shall serve as the JDC chairperson
shall be designated alternately by each Party, with each chairperson serving
for a period of one (1) year.  Each
Party may replace its JDC representatives by written notice to the other
Party.  The role of the JDC shall be:

 

(i)                                    to facilitate
the exchange of Information between the Parties under this Agreement with
respect to their Product-related activities (including activities conducted in
the Licensed Territory and the Retained Territory), including as and to the
extent necessary for each Party to perform its obligations under this
Agreement;

 

(ii)                                to develop,
review and comment on the Development Plan (and associated budget) and all
amendments and updates thereto, and to submit such plan (and associated budget)
to the JSC for approval (it being understood that the JDC shall submit such
plan (and associated budget) with sufficient time for the JSC to review and
approve such plan); and

 

(iii)                            to establish
such working teams or subcommittees and to perform such other functions as
appropriate to further the purposes of this Agreement, as determined by the
Parties in writing.

 

(b)                                  The JDC shall
meet at least once per quarter, unless otherwise specified by the JSC, at times
mutually agreed upon by the Parties.  At
least two (2) such meetings per calendar year must be held in person, and
all other such meetings may be held by teleconference or videoconference.  The location of the JDC meetings shall
alternate between sites designated by each Party, with the first such meeting
of the JDC to be held in person to be at Tranzyme’s offices.  A unanimous vote of all the members of the
JDC is required to make decisions.  In
the event of a disagreement among members of the JDC, the committee members
shall use good

 

18

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

faith
efforts to discuss and resolve expeditiously such disagreement.  If a disagreement among members of the JDC
remains unresolved for more than thirty (30) days after the committee first
addresses such matter (or such longer period as the Parties may mutually agree
upon), such disagreement shall be submitted to the JSC for resolution under Section 3.2.  The JDC shall have no power to amend or waive
compliance with this Agreement.

 

3.5                               Costs
of Governance.  The Parties
agree that the costs incurred by each Party in connection with its
participation at any meetings under this Article 3 shall be borne solely
by such Party.

 

3.6                               Discontinuation
of Participation in the Committee.  The JSC and/or
the JDC shall continue to exist until Tranzyme provides written notice to
Norgine of its intention to disband and no longer participate in such
committee, upon which notice such committee shall have no further obligations
under this Agreement.  Tranzyme shall not
give such a notice to Norgine prior to completion of the Core Studies
Development Plan except for a reasonable and material reason.

 

ARTICLE 4

 

PRODUCT DEVELOPMENT

 

4.1                               Overview of Product Development.    The Parties desire and intend to
collaborate with respect to the Development of Product in the Field, under the
direction of the JDC and JSC, as and to the extent set forth in this Agreement.  In general, the Parties shall jointly manage
and conduct a series of core studies that are required to obtain Regulatory
Approval for Product by both the FDA and the EMEA for a first Indication (the “Core Studies”). 
Norgine, its Affiliates and sublicensees shall be responsible for other
Development activities required for the Regulatory Approval of Product in the
Licensed Territory (including by the EMEA to the extent such activities are not
covered by the Core Studies) (the “Norgine Independent
Studies”), and Tranzyme, its Affiliates and licensees shall be
responsible for Development activities required for the Regulatory Approval of
Product in the Retained Territory (including by the FDA to the extent such
activities are not covered by the Core Studies) (the “Tranzyme
Independent Studies”, and together with Norgine Independent Studies,
the “Independent Studies”).  For clarity, the Parties agree to take into
consideration the need for Norgine to obtain pricing and reimbursement approval
in the Licensed Territory in designing the Core Studies and to use Commercially
Reasonable Efforts to design the Core Studies in a manner that Norgine may use
the data and results generated therefrom to satisfy the requirements of the
Major Markets in Europe for such pricing and reimbursement approvals.  In the event any clinical trial(s) is
required for Norgine to obtain any pricing and reimbursement approvals in
addition to the Core Studies, then such additional clinical trial(s) shall
be deemed Norgine Independent Studies.

 

4.2                               Development Plan.

 

(a)                                  Licensed Territory Development Plan. 
As of the Effective Date, the Parties have agreed upon a summary
development plan setting forth the Development activities anticipated by the
Parties to be conducted in order to obtain Regulatory Approval of Product in
the Licensed Territory for a first Indication, including an estimated budget
relating thereto (the

 

19

 

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

“Initial
Development Plan”), attached to this Agreement as Exhibit C. 
Within sixty (60) days after the Effective Date, the Parties shall
discuss and agree upon a detailed development plan consistent with the
principles set forth in the Initial Development Plan and detailing those Development
activities reasonably necessary to obtain Regulatory Approval of Product in the
Licensed Territory for a first Indication, including a detailed budget relating
thereto (the “Licensed Territory Development Plan”),
provided that such detailed budget shall not be greater than the estimated
budget set forth in the Initial Development Plan without the Parties mutual
agreement.  The Licensed Territory
Development Plan will consist of two parts: (i) a plan allocating between
the Parties the Development activities to be conducted by each Party pertaining
to the Core Studies, and setting forth the estimated timeline and a detailed
budget for such activities pertaining to the Core Studies (the “Core Studies Development Plan”); and (ii) a plan
setting forth the activities to be conducted by Norgine under the Norgine
Independent Studies for Regulatory Approval of Product in the Licensed
Territory for a first Indication, and an estimated timeline and budget for such
activities (the “Norgine Independent Studies Development Plan”).

 

(b)           Updates to
Core Studies Development Plan.  From time to time during the Term, the JDC
shall update and amend, as appropriate the then-current Core Studies
Development Plan as well as the associated detailed budget, by submitting all
such updates and amendments to the JSC for review and approval in accordance
with Section 3.2.  Once approved by
the JSC, each updated or amended Core Studies Development Plan and each updated
and amended budget shall become effective and supersede the previous Core
Studies Development Plan (and the previous budget) as of the date of such
approval.

 

(c)           Updates to Norgine Independent
Studies Development Plan.  From time to
time during the Term, Norgine shall have the right to propose amendments to the
then-current Norgine Independent Studies Development Plan to the JDC for its
review.  Norgine shall consider in good
faith any and all comments from the JDC with respect to such amendments.

 

(d)           Tranzyme Independent Studies
Development Plan.  Within
ninety (90) days after the Effective Date, Tranzyme shall prepare a plan
setting forth the activities to be conducted by Tranzyme under the Tranzyme
Independent Studies, and an estimated timeline and budget relating to such
activities (the “Tranzyme Independent Studies Development Plan”,
and together with the Norgine Independent Studies Development Plan, the “Independent Studies Development Plan”).  From time to time during the Term, Tranzyme
shall have the right to amend the then-current Tranzyme Independent Studies Development
Plan.  Tranzyme will provide any proposed
amendments to the JDC for its review, and will consider in good faith any and
all comments from the JDC with respect to such amendments, subject to any of
Tranzyme’s obligations to any Third Party (including confidentiality
obligations) in the event Tranzyme enters into a collaboration with a Third
Party for the Development and/or Commercialization of the Product in the
Retained Territory.  Tranzyme shall use
reasonable efforts in its negotiations with Third Parties to obtain from such
Third Parties the right to share with Norgine any updates to the Tranzyme
Independent Studies Development Plan, the details of any of Tranzyme’s
Development activities relating thereto and any Information arising therefrom.
If Tranzyme is unable to obtain from a Third Party the right to share such
updates, details and Information with Norgine, Tranzyme shall not share any
updates to the Norgine

 

20

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Independent Studies
Development Plan, the details of any of Norgine’s Development activities
relating thereto and any Information arising therefrom with that Third Party.

 

4.3          Tranzyme
Development Activities

 

(a)           Tranzyme shall timely and
diligently conduct the Development activities assigned to it in the Core Studies
Development Plan (the “Tranzyme Development
Activities”).  Tranzyme shall
conduct all Tranzyme Development Activities in accordance with the Development
Plan and under the direction of the JSC.

 

(b)           For as long as Tranzyme is
conducting Tranzyme Development Activities, the status, progress and results of
Tranzyme Development activities shall be discussed in reasonable detail at
meetings of the JDC, and Tranzyme shall provide the JDC with a written report
on the status and progress of such Tranzyme Development Activities on a
quarterly basis.  In addition, Tranzyme
shall make available to Norgine such information about Tranzyme Development
Activities as may be reasonably requested by Norgine from time to time.

 

(c)           Tranzyme shall have the sole
discretion to conduct the Tranzyme Independent Studies under the Tranzyme
Independent Studies Development Plan.

 

4.4          Norgine
Development Activities

 

(a)           Norgine shall
timely and diligently conduct all Development activities assigned to Norgine
under the Licensed Territory Development Plan (the “Norgine Development Activities”), in accordance with the
then-current Licensed Territory Development Plan and the direction of the
JDC.  Without limiting the generality of
the foregoing, Norgine shall use Commercially Reasonable Efforts to Develop the
Product in the Licensed Territory.

 

(b)           The status, progress and
results of Norgine’s Development Activities shall be discussed in reasonable
detail at meetings of the JDC, and Norgine shall provide the JDC with a written
report on the status and progress of such Norgine Development Activities on a
quarterly basis.  In addition, Norgine
shall make available to Tranzyme such information about Norgine Development
Activities as may be reasonably requested by Tranzyme from time to time.

 

(c)           Each Party shall keep the
other informed of any plans to use or incorporate any technology, material,
process or other intellectual property of a Third Party in connection with the
Development of Product in its Territory (being the Licensed Territory with
respect to Norgine and the Retained Territory with respect to Tranzyme).  The Parties shall discuss in good faith to,
when permitted under such Third Party arrangements, enable each Party to use or
incorporate such Third Party technology, material, process or intellectual
property in connection with each Party’s exercise of its rights in its
Territory (being the Licensed Territory with respect to Norgine and the
Retained Territory with respect to Tranzyme).

 

4.5          Compliance.

 

(a)           Each Party agrees that in
performing its obligations under this Agreement: (a) it shall comply with
all applicable Laws; and (b) it will not employ or engage any person who

 

21

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

has been debarred by any
Regulatory Authority, or, to such Party’s knowledge, is the subject of
debarment proceedings by a Regulatory Authority.  Each Party shall have the right to engage
subcontractor(s) for the performance of its obligations under the
Development Plan.  Each Party shall cause
the subcontractor(s) engaged by it to be bound by written obligations of
confidentiality and invention assignment consistent with those contained
herein, and such Party remains primarily responsible for the performance of
such subcontractor(s).

 

(b)           Each Party shall maintain
complete, current and accurate records of all work conducted by it under the
Development Plan, and all data and other Information resulting from such
work.  Such records shall fully and
properly reflect all work done and results achieved in the performance of the
Development activities in good scientific manner appropriate for regulatory
purposes.  Each Party shall document all
preclinical studies and clinical trials in formal written study reports
according to applicable national and international (e.g., ICH, GCP, GLP,
and GMP) guidelines.  Each Party shall
have the right to review such records maintained by the other Party at
reasonable times, upon written request at the reviewing Party’s costs, which
shall not exceed once a year.

 

4.6          Development
Cost Allocation.

 

(a)           Third Party
Development Costs for Core Studies.

 

(i)            The Third Party
Development Costs for the Core Studies that are incurred by or on behalf of a
Party or its Affiliates after the Effective Date in connection with conducting
the activities set forth in the then-current Core Studies Development Plan
shall be allocated between the Parties [***].

 

(ii)           [***]

 

(iii)         Failure for
Tranzyme to pay its share of the Third Party Development Costs for the first
Phase 3 Clinical Trial for the first Product for the first Indication under the
Core Studies Development Plan shall not be deemed a material breach of this
Agreement by Tranzyme and shall not give rise to Norgine’s right to terminate
this Agreement under Section 13.2, but instead, the sole remedy available
to Norgine for such failure to pay by Tranzyme shall be: [***].  Such remedy shall only be available to
Norgine after Norgine provides Tranzyme with written notification of such
underpayment, giving ninety (90) days to cure such underpayment and only if
Tranzyme fails to cure such underpayment within such ninety (90)-day notice
period.

 

(iv)          Failure for
Tranzyme to pay its share of the Third Party Development Costs under Section 4.6(a)(i) for
any Core Study under the Core Studies Development Plan for the first Product
for the first Indication, other than the first Phase 3 Clinical Trial for the
first Product for the first Indication, shall not be deemed a material breach
of this Agreement by Tranzyme and shall not give rise to Norgine’s right to
terminate this Agreement under Section 13.2, but instead, the sole remedy
available to Norgine for such failure to pay by Tranzyme shall be: [***].  Such remedy shall only be available to
Norgine after Norgine provides Tranzyme with written notification of such
underpayment, giving ninety (90) days to cure such underpayment and only if
Tranzyme fails to cure such underpayment within

 

22

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

such
ninety (90)-day notice period.

 

(v)            [***]

 

(b)           Third Party
Development Costs for a Party’s Independent Studies.    Each  Party shall bear all Third Party
Development Costs  that are
incurred by or on behalf of such Party or its Affiliates after the Effective
Date in connection with the activities in support of such Party’s Independent
Studies, subject to Section 5.5(b).

 

(c)           Internal Costs.  For clarity, as part of the sharing of
development costs under this Section 4.6, neither Party shall be required
to bear any of the internal costs incurred after the Effective Date by the
other Party, its Affiliates, licensees and/or sublicensees in connection with
conducting the activities set forth in the then-current Core Studies
Development Plan and/or activities pertaining to its Independent Studies, with
such internal costs to include the FTE costs incurred for employees and
consultants engaged on an ongoing basis, as well as facilities, utilities and
other overhead costs incurred by such Party at such Party’s facility.

 

ARTICLE 5

 

REGULATORY MATTERS

 

5.1          Data Sharing.  Within thirty (30) days after the Effective
Date, Tranzyme will provide Norgine with copies of all material Regulatory
Filings pertaining to the Development of the Product submitted to Regulatory
Authorities in the U.S. or the Licensed Territory prior to the Effective Date.

 

5.2          Regulatory
Responsibilities.

 

(a)           The Parties
shall collaborate through the JDC and JSC with respect to the regulatory
strategy and approach for the Core Studies in order to support the Regulatory
Approval for the Product in both the U.S. and the EU.  Otherwise, each Party shall be primarily
responsible for the regulatory strategy and approach for seeking and obtaining
Regulatory Approval for the Product in such Party’s territory.

 

(b)           Norgine shall
consult with Tranzyme regarding its proposed regulatory strategy in the
Licensed Territory and consider in good faith Tranzyme’s comments and
suggestions as the Parties recognize that the Development of the Product shall
be conducted in a manner consistent with Tranzyme’s global strategy for the
Product.

 

(c)           Norgine shall
be responsible for preparing any and all Regulatory Filings for the Products to be used for filing with the Regulatory Authority and
seeking and maintaining Regulatory Approvals in the Licensed Territory.  Norgine shall solely bear all costs and
expenses incurred in connection with such activities.  As Norgine may reasonably request, Tranzyme
shall use Commercially Reasonable Efforts to assist Norgine in connection with
the preparation and filing of such Regulatory Filings for the Licensed
Territory.  Norgine will reimburse
Tranzyme any out-of-pocket costs incurred by Tranzyme to Third Parties in
providing such assistance

 

23

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

(including
any filing fees associated therewith). 
Norgine shall hold in its name all Regulatory Filings and Regulatory
Approvals filed with Regulatory Authorities for the Product in the Licensed
Territory.

 

(d)           Tranzyme
acknowledges that Norgine will prepare MAAs for the Products in the Licensed
Territory on a rolling basis, with the draft MAAs being continually updated as
the relevant data and information required for submission becomes
available.  Norgine shall keep Tranzyme
reasonably informed of material regulatory activities and events that occur for
a Product in the Licensed Territory and shall, at Tranzyme’s reasonable
request, provide Tranzyme with copies of all material Regulatory Filings
submitted to Regulatory Authorities in the Licensed Territory at no cost to
Norgine, and any Information provided by Norgine to Tranzyme under this Section 5.2(d) shall
be deemed Norgine’s Confidential Information.

 

(e)           Subject to
Tranzyme’s cooperation with Norgine with respect to the Core Studies as set
forth in Section 5.2(a), Tranzyme shall have the sole responsibility, at
its sole discretion, to submit and maintain Regulatory Filings with Regulatory
Authorities for the Products in the Retained Territory.  Subject to Section 4.2(d), Tranzyme
shall keep Norgine reasonably informed of material regulatory activities and
events that occur for a Product in the Retained Territory and shall, at Norgine’s
reasonable request, provide Norgine with copies of all material Regulatory
Filings submitted to Regulatory Authorities in the U.S. and such other
jurisdictions in the Retained Territory as the Parties may agree from time to
time at no cost to Norgine, and any Information provided by Tranzyme to Norgine
under this Section 5.2(e) shall be deemed Tranzyme’s Confidential
Information.

 

5.3              Adverse Event
Reporting and Safety Data Exchange.  The Parties
agree that Tranzyme will be primarily responsible for the monitoring of all
adverse events and maintaining the global safety database.  Norgine will be responsible for the filing of
all required reports in the Licensed Territory throughout the Development and
Commercialization of Products.  The
Parties shall cooperate to develop methods and/or procedures for sharing
information relating to such clinical experiences in accordance with safety
reporting requirements of the respective Regulatory Authorities and as
necessary for a Party to comply with applicable law.  Promptly following the  Effective
Date but in any case prior to the commencement of the first Phase 3 Clinical
Trial using a Product, the Parties shall enter into a pharmacovigilance and
adverse event reporting agreement setting forth the worldwide pharmacovigilance
procedures for the Parties with respect to the Products, such as safety data
sharing, adverse events reporting and prescription events monitoring (the “Pharmacovigilance Agreement”).

 

5.4              Cross Territory
Actions.  If either Party believes that the
other Party, as the case may be, is taking or intends to
take any action with respect to a Product that could reasonably be expected to
have a material adverse impact upon the regulatory status of a Product in the Retained Territory, or the Licensed Territory, as the case may be,
such Party shall have the right to bring the matter to the attention of the
JSC.  Without limiting the
foregoing:  (a) neither Party shall
communicate with any Regulatory Authority having jurisdiction in the Territory of the other Party regarding any Product (meaning
Norgine shall not communicate with a Regulatory Authority in the Retained
Territory regarding Product and Tranzyme shall not communicate with a
Regulatory Authority in the Licensed Territory regarding Product) unless
explicitly requested or permitted in writing to do so by the other Party, or
unless so ordered by such Regulatory

 

24

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Authority,
in which case the Party obliged to make such communication shall provide
immediately to the other Party notice of such order, and (b) neither Party
shall submit any Regulatory Filings or seek Regulatory Approvals for the
Product in the Territory of the other Party.

 

5.5          Data Sharing.

 

(a)           Data Generated under
Core Studies.  Each Party
shall promptly provide the other Party with copies of final reports and of all
Information (including preclinical and clinical data) generated in conducting
the Core Studies.  A Party shall provide
such Information to the other as soon as reasonably practical and through
information sharing procedures to be established by the JSC.  Each Party and its Affiliates, sublicensees
and licensees may use any such Information for (i) the performance of the
activities under this Agreement, and (ii) the research, Development,
manufacture and Commercialization of Product for its Territory (being the
Licensed Territory for Norgine and the Retained Territory for Tranzyme); in
each case including the regulatory activities relating thereto.  Each Party hereby grants to the other Party a
fully-paid up right of reference (transferrable by such other Party to its
Affiliates, sublicensees and licensees) to all Regulatory Filings made by the
first Party (or its Affiliates or (sub)licensees) solely for such other Party
to conduct the activities set forth in subsections (i) and (ii) above.

 

(b)           Data Generated under
Independent Studies.  Each Party
shall have the right to conduct Independent Studies in its territory, or in the
other Party’s territory with the prior written consent of the other Party.  Each Party shall conduct any such Independent
Study in accordance with the applicable Independent Studies Development
Plan.  Such Independent Studies
Development Plan shall be subject to the review and comment (but not approval)
by the JDC.  As soon as practicable after
the completion of each clinical trial within the Independent Studies, the Party
conducting such trial shall provide the other Party with the full data set and
all results and reports generated in such trial and Controlled by such Party,
as well as a statement of the total Third Party Development Costs incurred by
such Party in connection with the conduct of such trial.  [***] 
The Party conducting its Independent Studies shall maintain its discretion
over such Independent Studies, regardless of whether the other Party reimburses
such Party for its share of the Third Party Development Costs for such
Independent Studies as set forth above. 
For clarity, each Party shall keep the other Party reasonably informed
of the progress of each such trial, as well as the results generated therefrom,
regardless of whether such other Party co-funds such trial, provided that, such
other Party shall not have the right to use such data or results in its own
Regulatory Filings, cross-reference Regulatory Approvals applied for or
obtained using the data sets and results generated in such an Independent
Study, unless such other Party reimburses the first Party for the Third Party
Development Costs as set forth above. 
The foregoing does not prevent a Party from using data generated from an
Independent Study by the other Party in periodic safety update reports,
expedited or urgent safety matters to maintain regulatory compliance, or like
Regulatory Filings.

 

25

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

ARTICLE 6

 

COMMERCIALIZATION

 

6.1          Overview of
Commercialization in the Licensed Territory.  Subject to the terms and conditions of this Article 6,
as between the Parties, Norgine will be solely responsible for all aspects of
the Commercialization of Products in the Field in the Licensed Territory, in
compliance with all applicable Laws and in accordance with the
Commercialization Plan (as defined in Section 6.2(b)).

 

6.2          Norgine Performance

 

(a)           Commercial
Diligence.  Norgine shall
devote Commercially Reasonable Efforts to Commercialize Product in the Licensed
Territory following Regulatory Approval of Product in the Licensed Territory in
accordance with this Agreement.  
Specifically and without limiting the foregoing, Norgine shall: (i) actively
pursue Regulatory Approval for Product for at least one (1) Indication in
each of the Major Market Countries if it is commercially reasonable to do so; (ii) commence
First Commercial Sale of a Product in any country in the Licensed Territory in
which it obtains a Regulatory Approval and in which it is commercially
reasonable to Commercialize Product [***] following receipt of all necessary
Regulatory Approvals and all necessary or commercially desirable pricing and
reimbursement approvals in such country; and (iii) use Commercially
Reasonable Efforts in conducting its post-launch Commercialization activities,
including without limitation in the allocation of sales force and the
performance of detailing and promotion activities.

 

(b)           Commercialization Plan.  When available to Norgine, but in any case at
least [***] to the anticipated filing of the Regulatory Filing seeking
Regulatory Approval for a Product in the Licensed Territory, Norgine will
provide the JSC with a summary of the commercialization plan derived from the
annual commercialization plan used by Norgine for its internal purposes,
including a summary of Norgine’s proposed Commercialization strategy for
Product in the Licensed Territory, as well as a summary of the anticipated
level of sales efforts to be dedicated to the promotion of Product (each a “Commercialization Plan”). 
During the Royalty Term, Norgine shall update such summary of the
commercialization plan from time to time by written notice, [***].

 

(c)           Diligence Failures.  If
Tranzyme believes in good faith that Norgine has failed to utilize Commercially
Reasonable Efforts with respect to Commercialization of Products, then Tranzyme
shall first raise such issue through the JSC, setting forth specific detailed
reasons underlying such allegation. 
Within [***] following Norgine’s receipt of any such notice from
Tranzyme, Norgine shall provide Tranzyme with a written response specifying, in
reasonable detail, how it is using or has begun to use such Commercially
Reasonable Efforts.  In the event of a
dispute between the Parties with respect to whether Norgine has failed to utilize
Commercially Reasonable Efforts with respect to Commercialization of Products,
such dispute shall be resolved in accordance with Article 14.

 

6.3          Reports.  Norgine shall informally
update the JSC periodically regarding Norgine’s Commercialization activities
with respect to Product in the Licensed Territory.  In addition, 

 

26

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

Norgine
shall present written reports to the JSC annually, summarizing its significant
Commercialization activities with respect to Products in the Licensed Territory
pursuant to this Agreement.  Such reports
submitted by Norgine shall cover subject matter at a level of detail reasonably
sufficient to enable Tranzyme to determine Norgine’s compliance with its
diligence obligations pursuant to Section 6.2.

 

6.4          Additional Marketing
Activities.  The Parties
shall meet and discuss additional marketing (as distinct from detailing or
promotional) support for the Products in the Licensed Territory, including
establishing medical science liaisons for the Products, maintaining existing
relationships with key opinion leaders and developing additional contacts, and
sponsoring or participating in medical education activities, including
conferences, exhibit booths and the like. 
All such activities will be consistent with messaging and strategy
coordinated by the JSC.

 

6.5          Product Recalls.  In
the event that any Regulatory Authority issues or requests a recall or takes
similar action in connection with a Product, or in the event a Party reasonably
believes that an event, incident or circumstance has occurred that may result
in the need for a recall, market withdrawal or other corrective action
regarding a Product, such Party shall promptly advise the other Party by
telephone or facsimile.  Norgine shall
decide and have control of whether to conduct a recall or market withdrawal in
the Licensed Territory (except in the event of a recall or market withdrawal
mandated by a Regulatory Authority, in which case it shall be required) or to
take other corrective action in any country in the Licensed Territory and the
manner in which any such recall, market withdrawal or corrective action shall
be conducted; provided that the Norgine shall keep Tranzyme regularly informed
regarding any such recall, market withdrawal or corrective action, and Norgine
shall bear the costs incurred by the Parties in connection with such recall.

 

6.6          Trademarks.  The Parties shall, through the JSC, discuss
the most appropriate trademark strategy for Product with the aim of having a
coordinated global trademark for Product.  Norgine shall have the right to
select the trademark to be used in connection with the Commercialization of the
Products in the Licensed Territory (the “Product Trademark”),
and shall have all rights in and to such Product Trademark in the Licensed
Territory.  Norgine will notify Tranzyme
of all Product Trademarks and Norgine will be responsible for the filing,
prosecution, maintenance and defense of all registrations of the Product
Trademark, and will be responsible for the payment of any costs relating to
filing, prosecution, maintenance and defense of all Product Trademarks in the
Licensed Territory.  Norgine shall not
select as a Product Trademark a trademark which contains or is confusingly
similar to the name and trademark “Tranzyme”, the Tranzyme group corporate logo
or any name or trademark including or comprising the letters “Tranz”.  Norgine shall not file or otherwise seek to
establish rights in the Product Trademark in the Retained Territory.  Norgine shall notify Tranzyme if Norgine decides
to change, alter, modify or replace the Product Trademark initially selected by
it for the Products.

 

ARTICLE 7

 

MANUFACTURING

 

7.1          Clinical
Manufacturing for Core Studies.  The Parties are
jointly responsible for the manufacturing of the Product for use in the Core
Studies.  The Parties currently
contemplate 

 

27

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

for
Tranzyme to procure supply of the Product for use in the Core Studies from the
Third Party supplier engaged by Tranzyme as of the Effective Date, and the
Parties will share the Clinical Manufacturing Costs for such supply equally in
accordance with Section 7.3.

 

7.2          Clinical
Manufacturing for Independent Studies.  The Parties may agree for Tranzyme to procure
supply of Product for use in certain Norgine Independent Studies from the Third
Party supplier engaged by Tranzyme as of the Effective Date.  In such event, Norgine will reimburse
Tranzyme for the Clinical Manufacturing Costs of procuring such supply in
accordance with Section 7.3. 
Otherwise, each Party shall be solely responsible for the procurement of
clinical supply for Product for its Independent Studies.  Such Party shall be solely responsible for
the Clinical Manufacturing Costs for such Independent Studies, [***].

 

7.3          Cost Sharing.

 

(a)           Inventory As of the
Effective Date.  The Parties
acknowledge that, as of the Effective Date, Tranzyme is in possession of
certain inventory of Product (in bulk and/or finished form) (the “Existing Inventory”). 
Tranzyme has incurred costs in connection with the procurement of such
Existing Inventory prior to the Effective Date, and will continue to incur
costs after the Effective Date in connection with the fill and finish of the
portion of such Existing Inventory that exists in bulk form as of the Effective
Date.  Tranzyme shall invoice Norgine for
fifty percent (50%) of the Clinical Manufacturing Costs incurred by Tranzyme in
connection with the fill and finish of such portion of the Existing Inventory,
on an ongoing basis as such costs are incurred by Tranzyme.  Concurrent with the issuance of each such
invoice for a particular lot of finished Product, Tranzyme shall also invoice
Norgine for fifty percent (50%) of the Clinical Manufacturing Costs incurred by
Tranzyme prior to the Effective Date in connection with the procurement of the
Existing Inventory incorporated into such lot of finished Product.  Norgine shall pay each such invoice within
thirty (30) days after receiving such invoice.

 

(b)           Procurement of
Supply after the Effective Date.  The Parties wish for Tranzyme to
procure certain quantity of Product from the Third Party supplier after the
Effective Date for use in Core Studies and Independent Studies (the “New Supply” and together with the Existing Inventory, the “Clinical Supply”). [***]

 

(c)           Use of Clinical
Supply for Independent Studies.  In the event a Party uses any Clinical Supply
in its Independent Studies and the Clinical Manufacturing Costs for such
Clinical Supply have been paid by each Party equally, such Party using such
Clinical Supply for its Independent Studies shall pay to the other Party fifty
percent (50%) of the Clinical Manufacturing Costs of the portion of the
Clinical Supply so used by such Party for such Independent Studies.  [***]

 

7.4          Validation and
Registration Batches; Commercial Supply. 
Each Party shall be solely responsible for procuring the validation and
registration batches of Product, as well as the commercial supply of Product,
for its territory, at its own costs and expense.

 

7.5          Manufacturing
Transfer.  At Norgine’s
request, Tranzyme shall make its qualified personnel available to Norgine to
provide reasonable assistance in transferring manufacturing Information to
Norgine on reasonable notice.  If
requested by Norgine, Tranzyme 

 

28

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

shall
support the establishment of a separate supply arrangement between any of its
existing Third Party manufacturers and use Commercially Reasonable Efforts to
assist Norgine in negotiating supply agreements with such contract
manufacturers with respect to purchase of the Products.  In the event Norgine decides to engage a
Third Party supplier which, at the time of such engagement by Norgine, is
engaged by Tranzyme for the supply of the Products for use or sale in the
Retained Territory, Norgine shall ensure that any agreement with such Third
Party supplier does not oblige the Third Party supplier to supply Norgine with
Product for use or sale in the Licensed Territory in preference to or in
priority to Tranzyme in the event the Third Party supplier is unable to meet
both Parties’ Product needs.

 

ARTICLE 8

 

FINANCIAL PROVISIONS

 

8.1          Initial Payments.

 

(a)           Upfront Fee.  Within ten (10) days
after the Effective Date, Norgine shall pay to Tranzyme a one-time,
non-refundable and non-creditable upfront fee of Eight Million Dollars
($8,000,000).

 

(b)           Equity Investment.  Norgine shall purchase certain
equity in Tranzyme in an amount equal to Two Million Dollars
($2,000,000) in accordance with this Section 8.1(b).  As of the
Effective Date, Norgine and Tranzyme have agreed to certain Equity Documents, attached
in the form hereto as Exhibit D.  In addition, as of the Effective Date, each
Party has obtained the approval of its board of directors to enter into such
Equity Documents in the form as attached hereto.  Promptly after the Effective Date, Tranzyme
will endeavor to procure all necessary consent and approval from its
stockholders in order for Tranzyme to enter into such Equity Documents, and the
Parties will execute such Equity Documents in the forms attached within five (5) days
after Tranzyme notifies Norgine in writing of its receipt of such stockholder
consent and approval.

 

8.2          Milestone Payments.  Norgine shall report the achievement of each
milestone event for Product as set forth in this Section 8.2 by or on
behalf of Norgine, its Affiliates or sublicensees to Tranzyme within [***] of
its achievement and shall make the following non-refundable and non-creditable
milestone payments to Tranzyme within [***] days after receipt of an invoice
therefor from Tranzyme.  Each milestone
payment by Norgine to Tranzyme hereunder shall be payable only once, regardless
of the number of times achieved by the Products, provided that, if more than
one sales milestones that have not been previously paid are triggered at the
end of any particular calendar year, then each and every of such sales
milestones shall be deemed to have been achieved upon the end of such calendar
year and the corresponding milestone payments triggered by each and every of
such sales milestones shall become due at the end of such calendar year.

 

29

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

	
  Milestone Event

  	
   

  	
  Milestone Payment

  
	
   

  	
   

  	
   

  
	
  Regulatory Milestones

  
	
   

  	
   

  	
   

  
	
  On successful completion of first Phase 3 Clinical
  Trial (where successful completion means that the Phase 3 Clinical Trial has
  met its primary endpoints and the data generated in such clinical trial, in
  Norgine’s opinion (acting reasonably), can be used as part of the submission
  for an MAA.

  	
   

  	
  [***]
  in cash and $1,000,000 in exchange for Tranzyme equity as provided in the
  Equity Documents

  
	
   

  	
   

  	
   

  
	
  On
  first filing of an MAA for a Product in a Major Market in the Licensed
  Territory.

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  
	
  On
  First Commercial Sale of the first Product in a Major Market in the Licensed
  Territory (the “Launch Milestone”).

  	
   

  	
  [***],
  subject to adjustment pursuant to Section 8.2(a) and (b)*

  
	
   

  	
   

  	
   

  
	
  On
  Regulatory Approval for a second Indication in a Major Market in the Licensed
  Territory 

  	
   

  	
  [***]

  

 

*              The
amount for the Launch Milestone shall be subject to the following adjustments:

 

(a) At the time of First Commercial Sale of
Product in the first Major Market, a portion of the Launch Milestone shall be
due upon such First Commercial Sale being made (“First Launch
Milestone”) which shall be determined as follows: if the Product is
sold at a price per Unit in such Major Market (which shall be determined at the
time of launch and shall be no less than the pricing approved in the Regulatory
Approval for the applicable Major Market) (the “Initial
Unit Price”) (i) is equal to, or
is greater than, [***] Euros (€[***]), then the First Launch Milestone shall be
$[***]; (b) is equal to, or is greater than, [***] Euros (€[***]), but is
less than [***] Euros (€[***]), then the First Launch Milestone shall equal:
$[***] x (Unit Price - €[***])/€[***]; and (c) is less than [***] Euros
(€[***]), then the First Launch Milestone shall be zero.

 

(b) Upon the First Commercial Sale of a Product
in each further Major Market, made within [***]:

(i)             The mean Unit price of the Product in all Major Markets in which the
Product is being sold (the selling price in each such Major Market shall be
determined at the time of launch in such Major Market and shall be no less than
the pricing approved in the Regulatory Approval for such Major Market) will be
calculated (“Cumulative Mean Unit Price”) and a
revised Launch Milestone (“Revised Launch Milestone”)
will be [***].

(ii)          [***]

(iii)       [***]

(iv)      [***]

 

30

 

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

(c) For the purposes of this Section a “Unit” means the daily human adult dose of Product for
intravenous, subcutaneous or intramuscular administration, whichever
formulation is first Commercialized by Norgine, its Affiliates or sublicensees
following Regulatory Approval.

 

Sales Milestones

 

	
  The
  aggregate Net Sales of all Products in the Licensed Territory during any
  calendar year equal to or exceed €[***]

  	
   

  	
  $

  	
  [***

  	
  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  aggregate Net Sales of all Products in the Licensed Territory during any
  calendar year equal to or exceed €[***]

  	
   

  	
  $

  	
  [***

  	
  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  aggregate Net Sales of all Products in the Licensed Territory during any
  calendar year equal to or exceed €[***]

  	
   

  	
  $

  	
  [***

  	
  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  aggregate Net Sales of all Products in the Licensed Territory during any
  calendar year equal to or exceed €[***]

  	
   

  	
  €

  	
  [***

  	
  ]

  
	
   

  	
   

  	
   

  	
   

  
	
  The
  aggregate Net Sales of all Products in the Licensed Territory during any
  calendar year equal to or exceed €[***]

  	
   

  	
  €

  	
  [***

  	
  ]

  

 

For
the aggregation of Net Sales for the purpose of determining whether a
commercial milestone trigger has been met under this Section 8.2 or the
applicable royalty rate under Section 8.3, all Combination Products and
single agent Products shall be considered the same Product, regardless of the
formulation, dosage strength, route of administration, packaging or indicated
use thereof or any other active ingredient(s) contained therein, or
whether such Product is sold by or on behalf of Norgine, its Affiliates or
sublicensees.

 

8.3          Royalties.

 

(a)           Royalty Rates. Subject to Section 8.4,
Norgine shall pay to Tranzyme a running royalty at the following royalty rates,
on Net Sales of the Products in all countries of the Licensed Territory:

 

31

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY
OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL TREATMENT UNDER
RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

	
  Aggregate Annual Net Sales of the Products in the

  Licensed Territory for a Particular Calendar Year

  	
   

  	
  Royalty Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  that portion of aggregate annual Net Sales less than or equal to €[***]

  	
   

  	
  [***

  	
  ]%

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  that portion of aggregate annual Net Sales greater than €[***] but less than
  or equal to €[***]

  	
   

  	
  [***

  	
  ]%

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  that portion of aggregate annual Net Sales greater than €[***]but less than
  or equal to €[***]

  	
   

  	
  [***

  	
  ]%

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  that portion of aggregate annual Net Sales Greater than €[***]

  	
   

  	
  [***

  	
  ]%

  

 

8.4          Royalty Term.  The royalty payment obligation under Section 8.3
above shall apply, on a country-by-country and Product-by-Product basis, during
the period of time beginning upon the First Commercial Sale of such Product in
such country, and ending upon the later of (i) the expiration of the
last-to-expire Valid Claim of a Tranzyme Patent or other exclusivity conferred
by a relevant Regulatory Authority covering such Product in such country; and (ii) the
[***] anniversary of the First Commercial Sale of such Product in such country
(the “Royalty Term”).  For the avoidance of doubt and notwithstanding
anything to the contrary herein, the First Commercial Sale of a Product
formulated for a different route of administration (e.g., for intramuscular
administration, subcutaneous administration and intravenous administration)
shall be construed as a new Product under this Section 8.4 and the Royalty
Term for such new Product shall start upon the First Commercial Sale of such
new Product.

 

8.5          Third Party Royalties.  If the Parties mutually agree that it is
necessary for Norgine to obtain a license to any Third Party’s Patents issued
before or after the Effective Date in order for Norgine, its Affiliates, or any
sublicensee to Develop, manufacture or Commercialize a Product in a particular
country in the Licensed Territory, then Norgine shall have the right to credit
[***] of any royalties actually paid by Norgine to such Third Party for such
license with respect to such Product in such country, against the royalty
payment due from Norgine to Tranzyme under Section 8.3 for such Product in
such country; provided that the royalties payable to Tranzyme for any
particular calendar quarter for such Product in such country shall not be
reduced by more than [***] by reason of this Section 8.5.

 

8.6          Royalty Reduction.  During the Royalty Term, for a particular
Product and in a particular country, if a Generic Competing Product for such
Product is launched and Norgine’s Net Sales in two (2) consecutive
calendar quarters following such launch are decreased by at least [***] as
compared to the quarterly average amount of Net Sales booked by Norgine for
that Product in that country during the two (2) calendar quarters
immediately preceding the launch of such Generic Competing Product, the
royalties due to Tranzyme shall be reduced by [***] from what would otherwise
have been due under Section 8.3, provided that this Section 8.6 shall
no longer apply in the event: (a) such Generic Competing Product is no
longer sold in such country; or (b) the Net Sales for the applicable
Product in the applicable country returns to at least the same level as the
quarterly average amount of Net Sales booked by Norgine for that Product in
that country during the two (2) calendar quarters immediately preceding
the launch of such Generic Competing Product.

 

32

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

8.7          Royalty Payments and
Reports.  Within sixty (60) days after
the end of each calendar quarter, Norgine shall deliver to Tranzyme a report
containing the following information for the prior calendar quarter:

 

(a)           the number of
units of Products sold by Norgine, its Affiliates and sublicensees;

 

(b)           the gross sales
associated with each Product sold by Norgine, its Affiliates and sublicensees;

 

(c)           a calculation
of Net Sales of each Products that are sold by Norgine, its Affiliates and (if
applicable) sublicensees; and

 

(d)           details of any
corrections or true-ups from previously reported Net Sales amounts; and

 

(e)           a calculation
of payments due to Tranzyme with respect to the foregoing.

 

Concurrent
with these reports, Norgine shall remit to Tranzyme any payment due for the
applicable calendar quarter.  If no
royalties are due to Tranzyme for such reporting period, the report shall so
state.

 

8.8          Foreign Exchange.  All payments required under this Agreement
shall be paid in U.S. Dollars.  The rate
of exchange to be used in computing the amount of currency equivalent in
Dollars of Net Sales invoiced in other currencies shall be made at the average
of the daily closing exchange rates reported in The Wall
Street Journal (U.S., Western Edition) over the applicable reporting
period for the payment due.

 

8.9          Payment Method; Late
Payments.  All
payments due to Tranzyme hereunder shall be made by wire transfer of
immediately available funds into an account designated by Tranzyme.  If Tranzyme does not receive payment of any
sum due to it on or before the due date, simple interest shall thereafter
accrue on the sum due to Tranzyme until the date of payment at the per annum
rate of two percent (2%) over the then-current prime rate quoted by Citibank in
New York City or the maximum rate allowable by applicable Law, whichever is
lower.

 

8.10        Records; Audits.  Norgine will maintain complete and accurate
records in sufficient detail to permit Tranzyme to confirm the accuracy of the
calculation of royalty payments under this Agreement.  Upon reasonable prior notice, such records
shall be available during regular business hours for a period of three (3) years
from the end of the calendar year to which they pertain for examination at the
expense of Tranzyme, and not more often than once each calendar year, by an
independent certified public accountant selected by Tranzyme and associated
with an independent accounting firm reasonably acceptable to Norgine, for the
sole purpose of verifying the accuracy of the financial reports furnished by Norgine pursuant to this Agreement.  The
accounting firm shall enter into appropriate obligations with Norgine to treat
all information it receives during its examination in confidence.  The accounting firm shall disclose to
Tranzyme only whether Norgine’s calculations of royalty payments under this
Agreement are correct and details concerning any discrepancies, but no other
information shall be disclosed to Tranzyme. 
Any amounts shown to be owed but unpaid shall be paid within thirty (30)
days from

 

33

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

the
accountant’s report, plus interest (as set forth in Section 8.9) from the original due date. 
Any amounts shown to have been overpaid shall be, at Tranzyme’s
election, refunded as soon as practicable after the accountant’s report or
credited towards future payments owed by Norgine to Tranzyme over time.  Tranzyme shall bear the full cost of such
audit unless such audit discloses an underpayment by Norgine of more than five
percent (5%) of the amount due, in
which case Norgine shall bear the full cost of such audit.

 

8.11        Taxes.

 

(a)           Taxes on Income.  Each Party shall be solely responsible for
the payment of all taxes imposed on its share of income arising directly or
indirectly from the collaborative efforts of the Parties under this Agreement.

 

(b)           Tax Cooperation.  The Parties agree to
cooperate with one another and use reasonable efforts to avoid or reduce tax
withholding or similar obligations in respect of royalties, milestone payments,
and other payments made by Norgine to Tranzyme under this Agreement. To the
extent Norgine is required to deduct and withhold taxes on any payment to
Tranzyme, Norgine shall pay the amounts of such taxes to the proper
Governmental Authority in a timely manner and promptly transmit to Tranzyme an
official tax certificate or other evidence of such withholding sufficient to
enable Tranzyme to claim such payment of taxes. 
Tranzyme shall provide Norgine any tax forms that may be reasonably
necessary in order for Norgine to not withhold tax or to withhold tax at a
reduced rate under an applicable bilateral income tax treaty.  Tranzyme shall use reasonable efforts to
provide any such tax forms to Norgine at least thirty (30) days prior to the
due date for any payment for which Tranzyme desires that Norgine apply a
reduced withholding rate.  Each Party
shall provide the other with reasonable assistance to enable the recovery, as
permitted by applicable law, of withholding taxes, value added taxes, or
similar obligations resulting from payments made under this Agreement, such recovery
to be for the benefit of the Party bearing such withholding tax or value added
tax.

 

(c)           Taxes Resulting From
Norgine Action.  If Norgine is
required to make a payment to Tranzyme subject to a deduction of tax or
withholding tax, then (i) if such withholding or deduction obligation
arises as a result of any action by Norgine, including any assignment or
sublicense, or any failure on the part of Norgine to comply with applicable
Laws or filing or record retention requirements, that has the effect of modifying
the tax treatment of the Parties hereto (an “Norgine
Withholding Tax Action”), then the sum payable by Norgine (in
respect of which such deduction or withholding is required to be made) shall be
increased to the extent necessary to ensure that Tranzyme receives a sum equal
to the sum which it would have received had no such Norgine Withholding Tax
Action occurred, and (ii) otherwise, the sum payable by Norgine (in
respect of which such deduction or withholding is required to be made) shall be
made to Tranzyme after deduction of the amount required to be so deducted or
withheld, which deducted or withheld amount shall be remitted in accordance
with applicable Law.

 

8.12            Cost Reimbursement.  For each calendar quarter during which the
Parties are sharing: (a) Third Party Development Costs for the Core
Studies; (b) Third Party Development Costs for any trial under the
Independent Studies in the event a [***]; and/or (c) any other costs
subject to reimbursement under this Agreement (other than the Clinical
Manufacturing Costs

 

34

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

which
shall be reimbursed pursuant to Section 7.3), within thirty (30) days
after the end of such calendar quarter, each Party shall provide the JDC with a
report itemizing the costs and expenses incurred by or on account of such Party
during such calendar quarter, together with the calculation of reimbursement
sought by such Party from the other Party for each item of such costs and
expenses.  Within fifteen (15) days after
receiving such reports, the JDC shall issue to both Parties a reconciliation
report setting forth the calculation of net reimbursement due from the Party
owing a reconciliation payment to the other Party, and the Party owing such
reconciliation payment shall make such payment within fifteen (15) days after
receiving such reconciliation report.

 

ARTICLE 9

 

INTELLECTUAL PROPERTY

 

9.1          Ownership of
Inventions.  As between
the Parties, each Party shall own any inventions conceived (or conceived and
reduced to practice) solely by its own employees, agents, or independent
contractors in the course of conducting its activities under this Agreement,
together with all intellectual property rights therein (“Sole
Inventions”).  Sole Inventions
conceived (or conceived and reduced to practice) solely by Norgine’s own
employees, agents or independent contractors in the course of conducting its
activities under the Agreement shall be “Norgine Sole Inventions”.  Sole Inventions conceived (or conceived and
reduced to practice) solely by Tranzyme’s own employees, agents or independent
contractors in the course of conducting its activities under this Agreement
shall be “Tranzyme Sole Inventions”.  The Parties (or their relevant Affiliates)
shall jointly own any inventions that are conceived (or conceived and reduced
to practice) jointly by employees, agents, or independent contractors of each
Party in the course of performing activities under this Agreement, together
with all intellectual property rights therein (“Joint
Inventions”).  Inventorship
shall be determined in accordance with applicable patent laws.  All Patents claiming patentable Norgine Sole
Inventions shall be referred to herein as “Norgine Sole Patents”.  All Patents claiming patentable Tranzyme Sole
Inventions shall be referred to herein as “Tranzyme Sole Patents”.  All Patents claiming patentable Joint
Inventions shall be referred to herein as “Joint Patents.”  As between the Parties, each Party retains an
undivided one-half interest in and to Joint Inventions and Joint Patents.  Subject to the rights and licenses granted by
one Party to the other under this Agreement and the Parties’ respective
exclusivity obligations under Section 2.6, each Party shall have the right
to exploit and exercise its ownership rights in and to its half interest in
Joint Inventions and/or Joint Patents for any field, including the right to
license and sub-license (which license and sub-license shall be non-exclusive
by reason of the half interest of the other Party), in each case without the
consent of or the duty of accounting to the other Party.  Any Party granting such license under the
Joint Inventions and/or Joint Patents shall inform the other Party of such
grant of rights promptly after such grant.

 

9.2          Disclosure of
Inventions.  Each Party
shall promptly disclose to the other any invention disclosures, or other
similar documents, submitted to it by its employees, agents or independent
contractors describing inventions that are either Sole
Inventions or Joint Inventions,

 

35

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

and all Information relating to such
inventions to the extent necessary for the preparation, filing and maintenance
of any Patent with respect to such invention.

 

9.3          Prosecution of
Patents.

 

(a)           Tranzyme Prosecuted Patents.

 

(i)            Subject to Section 9.3(a)(ii) below,
Tranzyme shall have the sole right to prepare, file, prosecute and maintain: (A) Tranzyme
Other-Product Patents in the Retained Territory and the Licensed Territory; and
(B) Tranzyme Product-Specific Patents in the Retained Territory (the “Tranzyme Prosecuted Patents”).  In particular, as soon as practicable after
the Effective Date, for certain patent families included in Tranzyme
Other-Product Patents where it would be practicable and beneficial to seek
TZP-101 specific claims, Tranzyme and Norgine shall use commercially reasonable
efforts to cooperate with each other to create divisional applications
containing only claims specific to TZP-101 (the “TZP-101
Divisionals”).  If such
TZP-101 Divisionals are created after the Effective Date, then such TZP-101
Divisionals shall be deemed Tranzyme Product-Specific Patents.  In the event, despite the Parties’ reasonable
efforts, such TZP-101 Divisionals cannot be created after the Effective Date,
then Tranzyme shall use commercially reasonable efforts to create TZP-101
specific claims within each such patent family (such claims, the “TZP-101 Specific Claims”). 
Tranzyme shall provide Norgine reasonable opportunity to review and
comment on the prosecution efforts regarding the Tranzyme Prosecuted Patents in
the Licensed Territory.  Tranzyme shall
provide Norgine with a copy of material communications from any patent
authority regarding such Tranzyme Prosecuted Patents in the Licensed Territory,
and shall provide drafts of any material filings or responses to be made to
such patent authorities a reasonable amount of time in advance of submitting
such filings or responses for Norgine’s review and comment.  Tranzyme shall, in good faith, consider the
advice and comments of Norgine for TZP-101 Specific Claims in the Licensed
Territory, but the final decision on such matters shall be Tranzyme’s (which
will be exercised in good faith). 
Tranzyme shall bear all costs incurred by Tranzyme in connection with
the filing, prosecution and maintenance of Tranzyme Prosecuted Patents.

 

(ii)           If Tranzyme
decides to cease the prosecution or maintenance of any Tranzyme Prosecuted
Patent described in subsection (i) above in the Licensed Territory, it
shall notify Norgine in writing sufficiently in advance so that Norgine may, at
its discretion, assume the responsibility for the prosecution or maintenance of
such Tranzyme Prosecuted Patents, at Norgine’s sole expense. If Norgine elects
to assume the responsibility for the prosecution or maintenance of such
Tranzyme Prosecuted Patents it shall give written notice to Tranzyme.  Tranzyme shall upon receipt of any such
notice from Norgine transfer to Norgine copies of all its files relating to the
relevant Tranzyme Prosecuted Patents and at Norgine’s reasonable cost and
expense execute any documents to otherwise transfer control of such filing,
prosecution and maintenance to Norgine and thereafter Norgine shall be
responsible for the cost and expense of prosecuting and maintaining such
Tranzyme Prosecuted Patents as set out in Section 9.3(b)(ii) and
thereafter such Tranzyme Prosecuted Patents shall no longer be regarded as part
of Tranzyme Patents for the sole purpose of Section 8.4.

 

(iii)         For clarity,
Tranzyme may discharge any of its obligations under Sections 9.3(a) and
9.3(c) through any of its Affiliates. 
However, in the event Tranzyme enters

 

36

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

into
a license agreement with a Third Party under which Tranzyme grants such Third
Party the right to develop and/or commercialize a Tranzyme proprietary product
under any Tranzyme Other-Product Patent, Tranzyme shall not agree to give such
Third Party higher level of control over the prosecution of such Tranzyme
Other-Product Patent with respect to such other Tranzyme proprietary Tranzyme
product, than the level of control Tranzyme has given to Norgine hereunder over
the prosecution of such Tranzyme Other-Product Patent with respect to TZP-101
in the Licensed Territory.

 

(b)           Norgine Prosecuted
Patents.

 

(i)            Tranzyme
Product-Specific Patents.

 

(1)           Upon the
Effective Date, Norgine shall have the sole responsibility for preparation,
filing, prosecution, and maintenance of: (A) any and all Tranzyme
Product-Specific Patents in the Licensed Territory (including patent
applications and any Third Party proceedings related thereto); and (B) all
Tranzyme Other-Product Patents for which the responsibility for prosecution and
maintenance has transferred to Norgine pursuant to Section 9.3(a)(ii) above,
in each case at Norgine’s sole costs and expense (collectively, the “Norgine Prosecuted Patents”).  Norgine shall provide Tranzyme reasonable
opportunity to review and comment on such prosecution efforts regarding the
Norgine Prosecuted Patents in the Licensed Territory, but the final decision on
such matters shall be Norgine’s (which will be exercised in good faith).  Norgine shall provide Tranzyme with a copy of
material communications from any patent authority regarding such Norgine
Prosecuted Patents, and shall provide drafts of any material filings or
responses to be made to such patent authorities a reasonable amount of time in
advance of submitting such filings or responses for Tranzyme’s review and
comment.  Norgine shall reasonably
consider such comments by Tranzyme in connection with the prosecution of
Norgine Prosecuted Patents, and shall implement such comments by Tranzyme with
respect to Norgine Prosecuted Patents as Norgine deems appropriate, but the
final decision on such matters shall be Norgine’s.  Norgine shall use reasonable efforts to
prosecute patent applications forming part of Tranzyme Prosecuted Patents to
grant with Valid Claims in the Licensed Territory, with the goal of achieving
broad coverage for the composition of matter of, and method of making and
using, TZP-101 and Product.

 

(2)           If Norgine
decides to cease the prosecution or maintenance of any Norgine Prosecuted
Patents, it shall notify Tranzyme in writing sufficiently in advance so that
Tranzyme may, at its discretion, assume the responsibility for the prosecution
or maintenance of such Norgine Prosecuted Patents, at Tranzyme’s sole expense
(such Patent, a “Norgine Abandoned Patent”).  Each Norgine Abandoned Patent (including any
Patent for which the responsibility for prosecution and maintenance has
transferred to Norgine pursuant to Section 9.3(a)(ii) and such
responsibility has been transferred back to Tranzyme pursuant to this Section 9.3(b)(i)(2))
shall continue to be deemed a Tranzyme Patent so long as the making, using,
importing, and/or the Commercialization of the Product, but for the license
granted herein, would infringe such Norgine Abandoned Patent (or, in the case
of a claim in a patent application, would infringe such Norgine Abandoned
Patent should such claim issue).

 

(3)           Norgine shall
have the right to delegate its responsibilities in Section 9.3(b)(i) above
to its Affiliates but shall not have the right to delegate such

 

37

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

responsibilities
to any of its sublicensees or to any other Third Party.

 

(ii)           Norgine Sole
Patents.  Norgine shall be solely
responsible for, at its sole expense, filing, prosecuting and maintaining all
Norgine Sole Patents.  Norgine shall
provide Tranzyme reasonable opportunity to review and comment on such
prosecution efforts regarding Norgine Sole Patents which cover or relate to
Product.  Norgine shall provide Tranzyme
with a copy of material communications from any patent authority regarding such
Norgine Sole Patents which cover or relate to Product, and shall provide drafts
of any material filings or responses to be made to such patent authorities a
reasonable amount of time in advance of submitting such filings or responses
for Tranzyme’s review and comment. 
Norgine shall consider such comments by Tranzyme in connection with the
prosecution of Norgine Sole Patents which cover or relate to Product, but the
final decision on such matters shall be Norgine’s.

 

(c)           Joint Patents.  For each family of Joint
Patents, the JSC shall determine which Party shall be primarily responsible for
the preparation, filing and maintenance of such Joint Patents (or, if both
Parties are responsible, the respective territory for which each Party is
responsible), taking into consideration the nature of the Joint Invention
claimed by such Joint Patents and the territory in which such Joint Patents are
filed and prosecuted, and the Party responsible for such preparation, filing
and maintenance of such Joint Patents shall also be responsible for all
out-of-pocket expenses in connection therewith. 
Each Party shall provide the other reasonable opportunity to review and
comment on its prosecution efforts regarding Joint Patents.  Each Party shall provide the other with a
copy of material communications from any patent authority regarding a Joint
Patent, and shall provide drafts of any material filings or responses to be
made to such patent authorities a reasonable amount of time in advance of
submitting such filings or responses for the other Party’s review and
comment.  Each Party shall consider the
others comments in connection with the prosecution of Joint Patents, but the
final decision on such matters shall be that of the Party with responsibility
for filing and prosecuting such Joint Patent in the jurisdiction in
question.  If a Party decides to cease
the prosecution or maintenance of any Joint Patents for which it has
responsibility, it shall notify the other Party in writing sufficiently in
advance so that the other Party may, at its discretion, assume the
responsibility for the prosecution or maintenance of such Joint Patent, at its
sole expense.

 

(d)           Cooperation in
Prosecution.  Each Party
shall provide the other Party all reasonable assistance and cooperation in the
Patent prosecution efforts provided above in this Section 9.3, including
providing any necessary powers of attorney and executing any other required
documents or instruments for such prosecution. 
The Parties acknowledge that, during the course of prosecution, certain
Patents that are included in a particular group of Patents under this Agreement
(and thus subject to certain rules of allocation of prosecution rights and
responsibilities between the Parties) may become included in a different group
of Patents (and subject to different rules). 
In such event, the Parties shall cooperate in good faith to transfer
such responsibilities accordingly.

 

(e)           Patent Term
Extensions.  The Parties
shall cooperate with each other in obtaining patent term extension or
restoration or supplemental protection certificates or their equivalents in any
country or region in the Licensed Territory (“Patent Term
Extensions”).  In particular
but without limiting the foregoing, each Party shall provide reasonable
assistance to

 

38

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

the
other by executing (and procuring its Affiliates execute) any required
documents and providing any relevant information required by the other Party in
connection with obtaining such Patent Term Extensions.  This means that, by way of example only,
where the Patent in question is a Tranzyme Patent granted in a country in the
European Union, Tranzyme will execute (or procure its Affiliates execute) any required
documents to apply for such Patent Term Extension and Norgine (as the Party
responsible for MAAs and Regulatory Approvals in the Licensed Territory) shall
provide (or procure its Affiliates and sublicensees provide) any required
documents relating to such MAAs and Regulatory Approvals as are required to
apply for Patent Term Extensions in the European Union.

 

9.4          Infringement of
Patents by Third Parties.

 

(a)           Notification.  (i) Each Party shall promptly notify the
other Party in writing of (A) any existing or threatened infringement of
the Tranzyme Patents or Joint Patents through the Development or
Commercialization of a Product in the Field in the Licensed Territory by a
Third Party of which such Party becomes aware, and (B) any declaratory
judgment, opposition, or similar action alleging the invalidity,
unenforceability or non-infringement of any of the Tranzyme Patents or Joint
Patents ((A) and (B) collectively a “Product
Infringement”), and (ii) each Party shall promptly notify the
other Party in writing of any existing or threatened infringement of the
Tranzyme Patents or Joint Patents either (A) in the Licensed Territory by
a Third Party which is not covered by (i) above, and (B) in the
Retained Territory of which such Party becomes aware, and any declaratory
judgment, opposition, or similar action alleging the invalidity,
unenforceability or non-infringement of any of the Tranzyme Patents or Joint
Patents.

 

(b)           Product Infringement.

 

For
any Product Infringement, each Party shall share with the other Party all
information available to it regarding such alleged infringement.  Norgine shall have the first right, but not
the obligation, to bring an appropriate suit or other action against any person
or entity engaged in such Product Infringement in the Licensed Territory,
including the right to defend any related, counterclaim or parallel claim
alleging the invalidity, unenforceability or non-infringement of any of the
Tranzyme Patents or Joint Patents, subject always to Sections 9.4(b)(i) through
9.4(b)(iii), below, provided that Norgine shall obtain Tranzyme’s prior written
approval before asserting any claim in the Tranzyme Other-Product Patents
(other than any TZP-101 Specific Claims) in such action.  If Norgine fails to institute and prosecute
an action or proceeding to address the Product Infringement within a period of
ninety (90) days after the first notice under Section 9.4(a) (or if
Norgine as exclusive licensee is unable to institute and prosecute such an
action in a particular jurisdiction of the Licensed Territory as a matter of
Law in the jurisdiction in question), then Tranzyme shall have the right to
commence a suit or take action to enforce the applicable Patent against such
Third Party in the Licensed Territory.
Where Norgine wishes to institute and prosecute such an action but is prevented
from doing so as a matter of Law in the jurisdiction in question, Tranzyme
shall exercise the foregoing right as Norgine reasonably requests and at
Norgine’s cost (in which case Norgine shall remain the Enforcing Party for the
purpose of Section 9.4(b)(ii) and Section 9.4(d)); where Norgine
may institute and prosecute such an action but chooses not to, Tranzyme shall
have the right to but is under no obligation to do so.  Norgine shall take appropriate actions in order to enable Tranzyme to commence a suit or

 

39

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

take the actions set forth in the preceding
sentence.  The Party that either (A) has
the right to institute and prosecute and elects to institute and prosecute an
action under this Section 9.4(b) or, (B) is required to
institute and prosecute an action under this Section 9.4(b), being the “Enforcing Party”.

 

(i)            Each Party
shall provide to the Enforcing Party reasonable assistance in such proceedings,
at such Enforcing Party’s request and expense, including joining such action as
a party plaintiff if required by applicable Law to pursue such action.  The Enforcing Party shall keep the other
Party regularly informed of the status and progress of such enforcement
efforts, shall reasonably consider the other Party’s comments on any such
efforts, and shall seek consent of the other Party in any important aspects of such
enforcement including, without limitation, determination of litigation
strategy, filing of important papers to the competent court, which shall not be
unreasonably withheld or delayed.

 

(ii)           Each Party
shall bear all of its own internal costs incurred in connection with its
activities under this Section 9.4(b). 
Subject to Section 9.4(b)(iii), the Enforcing Party shall bear all
external costs and expenses for such action.

 

(iii)         The Party not
bringing an action with respect to Product Infringement under this
Section 9.4(b) shall be entitled to separate representation in such
matter by counsel of its own choice and at its own expense, but such Party
shall at all times cooperate fully with the Party bringing such action.

 

(c)           Infringement Other
Than a Product Infringement.  For any and all infringements of any of the
Tranzyme Patents other than a Product Infringement (or any, counterclaim or
parallel claim alleging the invalidity, unenforceability or non-infringement of
any of the Tranzyme Patents or Joint Patents relating to the conduct of a
Product Infringement action), as between the Parties Tranzyme alone shall have
the right to bring an appropriate suit or other action against any person or
entity engaged in such other infringement, in its sole discretion, and as
between the Parties shall bear all related expenses and retain all related
recoveries.  Tranzyme shall keep Norgine
reasonably informed of the progress of such actions and of any material events
or disclosure arising therefrom, such as previously undisclosed or unidentified
prior art, and the judgment or findings of any court in relation to such
actions.

 

(d)           Allocation of
Proceeds.  If either
Party recovers monetary damages from any Third Party in a suit or action
brought for a Product Infringement, such recovery shall be allocated first to
the reimbursement of any expenses incurred by the Parties in such litigation
(including, for this purpose, a reasonable allocation of expenses of internal
counsel).  Any remaining amount shall be
retained by the Enforcing Party, provided that: [***].

 

9.5          Infringement of Third
Party Rights in the Licensed Territory.  If any Product used or sold by either Party,
its Affiliates, licensees or sublicensees becomes the subject of a Third Party’s
claim or assertion of infringement of a Patent granted by a jurisdiction within
the Licensed Territory, the Party first
having notice of the claim or assertion shall promptly notify the other Party,
the Parties shall agree on and enter into an “common interest agreement”
wherein such Parties agree to their shared, mutual interest in the outcome of
such potential dispute, and thereafter, the Parties shall promptly meet to
consider the claim or assertion and the

 

40

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

appropriate course of action.  Notwithstanding the foregoing, unless the
Parties otherwise agree in writing, each Party shall have the right to defend
itself against a suit that names it as a defendant (the “Defending
Party”) at its own cost and expense. 
Neither Party shall enter into any settlement of any claim described in
this Section 9.5 that adversely affects the other Party’s rights or
interests without such other Party’s written consent, which consent shall not
be unreasonably conditioned, withheld or delayed.  In any event, the other Party shall
reasonably assist the Defending Party and cooperate in any such litigation at
the Defending Party’s request and expense.

 

9.6      Settlements.  In no case may Norgine enter into any
settlement or consent judgment or other voluntary final disposition of any
suit, claim or action brought under Section 9.4(b) or Section 9.5
that: (a) extends, or purports to exercise, Norgine’s rights under the
Tranzyme Technology beyond the rights expressly granted pursuant to this
Agreement, (b) makes any admission regarding wrongdoing by Tranzyme, or
the invalidity, unenforceability or absence of infringement of any Tranzyme
Patents; (c) subjects Tranzyme or its Affiliates to an injunction or other
equitable relief; (d) obligates Tranzyme or its Affiliates, to make a
monetary payment; or (e) limits Tranzyme’s rights under the Norgine
Technology or under this Agreement, in each case without Tranzyme’s prior
written consent, unless Norgine is required to enter into any such settlement,
consent judgment or other final disposition which contains terms with (a) to
(e) above as a matter of applicable Law. 
Similarly, in no case may Tranzyme enter into any settlement or consent
judgment or other voluntary final disposition of any suit, claim or action
brought under Section 9.4(b) or Section 9.5 that: (i) limits
Norgine’s rights under the Tranzyme Technology or under this Agreement; (ii) makes
any admission regarding wrongdoing on the part of Norgine or its Affiliate, or
the invalidity, unenforceability or absence of infringement of any Norgine
Technology; (iii) subjects Norgine to an injunction or other equitable
relief; (iv) obligates Norgine to make a monetary payment; or (v) extends,
or purports to exercise, Tranzyme’s rights under the Norgine Technology beyond
the rights expressly granted pursuant to this Agreement; in each case without
the prior written consent of Norgine, unless Tranzyme is required to enter into
any such settlement, consent judgment or other final disposition which contains
terms with (i) to (v) above as a matter of applicable Law.

 

ARTICLE 10

 

REPRESENTATIONS AND
WARRANTIES

 

10.1    Mutual Representations and
Warranties.  Each Party
hereby represents, warrants, and covenants (as applicable) to the other Party
as follows:

 

(a)           Corporate
Existence and Power.  It is a
company or corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction in which it is incorporated, and has full
corporate power and authority and the legal right to own and operate its
property and assets and to carry on its business as it is now being conducted
and as contemplated in this Agreement, including, without limitation, the right
to grant the licenses granted by it hereunder.

 

(b)           Authority
and Binding Agreement.  As
of the Effective Date, except as set forth in Section 8.1(b): (i) it
has the corporate power and authority and the legal right to enter 

 

41

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

into this Agreement and to perform its obligations
hereunder (for Tranzyme, other than the requisite approval needed to issue the
stocks to Norgine under Section 8.2); (ii) it has taken all necessary
corporate action on its part required to authorize the execution and delivery
of the Agreement and the performance of its obligations hereunder (for
Tranzyme, other than the requisite approval needed to issue the stocks to
Norgine under Section 8.2); and (iii) the Agreement has been duly
executed and delivered on behalf of such Party, and constitutes a legal, valid,
and binding obligation of such Party that is enforceable against it in
accordance with its terms.

 

(c)           No
Conflict; Covenant.  It is not a
party to any agreement that would materially prevent it from granting the
rights granted to the other Party under this Agreement or performing its
obligations under the Agreement.

 

(d)           No
Debarment.  In the
course of the development of Products, each Party shall not use, during the Term, any employee or consultant who has been debarred by any Regulatory
Authority, or, to the best of such Party’s knowledge, is the subject of
debarment proceedings by a Regulatory Authority.

 

10.2    Additional Representations and
Warranties of Tranzyme. 
Tranzyme represents and warrants to Norgine that, as of the Effective
Date:

 

(a)           Tranzyme or a Tranzyme
Affiliate is the sole owner of the entire right, title and interest in the
Tranzyme Patents existing at the Effective Date and licensed to Norgine
hereunder.  Tranzyme has the right under
the Tranzyme Technology to grant the licenses to Norgine as purported to be granted
pursuant to this Agreement.  Neither
Tranzyme nor a Tranzyme Affiliate has previously entered into any agreement,
whether written or oral, with respect to, or otherwise assigned, licensed,
transferred, conveyed or otherwise encumbered its right, title or interest in
or to, Tranzyme Technology in connection with seeking Regulatory Approval for,
and/or Commercialization of TZP-101 and/or Product in the Licensed Territory to
a Third Party.  Neither Tranzyme nor a
Tranzyme Affiliate has granted any lien or other security interest under the
Tranzyme Patents to a Third Party;

 

(b)           The Tranzyme Patents listed
in Exhibit A (“Patent List”)
represent all Patents within Tranzyme’s Control at the Effective Date relating
to the subject matter of this Agreement which as of the Effective Date are
necessary for Norgine to manufacture, use, Develop, seek Regulatory Approval
for, and/or Commercialize TZP-101 and/or the Product as contemplated by the
Parties as of the Effective Date.  To
Tranzyme’s knowledge, there is no Information relating to and there are no
Patents in the Licensed Territory which claim or cover, the Product which, in
either case, Tranzyme has rights to but which rights Tranzyme cannot license to
Norgine;

 

(c)           To Tranzyme’s knowledge
there is no material reason why any of the Tranzyme Patents on the Patent List
are invalid;

 

(d)           The Tranzyme Patents on the
Patent List that are applications at the Effective Date are being diligently
procured from the respective patent offices and the Patent Rights on the Patent
List that are granted have been maintained properly and correctly and all 

 

42

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

applicable fees due on or before the Effective Date
have been paid on or before the due date for payment;

 

(e)           neither Tranzyme nor any of
its Affiliates has received any written notice from any Third Party asserting
or alleging that any research, Development or manufacture of TZP-101 or any
Product by Tranzyme prior to the Effective Date infringes or has
misappropriated the intellectual property rights of such Third Party and to
Tranzyme’s and its Affiliates’ knowledge there are no issued Patents of a Third
Party which will likely be infringed by the Development, manufacture, use or
Commercialization of Product in the Licensed Territory as contemplated by the
Parties as of the Effective Date;  and

 

(f)            there
are no actual, pending, alleged or threatened adverse actions, suits, claims,
interferences or formal governmental investigations involving TZP-101, the
Product and/or the Tranzyme Technology relating to TZP-101 or the Product by or
against Tranzyme or any of its Affiliates in or before any court, governmental
or regulatory authority.

 

10.3    Disclaimer.  Norgine understands that the Products are the
subject of ongoing clinical research and development and that Tranzyme cannot
assure the safety or usefulness of Products. 
In addition, Tranzyme makes no warranties except as set forth in this
Article 10 concerning the Tranzyme Technology.

 

10.4    No Other Representations or
Warranties.  EXCEPT AS
EXPRESSLY STATED IN THIS ARTICLE 10, NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS, IS MADE OR GIVEN BY OR ON BEHALF OF A PARTY.  ALL REPRESENTATIONS AND WARRANTIES, WHETHER
ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

 

43

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

ARTICLE 11

 

INDEMNIFICATION

 

11.1    Indemnification by Tranzyme.  Tranzyme hereby agrees to defend, hold
harmless and indemnify Norgine and its Affiliates, agents, directors, officers
and employees (the “Norgine Indemnitees”)
from and against any and all liabilities, expenses and/or losses, including
without limitation reasonable legal expenses and attorneys’ fees (collectively “Losses”) in each case resulting from Third Party suits,
claims, actions and demands (each, a “Third Party Claim”)
arising directly or indirectly out of (a) the death or personal injury of
a person as a result of the research, Development or Commercialization of
Products by Tranzyme or its Affiliates, or sublicensees in exercising its
retained rights to the Product under Section 2.1(b); or (b) the
negligence or willful misconduct of any Tranzyme Indemnitee.  Tranzyme’s obligation to Indemnify the
Norgine Indemnitees pursuant to this Section 11.1 shall not apply to the
extent that any such Losses arise from: (A) the negligence or willful
misconduct of any Norgine Indemnitee; (B) the research, Development or
Commercialization of Products by Norgine or its Affiliates, or sublicensees; or
(C) Norgine’s material breach of this Agreement.

 

11.2    Indemnification
by Norgine.  Norgine
hereby agrees to Indemnify Tranzyme and its Affiliates, agents, directors,
officers and employees (the “Tranzyme Indemnitees”)
from and against any and all Losses resulting from Third Party Claims arising
directly or indirectly out of (a) the death or personal injury of a person
as a result of the research, Development or Commercialization of Products by Norgine
or its Affiliates, or sublicensees; or (b) the negligence or willful
misconduct of Norgine Indemnitees. 
Norgine’s obligation to Indemnify the Tranzyme Indemnitees pursuant to
the foregoing sentence shall not apply to the extent that any such Losses arise
from: (A) the negligence or willful misconduct of any Tranzyme Indemnitee;
(B) the research, Development or Commercialization of Products by Tranzyme
or its Affiliates, or sublicensees in exercising its retained rights to the
Product under Section 2.1(b); or (C) Tranzyme’s material breach of
this Agreement.

 

11.3    Procedure.  The indemnified Party shall provide the
indemnifying Party with prompt notice of the claim giving rise to the
indemnification obligation pursuant to this Article 11 and the exclusive
ability to defend (with the reasonable cooperation of the indemnified Party) or
settle any such claim; provided, however,
that the indemnifying Party shall not enter into any settlement for damages
other than monetary damages without the indemnified Party’s written consent,
such consent not to be unreasonably withheld. The indemnified Party shall have
the right to participate, at its own expense and with counsel of its choice, in
the defense of any claim or suit that has been assumed by the indemnifying
Party. If the Parties cannot agree as to the application of Sections 11.1 and
11.2 to any particular Third Party Claim, the Parties may conduct separate
defenses of such Third Party Claim.  Each
Party reserves the right to claim indemnity from the other in accordance with
Sections 11.1 and 11.2 above upon resolution of the underlying claim,
notwithstanding the provisions of this Section 11.3 requiring the
indemnified Party to tender to the indemnifying Party the exclusive ability to
defend such claim or suit.

 

11.4    Limitation of Liability.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER
FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES OR LOSS OF
PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF
ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES. 
NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 11.4 IS
INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF ANY PARTY UNDER SECTION 11.1 OR 11.2, OR DAMAGES AVAILABLE
FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE 12.

 

44

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

11.5    Insurance. Each Party
shall procure and maintain insurance, including product liability insurance,
adequate to cover its obligations hereunder and which are consistent with
normal business practices of prudent companies in the pharmaceutical industry
similarly situated at all times during which any Product is being clinically
tested in human subjects or commercially distributed or sold by such Party.  It is
understood that such insurance shall not be construed to create a limit of
either Party’s liability with respect to its indemnification obligations under
this Article 11.  Each Party shall
provide the other Party with written
evidence of such insurance upon request after the Effective Date.  Following the Effective Date, each Party
shall provide the other Party with written evidence that the other Party had
been listed as an additional insured under the policies described herein.  Each Party shall provide the other Party with written notice at least thirty (30) days prior to the
cancellation, non-renewal or material change in such insurance or
self-insurance which materially adversely affects the rights of the other Party
hereunder.

 

ARTICLE 12

 

CONFIDENTIALITY

 

12.1    Confidentiality.  Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing by the Parties, each Party agrees that, for the Term and for a period of five (5) years
thereafter, it shall keep confidential and shall not publish or otherwise
disclose and shall not use for any purpose other than as provided for in this
Agreement (which includes the exercise of any rights or the performance of any
obligations hereunder) any Confidential Information furnished to it by the
other Party pursuant to this Agreement except for that portion of such
information or materials that the receiving Party can demonstrate by competent
written proof:

 

(a)           was already known to the
receiving Party or its Affiliate, other than under an obligation of
confidentiality, at the time of disclosure by the other Party;

 

(b)           was generally available to
the public or otherwise part of the public domain at the time of its disclosure
to the receiving Party;

 

(c)           became generally available
to the public or otherwise part of the public domain after its disclosure and
other than through any act or omission of the receiving Party in breach of this
Agreement;

 

(d)           is subsequently disclosed to
the receiving Party or its Affiliate by a Third Party who has a legal right to make such disclosure; or

 

45

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

(e)           is subsequently
independently discovered or developed by the receiving Party or its Affiliate
without the aid, application, or use of the
disclosing Party’s Confidential Information, as evidenced by a
contemporaneous writing.

 

12.2    Authorized Disclosure.  Notwithstanding the obligations set forth in Section 12.1,
a Party may disclose the other Party’s Confidential Information including the
terms of this Agreement to the extent:

 

(a)           such disclosure: (i) is
reasonably necessary for the filing or prosecuting patent rights as
contemplated by this Agreement; or (ii) is reasonably necessary for the
prosecuting or defending litigation as contemplated by this Agreement; or

 

(b)           such disclosure is
reasonably necessary: (i) to such Party’s directors, attorneys,
independent accountants or financial advisors for the sole purpose of enabling
such directors, attorneys, independent accountants or financial advisors to
provide advice to the receiving Party, provided that in each such case on the
condition that such directors, attorneys, independent accountants and financial
advisors are bound by confidentiality and non-use obligations consistent with
those contained in this Agreement; or (ii) to actual or potential
investors and/or acquirers solely for the purpose of evaluating an actual or
potential investment or acquisition; provided that in each such case on the
condition that such actual or potential investors and/or acquirers are bound by
confidentiality and non-use obligations consistent with those contained in the
Agreement; or

 

(c)           such disclosure is required
by judicial or administrative process, provided that in such event such Party
shall promptly inform the other Party of such required disclosure and provide
the other Party an opportunity to challenge or limit the disclosure
obligations.  Confidential Information
that is disclosed by judicial or administrative process shall remain otherwise
subject to the confidentiality and non-use provisions of this Article 12,
and the Party disclosing Confidential Information pursuant to law or court
order shall take all steps reasonably necessary, including seeking of
confidential treatment or a protective order to ensure the continued
confidential treatment of such Confidential Information.

 

12.3    Publication.
 Where one Party carries out any
clinical trial under this Agreement it shall prepare a final report of the
results from such clinical trial and from all sites and shall present the same
to the other Party at the same time supplying a written copy.  The first Party may thereafter release such
results or submit them for use at conferences and for publication in scientific
journals in accordance with this Section 12.3.  The Parties acknowledge that scientific
publications must be strictly monitored to prevent any adverse effect from
premature publications of results of the research and Development activities
hereunder.  Accordingly, the Parties
shall not publish, present or otherwise disclose any material related to a Product
without the prior written consent of the JSC, such consent not to be
unreasonably withheld or delayed.  In
rendering or withholding its consent, the JSC shall take into consideration
Tranzyme’s and Norgine’s interest in publishing the results of its research in
order to obtain recognition within the scientific community and to advance the
state of scientific knowledge, the need to protect Confidential Information and
the Parties’ mutual interest in obtaining valid patent protection, protecting
reasonable business interests and trade secret information and, having an
integrated approach to Developing one or more Products for one or more
Indications in the Licensed 

 

46

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Territory and Retained Territory.  The JSC shall have the right to require
modifications of the publication or presentation: (a) to protect the
Parties’ Confidential Information; (b) for trade secret reasons or
business reasons; and/or (c) to delay such submission for an additional
ninety (90) days as may be reasonably necessary to seek patent protection for
the information disclosed in such proposed submission.  Each Party’s contribution to such material
results shall be duly recognized in such publications.  Notwithstanding the foregoing, nothing in
this Agreement shall prevent either Party from posting the results of any
clinical trial conducted hereunder on a government website, such as
www.clinicaltrials.gov, or otherwise making the results of a clinical trial
conducted hereunder available in accordance with the Laws and industry codes of
practice of any country in which such clinical trial is conducted or in
accordance with good industry practice.

 

12.4    Publicity;
Use of Names.  Subject to
the rest of this Section 12.4 and the authorized disclosures permitted
under Section 12.2, no disclosure of the existence, or the terms, of this
Agreement may be made by either Party or its Affiliates, and no Party shall use
the name, trademark, trade name or logo of the other Party, its Affiliates or
their respective employee(s) in any publicity, promotion, news release or disclosure
relating to this Agreement or its subject matter, without the prior express
written permission of the other Party, except as may be required be law.

 

(a)           A Party may disclose this
Agreement and its terms, and material developments or material information
generated under this Agreement, in securities filings with the Securities
Exchange Commission (“SEC”) (or
equivalent foreign agency) to the extent required by law after complying with
the procedure set forth in this Section 12.4(a).  In such event, the Party seeking such
disclosure will prepare a draft confidential treatment request and proposed
redacted version of this Agreement to request confidential treatment for this
Agreement, and the other Party agrees to promptly (and in any event, no less
than seven (7) days after receipt of such confidential treatment request
and proposed redactions) give its input in a reasonable manner in order to
allow the Party seeking disclosure to file its request within the time lines
proscribed by applicable SEC regulations. 
The Party seeking such disclosure shall exercise Commercially Reasonable
Efforts to obtain confidential treatment of the Agreement from the SEC or other
agency as represented by the redacted version reviewed by the other Party.

 

(b)           Further, each Party
acknowledges that the other Party may be legally required or required by
prevailing industry codes of practice to make public disclosures (including in
filings with the SEC or other agency) of certain material developments or
material information generated under this Agreement and agrees that each Party
may make such disclosures as required by Laws, provided
that the Party seeking such disclosure first provides the other Party a copy of
the proposed disclosure, and provided further that (except to the extent that
the Party seeking disclosure is required to disclose such information to comply
with applicable laws or regulations) if the other Party demonstrates to the
reasonable satisfaction of the Party seeking disclosure, within ten (10) days
of such Party’s providing the copy, that the public disclosure of previously
undisclosed information will materially adversely affect the Development and/or
Commercialization of a Product being Developed and/or Commercialized, the Party
seeking disclosure will remove from the disclosure such specific previously
undisclosed information as the other Party shall reasonably request to be
removed.

 

47

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

(c)           Notwithstanding the
foregoing, Tranzyme and Norgine have agreed on language of a press release announcing
the collaboration, attached hereto as Exhibit E
to be issued promptly after the execution of the Agreement by both Parties.

 

(d)           Thereafter, if either Party
desires to issue a press release or make a public announcement concerning the
material terms of this Agreement or the Development or Commercialization of the
Product in the Licensed Territory under this Agreement, such as announcing the
achievement of any milestone that triggers a milestone payment under Section 8.2,
the commencement of any clinical trial for the Product, the filing of
Regulatory Filings for the Product and the achievement of Regulatory Approvals
of the Product, the disclosing Party shall provide the other Party with the
proposed text of such announcement for prior review and approval, such approval
not to be unreasonably withheld or delayed.

 

(e)           The Parties agree that after
a disclosure pursuant to Section 12.4(b) or a press release pursuant
to Section 12.4(c) or (d) hereof has been reviewed and approved
by a Party, either Party may make subsequent public disclosures or issue a
press release disclosing the same content without having to obtain the other
Party’s prior consent and approval.

 

ARTICLE 13

 

TERM AND TERMINATION

 

13.1    Term.  This Agreement shall become effective on the
Effective Date and, unless earlier terminated pursuant to this Article 13,
shall remain in effect, on a Product-by-Product basis and on a country-by-country basis, [***].

 

13.2    Termination for Breach.

 

(a)           Notice.  If either Party believes that
the other is in material breach of this Agreement, then the Party holding such
belief (the “Non-breaching Party”) may deliver
notice of such breach to the other Party (the “Notified
Party”).  The Notified Party
shall have [***] to cure such breach to the extent involving non-payment of
amounts due hereunder, and [***] to either cure such breach for all other
material breaches, or, if cure of such breach other than non-payment cannot
reasonably be effected within such [***], to deliver to the Non-breaching Party
a plan reasonably calculated to cure such breach within a timeframe that is
reasonably prompt in light of the circumstances then prevailing but in no event
in excess of an [***].  Following
delivery of such a plan, the Notified Party shall diligently carry out the plan
and cure the breach and the cure period shall be extended by the time period
provided in such plan but in no event to exceed one hundred and eighty (180)
days from the date of any initial breach notice delivered under this Section 13.2.

 

(b)           Failure
to Cure.  If the
Notified Party fails to cure a material breach of this Agreement as provided
for in Section 13.2(a), then the Non-Breaching Party may terminate this
Agreement upon written notice to the Notified Party.

 

(c)           Disputes.  If the Notified Party in good
faith disputes the alleged material breach or disputes the failure to cure or
remedy such material breach and provides written notice of that dispute to the
Non-breaching Party within the relevant time period to cure under Section 

 

48

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

13.2(a) or (b), then the matter will be
resolved in accordance with Article 14, and the Non-breaching Party may
not terminate this Agreement until it has been determined under Article 14
that the Notified Party is in material breach of this Agreement, and such Party
further fails to cure such breach within the relevant time period under Section 13.2(a) or
(b) for the type of breach in question after the matter has been resolved
in accordance with Article 14.

 

13.3    Termination Without Cause.  Norgine may terminate this Agreement in its
entirety at any time and for any reason during the Term as follows:

 

(a)           Prior to the First
Commercial Sale of any Product in the Licensed Territory, Norgine may terminate
this Agreement under this Section 13.3 upon providing Tranzyme with not
less than three (3) months prior written notice referencing this Section 13.3
and specifying termination of the Agreement. 
Thereafter the Parties shall (i) continue to be liable to share
Third Party Development Costs in relation to Core Studies which Third Party
Development Costs were committed to (meaning that a contract with the relevant
Third Party had been executed and the Development activity in question had been
initiated on or before the date of Norgine’s notice of termination, unless
performance of such Development activity can be cancelled or terminated without
any material impact to the Development of the Product and without any
cancellation costs) by either or both Parties in accordance with the Core
Studies Development Program and associated budget prior to the date of Norgine’s
notice of termination pursuant to this Section 13.3, which costs shall be
shared in accordance with Section 4.6(a)(i) but Norgine shall have no
liability for any Third Party Development Costs committed to by Tranzyme
following delivery of Norgine’s notice of termination, even if such costs are
committed to during the three (3) months termination period.

 

(b)           After the First Commercial
Sale of the Product, Norgine shall have the right to terminate this Agreement
under this Section 13.3 upon six (6)-month written notice to Tranzyme,
provided that, in the event Tranzyme is able to transfer the Commercialization
activities for the Product to a Third Party for any particular country prior to
the end of such six (6)-month notice period, then this Agreement shall
terminate with respect to such country at the time Tranzyme consummates such
transfer.

 

(c)           After Tranzyme receives
Norgine’s notice of termination under this Section 13.3, Norgine and its
Affiliates shall do all such things as are necessary to prepare for and execute
the transition back to Tranzyme of the Product. 
Norgine shall be and remain liable for any Third Party Development Costs
Norgine has committed to with respect to any Norgine Independent Studies.

 

13.4    Consequence of Termination.

 

(a)           Termination
by Tranzyme under Section 13.2; Termination by Norgine under Section 13.3.  Upon the early termination
of this Agreement by Tranzyme
pursuant to Sections 13.2 or by Norgine pursuant to Section 13.3, the
following shall apply (in addition to any other rights and obligations
otherwise under this Agreement with respect to such termination):

 

(i)            Termination
of licenses. The licenses granted to Norgine under 

 

49

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Section 2.1(a) shall terminate, with the
effect that all sublicenses granted by Norgine shall also terminate.

 

(ii)           Regulatory
Filings; Data; Trademarks.  To
the extent permitted by applicable Laws, Norgine shall, and shall cause its
Affiliates and sublicensees to, transfer and assign to Tranzyme all Regulatory
Filings, Regulatory Approvals, and related preclinical, analytical, and
clinical data and other results for the Products throughout the Licensed
Territory and grant Tranzyme a right of reference to Regulatory Approvals that
are owned by Norgine for the Products throughout the Licensed Territory as and
to the extent owned or Controlled by Norgine, and shall assign to Tranzyme all
of its right, title and interest in the Product Trademarks. 
Norgine shall provide such assistance, at no cost to Tranzyme, as may be
reasonably necessary to transfer and/or transition to Tranzyme all such
Regulatory Filings, Regulatory Approvals, data, and Product Trademarks for
Tranzyme to commence or continue Developing, manufacturing or Commercializing
Products.

 

(iii)         Norgine
License.  Subject to the pre-existing
rights of Norgine’s existing licensees under Norgine Technology in the Licensed
Territory, Norgine hereby grants to Tranzyme, effective only in the event of
such termination, an exclusive  license, with
the right to grant multiple tiers of sublicenses, under Norgine Technology and
Norgine’s interest in Joint Patents to Develop, make, have made, use, sell,
offer for sale, have sold, import and otherwise Commercialize the Products in
the Licensed Territory, which license shall be effective as of the date of such
termination.  In its
Sublicense Agreements, Norgine shall obtain the right from its sublicensees
under the Information and Patents generated by such sublicensees in connection
with the making, using, Developing, seeking Regulatory Approval for and/or
Commercializing the Products in order to pass such rights to Tranzyme under
this Section 13.4(a)(iii) in the event of such termination.  This license shall be fully paid up if the
Agreement is terminated by Norgine pursuant to Section 13.3.  If the Agreement is terminated by Tranzyme
pursuant to Section 13.2 the license set out above shall be on reasonable
financial terms to be agreed in good faith between the Parties taking into
account the following factors:

 

(1)           industry benchmarks for financial terms paid to companies in Norgine’s
position for a license of similar intellectual property at the then stage of
research, Development and/or Commercialization of the Products in such circumstances
of termination and taking into account the circumstances of termination; and

 

(2)           the relative value represented by Tranzyme Technology and other
contributions made by Tranzyme with respect to the Product, compared to the
value represented by Norgine Technology and other contributions made by Norgine
with respect to the Product; and

 

(3)           the value of lost Tranzyme Patent life represented by the delay in the
research, Development and or Commercialization of Products caused by the
termination.

 

(iv)          Transition Assistance.  Norgine shall provide such assistance, at no
cost to Tranzyme, as may be reasonably necessary or useful for Tranzyme to
commence or continue Developing, manufacturing or Commercializing Products in the Licensed Territory, to

 

50

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

the extent Norgine is then performing or having
performed such activities, including without limitation transferring or amending as appropriate, upon request of Tranzyme,
any agreements or arrangements with Third Party vendors to sell or manufacture
Products in the Licensed Territory.  To the extent that any such
contract between Norgine and a Third Party is not assignable to Tranzyme, then
Norgine shall reasonably cooperate with Tranzyme to arrange to continue to and
provide such services from such entity.

 

(b)           Termination
by Norgine under Section 13.2.  Upon the early
termination of this Agreement by
Norgine pursuant to Section 13.2, the license granted to Norgine under Section 2.1(a) shall
survive, provided that Norgine fulfills its payment obligations to Tranzyme
under Article 8.  Section 2.6
shall survive such termination on its own terms.

 

13.5    Bankruptcy.  Should Tranzyme be and/or should Tranzyme
seek to be or is involuntarily placed under the protection of the “Bankruptcy
Code” (i.e., Title 11, U.S. Code), then Norgine hereby requests, under Section 365(n)(4) of
the Bankruptcy Code, that, unless and until the trustee in bankruptcy, or
Tranzyme as a debtor in possession, rejects the Agreement, Tranzyme and/or the
trustee in bankruptcy shall perform Tranzyme’s obligations under the Agreement.  As of the commencement of a bankruptcy
proceeding by or against Tranzyme under the Bankruptcy Code, Norgine is
entitled to a complete duplicate of all embodiments of intellectual property
licensed to it hereunder.  To the extent
such embodiments are not already in Norgine’s possession as of the commencement
of a bankruptcy, upon a rejection of this Agreement by or on behalf of Tranzyme
or if Tranzyme elects not to continue to perform all of its obligations under
this Agreement Tranzyme (or the trustee in bankruptcy) shall deliver such
embodiments to Norgine.  All licenses
granted under this Agreement are deemed to be, for purposes of Section 365(n) of
the Bankruptcy Code, licenses of “intellectual property” as defined in Section 101
of such Code.

 

13.6    General Effects of Expiration or
Termination.

 

(a)           Accrued
Obligations.  Expiration
or termination of this Agreement for any reason shall not release either Party
from any obligation or liability which, at the time of such expiration or
termination, has already accrued to the other Party or which is attributable to
a period prior to such expiration or termination.

 

(b)           Non-Exclusive
Remedy.  Notwithstanding anything herein
to the contrary, termination of this Agreement by a Party shall be without
prejudice to other remedies such Party may have at law or equity.

 

(c)           Termination
Press Releases.  In the event
of any termination of this Agreement (whether in its entirety or as to a
particular country) for any reason, the Parties shall cooperate in good faith
to coordinate public disclosure, if any, of such termination and the reasons
therefor, and shall not, except to the extent required by applicable Laws or
the rules of a recognized stock exchange, disclose such information
without the prior approval of the other Party, such approval not to be
unreasonably withheld, conditioned or delayed.

 

(d)           Survival.  The following provisions shall survive any
termination of this Agreement or expiry of the Term for the period of time
specified: Articles 1, 8 (solely with 

 

51

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

respect to payments that are payable as of the
effective date of such expiration or termination, or that become payable in
connection with such expiration or termination), 11, 12, 14, and 15, and
Sections 2.1(b), 2.2, 8.8, 8.9, 8.10, 9.1, 10.3, 10.4, 13.3, 13.4 and 13.6.

 

ARTICLE 14

 

DISPUTE RESOLUTION

 

14.1    Disputes.  The Parties recognize that disputes as to
certain matters may from time to time arise during the Term which relate to
either Party’s rights and/or obligations hereunder.  It is the objective of the Parties to
establish procedures to facilitate the resolution of disputes arising under
this Agreement in an expedient manner by mutual cooperation and without resort
to litigation.  To accomplish this
objective, the Parties agree to follow the procedures set forth in this Article 14
to resolve any controversy or claim arising out of, relating to or in
connection with any provision of this Agreement, if and when a dispute arises
under this Agreement.

 

14.2    Internal Resolution.  With respect to all disputes
arising between the Parties under this Agreement, including, without
limitation, any alleged breach under this Agreement or any issue relating to
the interpretation or application of this Agreement, if the Parties are unable
to resolve such dispute within thirty (30) days after such dispute is first
identified by either Party in writing to the other, the Parties shall refer
such dispute to the Chief Executive Officers of the Parties for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received.

 

14.3    Binding Arbitration.  If the Chief Executive
Officers of the Parties are not able to resolve such disputed matter within
thirty (30) days of such matter being referred to them pursuant to Section 14.2
and either Party wishes to pursue the matter, except as set forth in Section 3.2(b),
each such dispute, controversy or claim that is not an Excluded Claim (defined
in Section 14.4 below) shall be finally resolved by binding arbitration
administered by the International Chamber of Commerce (the “ICC”) in accordance with its then existing Rules of
Conciliation and Arbitration, and judgment on the arbitration award may be
entered in any court having jurisdiction thereof.  The Parties agree that:

 

(a)           The arbitration shall be
conducted by a panel of three persons experienced in the pharmaceutical
business: within thirty (30) days after initiation of arbitration, each Party
shall select one person to act as arbitrator and the two Party-selected arbitrators
shall select a third arbitrator within thirty (30) days of their
appointment.  If the arbitrators selected
by the Parties are unable or fail to agree upon the third arbitrator, the third
arbitrator shall be appointed by ICC. 
The place of arbitration shall be New York, New York, and all
proceedings and communications shall be in English.

 

(b)           Either Party may apply to
the arbitrators for interim injunctive relief until the arbitration award is
rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any
remedy under this Agreement, seek from any court having jurisdiction any
injunctive or provisional relief necessary to protect the rights or property of
that Party pending the arbitration award. 
The arbitrators shall have no authority to award punitive or any other
type of damages not measured by a Party’s compensatory damage.  Each Party shall bear its own 

 

52

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

costs and expenses and attorneys’ fees and an equal
share of the arbitrators’ fees and any administrative fees of arbitration.

 

(c)           Except to the extent
necessary to confirm an award or as may be required by law, neither a Party nor
an arbitrator may disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties.  In no event shall an arbitration be initiated
after the date when commencement of a legal or equitable proceeding based on
the dispute, controversy or claim would be barred by the applicable New York
statute of limitations.

 

14.4    Excluded Claim. As used in this
Article 14, the term “Excluded Claim”
shall mean a dispute, controversy or claim that concerns (a) the scope,
validity, enforceability, inventorship or infringement of a patent, patent
application, trademark or copyright; or (b) any antitrust, anti-monopoly
or competition law or regulation, whether or not statutory.

 

ARTICLE 15

 

MISCELLANEOUS

 

15.1    Entire Agreement; Amendment.  This Agreement, including the Exhibits
hereto, sets forth the complete, final and exclusive agreement and all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof and supersedes, as of the Effective Date, all prior agreements and
understandings between the Parties with respect to the subject matter hereof.   There are no covenants,
promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties other than as are
set forth herein and therein.  No
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party.

 

15.2    Force Majeure.  Each Party shall be excused from the
performance of its obligations under this Agreement to the extent that such
performance is prevented by force majeure and the nonperforming Party promptly
provides notice of the prevention to the other Party.  Such excuse shall be continued so long as the
condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition.  For purposes of this Agreement, force majeure  shall include conditions beyond the reasonable control of
the nonperforming Party, including without limitation, an act of God or
terrorism, voluntary or involuntary compliance with any regulation, law or
order of any government, war, civil commotion, labor strike or lock-out,
epidemic, failure or default of public utilities or common carriers, destruction
of production facilities or materials by fire, earthquake, storm or like
catastrophe.  Notwithstanding the
foregoing, a Party shall not be excused from making payments owed hereunder
because of a force majeure affecting such Party.  If a force majeure persists for more than
ninety (90) days, then the Parties will discuss in good faith the modification
of the Parties’ obligations under this Agreement in order to mitigate the
delays caused by such force majeure.

 

15.3    Notices.  Any notice required or permitted to be given
under this Agreement shall be in writing, shall specifically refer to this
Agreement, and shall be addressed to the appropriate 

 

53

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Party at the address specified below or such other
address as may be specified by such Party in writing in accordance with this Section 15.3,
and shall be deemed to have been given for all purposes (a) when received,
if hand-delivered or sent by confirmed facsimile or a reputable courier service, or (b) five (5) business days
after mailing, if mailed by first class certified or registered airmail, postage prepaid, return receipt requested.

 

	
  If
  to Tranzyme:

  	
   

  	
  Tranzyme, Inc.

  
	
   

  	
   

  	
  4819
  Emperor Blvd. Suite 400

  
	
   

  	
   

  	
  Durham,
  NC 27703

  
	
   

  	
   

  	
  Attn:
  [***]

  
	
   

  	
   

  	
  Fax:
  [***]

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
   

  	
  Cooley
  LLP

  
	
   

  	
   

  	
  One
  Freedom Square, Reston Town Center

  
	
   

  	
   

  	
  11951
  Freedom Drive

  
	
   

  	
   

  	
  Reston,
  VA 20190-5656

  
	
   

  	
   

  	
  Attention:
  [***]

  
	
   

  	
   

  	
  Facsimile:
  [***]

  
	
   

  	
   

  	
   

  
	
  If
  to Norgine:

  	
   

  	
  Norgine
  B.V.

  
	
   

  	
   

  	
  Hogehilweg
  7

  
	
   

  	
   

  	
  1101
  CA Amsterdam ZO

  
	
   

  	
   

  	
  The
  Netherlands

  
	
   

  	
   

  	
  Attention:
  [***]

  
	
   

  	
   

  	
  Facsimile
  No: [***]

  
	
   

  	
   

  	
   

  
	
  with
  a copy to:

  	
   

  	
  Norgine
  Limited

  
	
   

  	
   

  	
  Norgine
  House

  
	
   

  	
   

  	
  Widewater
  Place

  
	
   

  	
   

  	
  Moorhall
  Road

  
	
   

  	
   

  	
  Harefield

  
	
   

  	
   

  	
  Middlesex,
  UB9 6NS, UK

  
	
   

  	
   

  	
  Attention:
  [***]

  
	
   

  	
   

  	
  Facsimile
  No: [***]

  

 

15.4    No Strict Construction; Headings.  This Agreement has been prepared jointly and
shall not be strictly construed against either Party.  Ambiguities, if any, in this Agreement shall
not be construed against any Party, irrespective of which Party may be deemed
to have authored the ambiguous provision. 
The headings of each Article and Section in this Agreement
have been inserted for convenience of reference only and are not intended to
limit or expand on the meaning of the language contained in the particular Article or
Section.

 

15.5    Assignment.

 

(a)           Neither Party may assign or
transfer this Agreement without the prior written consent of the other, except
that a Party may make such an assignment without the other 

 

54

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Party’s consent to Affiliates or to a successor to
all or substantially all of the assets of such Party to which this Agreement
relates (whether by merger, sale of stock, sale of assets or other transaction)
(the “Acquisition”).  Any permitted successor or assignee of rights
and/or obligations hereunder shall, in writing to the other Party, expressly
assume performance of such rights and/or obligations.  Any permitted assignment shall be binding on
the successors of the assigning Party.

 

(b)           For clarity, the
intellectual property rights of a Third Party who becomes an assignee or an
Affiliate of a Party as a result of a transaction in which such Third Party
purchases all or substantially all of such Party’s assets or stock to which
this Agreement relates, as existing on the date of closing of such transaction,
shall be automatically excluded from the rights licensed to the other Party
under this Agreement, except to the extent such intellectual property rights
are necessary for the non-assigning Party to practice the license granted to it
hereunder in the same manner as it is practiced (or is contemplated to be
practiced as evidenced by written proof of the non-assigning Party) as of the
date of such assignment.  The foregoing
shall not be construed as limiting or in any other way modifying any existing
agreement between the non-assigning Party and such Third Party that are entered
into prior to such assignment.

 

(c)           Any assignment or attempted
assignment by either Party in violation of the terms of this Section 15.5
shall be null, void and of no legal effect.

 

(d)           Tranzyme shall not, and
Tranzyme shall ensure that Tranzyme Pharma Inc. shall not, convey, transfer or
assign any Tranzyme Technology or its interest in Joint Patents or Joint
Inventions in any manner that would materially adversely affect the scope of
the license granted to Norgine under this Agreement.  Norgine shall not convey, transfer or assign
any Norgine Technology or its interest in Joint Patents or Joint Inventions in
any manner that would materially adversely affect the scope of the license
granted to Tranzyme under this Agreement.

 

15.6    Performance by Affiliates.  Each Party may discharge any obligations and
exercise any right hereunder through any of its Affiliates.  Each Party hereby guarantees the performance
by its Affiliates of such Party’s obligations under this Agreement, and shall
cause its Affiliates to comply with the provisions of this Agreement in
connection with such performance.  Any
breach by a Party’s Affiliate of any of such Party’s obligations under this
Agreement shall be deemed a breach by such Party, and the other Party may
proceed directly against such Party without any obligation to first proceed
against such Party’s Affiliate.

 

15.7    Further Actions.  Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts (and agrees to
procure that its Affiliates do the same) as may be necessary or appropriate in
order to carry out the purposes and intent of this Agreement including so as to
allow Norgine to register the licenses granted to it under the Tranzyme Patents
and Joint Patents in this Agreement with Patent Offices in the Licensed
Territory (and to allow the Parties to un-register such licenses upon any
termination of such licenses).

 

15.8    Severability.  If any one or more of the provisions of this
Agreement is held to be invalid or unenforceable by any court of competent
jurisdiction from which no appeal can be or is taken, the provision shall be
considered severed from this Agreement and shall not serve to 

 

55

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

invalidate any remaining provisions hereof.  The Parties shall make a good faith effort to
replace any invalid or unenforceable provision with a valid and enforceable one
such that the objectives contemplated by the Parties when entering this
Agreement may be realized.

 

15.9    No Waiver.  Any delay in enforcing a Party’s rights under
this Agreement or any waiver as to a particular default or other matter shall
not constitute a waiver of such Party’s rights to the future enforcement of its
rights under this Agreement, except with respect to an express written and
signed waiver relating to a particular matter for a particular period of time.

 

15.10  Independent Contractors.  Each Party shall act solely as an independent
contractor, and nothing in this Agreement shall be construed to give either
Party the power or authority to act for, bind, or commit the other Party in any
way.  Nothing herein shall be construed
to create the relationship of partners, principal and agent, or joint-venture
partners between the Parties.

 

15.11  English Language; Governing Law. This
Agreement was prepared in the English language, which language shall govern the
interpretation of, and any dispute regarding, the terms of this Agreement.  This Agreement shall be governed by and
construed under the laws of the State of New York, without giving effect to any
choice of law principles that would require the application of the laws of a
different state.  Any Excluded Claims
arising out of or relating to this Agreement shall be subject to the exclusive
jurisdiction of the courts of New York, New York.

 

15.12  Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

[Remainder of this Page Intentionally Left Blank.]

 

56

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

EXECUTION COPY

 

IN WITNESS WHEREOF, the Parties have executed
this Agreement in duplicate originals by their duly authorized officers as of
the Effective Date.

 

	
  TRANZYME,
  INC.

  	
  NORGINE
  B.V.

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Vipin K. Garg

  	
   

  	
  By:
  

  	
  /s/
  Frank Nooteboom

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:
  

  	
  Vipin
  K. Garg

  	
   

  	
  Name:
  

  	
  Frank
  Nooteboom

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:
  

  	
  President
  & CEO

  	
   

  	
  Title:
  

  	
  Director

  

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Exhibit A

 

Tranzyme Patents Existing as of the Effective Date

 

Part A:
Tranzyme Other-Product Patents

 

[***]    [four
pages omitted]

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Part B:
Tranzyme Product-Specific Patents

 

[***]    [two
pages omitted]

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Exhibit B

 

TZP-101

 

[***]

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Exhibit C

 

Initial Development Plan

 

TZP-101
Intravenous Injection Postoperative Ileus Development Programme

 

[***]    [2
pages omitted]

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

	
  Clinical Program / Regulatory Activity

  	
   

  	
  Status / Start

  Date

  	
   

  	
  Data Available /

  End Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Single dose safety, tolerability and PK/PD assessments in
  healthy volunteers

  	
   

  	
  Complete

  	
   

  	
  Q2 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Single dose safety, tolerability and PK/PD assessments and
  effect on gastric emptying in patients with diabetic gastroparesis

  	
   

  	
  Complete

  	
   

  	
  Q1 2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Multi-dose safety, tolerability, PK/PD assessments in
  healthy volunteers

  	
   

  	
  Complete

  	
   

  	
  Q4 2006

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  End of Phase 1 meeting with the FDA

  	
   

  	
  Complete

  	
   

  	
  Q1 2007

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thorough ECG Evaluation (QT) Study

  	
   

  	
  Complete

  	
   

  	
  Q2 2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase 2 dose-ranging study in POI patients

  	
   

  	
  Complete

  	
   

  	
  Q3 2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phase 2 dose-ranging study in diabetic gastroparetic
  patients

  	
   

  	
  Complete

  	
   

  	
  Q2 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EOP2 POI meeting with the FDA

  	
   

  	
  Complete

  	
   

  	
  Q4 2008

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EOP2 gastroparesis meeting with the FDA

  	
   

  	
  Complete

  	
   

  	
  Q1
  2010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Remaining Activities

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EMEA Scientific Advice

  	
   

  	
  -

  	
   

  	
  Q3
  2010

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

[***]    [table omitted]

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND
HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN
APPICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS.

 

Exhibit D

 

Equity Documents

 

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL
TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

	
  

  	
  

  

 

Exhibit E

 

Press Release

 

For Immediate Release — Month Day, 2010

 

Tranzyme Pharma and Norgine Sign License Agreement for
Late-Stage

Development Product, Ulimorelin (TZP-101), in Europe and Other Select

Regions

 

Companies to Jointly Initiate
Pivotal Phase 3 Studies in 2010

 

RESEARCH
TRIANGLE PARK, NC and AMSTERDAM, NETHERLANDS (Month Day, 2010) — Tranzyme
Pharma, a clinical-stage biopharmaceutical company, and Norgine B.V., a
European specialty pharmaceutical company, announced today that they have
entered into a licensing agreement that provides Norgine with the exclusive
rights to develop and commercialize Tranzyme’s novel ghrelin agonist,
ulimorelin (TZP-101), in Europe, Australia, New Zealand, the Middle East, South
Africa and North Africa. Ulimorelin is entering Phase 3 development for the
treatment of gastrointestinal dysmotility conditions in acute care settings.

 

Under
the agreement, Norgine will make an upfront payment of $8 million and will also
make an equity investment in Tranzyme. Further, Tranzyme is eligible to receive
up to approximately $150 million if certain development, regulatory and
commercial milestones are achieved. Tranzyme will also receive escalating
double-digit royalties on net sales in the licensed territories. The companies
will jointly fund further development of ulimorelin and anticipate initiating
pivotal Phase 3 studies in the second half of 2010.

 

“Norgine’s
focus on pharmaceutical products that address unmet medical needs, and their
development and commercial experience and expertise in European markets, make
them an ideal strategic and co-development partner for Tranzyme,” said Vipin K.
Garg, PhD, President and CEO of Tranzyme. “This partnership allows us to
monetize part of the value of ulimorelin, while still retaining the significant
upside of North American and Asian markets”.

 

Peter
Stein, Chairman and CEO of Norgine said, “There is a critical need for a new,
safe and effective prokinetic drug for use in acute care settings, as there are
no satisfactory treatments on the market. 
We have been very impressed with the work that Tranzyme have done to
take ulimorelin through Phase 2 development and we are excited to be working
with them on this innovative therapy, which could bring relief to millions of
patients.”

 

About Ulimorelin

 

Ulimorelin is an intravenous
ghrelin agonist with potent prokinetic properties currently in clinical
development for the treatment of gastrointestinal dysmotility disorders in
acute care settings. Ulimorelin has been comprehensively studied in the
management of severe gastroparesis and postoperative ileus (POI), and has the
potential to treat other serious conditions 

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY
WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPICATION FOR CONFIDENTIAL
TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS.

 

requiring administration of
intravenous prokinetic agents. The safety and pharmacokinetic profiles of
ulimorelin have been extensively characterized in healthy subjects and patients
across multiple dose levels, and the GI prokinetic properties of the compound
are well-established. Ulimorelin was discovered using Tranzyme’s proprietary
drug discovery technology.

 

About Norgine

 

Norgine is an independent,
successful European specialty pharmaceutical company that has been established
for over 100 years and has a presence in all major European markets. In 2009,
Norgine’s net product sales were €253 million, the 23rd year of double-digit
growth at constant exchange rates. The company employs over 1,200 people.

 

Norgine’s focus is the
development and marketing of pharmaceutical products that address significant
unmet clinical needs in areas such as gastroenterology, hepatology and pain
management. The company currently markets a range of products in various
markets in its key therapeutic areas e.g., MOVICOL® for the treatment of
constipation and fecal impaction, MOVIPREP® a new generation of bowel cleansing
preparation, KLEAN-PREP® for bowel preparation prior to colonoscopy, XIFAXAN®
for the treatment of travelers’ diarrhea and ORAMORPH® for the treatment of
moderate to severe pain associated with cancer.

 

Norgine is active in
research and development and currently has products in various stages of
clinical development. Norgine manufactures most of its own products in Hengoed,
Wales and Dreux in France. www.norgine.com

 

About Tranzyme Pharma

 

Tranzyme
Pharma is a clinical-stage drug development company that discovers and develops
novel small molecule macrocyclic drugs for both acute care (hospital-based) and
chronic indications with significant unmet medical needs. The Company’s
pipeline is derived from its proprietary drug discovery (chemistry) technology,
MATCHTM, and targets products for gastrointestinal motility, metabolic diseases
and cancer supportive care.

 

Tranzyme
recently entered into a broad drug discovery partnership with Bristol-Myers
Squibb to discover, develop and commercialize novel drug candidates in multiple
therapeutic areas. www.tranzyme.com.

 

	
  Tranzyme Contacts

  	
   

  	
   

  	
   

  	
   

  
	
  Vipin
  K. Garg, PhD

  	
   

  	
  Jennifer
  A. Filbey, PhD

  	
   

  	
  Susan
  S. Josselyn

  
	
  President
  and CEO

  	
   

  	
  VP,
  Business Development

  	
   

  	
  Corporate
  Communications Manager

  
	
  (919)
  313-4764

  	
   

  	
  (256)
  417-8568

  	
   

  	
  (919)
  313-4761

  
	
  vgarg@tranzyme.com

  	
   

  	
  jfilbey@tranzyme.com

  	
   

  	
  sjosselyn@tranzyme.com

  

 

Norgine Contact

Julie Hornby Winfield

Global Corporate
Communications Manager

+44 (0) 1895 826600

jhornbywinfield@norgine.comQuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

  Exhibit 10.2    
    

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  STRATEGIC COLLABORATION AGREEMENT    
    
    by and between    
    
    TRANZYME, INC.    
    
    and    
    
    BRISTOL-MYERS SQUIBB COMPANY    
    
    December 4, 2009    
    

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  Table of Contents    
    

 

 

					
	 
	 	 
	 	Page 
	 1.
	 	  Definitions
	 	 1
	 2.
	 	  Research Program
	 	

12
	 3.
	 	  Governance
	 	

21
	 4.
	 	  Development and Commercialization
	 	

23
	 5.
	 	  Intellectual Property Licenses
	 	

24
	 6.
	 	  Payments and Royalties
	 	

27
	 7.
	 	  Research Program Intellectual Property
	 	

34
	 8.
	 	  Patent Prosecution and Maintenance
	 	

35
	 9.
	 	  Patent Enforcement and Defense
	 	

38
	 10.
	 	  Confidentiality
	 	

40
	 11.
	 	  Warranties; Limitations of Liability; Indemnification
	 	

44
	 12.
	 	  Term and Termination
	 	

48
	 13.
	 	  General Provisions
	 	

53

 

 i

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

List of Exhibits    
    

Exhibit 1.10—Collaboration
Targets 

Exhibit 2.1(b)—Research
Plan 

Exhibit 2.1(c)—Tranzyme
Capabilities Expansion 

Exhibit 2.2(e)—HITCREATETM
Library Description 

Exhibit 10.3(b)—Tranzyme
Press Release 

a

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  STRATEGIC COLLABORATION AGREEMENT    
    

        This Strategic Collaboration Agreement (this "Agreement"), dated as of
December 4, 2009 (the "Effective Date"), is made by and between Tranzyme, Inc., a Delaware corporation with a place of business at 4819
Emperor Boulevard, Suite 400, Durham, North Carolina 27703 ("Tranzyme"), and Bristol-Myers Squibb Company, a Delaware corporation with a place of
business at Route 206 & Province Line Road, Princeton, NJ 08543-4000 USA (together with its Affiliates, "BMS"). Each of Tranzyme and
BMS may be referred to herein as a "Party" or together as the "Parties." 

        WHEREAS,
Tranzyme or its Affiliates has developed and owns or has rights to certain patents and technology useful to develop macrocycle compounds as drug candidates and methods of making
and using the same; 

        WHEREAS,
BMS has specialized experience in, among other things, discovery, clinical development and commercialization of biopharmaceutical products, and desires to collaborate with
Tranzyme in the development of biopharmaceutical products containing such macrocycles for BMS to commercialize; and 

        WHEREAS,
Tranzyme and BMS each desire to collaborate to develop biopharmaceutical products containing one or more macrocycles, all in accordance with the terms and conditions set forth
below. 

        NOW,
THEREFORE, the Parties hereby agree as follows: 

1.     Definitions.

        The
following terms and their correlatives shall have the following meanings: 

        1.1    "Affiliate" of a person or entity shall mean any other entity which (directly or indirectly) is controlled by, controls
or is under common control with such person or entity. For the purposes of this definition, the term "control" (including, with correlative meanings, the terms "controlled by" and "under common
control with") as used with respect to an entity shall mean (a) in the case of a corporate entity, direct or indirect ownership of voting securities entitled to cast more than fifty percent
(50%) of the votes in the election of directors or (b) in the case of a non-corporate entity, direct or indirect ownership of more than fifty percent (50%) of the equity interests
with the power to direct the management and policies of such entity, provided that if local law restricts foreign ownership, control shall be
established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests. 

        1.2    "Analog(s)" shall mean with regard to a given Collaboration Compound, another compound or series of compounds having the
same core chemical structure. 

        1.3    "Applicable Law" shall mean all applicable laws, rules and regulations (including any rules, regulations, guidelines or
other requirements of the Regulatory Agencies) that may be in effect from time to time. 

        1.4    "BMS Discovery & Development Program" shall mean an active discovery and Development program based upon one or
more Optimized Collaboration Hits or Collaboration Leads undertaken by BMS or any of its Affiliates or Sublicensees, the ultimate goal of which is to Develop one or more Licensed Products for
Commercialization. 

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.5    "BMS Technology" shall mean Know-How and Patents Controlled by BMS or any of its Affiliates necessary for
Tranzyme to discover and Develop any of the Collaboration Hits and Collaboration Leads, as part of the Research Program, or any Collaboration Target proprietary to BMS, or covering any Materials
Controlled by BMS and provided to Tranzyme under this Agreement. For clarity, BMS Technology shall include, if applicable, (a) BMS's interest in Patents within its Sole Research Program IP and
the Joint Research Program IP, and (b) Research Program Know-How owned in whole or in part by BMS. 

        1.6    "Change of Control" means with respect to any Party (the "Acquired
Entity") (a) any sale, exchange, transfer, issuance to, or acquisition, whether in one transaction or a series of related transactions, by one or more Third Parties of
shares representing more than fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the election of directors represented by the issued and outstanding stock of the Acquired
Entity or any Affiliate that directly or indirectly controls the Acquired Entity, whether such sale, exchange, transfer, issuance or acquisition is made directly or indirectly, by merger or otherwise,
or beneficially or of record, but excluding the issuance of shares in a financing transaction or any change in domicile of a Party; (b) a merger or consolidation under applicable law of the
Acquired Entity with a Third Party in which the shareholders of the Acquired Entity or any Affiliate that directly or indirectly controls the Acquired Entity immediately prior to such merger or
consolidation do not continue to hold immediately following the closing of such merger or consolidation at least fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the
election of directors represented by the issued and outstanding stock of the entity surviving or resulting from such consolidation; or (c) a sale or other disposition of all or substantially
all of the assets of the Acquired Entity to which this Agreement relates to one (1) or more Third Parties in one transaction or a series of related transactions. 

        1.7    "Collaboration Compound" shall mean any macrocycle compound developed or generated by or on behalf of either Party (or
the Parties jointly) arising from activities conducted or permitted under this Agreement, and any Analog, derivative, salt, ester, polymorphic, stereoisomer, metabolite, pro-drug form of
any such Collaboration Compound. For clarity, Collaboration Compounds shall include all Collaboration Hits (including all compounds provided by Tranzyme to BMS as part of the NPY2 program) and
Optimized Collaboration Hits and shall exclude all other compounds first synthesized by a Party prior to the Effective Date. 

        1.8    "Collaboration Hit" shall mean a macrocycle compound arising from screening the
HITCREATETM Library against a Collaboration Target in the course of the Research
Program to have specific and selective binding affinity for a Collaboration Target and meeting the applicable Hit Criteria. Collaboration Hits include the Optimized Collaboration Hits. 

        1.9    "Collaboration Lead(s)" shall mean any Collaboration Compound that binds to or has activity with regards to the
applicable Collaboration Target and is designated as a Collaboration Lead under Section 2.2(h)(iii), and in each case certain Analogs as
described below, along with any derivative, salt, ester, polymorphic, stereoisomer, metabolite, pro-drug form of such Collaboration Compound. Upon designation of a Collaboration Lead under  Section 2.2(h)(iii)
, such designation shall include those Analogs of the selected Collaboration Compound, which exhibit the same
structure-activity relationship with the applicable Collaboration Target, such structure-activity relationship as mutually agreed in good faith by the JSC, such agreement shall require approval of
(a) both Parties' representatives on the JSC or (b) if the term of the JSC has expired or Tranzyme's participation on the JSC has ceased, then the approval of designees of each Party, in
each case with a Party's consent not to be unreasonably withheld. 

2

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.10    "Collaboration Targets" shall mean (a) those targets identified on  Exhibit 1.10, and (b) any targets designated as Collaboration Targets pursuant to
 Section 2.2(a). 

        1.11    "Commercialization" shall mean any and all activities related to the manufacture, distribution, marketing, detailing,
promotion, selling and securing of reimbursement of any Licensed Product after Regulatory Approval has been obtained (including making, using, importing, selling and offering for sale any Licensed
Product), including any post-approval clinical studies. When used as a verb, "Commercialize" shall mean to engage in Commercialization. 

        1.12    "Commercially Reasonable Efforts" shall mean, with respect to the any applicable activity under this Agreement, the
carrying out of such obligations or tasks as an active and ongoing program with a level of effort and resources consistent with the commercially reasonable practices customarily devoted by a similarly
situated pharmaceutical company (which shall in no event be less than the standard normally applied by BMS or Tranzyme, as applicable to its other compounds or products) to the
discovery, research, development or commercialization, as the case may be, of a compound or product [***]. 

        1.13    The
term "compound" when used herein shall include the particular compound structure in question, its optical isomers,
plus all solvates (including hydrates), salt forms and polymorphs of the foregoing. 

        1.14    "Contract Year" shall mean each 12-month period during the Research Program Term beginning with the
Effective Date. 

        1.15    "Control" shall mean with respect to any Know-How, Material, Patent, or other intellectual property right,
the possession (whether by ownership or license, other than by a license granted pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access, ownership,
a license or a sublicense as provided herein to such Know-How, Material or Patent, without violating the terms of any agreement or other arrangement with any Third Party in existence as of
the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, ownership, license or sublicense; provided
that, any Know-How, Material or Patent that becomes Controlled after the Effective Date by Tranzyme that is subject to an obligation of Tranzyme to pay royalties or
other financial consideration to a Third Party as a direct result of granting BMS a sublicense to such Know-How, Material or Patent or the Development or Commercialization of Licensed
Products will be treated as "Controlled" by Tranzyme for purposes of this Agreement only if the Parties agree to include a license to such pursuant to  Section 6.4(f). The term "Controlled" shall
have a correlative meaning. 

        1.16    "Covers," with reference to a Patent, shall mean that the making, using, selling, offering for sale or importing of a
composition of matter or practice of a claimed method would infringe a Valid Claim (or, if such Valid Claim has not issued, if such Valid Claim were to issue), within such Patent in the country in
which such activity occurs. The term "Covered by" shall have a correlative meaning. 

3

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.17    "Development" shall mean, with respect to a compound, preclinical and clinical drug discovery and development
activities, including: test method development and stability testing, screening, toxicology, formulation, process development, qualification and validation, manufacture scale-up,
development-stage manufacturing, quality assurance/quality, the preparation and submission of INDs, clinical studies, statistical analysis and report writing, the preparation and submission of NDAs,
regulatory affairs with respect to the foregoing and all other activities necessary or useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or
maintaining a Regulatory Approval or commercialization of a product (including pricing), plus pre-launch marketing, promoting, detailing, marketing research, distributing, and commercial
sales. The term "Develop" shall have a correlative meaning; when used as a verb, "Develop" shall mean to engage in Development. 

        1.18    "ECN" shall mean a Collaboration Compound designated by BMS as an early clinical nomination, which compound has met
certain pre-defined criteria (as disclosed to the JSC) indicating that it is suitable for further Development activities as a Collaboration Lead and Licensed Product, including
IND-enabling toxicology studies. 

        1.19    "Exclusive Patent(s)" shall mean Tranzyme Patents (including Tranzyme's interest in Patents within its Sole Research
Program IP and within the Joint Research Program IP) that, but for the license granted herein would be infringed by the manufacture, use or sale of a Collaboration Lead (if Developed or Commercialized
as a Licensed Product) or Licensed Product (each such Tranzyme Patent, only when so subject, an "Exclusive Patent"). For clarity, Exclusive Patents do not include Subject Patents. 

        1.20    "European Union" shall mean the organization of member states of the European Union as it may be constituted from time
to time. 

        1.21    "FDA" shall mean the United States Food and Drug Administration and any successor agency thereto. 

        1.22    "Field" shall mean all applications for therapeutic and prophylactic uses in human and animal health care. 

        1.23    "First Commercial Sale" shall mean the first sale for use or consumption by the general public of Licensed Product in a
country after all required Regulatory Approvals for commercial sale of Licensed Product have been obtained in such country. 

        1.24    "FTE" shall mean a full-time person, or more than one person working the equivalent of a
full-time person, where "full-time" is determined by the
standard practices in the biopharmaceutical industry, including one thousand eight hundred eighty (1,880) hours of work per year, in the geographic area in which such personnel are working and
includes only R&D activities and limited scientific management oversight. 

        1.25    "FTE Rate" shall equal (a) during the initial twenty four (24) months of the Research Program Term
[***] for twelve (12) continuous months of one (1) FTE, or [***] per calendar quarter; and (b) during the remaining twelve
(12) months of the Research Program Term, Tranzyme's then-current FTE rate which shall not exceed [***] for twelve (12) continuous months of one
(1) FTE, or [***] per calendar quarter. The FTE Rate is the fully burdened rate for each such FTE and, for clarity, shall include all standard laboratory supplies and
reagents to be used by such FTE in conducting the Research Program. For avoidance of doubt, any issues of compensation regarding the Tranzyme employees acting as Tranzyme FTEs hereunder shall be a
matter solely between Tranzyme and such Tranzyme FTEs. For clarity, this FTE Rate shall not apply to the first [***] FTEs included in the Research Program funding described in  Section 6.2(a)(i) for
the first two (2) years of the Research Program Term. 

4

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.26    "GAAP" shall mean generally accepted accounting principles, consistently applied. 

        1.27    "Generic Product" shall mean, with respect to a particular Licensed Product, any pharmaceutical product that
(a) contains as an active ingredient an agent that is the same as the active ingredient contained in such Licensed Product; and (b) is sold in the same country as such Licensed Product
by any Third Party that is not a Sublicensee of BMS or its Affiliates and did not purchase such product in a chain of distribution that included any of BMS or any of its Affiliates or its
Sublicensees. 

        1.28    "GLP Toxicity Study" shall mean a study of the toxicological effects of a compound (including any of the Collaboration
Leads) conducted in accordance with Good Laboratory Practices. 

        1.29    "Good Laboratory Practices" or "GLP" shall mean the then-current practices and procedures set forth in Title
21, United States Code of Federal Regulations, Part 58 (as amended), and any other regulations, guidelines or guidance documents relating to good laboratory practices, or any foreign
equivalents thereof in the country in which such studies or clinical trials are conducted. 

        1.30    "Hit Criteria" shall mean the properties mutually agreed in good faith by the JSC (with such agreement requiring
approval of (a) both Parties' representatives on the JSC or (b) if the term of the JSC has expired or Tranzyme's participation on the JSC has ceased, then the approval of designees of
each Party, in each case with a Party's consent not to be unreasonably withheld) as sufficient to identify a compound as capable of binding to or having activity with regards to the applicable
Collaboration Target. The Hit Criteria shall include appropriate screening assays and parameters, binding potency, and cross-assays to confirm selectivity for the applicable Collaboration Target. 

        1.31    "HITCREATETM Library" shall mean the proprietary synthetic
macrocycle compound library Controlled by Tranzyme or its Affiliates existing as of the Effective Date and as may be expanded by Tranzyme or its Affiliates during the Term in connection with the
Research Program. 

        1.32    "IND" shall mean an investigational new drug application filed with the FDA for authorization to commence clinical
studies, and its equivalent in a country other than the United States. 

        1.33    "JSC" or "Joint Steering Committee" shall mean the steering committee
described in Section 3.2. 

        1.34    "Know-How" shall mean all proprietary commercial, technical, scientific and other know-how and
information, trade secrets, knowledge, technology, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings,
assembly procedures, computer programs, specifications, data and results (including biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, preclinical,
clinical, safety, manufacturing and quality control data and know-how, including study designs and protocols), in all cases, whether or not patented or patentable, in written, electronic
or any other form now known or hereafter developed. 

        1.35    "Licensed Product" shall mean a product comprising or containing one or more Collaboration Leads. 

        1.36    "Major Market EU Country" shall mean each of Germany, the United Kingdom, France, Spain and Italy. 

        1.37    "MATCHTM Technology" shall mean the proprietary drug discovery and medicinal chemistry technology used for
the discovery of novel synthetic macrocycle compounds Controlled by Tranzyme or its Affiliates as of the Effective Date, including improvements relating directly thereto developed by Tranzyme or its
Affiliates during the Term. 

5

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.38    "Materials" shall mean any tangible chemical or biological material, including any macrocycle compounds, macrocycle
compound libraries, small molecules, DNA, RNA, clones, cells, and any expression product, progeny, derivative or other improvement thereto, along with any tangible chemical or biological material
embodying any Know-How. 

        1.39    "NDA" shall mean a complete "application" or "New Drug Application" as defined in 21 C.F.R. 314.3 and containing the
content, and in the format, required by 21 C.F.R. Part 314, Subpart B, or a corresponding application with a Regulatory Authority in a country other than the United States, together with
all replacements, additions, deletions, and supplements thereto. 

        1.40    "Net Sales" shall mean the gross amount invoiced or otherwise billed by BMS or its Affiliates or Sublicensees for sales
or other disposition of a Licensed Product to a Third Party purchaser, less the following to the extent included in such billing or otherwise actually taken: (a) discounts, including cash,
trade and quantity discounts, price reduction programs, retroactive price adjustments with respect to sales of such Licensed Product, charge-back payments and rebates granted to managed
health care organizations or to federal, state and local governments (or their respective agencies, purchasers and reimbursers) or to trade customers, including wholesalers and chain and pharmacy
buying groups; (b) credits or allowances actually granted upon rejections or returns of Licensed Products, including for recalls or damaged goods; (c) freight, postage, shipping and
insurance charges actually allowed or paid for delivery of such Licensed Product, to the extent billed; (d) customs duties, surcharges and other governmental charges incurred in connection with
the exportation or importation of such Licensed Product; (e) bad debts relating to sales of Licensed Products that are actually written off by BMS in accordance with GAAP during the applicable
calculation period; (f) discounts (but not transaction fees) due to factoring of receivables in countries where factoring of receivables is customary in the pharmaceuticals industry
(e.g., Spain, Italy and Greece) consistent with BMS practices for its other products in such countries; and (g) taxes, duties or other governmental charges levied on, absorbed or
otherwise imposed on sale of such Licensed Product, including value-added taxes, or other
governmental charges otherwise measured by the billing amount, when included in the billing, as adjusted for rebates and refunds, but specifically excluding taxes based on net income of the seller;  provided
that all of the foregoing deductions are calculated in accordance with GAAP consistently applied.

In
the event that BMS, its Affiliates or Sublicensees make any adjustments to such deductions after the associated Net Sales have been reported pursuant to this Agreement, the adjustments shall be
reported and reconciled with the next report and payment of any royalties due. 

        Notwithstanding
the foregoing, if any Licensed Product is sold under a bundled or capitated arrangement with other BMS products, then, solely for the purpose of calculating Net Sales
under this Agreement, any discount on such Licensed Products sold under such an arrangement shall be no greater, on a weighted-average percentage basis based on the gross selling price prior to
discount, than the weighted-average percentage discount applied on all other pharmaceutical products sold within such bundled arrangement for the applicable accounting period. In case of any dispute
as to the applicable discount numbers under the preceding sentence, the determination of same shall be calculated and certified by an independent public accountant selected by Tranzyme and reasonably
acceptable to BMS, whose decision shall be binding. 

6

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        Consistent
with BMS practices for its other products, a sale of a Licensed Product is deemed to occur upon transfer of the risk of loss. For clarity, sales by BMS, its Affiliates or
Sublicensees of a Licensed Product to a Third Party distributor not Affiliated with BMS or any of its Sublicensees of such Licensed Product in a given country shall be considered a sale to a Third
Party customer. Any Licensed Products used (but not sold for consideration) for promotional or advertising purposes or used (but not sold for consideration) for clinical or other research purposes or
compassionate use shall not be considered in determining Net Sales hereunder. 

        In
the event a Licensed Product is sold as an end-user product consisting of a combination of independently active pharmaceutical ingredients, Net Sales, for purposes of
determining royalty payments on such Licensed Product, shall be calculated by multiplying the Net Sales of the
end-user product by the fraction A/(A+B), in which A is the selling price of the Licensed Product portion of the end-user product when such Licensed Product is sold separately
in the applicable country in the same potency during the applicable accounting period in which the sales of the end-user product were made, and B is the selling price of the other
independently active pharmaceutical ingredients of the end-user product sold separately in the applicable country in the same potency during the accounting period in question. All selling
prices of the independently active pharmaceutical ingredients of such end-user product shall be calculated as the average selling price of the said ingredients in the applicable country in
the same potency during the applicable accounting period for which the Net Sales are being calculated. In the event that, in any country or countries, no separate sale of either such above-designated
Licensed Product or such above designated other independently active pharmaceutical ingredients of the end-user product are made in the same potency during the accounting period in which
the sale was made or if net selling price for an independently active pharmaceutical ingredient cannot be determined for an accounting period, Net Sales allocable to the Licensed Product in each such
country shall be determined by mutual agreement reached in good faith by the Parties prior to the end of the accounting period in question based on an equitable method of determining same that takes
into account, on a country-by-country basis, variations in potency, the relative contribution of each independently active pharmaceutical ingredient in the combination, and
relative value to the end user of each such independently active pharmaceutical ingredient. Notwithstanding the foregoing, the Parties agree that, for purposes of this paragraph, devices, drug
delivery vehicles, adjuvants, half-life extenders, solubilizers and excipients shall not be deemed to be "independently active pharmaceutical ingredients." 

        To
the extent BMS or its Affiliates or Sublicensees receives consideration other than or in addition to cash upon the sale or distribution of Licensed Products, Net Sales shall include
the fair market value of such additional consideration; provided that, notwithstanding the foregoing, Net Sales shall not include amounts (whether
actually existing or deemed to exist for purposes of calculation) for Products (x) distributed for use in clinical trials or as samples or for promotional purposes, (y) provided pursuant
to an early access, compassionate use, indigent access or patient assistance program (except to the extent of any amounts actually received from Third Parties on account of same), or (z) unless
otherwise expressly provided in this Agreement, any amounts or other consideration received by a Party or its Affiliates from Sublicensees, whether or not in consideration of the grant of a sublicense
to such Sublicensee. 

        1.41    "Optimized Collaboration Hits" means a series of improved Collaboration Hits resulting from the synthesis by Tranzyme of
targeted compounds and libraries based upon one (1) or more Collaboration Hits. 

7

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS. 

        1.42    "Patent" shall mean a patent or a patent application, including any additions, divisions, continuations,
continuations-in-part, invention certificates, substitutions, reissues, reexaminations, registrations, supplementary protection certificates and renewals, but not including any
rights that give rise to Regulatory Exclusivity Periods (other than supplementary protection certificates, which shall be treated as "Patents" hereunder). 

        1.43    "Patent Costs" shall mean the out-of-pocket costs and expenses paid to outside legal counsel and
other Third Parties (including Third Party licensors of any Patents), and filing and maintenance expenses, incurred in Prosecuting and Maintaining Patents and enforcing and defending them. 

        1.44    "Phase 1 Study" shall mean a clinical trial of a product, the principal purpose of which is a preliminary
determination of safety in healthy individuals or patients, as described in 21 C.F.R. 312.21(a) (as amended or any replacement thereof), or a similar clinical study prescribed by the Regulatory
Authorities in a foreign country, including any Exploratory IND studies as contemplated by that guidance issued by the FDA on January 1, 2006 (as amended or any replacement thereof). For
purposes of this Agreement, "start of Phase 1 Study" for a product shall mean the first dosing of such product in a human patient in a
Phase 1 Study. 

        1.45    "Phase 2 Study" shall mean a clinical trial of a product on a sufficient number of patients, the principal
purpose of which is to provide a preliminary determination of safety and efficacy of such product in the target patients over a range of doses and dose regimens, as described in 21 C.F.R. 312.21(b)
(as amended or any replacement thereof), or a similar clinical study prescribed by the Regulatory Authorities in a foreign country. For purposes of this Agreement, "start of
Phase 2 Study" for a product shall mean the first dosing of such product in a human patient in a Phase 2 Study. 

        1.46    "Phase 3 Study" shall mean a clinical trial of a product on a sufficient number of subjects that is designed to
establish that a pharmaceutical product is safe and efficacious for its intended use, and to determine warnings, precautions, and adverse reactions that are associated with such pharmaceutical product
in the dosage range to be prescribed, which trial is intended to support Regulatory Approval of such product, as described in 21 C.F.R. 312.21(c) (as amended or any replacement thereof), or a similar
clinical study prescribed by the Regulatory Authorities in a foreign country. For purposes of this Agreement, "start of Phase 3 Study" for a
product shall mean the first dosing of such product in a human patient in a Phase 3 Study. 

        1.47    "Progressable Hit" shall mean a Collaboration Hit or Optimized Collaboration Hit which has been determined by the JSC as
progressable to the next stage of development. 

        1.48    "Prosecution and Maintenance," with regard to a particular Patent, shall mean the preparation, filing, prosecution and
maintenance of such Patent, as well as re-examinations, reissues and the like with respect to that Patent, together with the conduct of interferences, the defense of oppositions and other
similar proceedings with respect to that Patent. 

        1.49    "Regulatory Approval" shall mean, with respect to a country or extra-national territory, any and all approvals
(including NDAs), licenses, registrations or authorizations of any Regulatory Authority necessary in order to commercially distribute, sell or market a product in such country or some or all of such
extra-national territory, including any pricing or reimbursement approvals. 

8

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.50    "Regulatory Authority" shall mean any national (e.g., the FDA in the
U.S.), supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, in any jurisdiction in the world, involved in the granting of
Regulatory Approval. 

        1.51    "Regulatory Exclusivity Period" shall mean any period of data, market or other regulatory exclusivity (other than
supplementary protection certificates, which shall be treated as Patents hereunder), including any such periods under national implementations in the European Union of Section 10.1(a)(iii) of
Directive 2001/EC/83, as amended from time to time, and all international equivalents. 

        1.52    "Research Plan" shall mean the written description of the activities to be conducted by the Parties in pursuing the
Research Program, as such may be amended from time to time by the JSC. The Research Plan shall include the budget associated for such research activities, including the number of Tranzyme FTEs to be
assigned to the Research Program. 

        1.53    "Research Program" shall mean the program of discovery, research and preclinical Development that the Parties engage in
under this Agreement during the Research Program Term. 

        1.54    "Research Program Know-How" shall mean all Know-How created, conceived or reduced to practice in
connection with activities performed pursuant to the Research
Program (whether solely by one Party or jointly by the Parties, in each case optionally with their Affiliates or any licensees or sublicensees or any employees, subcontractors, consultants or agents
of any of the foregoing), including any Know-How covering any Materials generated by a Party pursuant to the Research Program (whether solely by one Party or jointly by the Parties, in
each case optionally with their Affiliates or any licensees or sublicensees or any employees, subcontractors, consultants or agents of any of the foregoing). 

        1.55    "Research Program Term" shall mean the period of time ascribed to such term in  Section 2.1(d). 

        1.56    "Subject Patent(s)" shall mean any Patents claiming an invention or discovery within the Research Program
Know-How invented by employees or representatives of Tranzyme or its Affiliates solely or jointly (including any interest in any Joint Research Program IP and Sole Research Program IP) to
the extent Covering the composition of matter, method of use or method of manufacture of a Collaboration Lead or Covering a Collaboration Target or method of use thereof. 

        1.57    "Sublicensee" shall mean any person or entity that is granted a sublicense by BMS as permitted by  Section 5.5. 

        1.58    "Third Party" shall mean any person or entity other than Tranzyme, BMS and their respective Affiliates. 

        1.59    "Tranzyme Core Technology" shall mean all Patents and Know-How Controlled by Tranzyme or any of its
Affiliates covering or claiming the creation of macrocycle libraries using its MATCHTM Technology, the macrocycle compounds in Tranzyme's HITCREATETM Library, assay methods for
interrogating or selecting HITCREATETM Libraries or any Materials Controlled by Tranzyme and provided to BMS under this Agreement. For clarity, neither the generation of compounds by BMS
that are derived from the HITCREATETM Library nor any such derived compounds, shall be considered Tranzyme Core Technology. 

9

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        1.60    "Tranzyme Know-How" shall mean all Know-How (other than Tranzyme Core Technology) Controlled by
Tranzyme or any of its Affiliates, used by Tranzyme in the Research Program, and necessary to discover any of the Collaboration Hits, Collaboration Leads or Licensed Products. For clarity, Tranzyme
Know-How shall include, if applicable, Research Program Know-How owned in whole or in part by Tranzyme. 

        1.61    "Tranzyme Patents" shall mean all Patents (other than Patents claiming any Tranzyme Core Technology) Controlled by
Tranzyme or any of its Affiliates, and containing a Valid Claim Covering any of the Collaboration Compounds or Licensed Products. For clarity, Tranzyme Patents shall include, if applicable, Tranzyme's
interest in Patents within its Sole Research Program IP and within the Joint Research Program IP. 

        1.62    "United States" or "U.S." or "USA" shall mean the United States of America, including its territories and possessions,
the District of Columbia and Puerto Rico. 

        1.63    "Valid Claim" shall mean, with respect to a particular country, (a) any claim of an issued and unexpired Patent
in such country that (i) has not been held permanently revoked, unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction, which decision is
unappealable or unappealed within the time allowed for appeal and (ii) has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise in such country, or (b) a bona fide claim of a pending Patent application, which claim has not been (X) pending for more than seven (7) years or (Y) abandoned or
finally disallowed without the possibility of appeal or re-filing of the application. 

10

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

         Additional Definitions.    In addition to those terms defined above, definitions for each of the following terms are found in the body of
this Agreement
as indicated below: 

 

			
	Defined Term

 
	 	Section 
	Acquiror	 	13.3
	Additional HITCREATETM Compounds	 	2.2(g)
	Agreement	 	Preamble
	Alliance Managers	 	3.1(b)
	Bankrupt Party	 	12.4(b)
	Biocon	 	2.6
	BMS	 	Preamble
	BMS Alliance Manager	 	3.1(b)
	BMS Indemnitees	 	11.5(b)
	BMS Royalty-Bearing Patent	 	6.4(b)(ii)
	Competitive Infringement	 	9.1
	Confidential Information	 	10.1(a)
	Confidentiality Agreement	 	10.4
	Disclosing Party	 	10.1(a)
	Effective Date	 	Preamble
	Excluded Target	 	2.2(c)(i)
	Hatch-Waxman Time Period	 	9.2(a)(iii)
	Indemnification Claim Notice	 	11.5(c)
	Indemnified Party	 	11.5(c)
	Joint Research Program IP	 	7.2(b)(i)
	Losses	 	11.5(a)
	Milestone Event	 	6.3(a)
	Milestone Payment	 	6.3(a)
	Other Patent	 	8.2
	Party / Parties	 	Preamble
	Phenotype Target Invention	 	2.2(f)
	Program Director(s)	 	3.1(a)
	Receiving Party	 	10.1(a)
	Regulatory Exclusivity	 	6.4(b)(iii)
	Release	 	10.3(b)
	Royalty Term	 	6.4(b)
	Screening Activities	 	2.2(f)
	Sole Research Program IP	 	7.2(b)(i)
	Term	 	12.1
	Terminated Compounds	 	12.5(b)
	Terminated Rights	 	12.5(a)
	Third Party Claims	 	11.5(a)
	Title 11	 	12.4(b)
	Tranzyme	 	Preamble
	Tranzyme Alliance Manager	 	3.1(b)
	Tranzyme Indemnitees	 	11.5(a)
	Tranzyme Research Materials	 	12.6(a)

 

 11

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS. 

2.     Research Program.

        2.1    Research Program Generally.    

        (a)    Goals.    The primary objective of the Research Program shall be to discover and characterize Collaboration
Leads contained in or otherwise derived from Tranzyme's HITCREATETM Library targeting the Collaboration Targets and suitable for Development and Commercialization as Licensed Products. 

        (b)    Research Plan.    An initial version of the Research Plan is attached hereto as  Exhibit 2.1(b). The Research Plan shall
be reviewed as necessary at each meeting of the JSC, and at any other time upon the reasonable request of
either Party (but in no event more than quarterly), and shall be modified as appropriate at the direction of the JSC to reflect material scientific and other developments. Notwithstanding the
provisions in Section 3.2(d), BMS shall not exercise its final decision making authority on the JSC to amend the Research Plan to increase the
activities assigned to Tranzyme thereunder without the consent of Tranzyme. 

        (c)    Tranzyme Capabilities Expansion.    Tranzyme agrees to undertake those specific obligations described on  Exhibit 2.1(c)
in accordance with the terms thereof. 

        (d)    Length and Scope of Research Program.    The Research Program shall initially be in effect for a period from
the Effective Date until the second (2nd) anniversary thereof; provided that such time period may be extended by BMS for up to one
(1) additional one (1) year period with ninety (90) days written notice to Tranzyme if activities are still being conducted by the Parties under the Research Plan (the
"Research Program Term"). Neither Party shall have any obligation to continue to work on the Research Program after the end of the Research Program
Term. The Parties may extend the Research Program Term further upon mutual agreement. 

        2.2    Target Selection and Stages of the Research Program.    

        (a)    Target Selection.    There shall be up to [***] Collaboration Targets in the Research
Program. The initial Collaboration Targets are designated on Exhibit 1.10 attached hereto; provided
that, the Parties acknowledge that the final Collaboration Target will be finalized at the first JSC meeting and if the JSC determines to replace such Collaboration Target such
replacement target will be subject to the gatekeeping procedure of Section 2.2(c). 

        (b)    Additional Collaboration Targets.    At any time after there are [***] Collaboration
Targets designated pursuant to Section 2.2(a), BMS may, from time to time, request to designate additional targets as Collaboration Targets. Upon
such request, the Parties will discuss the terms under which such targets would become Collaboration Targets with such terms subject to each Party's consent in its sole discretion. For clarity,
Tranzyme shall have no obligation to accept any Additional Collaboration Targets; provided that Tranzyme shall include any target designated by BMS
pursuant to Section 2.2(f) under the terms thereof and subject to the gatekeeping procedure of Section 2.2(c). 

12

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (c)    Gatekeeping Procedures.    

          (i)  Upon
any written request by BMS to add an additional target to this Agreement as a Collaboration Target, Tranzyme shall promptly review such additional target under the
terms of this Section 2.2(c) and shall have the right to reject the proposed new target as a Collaboration Target if it is (A) the subject
of an active program at Tranzyme, (B) Tranzyme has previously granted exclusive rights or any option to such target to a Third Party, or (C) Tranzyme is at such time in good faith
discussions with a Third Party respecting an agreement to grant such Third Party exclusive rights to such target (each such target described in (A), (B), and (C), above an
"Excluded Target") (it being understood that ghrelin and motilin are Excluded Targets as of the Effective Date). 

         (ii)  Each
additional target agreed by the Parties would become a Collaboration Target and subject to the remaining terms of this Agreement (other than financial terms unless
such new Collaboration Target is a replacement pursuant to Section 2.2(d) or a target designated by BMS pursuant to  Section 2.2(f)).
Upon each new Collaboration Target being added to this Agreement, the Parties would negotiate in good faith the appropriate changes to the Research Plan. 

        (iii)  If
a target designated as an Excluded Target pursuant to Section 2.2(c)(i) becomes available for selection as a
Collaboration Target in that the circumstance of Section 2.2(c)(i) that caused the target to become an Excluded Target no longer exists, then as
of such date, such target will no longer be deemed an Excluded Target under Section 2.2(c)(i), Tranzyme will promptly notify BMS of such
availability, and such target may become a Collaboration Target pursuant to Section 2.2(c)(ii). 

        (d)    Replacement of a Collaboration Target.    During the Research Program Term, in the event that no Progressable
Hits or Collaboration Leads are identified by BMS in screening the HITCREATETM Library against any given Collaboration Target designated pursuant to  Section 2.2(a) according to the Hit Criteria
for such Collaboration Target, then BMS shall promptly either (i) substitute a new target to
replace the failed Collaboration Target subject to Section 2.2(c) or (ii) terminate this Agreement under  Section 12.3(b) with respect to
such failed Collaboration Target. Upon the replacement of such failed Collaboration Target, such failed target
will no longer be a Collaboration Target hereunder and the terms of Section 12.5 shall apply. Notwithstanding, in the event that BMS terminates
[***] as a Collaboration Target caused by Tranzyme's failure to provide any Optimized Collaboration Hits which are Progressable Hits in accordance with the terms of the
Research Plan, then BMS shall have the right to substitute [***] targets as Collaboration Targets as a substitute for [***] and the total number of
Collaboration Targets permitted under Section 2.2(a) shall be increased to [***]. 

        (e)    Transfer of the HITCREATETM Library to BMS.    Within fifteen (15) days after the Effective
Date, Tranzyme shall transfer the HITCREATE LibraryTM as it exists at such date to BMS solely to conduct the activities under the Research
Program expressly permitted by this Agreement. Tranzyme represents that as of the Effective Date, the HITCREATETM Library is as described on  Exhibit 2.2(e)
. During the Term, BMS shall be entitled to retain any Materials comprising the
HITCREATETM Library provided by Tranzyme pursuant to this Section 2.2(e) or  Section 2.2(f)
solely for the practice of the licenses granted by Tranzyme. 

13

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (f)    Phenotypic Screens.    Subject to the terms of this Agreement, BMS may use the
HITCREATETM Library during the Research Program Term to conduct phenotypic screens for the discovery of new therapeutic targets and during
the Research Program Term and thereafter to conduct the further internal research related to understanding the function and biology of such targets discovered during the Research Program Term (such
activities collectively, "Screening Activities"). BMS shall provide Tranzyme with all data or results generated in connection with such screens and each
Party shall have the right to use (and to disclose to Third Parties notwithstanding Article 10) the data from such screens for any purpose. In
the event BMS desires, during the Research Program Term, to research or develop a macrocycle compound for any proprietary target developed in the course of conducting the Screening Activities , BMS
shall add such target as a Collaboration Target subject to the gatekeeping provisions described in Section 2.2(c) and notwithstanding the number
of targets specified in Section 2.2(a) or 2.2(d). Promptly upon such designation as a
Collaboration Target, the Parties shall discuss and amend the then-current Research Plan and associated budget (including FTE allocation) to include such Collaboration Target,  provided that the Parties
agree and acknowledge that all other financial terms shall be the same as any other Collaboration Target hereunder. On a
quarterly basis, BMS shall notify Tranzyme of any invention covering or claiming any new targets identified through the use of the
HITCREATETM Library in conducting the Screening Activities or the use of any compound in the HITCREATETM Library to modulate the
activity of any such target (each invention a "Phenotype Target Invention") together with providing Tranzyme with a copy of any data or results from
conducting the Screening Activities. BMS hereby grants, and agrees to grant, to Tranzyme a perpetual, transferrable, royalty-free, non-exclusive, world-wide license
(sublicensable through multiple tiers) under any Patent and/or any data or results generated in the phenotypic screens Controlled by BMS after the Effective Date Covering the Phenotype Target
Invention solely for Tranzyme to make, have made, research, develop, use, sell, offer for sale, promote, commercialize, and import/export products containing a macrocycle compound to modulate the
activity of such target. 

14

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (g)    Expansion of the HITCREATETM Library.    During the Research Program Term, Tranzyme will expand the
HITCREATETM Library for use under the terms of this Agreement as the Parties may agree and subject to this  Section 2.2(g) with the specific scope,
timelines and technical requirements to be defined. As between the Parties, Tranzyme will own all right
in and to any Know-How generated by either Party solely or the Parties jointly in the course of performing such activities (including any Patent generated therefrom) solely to the extent
Covering the Additional HITCREATETM Compounds, all other Know-How and inventions will be treated as other inventions hereunder. Tranzyme shall provide BMS with (i) a
sample
of any such synthesized compounds (the "Additional HITCREATETM Compounds") (in an amount equal to the greater of fifty percent (50%) of the
amount generated by Tranzyme or 1mg (unless otherwise agreed by the JSC), and having >90% purity or other such purity level reasonably agreed to by the JSC), and (ii) as reasonably requested by
BMS, chemical structures and general synthesis information as available, excluding any solid-phase chemistry technology. Tranzyme shall provide such Additional HITCREATETM Compounds in a
format, such as arrayed in microtiter plates, reasonably requested by BMS and defined by the JSC. During the Research Program Term, BMS shall have a non-exclusive right to use such
Additional HITCREATETM Compounds solely to research Collaboration Targets and any Collaboration Compounds generated under such activities by BMS shall be treated as Collaboration Compounds
for purposes of the financial and other terms of this Agreement. Following the Research Program Term, BMS shall have a non-exclusive right to use such Additional HITCREATETM
Compounds for any purpose and without the payment of any additional consideration to Tranzyme. Tranzyme shall retain all other rights to such Additional HITCREATETM Compounds and such
compounds shall be included in the HITCREATETM Library licensed to BMS, and Tranzyme shall not owe any compensation to BMS with respect thereto. In addition, each Party shall grant to the
other a worldwide, royalty-free (sublicensable through multiple tiers), non-exclusive license under any Patents filed by either Party Covering the composition of matter of any
Additional HITCREATETM Compounds; provided that (A) BMS's license shall be royalty-bearing and exclusive to the extent that any
Additional HITCREATETM Compounds are used to Develop any Licensed Product or Collaboration Lead during the Research Program Term and (B) no licenses are provided by either Party to
the other under any intellectual property rights existing prior to the Effective Date or generated by such Party outside of activities performed or rights exercised under this Agreement. If either
Party has any Patent(s) covering an Additional HITCREATETM Compound that the other Party wishes to Develop or Commercialize, provided that a
license is available under such Patent(s), the Parties will agree to negotiate in good faith for a reasonable time period to provide a license (if any) to such Patent(s). 

          (i)  The
Parties contemplate that in the event that there are Tranzyme FTEs within the staff BMS is supporting with the funding provided under  Section 6.2(a)(i) which may, from time to time experience a
reduced work load while working on any of the Collaboration Targets, such FTEs may be
tasked by the JSC with expansion of the HITCREATETM Library. 

         (ii)  During
the second (2nd) and subsequent years of the Research Program Term, BMS may elect, at its sole option, to fund up to [***]
suitable qualified FTEs, in addition to the FTEs within the staff BMS is supporting with the funding provided under Section 6.2(a)(i), to focus
on expansion of the HITCREATETM Library. BMS will notify Tranzyme no later than sixty (60) days prior to the start of the second
(2nd) and subsequent years of the Research Program Term if it will not exercise this option for the applicable year. 

15

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)  BMS
will reimburse Tranzyme for the external costs actually incurred in association with the HITCREATETM Library expansion in accordance with the budget
approved by the JSC for these activities as part of the Research Plan [***], and BMS may also provide certain in-kind work, supplies and/or reagents to support
these HITCREATETM Library expansion activities. 

        (h)    Research Program Stages.    As more fully described in the Research Plan, the Research Program shall be divided
into three (3) general stages, the "Hit Identification and Validation Stage," the "Hit Iteration Stage" and the "Hit-to-Lead Stage," pursuant to the following process
and otherwise in accordance with the terms and conditions hereof: 

        (i)    Hit Identification and Validation Stage.    Within thirty (30) days of designation of a target as a
Collaboration Target, the JSC shall establish the Hit Criteria for the applicable Collaboration Target, such Hit Criteria shall be reflected in the written minutes of the JSC meeting as approved by
the JSC. Following the establishment of the Hit Criteria, Tranzyme or BMS shall (A) screen the HITCREATETM Library against such Collaboration Target, (B) identify any
Collaboration Hits generated as a result of such screening, and (C) report the results of such screening (including the identification and structure of the Collaboration Hits) to the JSC in
each case in accordance with the Research Plan. The Collaboration Hits shall be evaluated by the JSC in accordance with the Research Plan and the applicable Hit Criteria, and the JSC shall select
certain Collaboration Hits to be further evaluated pursuant to Section 2.2(h)(ii). If no Progressable Hits are identified in this stage according
to the Hit Criteria for such Collaboration Target, then Section 2.2(d) shall apply. 

        (ii)    Hit Iteration Stage.    After Collaboration Hits have been identified pursuant to  Section 2.2(h)(i), the Parties shall
conduct an analysis of the results of the screening activities described in  Section 2.2(h)(i) for such Collaboration Targets, and as necessary, the Parties shall use Commercially Reasonable Efforts
(A) to
synthesize additional compounds based upon the Collaboration Hit, (B) perform further screening of the additional compounds against the Collaboration Targets in order to determine Optimized
Collaboration Hits, (C) identify any Collaboration Hits or Optimized Collaboration Hits as a result of such screening, and (iv) report its findings to the JSC. Such Collaboration Hits
shall be evaluated by the JSC in accordance with the Research Plan and the applicable Hit Criteria, and the JSC shall advance those Collaboration Targets for further evaluation pursuant to  Section 2.2(h)(iii)
 to the extent that the quality of the Collaboration Hits for any specific Collaboration Target warrant continued research and
Development under this Agreement. If no Progressable Hits are identified in this stage according to the Hit Criteria for such Collaboration Target, then  Section 2.2(d) shall apply. 

16

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)    Hit-to-Lead Stage.    Upon selection of one or more Collaboration Hits for further
research and Development pursuant to Section 2.2(h)(ii), the Parties shall further analyze the results of the process described
in Section 2.2(h)(ii) for each such Collaboration Target, deploy each of their respective capabilities within the Research Program to discover
and advance Collaboration Hits, Optimized Collaboration Hits, and Collaboration Leads, and report their findings to the JSC. The Collaboration Hits and Optimized Collaboration Hits shall be evaluated
by the JSC in accordance with the Research Plan, the applicable Hit Criteria, and those other criteria established by BMS (in consultation with Tranzyme at the JSC) for selecting lead candidates
suitable for Development as a drug candidate. Following submission to the JSC, the JSC shall designate up to three (3) Collaboration Compounds as Collaboration Lead(s) for a given Collaboration
Target (it being understood that each such Collaboration Lead may be from a different structure-activity chemical class and includes the applicable Analogs, as qualified in Section 1.9). If no
Collaboration Leads are so designated, then BMS shall terminate the Collaboration Target and designate a replacement target
under Section 2.2(d). 

        (i)    Independent BMS Optimization outside of the Research Program.    Once the Collaboration Leads have been
selected for a given Collaboration Target, BMS shall perform additional research and pre-clinical Development activities on the Collaboration Leads, including creating additional
Collaboration Compounds in an effort to create and evaluate Collaboration Leads for further Development all as part of a BMS Discovery & Development Program as further described
in Article 4. 

        (j)    Use of Collaboration Compounds.    BMS agrees that during the Research Program Term it will not, alone or in
collaboration with any of its Affiliates or any Third Party (including the grant of any license or right), Develop or commercialize any Collaboration Compound, except as a Collaboration Lead or
Licensed Product pursuant to this Agreement. In addition to the foregoing, BMS agrees that, during the Term or following any termination of this Agreement in its entirety, BMS will not, alone or in
collaboration with any of its Affiliates or any Third Party (including the grant of any license or right), Develop or commercialize any Collaboration Compound against any target which was terminated
as a Collaboration Target (as described in Sections 2.2(d) or 12.3 for a period of time expiring
two (2) years after such Collaboration Target was terminated in accordance with Sections 2.2(d) or 12.3. 

17

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        2.3    Relationship of the Research Program to Other Efforts.    

        (a)    Exclusivity.    Subject to the terms and conditions of this Agreement, on a Collaboration
Target-by-Collaboration Target basis, for a period of seven (7) years from the Effective Date during the Term (the "Exclusivity
Period"): 

          (i)  Tranzyme
shall not, whether alone or in collaboration with any of its Affiliates or any Third Party, engage in any activities (including screening of its
HITCREATETM Library) where a primary goal of which is to use Tranzyme Core Technology to discover and Develop any macrocycle compounds specifically and directly targeting such Collaboration
Target, other than in accordance with this Agreement; 

         (ii)  Tranzyme
shall not grant any license under any Tranzyme Patents to any Third Party to Develop clinically or commercialize any macrocycle compound developed to target
such Collaboration Target for use in the Field. 

        (iii)  Tranzyme
shall not provide any Third Party with access to Tranzyme Know-How or HITCREATETM Library for use in screening macrocycle compounds
developed to target such Collaboration Target. 

        (b)    Early Termination of Exclusivity.    The Exclusivity Period shall terminate with respect to a Collaboration
Target prior to the expiration of the seven (7) year period described above upon the earlier to occur of any of the following events: (i) BMS fails to use Commercially Reasonable Efforts
to research, Develop or Commercialize Collaboration Leads or Licensed Products for such Collaboration Target as described in Section 4.2; or
(ii) BMS terminates such Collaboration Target under Article 12. 

        (c)    Limitations on Tranzyme Regarding Collaboration Lead.    At such time as the JSC designates a Collaboration
Lead and for so long as BMS has not terminated its rights under this Agreement with respect to such Collaboration Lead or applicable Collaboration Target, Tranzyme shall not identify for a Third Party
any such Collaboration Lead as a hit for any target and use reasonable efforts to thereafter not add such Collaboration Lead to collections of compounds provided to a Third Party for screening against
any target where practical. Tranzyme shall endeavor to mark (by electronic means) its internal records for any HITCREATETM Library containing any of the Collaboration Leads regarding the
existence of the foregoing limitation, with the understanding that a library used by Tranzyme or its Affiliates may contain Collaboration Leads notwithstanding such mark and limitations;  provided that
Tranzyme shall not grant any further clinical Development or Commercialization rights to a Third Party for any such Collaboration Lead in
hits disclosed to such Third Party resulting from the screen of the HITCREATETM Library against such other target. 

        (d)    Change of Control of Tranzyme.    For avoidance of doubt, in the event that Tranzyme undergoes a Change of
Control, the above described restrictions in this Section 2.3 shall not in any way limit the activities of any Tranzyme Affiliate (or Tranzyme,
if Tranzyme undergoes a Change of Control and is not a separately surviving entity) from (i) the research, development, use, manufacture, marketing, sale, promotion or commercialization of any
product, service or other activity that was Controlled by any Third Party prior to the consummation of such Change of Control; or (ii) the research, development, use, manufacture, marketing,
sale, promotion or commercialization of any product undertaken after the date of the Change of Control with respect to any Collaboration Target where such activities are conducted without the use of
the Tranzyme Core Technology, Tranzyme Patents or Tranzyme Know-How. 

18

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (e)    Exception for Alternate Mechanisms of Action.    In the event that BMS has selected an ECN against a particular
Collaboration Target, upon request by Tranzyme, the Parties will discuss BMS waiving, such waiver not to be unreasonably withheld, the above exclusivity provisions in this  Section 2.3 to allow
Tranzyme to pursue compounds active against such Collaboration Target but with a different mechanism of action
(e.g., if BMS is developing an antagonist against a given Collaboration Target, BMS may waive the exclusivity provision to allow Tranzyme to develop an agonist against such Collaboration
Target). 

        2.4    Research Program Records, Reports and Materials.    

        (a)    Records.    Each Party shall maintain, or cause to be maintained, records of its activities under the Research
Program in sufficient detail and in good scientific manner appropriate for scientific, Patent and regulatory purposes, which shall properly reflect all work included in the Research Program for a
period of at least thirty (30) years after the creation of such records. Each Party shall have the right to request a copy of any such records, except to the extent that the other Party
reasonably determines that such records contain Confidential Information that is not licensed to such Party hereunder. 

        (b)    Reports.    During the Research Program Term and for the next calendar quarter thereafter, each Party shall
furnish to the JSC: 

          (i)  within
forty-five (45) days after the end of each calendar quarter, a summary written report or presentation to the JSC (at the discretion of the
JSC) describing its progress under the Research Plan; and 

         (ii)  within
sixty (60) days after the end of each calendar year and the end of the Research Program Term, a summary written report or presentation to the JSC (at the
discretion of the JSC) describing in detail the work accomplished under the Research Plan as part of the Research Program during the preceding calendar year and since the end of the preceding calendar
year, respectively, and discussing the results of such work. 

        (c)    Materials.    

          (i)  Each
Party shall, during the Research Program Term, as a matter of course as described in the Research Plan or upon the other Party's reasonable written request,
furnish to each other samples of Materials that are in such Party's Control and are necessary for the other Party to carry out its responsibilities under the Research Plan. 

19

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

         (ii)  Each
Party shall use such Materials only in accordance with the Research Plan and in accordance with the terms and conditions of this Agreement, including for the
Development or Commercialization of Licensed Products hereunder. Except with the prior written consent of the supplying Party, the Party receiving any Materials shall not distribute or otherwise allow
the release of Materials to any Third Party, except for subcontracting or to sublicensees in each case as permitted hereunder. All Materials delivered to the receiving Party shall remain the sole
property of the supplying Party and shall be used in compliance with all applicable law. The Materials supplied under this Agreement shall be used with prudence and appropriate caution in any
experimental work because not all of their characteristics may be known. In the event that a Party or any of its Affiliates or Sublicensees uses the proprietary Materials of the other Party in breach
of this Agreement, such Party shall notify the providing Party promptly upon becoming aware of such use, and in addition to any other remedies that the Party providing such Materials may have, the
Party using such proprietary Materials of the other Party shall (A) limit its use to internal, de minimus activities (and in no event selling or offering for sale any product or service
incorporating or based upon such results of unauthorized use) and (B) grant, and hereby does grant the providing Party a worldwide, fully paid, irrevocable, fully transferrable
non-exclusive license (with the right to grant sublicenses through multiple tiers) under, the results of such unauthorized use, and any discoveries or inventions that arise from such
unauthorized use, whether patentable or not. 

        2.5    Obligations Relating to the Research Program and the Research Plan.    Each Party shall use reasonable efforts
to perform (itself or through its Affiliates or by permitted subcontracting) its respective obligations under the Research Plan, and shall cooperate with and provide reasonable support to the other
Party in such other Party's performance of its responsibilities under the Research Plan. The Parties acknowledge and agree, however, that no outcome or success is or can be assured and that failure to
achieve desired results shall not in and of itself constitute a breach or default of any obligation in this Agreement. Tranzyme would have an obligation to ensure that by June 30, 2010 and
throughout the remainder of the Research Program Term, it has at least [***] suitably qualified FTE scientists ((meaning either a Ph.D. in chemistry, M.S. in chemistry or five
(5) years of relevant industry experience), with no fewer than [***] having a Ph.D. or more if specified in the Research Plan, available to work on the Research Program
activities as further described in the Research Plan. 

        2.6    Permitted Subcontracting.    As provided in the Research Plan or otherwise with the prior consent of the other
Party, not to be unreasonably withheld, each Party may subcontract any of its activities to be
performed under the Research Plan to a Third Party, provided that any such Third Party shall have entered into a written agreement with such Party that
includes terms and conditions protecting and limiting use and disclosure of Confidential Information and Materials and Know-How at least to the same extent as under this Agreement, and
requiring such Third Party and its personnel to assign to such Party all right, title and interest in and to any Patents and Know-How and Materials created, conceived or reduced to
practice in connection with the performance of subcontracted activities. For avoidance of doubt, the Parties agree that BMS may outsource any portion of its Development activities to Biocon Limited
("Biocon" which includes Biocon's subsidiary Syngene International) in connection with BMS's broad collaboration with Biocon without requiring approval
from Tranzyme. 

20

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

3.     Governance.

        3.1    Collaboration Management.    

        (a)   The
Research Program shall have a program director from each Party (each, a "Program Director, and together the
"Program Directors"), initially [***] for Tranzyme and [***] for BMS), either Party may substitute their
Program Director either on a temporary or permanent basis on written notice to the other Party. The Program Directors shall coordinate the research efforts of the Parties in conducting the Research
Program. 

        (b)   Each
Party shall appoint a single individual to act as the single point of contact between the Parties to support the Research Program (the
"Alliance Managers") other than the coordination of day-to-day research activities which will be coordinated by the Program
Directors. As of the Effective Date, the Alliance Managers shall be [***] for BMS (the "BMS Alliance Manager") and
[***] for Tranzyme (the
"Tranzyme Alliance Manager"), either Party may substitute their Alliance Manager either on a temporary or permanent basis on written notice to the other
Party. 

        The
Alliance Managers will: 

          (i)  use
good faith efforts to attend all meetings of the JSC, but shall be non-voting members at such meetings; 

         (ii)  circulate
the written minutes of the JSC meetings for review and approval by the Parties, and identify action items to be carried out by the Parties; and 

        (iii)  be
the first point of referral for all matters of conflict resolution, and bring disputes to the attention of the JSC in a timely manner. 

        3.2    Joint Steering Committee ("JSC").    

        (a)    Steering Committee.    As soon as practicable, the Parties shall establish a Joint Steering Committee,
comprised of three (3) representatives of Tranzyme (including the Program Director for Tranzyme) and three (3) representatives of BMS (including the Program Director for BMS). Each Party
may replace its representatives to the JSC at any time upon written notice to the other Party. With the consent of the other Party (which shall not be unreasonably withheld), each Party may invite
non-voting employees and consultants to attend meetings of the JSC, subject to their agreement to be bound to the same extent as a permitted subcontractor under Section 2.6. 

        (b)    Meetings.    While in existence, the JSC shall meet quarterly by audio or video teleconference and, at a
minimum, twice each calendar year in person (which in-person meeting shall be held on an alternating basis in Sherbrooke, Quebec, Canada and in Princeton, NJ unless otherwise agreed by the
JSC). Meetings of the JSC shall be effective only if at least one (1) representative of each Party is present or participating. Each Party shall be responsible for all of its own expenses of
participating in the committee meetings. The Parties shall endeavor to schedule meetings of the JSC at least six (6) months in advance. The Parties shall alternate in preparing the meeting
agenda, and the Party that was responsible for preparing the meeting agenda shall prepare and circulate for review and approval by the other Party written minutes of such meeting within fifteen
(15) days after such meeting. The Parties shall agree on the minutes of each meeting promptly, but in no event later than the next meeting of the JSC. 

21

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (c)    Responsibilities.    The JSC shall oversee and supervise the overall performance of the Research Plan and
within such scope shall: 

          (i)  review
the efforts of the Parties and allocate those resources for the Research Plan committed by the Parties hereunder; 

         (ii)  revise
and approve any revisions to the Research Plan; 

        (iii)  establish
Hit Criteria for each Collaboration Target; 

        (iv)  identify
the Collaboration Hits, Optimized Collaboration Hits and Collaboration Leads, as well as decide on the progressability of Collaboration Hits; 

         (v)  form
such other committees as the JSC may deem appropriate, provided that such committees may make recommendations to the
JSC but may not be delegated JSC decision-making authority; 

        (vi)  address
such other matters relating to the activities of the Parties under this Agreement as either Party may bring before the JSC, including any matters that are
expressly for the JSC to decide as provided in this Agreement; and 

       (vii)  attempt
to resolve any disputes on an informal basis. 

        (d)    Decision-making.    The three (3) JSC representatives of each Party shall collectively have one
(1) vote, and the JSC shall make decisions only by unanimous consent. In the event of a dispute between the Parties with regard to the performance of the Research Program, obligations to expand
the HITCREATETM Library or otherwise within the scope of the JSC, the matter shall be first referred to the Alliance Managers for resolution,
and if not resolved, then shall be referred to senior executives pursuant to Section 13.1, and if still not resolved, then BMS shall have the
deciding vote with respect to any such dispute if exercised in good faith and in a reasonable manner, subject to Section 3.2(e), and  provided that any
final determination made by BMS shall: (i) be consistent with the terms of this Agreement (including BMS's diligence
obligations hereunder); and (ii) not materially affect the rights and obligations of Tranzyme under this Agreement without Tranzyme's consent. 

        (e)    Limits on JSC Authority.    Each Party shall retain the rights, powers and discretion granted to it under this
Agreement and no such rights, powers, or discretion shall be delegated to or vested in the JSC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties
expressly so agree in writing. The JSC shall not have the power to amend, modify or waive compliance with this Agreement (other than as expressly permitted hereunder). Notwithstanding anything herein
to the contrary, neither Party shall require the other Party to breach any obligation or agreement that such other Party may have with or to a Third Party. 

        (f)    Term of Committee.    The JSC shall end six (6) months after the end of the Research Program Term. 

22

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (g)    Verification.    The Parties shall select and agree upon an independent Third Party reviewer to verify any
claims by Tranzyme that it is unable to extend a right or license to BMS by the terms of Section 2.2(c) or  2.2(d), in a manner that protects the
Confidential Information of each Party and any Third Parties. Tranzyme shall submit any such rejections, along
with the relevant information (which may include copies of Tranzyme's agreement with a Third Party as well as certain assay results), to allow such Third Party reviewer to confirm to BMS that Tranzyme
is unable to extend such right or license to BMS in accordance with the applicable provisions of this Agreement. BMS shall bear all costs related to such verification by such independent Third Party
reviewer unless such verification shows that Tranzyme did have the rights to grant such license to BMS. BMS may waive its right to have such rejection verified, such waiver to be in BMS's sole
discretion. 

4.     Development and Commercialization.

        4.1    In General.    Without limiting its diligence obligation under  Section 4.2, BMS shall determine, in its sole discretion,
 either to initiate a BMS Discovery & Development Program to Develop
Collaboration Leads for each Collaboration Target or to terminate this Agreement with respect to such Collaboration Target. BMS shall have sole responsibility for all costs and expenses arising from
any such Development of Collaboration Leads and any subsequent Commercialization of Licensed Products throughout the world. 

        4.2    BMS Diligence.    

        (a)    General Diligence.    BMS, directly or through one or more of its Affiliates or Sublicensees, shall use
Commercially Reasonable Efforts, for at least one Collaboration Lead for each Collaboration Target, (i) to Develop one or more such Collaboration Lead for such Collaboration Target as part of a
BMS Discovery & Development Program directed toward the designation of such Collaboration Lead as an ECN and to obtain Regulatory Approvals therefore, and (ii) to Commercialize one or
more Licensed Products after obtaining such Regulatory Approval for such compound. The Parties shall discuss the expected Development milestones and timelines for each Collaboration Lead, and BMS
shall update Tranzyme with any material deviation from such milestones and timelines and the reason therefore. 

        (b)    Termination of License Rights.    After the Research Program Term, at such time as BMS provides timely notice
to Tranzyme in a timely manner that it is no longer actively pursuing any Collaboration Lead as part of a BMS Discovery & Development Program for a Collaboration Target, all Collaboration Leads
against such terminated Collaboration Target shall no longer be within the scope of this Agreement, including the licenses granted in Article 5.
BMS shall use reasonable efforts to provide notice to Tranzyme of any such occurrence. 

23

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        4.3    Reports by BMS.    BMS shall prepare and maintain and shall cause its Affiliates and Sublicensees to prepare
and maintain reasonably complete and accurate records regarding the Development of Collaboration Leads and Licensed Products, and Commercialization of Licensed Products after Regulatory Approval
therefore. On an annual basis, BMS shall provide to Tranzyme a reasonably detailed report regarding such efforts on a Collaboration Target-by-Collaboration Target basis. Such
report shall contain sufficient detail to enable Tranzyme to assess BMS's compliance with its Development and Commercialization obligations in Section 4.2, including information with respect to any
regulatory milestones, and any Regulatory Approvals achieved, for Collaboration Leads and Licensed Products, and
such reports shall be Confidential Information of BMS pursuant to Article 10. BMS shall provide Tranzyme with additional information regarding
any such activities as Tranzyme may reasonably request from time to time; such additional information shall also be treated as Confidential Information of BMS pursuant to Article 10. 

        4.4    Other Related Activities.    As between the Parties, BMS shall be solely responsible for, and shall bear all
the costs and expenses of, (a) preparing and submitting applications for and obtaining Regulatory Approvals for Licensed Products; provided that
Tranzyme shall provide reasonable cooperation in the event that information Controlled by Tranzyme is needed for any such application and provided that
BMS reimburses Tranzyme on a reasonable basis for the time and expenses incurred by Tranzyme to provide such cooperation, (b) manufacturing and supplying all Licensed Products for Development
and Commercialization, and (c) further Development and Commercialization of Licensed Products. 

5.     Intellectual Property Licenses.

        5.1    Licenses by Tranzyme for the Research Program.    Subject to the terms and conditions of this Agreement,
Tranzyme hereby grants to BMS a non-transferrable (except under Section 13.12) worldwide, royalty-free
non-exclusive license, under Tranzyme Core Technology, Tranzyme Know-How and Tranzyme Patents, to make and use for research purposes Collaboration Hits and Collaboration Leads
as part of the Research Program solely directed toward Collaboration Targets. For the purposes of the licenses granted to BMS by Tranzyme in this  Article 5, Tranzyme Core Technology, Tranzyme
Know-How and Tranzyme Patents shall not include Know-How or Patents to the
extent they Cover Tranzyme's proprietary solid-phase chemistry technology. The foregoing license may be sublicensed by BMS only to Affiliates, Biocon or Third Parties performing contracted research
with or for BMS in accordance with the terms of Section 5.5. For clarity, the foregoing license excludes any right to Develop Collaboration Leads
(except as described in the Research Plan) or Commercialize Collaboration Leads or Licensed Products. 

        5.2    Licenses by Tranzyme for Collaboration Leads and Licensed Products.    Subject to the terms and conditions of
this Agreement, Tranzyme hereby grants to BMS a royalty-bearing, worldwide, exclusive license, with the right to sublicense (subject to Section 5.5), under Tranzyme Know-How and Exclusive Patents,
solely to Develop Collaboration Leads and Commercialize Licensed Products in the Field. The
licenses granted in this Section 5.2 shall include the ability to enforce such Patents as further described in Article 9. 

        5.3    License by BMS for the Research Program.    Subject to the terms and conditions of this Agreement, BMS hereby
grants to Tranzyme and its Affiliates a royalty-free, worldwide, non-exclusive license, under BMS Technology, solely to the extent necessary or useful for Tranzyme to perform
the Research Program. 

24

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        5.4    Grant-Back Licenses.    

        (a)    By Each Party for Improvements to Certain Technology.    Subject to the terms and conditions of this Agreement,
each Party hereby grants to the other Party and its Affiliates a worldwide, fully paid-up, non-exclusive license, with the right to sublicense, to practice under the granting
Party's interest in and to Sole Research Program IP, solely to the extent constituting improvements to proprietary and confidential technology of the grantee Party; and further, the granting Party
shall not use or practice such improvement except for performing activities under this Agreement. Each Party shall notify the other Party promptly following the creation of any such improvement. 

        (b)    By BMS for Joint Research Program IP.    Subject to the terms and conditions of this Agreement, BMS hereby
grants to Tranzyme and its Affiliates a worldwide, fully paid-up non-exclusive license, with the right to sublicense, to practice the Joint Research Program IP (other than
Subject Patents), subject to Sections 2.3 and 5.2. 

        (c)    By BMS to Certain Patents and Know-How.    Subject to the terms and conditions of this Agreement,
BMS hereby grants to Tranzyme and its Affiliates a worldwide, fully paid-up non-exclusive license, with the right to sublicense, to practice those claims of those Patents owned
(in whole or in part) or Know-How (solely to the extent of any Know-How covering Collaboration Compounds or Materials disclosed by BMS to Tranzyme under this Agreement)
otherwise Controlled by BMS or any of its Sublicensees, licensees or Affiliates (including any Sole Research Program IP and Subject Patents), but excluding Patents and Know-How Controlled
by BMS as of the Effective Date or developed by BMS outside of activities performed or rights exercised under this Agreement, Covering the composition of matter, use or manufacture of a Collaboration
Compound for any purpose (other than any activity directed at a then-current Collaboration Target), including incorporating such Collaboration Compound in its library for screening against
targets other than Collaboration Targets, provided that the foregoing license grant: 

          (i)  shall
not include Patents in which the claim scope Covers any Collaboration Lead or Licensed Product, or any Know-How Covering any Collaboration Lead or
Licensed Product for as long as the compound in question is included in the licenses from Tranzyme to BMS under Section 5.2; and 

         (ii)  shall
not apply to the Development or Commercialization of any macrocycle compound that specifically targets a Collaboration Target while such Collaboration Target is
subject to the restrictions in Section 2.3(a), and, if there is a First Commercial Sale of a Licensed Product for such Collaboration Target,
thereafter for as long as BMS continues to satisfy its diligence obligations under Section 4.2(a) for such Licensed Product. 

        (d)    Sublicensing.    In the event of any sublicense by a licensee Party of the license grants contained in  Section 5.4, the
sublicensing Party shall notify the licensor Party in writing regarding the grant of a sublicense and the sublicensing Party
shall be responsible for any and all obligations of such sublicensee under such license grant. 

25

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        5.5    Sublicensing Rights.    In addition to the right to grant such limited sublicenses as may be necessary for
permitted subcontracting hereunder as provided in Section 2.6, the licenses granted in  Sections 5.1 and 5.2 may be sublicensed by BMS to its Affiliates and Third Parties,  provided, that as a condition precedent to and requirement of any such sublicense: 

        (a)   BMS
shall provide Tranzyme with a reasonably redacted copy of any sublicense agreement within thirty (30) days of execution thereof; 

        (b)   BMS
shall agree in writing to be responsible for any and all obligations of such Sublicensee as if such Sublicensee were "BMS" hereunder; and 

        (c)   BMS
shall cause such Affiliate, and such Sublicensee shall agree in writing, to be bound by and subject to all applicable terms and conditions of this Agreement in the
same manner and to the same extent as BMS is bound thereby. 

        (d)   BMS
shall include in such sublicense agreement provisions such that Tranzyme shall have the same rights and license to all inventions and Know-How generated
by such Affiliate or Third Party licensee to the same extent as if such invention or information was generated by BMS and (ii) BMS (through such Affiliate or Sublicensee) can fully perform all
of its obligations under this Agreement in the same manner and to the same extent as would be required if BMS performed the Development and Commercialization of Licensed Product rather than such
Affiliate or Third Party licensee. 

        5.6    No Other Licenses or Rights.    No license or other right is or shall be created or granted hereunder by
implication, estoppel or otherwise. All such licenses and rights are or shall be granted only as expressly provided in this Agreement. Each Party covenants that it will not, and it will not knowingly
permit any of its Affiliates or sublicensees to, use or practice any intellectual property right of the other Party licensed hereunder outside the scope of the licenses granted to it under this  Article 5 if such use or practice would constitute infringement of such intellectual property right. 

26

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

6.     Payments and Royalties.  

        6.1    Up-Front Payment.    BMS shall pay to Tranzyme, within ten (10) business days after the
Effective Date, a non-refundable, non-creditable, one-time payment of ten million dollars (U.S. $10,000,000). 

        6.2    Research Program FTE Support and Expense Payments.    

        (a)    Research Program FTE Support.    

          (i)  During
the first two (2) years of the Research Program Term, Tranzyme will provide [***] FTEs each year and BMS will provide research
funding in the amount of one million five hundred thousand dollars ($1,500,000) per year notwithstanding any decrease in Tranzyme's FTE allocations under the Research Plan by the JSC. The research
funding shall be payable in four (4) equal quarterly installments as described below in paragraph (iii). This research funding will
include all standard laboratory supplies and reagents to be used by such FTEs in
conducting the Research Program. For any FTEs included in the Research Plan beyond the initial [***], BMS will pay for the additional FTEs as described below in  paragraph (ii). If Tranzyme provides
less than [***] FTEs during a year during the Research Program Term, and while BMS
is providing the funding described above in this Section 6.2(a)(i), and BMS does not terminate this Agreement and get a technology transfer
pursuant to Section 12.6, BMS shall be entitled to a prorated credit, at BMS's election, (i) to be applied towards research funding
obligation in the next year of the Research Program Term which will reduce the funding obligation for the next year under this Section 6.2(a)(i),
or (ii) to be applied towards additional work to be conducted in the next year of the Research Program Term such that Tranzyme would have to apply additional FTEs at no additional cost to BMS
to make up for the FTEs not applied during the applicable year; provided that BMS shall not have the right to carry forward any FTE support reduced by
action of BMS at the JSC. The FTE rate under this section for calculation of any prorated credit shall be equal to [***] per FTE year. If BMS elects to carry forward work
(rather than credit on amount due), the Parties will reasonably develop a schedule for using any such additional FTE time taking into consideration the availability of Tranzyme resources and other
factors as discussed in good faith by the Parties. 

         (ii)  During
any subsequent years of the Research Program Term, or any FTEs over the [***] FTEs described above in  Section 6.2(a)(i), as support for work performed by or on behalf of Tranzyme under the Research
Plan, BMS shall pay Tranzyme for FTE efforts
actually allocated to the Research Program at the FTE Rate, provided that such FTEs have been budgeted under the Research Plan. At least ninety
(90) days prior to the start of each Contract Year, the JSC shall set the specific number of FTEs to be provided by Tranzyme, which may be adjusted during the applicable Contract Year by the
mutual agreement of the Parties not to be unreasonably withheld and reasonable prior notice to Tranzyme. Such number of FTEs shall be budgeted for and set forth in the Research Plan. Tranzyme shall
maintain accurate records as to the FTE efforts allocated to the Research Program for each quarter of the Research Program Term. BMS shall have the opportunity to audit such records in a manner
substantially similar to that outlined in Section 6.5(c). 

27

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)  No
later than sixty (60) days after the end of each calendar quarter during the Research Program Term and receipt of an invoice from Tranzyme, BMS shall make
payment for the research funding described above in Section 6.2(a)(i), and if applicable the FTEs for such calendar quarter at the FTE Rate, and
all such non-disputed payments when owed or paid shall be non-refundable and non-creditable and not subject to
set-off. For any FTE payments, the first such payment shall be prorated for the number of days from the Effective Date until the end of the applicable calendar quarter, and the last such
payment payable for the last calendar quarter starting in the Research Program Term shall be prorated for the number of days from the beginning of such calendar quarter until the end of the of the
Research Program Term. 

        (b)    Payment for External Expenses.    For each quarter during the Research Program Term, BMS shall pay Tranzyme an
amount for external expenses actually spent by Tranzyme in support of the Research Program or any other activity requested by BMS; provided that such
external expenses are specifically set forth in the Research Plan and budget and approved by BMS. Tranzyme shall invoice BMS quarterly in arrears, and BMS shall pay Tranzyme within sixty
(60) days of receiving such invoice, and such non-disputed payments by BMS when owed or paid shall be non-refundable and non-creditable and not subject to
set-off. 

        (c)    Total Support.    Total expenses payable by BMS to Tranzyme under this  Section 6.2 shall not exceed: 

          (i)  [***]
during each of the first two (2) Contract Years if Tranzyme is not engaged in
HITCREATETM Library expansion as described in Section 2.2(g); or 

         (ii)  if
Tranzyme is engaged in HITCREATETM Library expansion as described in  Section 2.2(g), [***] during the first Contract Year, [***] during the second
Contract Year, and
if applicable, [***] during the third Contract Year. 

        The
above limits may be lower depending on the budgeted amount approved by the JSC, without the prior written consent of BMS. Tranzyme shall not be required to conduct any activity under
the Research Program (or commit FTEs or to incur external expenses) in excess of amounts that will be reimbursed by BMS and in accordance with the Research Plan. 

28

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        6.3    Milestone Payments.    

        (a)    Development Milestones.    BMS shall make milestone payments (each, a "Milestone
Payment") to Tranzyme upon the occurrence of each of the milestones events (each, a "Milestone Event") for Collaboration
Compounds as set forth below in this Section 6.3(a). Each of the Milestone Payments shall be payable to Tranzyme by BMS within seventy five
(75) days of the achievement of the specified Milestone Event. All milestone payments made by BMS to Tranzyme hereunder shall be noncreditable and nonrefundable. 

 

			
	Milestone Event

 
	 	Milestone Payment 
	Selection of an ECN by BMS	 	[***]
	
Initiation of Phase 1 Study	
 	
[***]
	
Initiation of Phase 2 Study	
 	
[***]
	
Initiation of Phase 3 Study	
 	
[***]
	
NDA Acceptance in the US	
 	
[***]
	
NDA Approval in the US	
 	
[***]
	
Acceptance of MAA in Europe	
 	
[***]
	
Receipt of MAA in Europe	
 	
[***]
	
Marketing Approval in Japan	
 	
[***]

 

 
If
the first compound achieves any of the above Milestone Payments before a prior milestone has been achieved, then in respect to such first compound, such prior unachieved milestones will be deemed
to have been achieved and BMS will pay to Tranzyme any previously unpaid milestones at the same time as the most recent milestone payment is due. The above Milestone Payments shall be due and payable
one time for the first compound, on a Collaboration Target-by-Collaboration Target basis, to achieve such milestone, and for clarity milestone payments shall be due or payable
for a back-up or subsequent compound in accordance with the chart above beginning with achievement of the first milestone that had not been previously paid for the prior compound(s) that
was discontinued, and then only for previously unpaid milestones. Receipt of MAA in Europe shall be deemed achieved upon receiving regulatory and pricing approval, if necessary, in three (3) of
the Major Market EU Countries. In the context of the above table, "M" means million dollars, e.g., $7M would mean seven million dollars ($7,000,000). 

        (b)    Sales Milestone.    BMS shall pay to Tranzyme a one-time sales milestone of
[***] when annual Net Sales for the first Licensed Product against each Collaboration Target exceed [***] as further described below. This sales
milestone would be due ninety (90) days after the end of the first calendar year in which the annual Net Sales exceed the above threshold. 

29

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        6.4    Royalties.    

        (a)    Royalties and Rates.    Subject to the rest of this  Section 6.4, BMS shall pay to Tranzyme royalties based on the total
worldwide annual Net Sales of each Licensed Product in a given calendar year
at the following royalty rates: 

 

 

			
	

 Annual Worldwide Net Sales of Applicable Licensed Product	 	 Royalty Rate
	Up to and including [***]	 	[***]
	

 Greater than [***] up to and including [***]	 	[***]
	Greater than [***]	 	[***]

 

 
By
way of example, in a given calendar year, if the aggregate annual worldwide Net Sales for a Licensed Product is $1,250,000,000, the following royalty payment would be payable for those Net Sales
under this Section 6.4(a): [***]. 

        (b)    Royalty Term.    Royalties under Section 6.4(a) shall be
payable by BMS to Tranzyme on a Licensed Product-by-Licensed Product and country-by-country basis until the later of (such period, the
"Royalty Term"): 

          (i)  the
expiration of the last to expire Valid Claim within any BMS Royalty-Bearing Patents (as defined below) Covering such Licensed Product in such country; 

         (ii)  ten
(10) years from the First Commercial Sale of such Licensed Product in such country; or 

        (iii)  the
expiration of all Regulatory Exclusivity (as defined below) covering the Licensed Product in such country. 

For
purposes of this Agreement, "BMS Royalty-Bearing Patents" shall mean all Patents owned (in whole or in part), in-licensed or otherwise
controlled by Tranzyme, BMS or any of its Affiliates or Sublicensees, for which BMS or any of its Affiliates or Sublicensees has any right to enforce applicable to the Licensed Product in question
(whether or not a sole or joint enforcement right or one contingent on the activities of other(s)) and where such Patent Covers the composition of matter of the applicable Collaboration Lead included
in such Licensed Product. "Regulatory Exclusivity" means market exclusivity granted by a Regulatory Authority designed to prevent the entry of Generic
Product onto the market, including new chemical entity exclusivity, new use or indication exclusivity, orphan drug exclusivity and pediatric exclusivity. 

        (c)   Tranzyme
shall bear all Third Party royalties owed with respect to any license or acquisition of any Patent of a Third Party that is necessary to practice the Tranzyme
Core Technology licensed by
Tranzyme to BMS hereunder for the Development or Commercialization of a Licensed Product. As between the Parties, Tranzyme shall have the right to obtain a license to any such Patent and Tranzyme
shall ensure that it has the right to sublicense such Patent to BMS as described herein. Subject to Section 6.4(d), BMS shall solely bear all
other royalties, payments or damages owed on Patents and other intellectual property in connection with the Development and Commercialization of a Licensed Product; provided
that each Party shall bear all Third Party royalties (or damages) arising from any infringing activities by such Party prior to the Effective Date. 

30

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (d)   BMS
may deduct, on a Licensed Product-by-Licensed Product and country-by-country basis, from the royalties it would
otherwise owe to Tranzyme pursuant to this Section 6.4 for a particular Licensed Product, an amount equal to [***] of all
royalties payable to Third Parties in consideration for rights claiming the composition of matter of a Collaboration Lead included in such Licensed Product and that are necessary or reasonably useful
for the manufacture, use or sale of such Licensed Product, up to a maximum reduction in the royalty rate of [***] of the royalty rates specified in the table in  Section 6.4(a) (so that the minimum
royalty rates would be [***] respectively). 

        (e)   During
the applicable Royalty Term for a particular Licensed Product in a particular country, when royalties are payable to Tranzyme on the basis of  Section 6.4(b)(ii) but not on the basis of Section 6.4(b)(i) and  Section 6.4(b)(iii), if any Third Parties are: (i) selling a Generic Product in any given country in any year; (ii) such sales
of
such Generic Product(s) in such country for such year are, in the aggregate (based upon the number of equivalent units sold) greater than or equal to [***] but less than
[***] of the total equivalent units sold of the Licensed Product in such country, then the royalty rates specified in the table in  Section 6.4(a) shall be reduced by [***] (so that the royalty
rates would be [***] respectively);
and (iii) such sales of such Generic Product(s) in such country for such year are, in the aggregate (based upon the number of equivalent units sold) greater than or equal to
[***] of the total equivalent units sold of Licensed Product in such country, then the royalty rates specified in the table in  Section 6.4(a) shall be reduced by [***] (so that the royalty rates
would be [***] respectively). 

        (f)    If
Tranzyme in-licenses any Patent or Know-How after the Effective Date that would be included in the Tranzyme Know-How or Tranzyme
Patents that would require that Tranzyme to pay a royalty or other consideration to a Third Party in connection with the Development or Commercialization of a Licensed Product (an
"Additional License"), then, to the extent that Tranzyme has the right to grant BMS a sublicense under such Additional License, Tranzyme shall disclose
the substantive terms of such Additional License to BMS, and such Additional License shall be deemed to be licensed hereunder and included within the definition of Tranzyme Know-How or
Tranzyme Patents only if BMS provides Tranzyme, within sixty (60) days after receipt of such substantive terms, with a written notice in which (i) BMS consents to abiding by the terms of
such Additional License and (ii) BMS agrees that its financial obligations under such Additional License shall be to assume all payments under such Additional License to the extent arising from
BMS's Development or Commercialization of Licensed Products under this Agreement. With respect to any Additional License obtained by Tranzyme after the Effective Date, Tranzyme shall either
(x) use Commercially Reasonable Efforts to obtain the right to grant BMS a sublicense thereunder or (y) not enter into any agreement that would prevent BMS from obtaining such Additional
License directly from such Third Party, and absent the ability to grant a sublicense to BMS such license will not be an Additional License hereunder. 

31

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (g)    Additional Royalty Provisions.    The royalties payable under  Section 6.4 shall be subject to the following:

          (i)  only
one royalty shall be payable hereunder with respect to each Licensed Product; 

         (ii)  royalties
when owed or paid hereunder shall be non-refundable and non-creditable and not subject to set-off; 

        (iii)  the
maximum reduction in the royalty rates specified in the table in Section 6.4(a) shall be
[***], even when multiple royalty reductions apply (such as Section 6.4(d) and  6.4(e) together), so that the minimum royalty rates would be [***]
respectively; and 

        (iv)  if
a particular Licensed Product is sold or distributed in one country with the intention of the selling or distributing entity for use in one or more other countries,
the countries of intended use shall be treated as the countries of sale for purposes of Section 6.4(b)(ii). The Parties agree that the good faith
estimate of such intended use by the selling entity shall be binding for such purposes, and that the Royalty Term shall be based on a country-by-country basis for each country
of intended use. 

        6.5    Payment Terms.    

        (a)    Manner of Payment.    All payments to be made by BMS hereunder shall be made in U.S. dollars by wire transfer
to such bank account as Tranzyme may designate. 

        (b)    Reports and Royalty Payments.    For as long as royalties or other payments are due under this  Article 6, BMS shall
furnish to Tranzyme a written report, within seventy five (75) days after the end of each calendar quarter, showing
the amount of Net Sales of Licensed Product and royalty due. Royalty and other payments for each calendar quarter shall be due at the same time as such written report for the calendar quarter. The
report shall include, at a minimum, the following information for the applicable calendar quarter, each listed by Licensed Product, and by country of sale or intended use: (i) the calculation
of Net Sales; and (ii) royalties, Milestone Payments, and other payments owed to Tranzyme or already paid during such calendar quarter, listed by category. 

32

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (c)    Records and Audits.    BMS shall keep, and shall cause each of its Affiliates and Sublicensees, as applicable,
to keep adequate books and records of accounting for the purpose of calculating all royalties and other amounts payable to Tranzyme hereunder and ensuring BMS's compliance hereunder. For the three
(3) years following the end of the calendar year to which each shall pertain, such books and records of accounting (including those of BMS's Affiliates and Sublicensees, as applicable) shall be
kept at each of their principal place of business and shall be open for inspection and copying at reasonable times and upon reasonable notice by an independent certified accountant
selected by Tranzyme, and which is reasonably acceptable to BMS, for inspecting the royalties and other amounts due to Tranzyme under this Agreement. In no event shall such inspections be conducted
hereunder more frequently than once every two (2) years. Such accountant shall have executed and delivered to BMS and its Affiliates and Sublicensees, as applicable, a customary confidentiality
agreement as reasonably requested by BMS. The results of such inspection, if any, may be shared by the accountant with BMS and Tranzyme at either Party's request, and shall be binding on both Parties.
Any underpayments shall be paid by BMS within thirty (30) days of notification of the results of such inspection, plus interest (as set forth in  Section 6.5(g)). Any overpayments shall be
fully creditable against amounts payable in subsequent payment periods but otherwise shall not be
reimbursed by Tranzyme. Tranzyme shall pay for any such inspections, except that in the event there is any upward adjustment in aggregate royalties or other amounts payable for any calendar year shown
by such inspection of more than five percent (5%) of the amount paid, BMS shall reimburse Tranzyme for the full costs of such accountant or related to such inspection. 

        (d)    Currency Exchange.    With respect to Net Sales invoiced in a currency other than U.S. dollars, the Net Sales
shall be converted to U.S. Dollars using the rate that BMS uses for its own corporate consolidation purposes for the calendar quarter for which the payment is made consistently applied to its other
products in accordance with GAAP. Upon request by Tranzyme, BMS shall provide Tranzyme with the applicable exchange rate used by BMS with respect to any royalty period. 

        (e)    Taxes.    BMS may withhold from payments due to Tranzyme amounts for payment of any withholding tax that is
required by law to be paid to any taxing authority with respect to such payments. BMS shall provide Tranzyme all relevant documents and correspondence, including an official tax certificate, and shall
also provide to Tranzyme any other cooperation or assistance on a reasonable basis as may be necessary to enable Tranzyme to claim exemption from such withholding taxes and to receive a refund of such
withholding tax or claim a foreign tax credit. BMS shall give proper evidence from time to time as to the payment of any such tax. The Parties shall cooperate with each other in seeking deductions
under any double taxation or other similar treaty or agreement from time to time in force. Apart from any such permitted withholding and those deductions included in the definition of Net Sales, the
amounts payable by BMS to Tranzyme hereunder shall not be reduced on account of any taxes, charges, duties or other levies. 

        (f)    Blocked Payments.    In the event that, by reason of applicable law in any country, it becomes impossible or
illegal for BMS (or any of its Affiliates or Sublicensees) to transfer, or have transferred on its behalf, payments owed Tranzyme hereunder, BMS shall promptly notify Tranzyme of the conditions
preventing such transfer and such payments shall be deposited in local currency in the relevant country to the credit of Tranzyme in a recognized banking institution designated by Tranzyme or, if none
is designated by Tranzyme within a period of thirty (30) days, in a recognized banking institution selected by BMS or its Affiliate or Sublicensee, as the case may be, and identified in a
written notice given to Tranzyme. 

33

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (g)    Interest Due.    BMS shall pay Tranzyme interest on any payments that are not paid on or before the date such
payments are due under this Agreement at a rate of [***] per month or the maximum applicable legal rate, if less, calculated on the total number of days payment is delinquent. 

7.     Research Program Intellectual Property.  

        7.1    Disclosure of Research Program Know-How.    Each Party shall promptly (and at least on a calendar
quarterly basis) use reasonable and good faith efforts to disclose to the other Party any Research Program Know-How (along with existing documentation thereof) created, conceived or
reduced to practice by or on behalf of such Party. 

        7.2    Ownership and Inventorship.    

        (a)    Subject Patents.    Subject to the terms and conditions of this Agreement and effective upon BMS designating a
compound as a Collaboration Lead, Tranzyme, for itself and on behalf of its Affiliates, and employees, subcontractors, consultants and agents of any of the foregoing, agrees to assign and hereby does
assign (effective upon such designation), all right title and interest in and to any Subject Patent to BMS. Tranzyme shall cooperate, and shall cause the foregoing persons and entities to cooperate,
with BMS to effectuate and perfect the foregoing ownership, including by promptly executing and recording assignments and other documents consistent with such ownership at BMS's expense. 

        (b)    Sole and Joint Research Program IP.    

          (i)  Except
for any Subject Patents which are addressed elsewhere in this Article 7, ownership of any Research Program
Know-How, and Patents arising therefrom, created, conceived or reduced to practice solely by or on behalf of a Party shall be solely owned by such Party (referred to herein along with all
Patents arising therefrom, as "Sole Research Program IP" for each Party), and if created, conceived or reduced to practice jointly by or on behalf of
both of the Parties shall be jointly owned by the Parties (referred to herein along with all Patent Rights arising therefrom, as "Joint Research Program
IP"). 

         (ii)  Each
Party shall have an undivided one-half (1/2) interest in and to Joint Research Program IP. Each Party shall exercise its ownership
rights in and to such Joint Research Program IP, including the right to license and sublicense or otherwise to exploit, transfer or encumber its ownership interest, without an accounting or obligation
to, or consent required from, the other Party, but subject to the licenses hereunder and the other terms and conditions of this Agreement (including the licenses granted pursuant to  Article 5);
provided that BMS agrees not to practice any such Joint Research Program IP for any
Collaboration Target using Collaboration Compounds except pursuant to this Agreement with Tranzyme. At the reasonable written request of a Party, the other Party shall in writing grant such consents
and confirm that no such accounting is required to effect the foregoing regarding Joint Research Program IP. Each Party, for itself and on behalf of its Affiliates, licensees and sublicenses, and
employees, subcontractors, consultants and agents of any of the foregoing, agrees to assign and hereby assigns, to the other Party a joint and undivided interest in and to all Joint Research Program
IP. 

34

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)  Subject
to the licenses hereunder (including the licenses granted pursuant to Article 5) and the other terms and
conditions of this Agreement: 

        (A)  Each
Party shall be solely responsible for the Prosecution and Maintenance, and the enforcement and defense, of any Patents within its Sole Research Program IP or
otherwise assigned to a Party hereunder, and the other Party shall have no rights with respect thereto; and 

        (B)  The
Prosecution and Maintenance, and the enforcement and defense, of any Patents within Joint Research Program IP shall be jointly managed by the Parties on mutually
agreeable terms to be entered into by the Parties at the time any such Patents are first filed, and all recoveries and out-of-pocket costs and expenses arising from those
activities, absent further agreement, shall be shared equally by the Parties in countries in which Tranzyme would customarily seek patent protection (provided that sufficient advance written notice of
any such costs or expenses is given to the Party not incurring same) and in any other country, BMS shall bear such costs. Such terms to be negotiated shall include the right of a Party to
opt-out of the Prosecution and Maintenance of such Patents and retain a non-exclusive right under such Patent for such Party's internal research use. 

        (c)    Joint Research Agreement.    This Agreement shall be understood to be a joint research agreement in accordance
with 35 U.S.C. § 103(c)(3) to Develop and Commercialize Licensed Products, provided that neither Party shall be required by this
reference to have any Patent take advantage of or become subject to such § 103(c)(3) except in accordance with the provisions of this  Article 8 regarding Prosecution and Maintenance of
such Patent. 

        (d)    Inventorship.    Inventorship determination for all Patents worldwide arising from any Research Program
Know-How and thus the ownership thereof shall be made in accordance with applicable United States patent laws. 

8.     Patent Prosecution and Maintenance.  

        8.1    Guiding Principles.    In general, if a Tranzyme Patent or a Patent Controlled by BMS provides support to claim
a Collaboration Lead (once selected), or Licensed Product, then the Parties would endeavor to file a separate Patent application (or separate divisional Patent application, for cases already
filed), claiming only the applicable Collaboration Lead(s) or Licensed Product(s) as a composition of matter or its method of use or method of manufacture. The patent counsel for each Party shall
cooperate in good faith to file Patent applications in accordance with these principles and make such decisions jointly, such decisions not to be unreasonably withheld. 

        8.2    Certain Tranzyme Patents.    The following provisions of this  Section 8.2 shall apply to each Exclusive Patent. In
addition, Tranzyme may elect by written notice to BMS to have any Patent within Joint
Research Program IP licensed to Tranzyme under Section 5.4(b) treated as a "Exclusive Patent" hereunder. Other than for Exclusive Patents
hereunder, all Tranzyme Patents shall be referred to herein as "Other Patents." Tranzyme shall use reasonable efforts to file separate Patents on
compounds Covering Collaboration Leads from any compounds licensed by Tranzyme to Third Parties. 

35

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (a)    Tranzyme Responsible.    Tranzyme shall have the sole right and discretion to Prosecute and Maintain throughout
the world the Exclusive Patents, and BMS shall have no rights with respect thereto other than as expressly provided in Sections 8.2(b), 8.2(c)  and 8.2(e). 

        (b)    BMS Involvement in Prosecution and Maintenance.    

          (i)  Tranzyme
shall have the sole right in its discretion, and the responsibility for, the Prosecution and Maintenance of the Exclusive Patents. Tranzyme shall regularly
provide BMS with copies of all Exclusive Patent applications, and all other material submissions and correspondence with any patent authorities regarding Exclusive Patents, in sufficient time to allow
for review and comment by BMS. In addition, the Parties and their counsel shall consult with one another on a regular basis regarding Prosecution and Maintenance of any Exclusive Patent, and Tranzyme
shall take into account BMS's reasonable comments in directing the Prosecution and Maintenance of Exclusive Patents as applicable to the Collaboration Lead or Licensed Product. In the event of any
disagreement between the Parties regarding any such Prosecution and Maintenance, BMS shall have the right to determine the Prosecution and Maintenance of any claims in the Exclusive Patents covering
the composition of matter or use of the Collaboration Leads or Licensed Products, and in all other cases Tranzyme shall have the right to determine the Prosecution and Maintenance of such Exclusive
Patents. 

         (ii)  Patent Costs. BMS shall reimburse Tranzyme a percentage of Patents Costs incurred by Tranzyme for each Exclusive Patent
(on a Exclusive Patent-by-Exclusive Patent and country-by-country basis) equal to: one hundred divided by the sum of Tranzyme, BMS, plus all Third Party
licensees of Tranzyme holding an exclusive license to the Exclusive Patents expressed as a percentage (for example, if there is one (1) Third Party licensee of the Exclusive Patent, BMS would
reimburse Tranzyme an amount equal to 33.3% of such Patent Costs (100/(1+1+1))), provided Tranzyme shall not be required to bear any portion of the costs for countries in which Tranzyme would not
normally seek patent protection. 

        (c)    Election Not to Prosecute or Maintain or Pay Patent Costs.    

          (i)  If
Tranzyme elects to cease the Prosecution or Maintenance of the last pending member of any family of Exclusive Patents in a country Covering the composition of matter
or use of a Collaboration Lead or Licensed Product, then Tranzyme shall so notify BMS, promptly in writing and in sufficient time to enable BMS to meet any deadlines by which an action must be taken
to preserve such Exclusive Patent in such country. Upon receipt of each such notice by Tranzyme or if, at any time, Tranzyme fails to initiate any such action within ninety (90) days after a
request by BMS that it do so (or within such shorter time as may be required to prevent the forfeiture of rights), BMS shall have the right, but not the obligation, to notify Tranzyme in writing that
BMS will assume and continue the Prosecution or Maintenance of such Exclusive Patent covering the composition of matter or use of a Collaboration Lead or Licensed Product. 

36

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

         (ii)  If
BMS elects not to pay BMS's share of the Patent Costs associated with Prosecution or Maintenance of any Exclusive Patent, then in each such case BMS shall so notify
Tranzyme and on the ninetieth (90th) day after Tranzyme's receipt of such notice such Exclusive Patent shall no longer be licensed to BMS hereunder and shall not longer be treated as an
"Exclusive Patent" hereunder. BMS shall be required to reimburse Tranzyme for Patent Costs for such Exclusive Patent incurred by Tranzyme through such ninetieth (90th) day, but not
thereafter. 

        (d)    Third Party Rights.    To the extent that a Third Party licensor of Tranzyme has retained any right to
Prosecute or Maintain any Exclusive Patents or otherwise be involved in such activities, Tranzyme shall use commercially reasonable efforts to cause such Third Party licensor to take the actions
specified by this Section 8.2 in a manner consistent with the agreement(s) by which such Third Party retains such rights, but Tranzyme shall not
be deemed to be in breach of its obligations under this Section 8.2 if, after using such commercially reasonable efforts, it is unable to comply
with such obligations because of actions taken or not taken by such Third Party licensor. 

        (e)    Patent Term Extensions and Filings for Regulatory Exclusivity Periods.    

          (i)  BMS
shall have the right, at its costs and expense, subject to consultation with Tranzyme, to pursue any patent term restoration or supplemental protection certificates
or their equivalent for the Exclusive Patents. In the event that any election with respect to patent term restoration or supplemental protection certificates or their equivalent for any Exclusive
Patent is available based on a Licensed
Product, as between the Parties, BMS as the licensee thereof shall have the right to decide whether or not to make any such election. 

         (ii)  With
respect to any Patent listings required for any Regulatory Exclusivity Periods for Licensed Products, the Parties shall mutually agree on which Tranzyme Patents to
list, provided that (A) BMS shall have the sole right with regards to Exclusive Patents, and (B) BMS shall not be required to list any
Patents which, in its sole discretion, it deems to be contrary to Applicable Law (including any applicable consent order or decree to which BMS, its Affiliates or Sublicensee is subject). 

        8.3    Other Patents.    Tranzyme shall have the sole right, and sole responsibility for all Patent Costs incurred by
Tranzyme, to Prosecute and Maintain all Other Patents, and BMS shall have no rights with respect thereto. BMS shall have the sole right, and sole responsibility for all Patent Costs incurred by BMS,
to Prosecute and Maintain all Patents within BMS Technology, and Tranzyme shall have no rights with respect thereto. 

        8.4    Subject Patents.    

        (a)    BMS Responsible.    BMS shall have the sole right to prepare, file, Prosecute and Maintain Subject Patents
(once a Patent becomes a Subject Patent) throughout the world, at BMS's cost and expense. BMS shall have the right to broaden the scope of the claims in the Subject Patents as supported by the
disclosures. BMS shall provide Tranzyme reasonable opportunity to review and comment on such prosecution efforts regarding such Subject Patents. BMS shall provide Tranzyme with a copy of material
communications from any patent authority regarding such Subject Patents, and shall provide drafts of any material filings or responses to be made to such patent authorities a reasonable amount of time
in advance of submitting such filings or responses for Tranzyme's review and comment. BMS shall consider such reasonable comments by Tranzyme in connection with the prosecution of Subject Patents, and
shall implement as appropriate such comments by Tranzyme with respect to Subject Patents. 

37

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (b)    Election Not To Prosecute or Maintain Subject Patents.    If BMS decides to cease the Prosecution or
Maintenance of the last pending member of any family of Subject Patents in a country, it shall notify Tranzyme in writing sufficiently in advance so that the Parties may discuss in good faith Tranzyme
assuming the responsibility for the prosecution or maintenance of such Subject Patents, at Tranzyme's sole expense; provided that if Tranzyme does
assume Prosecution and Maintenance of any such Subject Patents, BMS shall assign such Subject Patent to Tranzyme and such Patents will thereafter be treated as Exclusive Patents hereunder (except for
cost sharing). 

        8.5    Cooperation.    Each Party shall reasonably cooperate with the other Party in the Prosecution and Maintenance
of the Exclusive Patents, Other Patents and Patents within each Party's Sole Research Program IP and within Joint Research Program IP. Such cooperation includes promptly executing all documents, or
requiring inventors, subcontractors, employees and consultants and agents of BMS and its Affiliates and Sublicensees to execute all documents, as reasonable and appropriate so as to enable the
Prosecution and Maintenance of any such Patents in any country. 

        8.6    Patent Marking.    BMS shall mark, and shall cause its Affiliates and Sublicensees to mark, Licensed Products
with all Tranzyme Patents in accordance with Applicable Law. Tranzyme shall mark, and shall cause its Affiliates and sublicensees to mark, all products with all Patents licensed by BMS to Tranzyme
hereunder in accordance with Applicable Law. Each Party's marking obligations under this Section 8.6 shall continue for as long as such Party is
licensed by the other Party to one or more Patents or otherwise required by Applicable Law. 

9.     Patent Enforcement and Defense.  

        9.1    Notice.    Each Party shall promptly notify, in writing, the other Party upon learning of any actual or
suspected infringement of any Exclusive Patents or Subject Patents by a non-Affiliated Third Party, or of any claim of invalidity, unenforceability, or non-infringement of any
Exclusive Patents or Subject Patents, and shall, along with such notice, supply the other Party with any evidence in its Control pertaining thereto. For purposes of this Agreement,
"Competitive Infringement" shall mean the commercial making, using or selling of a pharmaceutical that is reasonably expected to reduce the sales of any
Licensed Product in the country where such pharmaceutical is sold. 

        9.2    Enforcement and Defense.    

        (a)    Exclusive Patents, and Competitive Infringement.    

          (i)  As
between the Parties, BMS shall have the first right, but not the obligation, to seek to abate any actual or suspected Competitive Infringement of the Exclusive
Patents by a non-Affiliated Third Party, or to file suit against any such Third Party for such Competitive Infringement. If BMS does not take steps to abate the actual or suspected
Competitive Infringement, or file suit to enforce the Exclusive Patents against such Third Party with respect to such Competitive Infringement, within a commercially reasonably time (and in all events
within the applicable Hatch-Waxman Time Period, as defined below), Tranzyme shall have the right (but not the obligation) to take action to enforce the Exclusive Patents against such Third Party for
such Competitive Infringement. The controlling Party shall pay all its Patent Costs incurred for such enforcement. 

38

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

         (ii)  Neither
Party shall exercise any of its enforcement rights under this Section 9.2(a) without first consulting
with the other Party, provided that this consultation requirement shall not limit each Party's rights under this  Section 9.2(a). 

        (iii)  For
purposes of this Agreement, "Hatch-Waxman Time Period" shall mean the applicable period of time during which a
patent holder or licensee has the right to file an infringement suit to maintain certain rights and privileges upon receipt of Paragraph IV Patent Certification by a Third Party filing an
Abbreviated New Drug Application or an application under §505(b)(2) of the United States Food, Drug, and Cosmetic Act, as amended or any replacement thereof or any other similar Patent
certification by a Third Party, or any foreign equivalent thereof. 

        (b)    Defense.    

          (i)  As
between the Parties, Tranzyme shall have the first right, but not the obligation, to defend against a declaratory judgment action or other action challenging any
Exclusive Patents, other than with respect to (i) any interferences, oppositions, reissues or reexaminations, which are addressed in  Article 8, (ii) any counter-claims in any enforcement
action brought by BMS pursuant to  Section 9.2(a), or (iii) any action by a non-Affiliated Third Party in response to an enforcement action brought by BMS
alleging infringement of any Exclusive Patents, which defense for the foregoing clause (ii) and this clause (iii) shall be controlled by BMS. BMS shall reimburse Tranzyme within thirty
(30) days of BMS's receipt of Tranzyme's invoice for Patent Costs incurred by Tranzyme for any such defense. If Tranzyme does not take steps to defend within a commercially reasonably time, BMS
shall have the right (but not the obligation) to defend any Exclusive Patent. 

        (c)    Withdrawal, Cooperation and Participation.    With respect to any infringement or defensive action identified
above in this Section 9.2: 

          (i)  If
the controlling Party ceases to pursue or withdraws from such action, it shall notify the other Party and such other Party may substitute itself for the withdrawing
Party and proceed under the terms and conditions of this Section 9.2. 

         (ii)  The
non-controlling Party shall cooperate with the Party controlling any such action (as may be reasonably requested by the controlling Party), including
(i) providing access to relevant documents and other evidence, (ii) making its and its Affiliates and sublicensees and licensees and all of their respective employees, subcontractors,
consultants and agents available at reasonable business hours and for reasonable periods of time, but only to the extent relevant to such action, and (iii) if necessary, by being joined as a
party, subject for this clause (iii) to the controlling Party agreeing to indemnify such non-controlling Party for its involvement as a named party in such action and paying those
Patent Costs incurred by such Party in connection with such joinder. The Party controlling any such action shall keep the other Party updated with respect to any such action, including providing
copies of all documents received or filed in connection with any such action. 

39

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)  Each
Party shall have the right to participate or otherwise be involved in any such action controlled by the other Party, in each case at the participating Party's
sole cost and expense. If a Party elects to so participate or be involved, the controlling Party shall provide the participating Party and its counsel with an opportunity to consult with the
controlling Party and its counsel regarding the prosecution of such action (including reviewing the contents of any correspondence, legal papers or other documents
related thereto), and the controlling Party shall take into account reasonable requests of the participating Party regarding such enforcement or defense. 

        (d)    Settlement.    Neither Party may settle or consent to an adverse judgment in any action described in this  Section 9.2,
including any judgment which affects the scope, validity or enforcement of any Exclusive Patents involved therewith, without the
prior written consent of the other Party (such consent not to be unreasonably withheld). 

        (e)    Damages.    Unless otherwise agreed by the Parties, all monies recovered upon the final judgment or settlement
of any action described in Section 9.2(a), or any action described in Section 9.2(b),
shall be used: (i) first, to reimburse each of the Parties, and any other Third Party licensees of Tranzyme, on a pro rata basis for each of
their out-of-pocket costs and expenses relating to the action; and (ii) second, to the Parties in accordance with their relative economic interests. 

        9.3    Solely Owned Patents.    Tranzyme shall have the sole right, and sole responsibility for all Patent Costs
incurred by Tranzyme, to enforce and defend all Other Patents, and BMS shall have no rights with respect thereto. BMS shall have the sole right, and sole responsibility for all Patent Costs incurred
by BMS, to enforce and defend all Subject Patents and Patents within BMS Technology, and Tranzyme shall have no rights with respect thereto; provided
that, with regards to the Subject Patents, with BMS's consent, Tranzyme will have a backup right to enforce and defend the Subject Patents in the same manner as described in  Section 9.2 for Exclusive Patents. 

        9.4    Third Party BMS and Licensor Rights.    To the extent that a Third Party licensor has retained any right to
enforce or otherwise be involved in the activities specified in this Article 9 for any Exclusive Patents, Tranzyme shall cause such Third Party
licensor to take the actions specified by this Article 9 in a manner consistent with the agreement(s) by which such Third Party retains such
rights, but Tranzyme shall not be deemed to be in breach of its obligations under this Article 9 if, after using such commercially reasonable
efforts, it is unable to comply with such obligations because of actions taken or not taken by such Third Party licensor. 

10.   Confidentiality.  

        10.1    Confidential Information.    

        (a)    Confidential Information.    Each Party ("Disclosing Party")
may disclose to the other Party ("Receiving Party"), and Receiving Party may acquire during the course and conduct of activities under the Agreement,
certain proprietary or confidential information of Disclosing Party in connection with this Agreement. The term "Confidential Information" shall mean
(i) all Materials and (ii) all ideas and information of any kind, whether in written, oral, graphical, machine-readable or other form, whether or not marked as confidential or
proprietary, which are transferred, disclosed or made available by Disclosing Party or at the request of Receiving Party, including any of the foregoing of Third Parties. Without limiting the
foregoing, Tranzyme Core Technology and Tranzyme Know-How shall be considered Confidential Information of Tranzyme, and BMS Technology and the identity of Collaboration Leads, and the
Collaboration Targets shall be considered Confidential Information of BMS. 

40

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (b)    Restrictions.    During the Term and for ten (10) years thereafter, Receiving Party shall keep all
Disclosing Party's Confidential Information in confidence with the same degree of care with which Receiving Party holds its own confidential information. Receiving Party shall not use Disclosing
Party's Confidential Information except for in connection with the performance of its obligations and exercise of its rights under this Agreement. Receiving Party has the right to disclose Disclosing
Party's Confidential Information without Disclosing Party's prior written consent, to the extent and only to the extent reasonably necessary, to Receiving Party's Affiliates and their employees,
subcontractors, consultants or agents who have a need to know such Confidential Information in order to perform its obligations and exercise its rights under this Agreement and who are required to
comply with the restrictions on use and disclosure in this Section 10.1(b). Receiving Party shall use diligent efforts to cause those entities
and persons to comply with the restrictions on use and disclosure in this Section 10.1(b). Receiving Party assumes responsibility for those
entities and persons maintaining Disclosing Party's Confidential Information in confidence and using same only for the purposes described herein. 

        (c)    Exceptions.    Receiving Party's obligation of nondisclosure and the limitations upon the right to use the
Disclosing Party's Confidential Information shall not apply to the extent that Receiving Party can demonstrate that the Disclosing Party's Confidential Information: (i) was known to Receiving
Party or any of its Affiliates, without obligation to keep it confidential, prior to the time of disclosure; (ii) is or becomes public knowledge through no fault or omission of Receiving Party
or any of its Affiliates; (iii) is obtained by Receiving Party or any of its Affiliates from a Third Party lawfully in possession thereof and under no obligation of confidentiality to
Disclosing Party; or (iv) has been independently
developed by employees, subcontractors, consultants or agents of Receiving Party or any of its Affiliates without the aid, application or use of Disclosing Party's Confidential Information, as
evidenced by contemporaneous written records. 

        (d)    Permitted Disclosures.    Receiving Party may disclose Disclosing Party's Confidential Information to the
extent (and only to the extent) such disclosure is reasonably necessary in the following instances: 

          (i)  in
order to comply with Applicable Law (including any securities law or regulation or the rules of a securities exchange) or with a legal or administrative proceeding; 

         (ii)  in
connection with prosecuting or defending litigation, Regulatory Approvals and other regulatory filings and communications, and filing, prosecuting and enforcing
Patents in connection with Receiving Party's rights and obligations pursuant to this Agreement; and 

41

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iii)  in
connection with exercising its rights hereunder, to (A) its Affiliates; (B) potential and future collaborators (including sublicensees (where BMS is
the Receiving Party) and Third Party licensees and sublicensees and in connection with Tranzyme activities (where Tranzyme is the Receiving Party)); (C) permitted actual or potential acquirers
or assignees; and (D) investment bankers, investors and lenders, and in all of the above cases (other than clause (A)) subject to redaction of the Research Plan, and/or the structures of
any compounds (including Collaboration Lead), and also for clause (B) subject to redaction of the identity of the Collaboration Targets, and the financial terms of this Agreement;  provided that
(1) with respect to Sections 10.1(d)(i) or  10.1(d)(ii), where reasonably possible, Receiving Party shall notify Disclosing Party of Receiving
Party's intent to make any disclosure pursuant
thereto sufficiently prior to making such disclosure so as to allow Disclosing Party adequate time to take whatever action it may deem appropriate to protect the confidentiality of the information to
be disclosed, and (2) with respect to Section 10.1(d)(iii), each of those named people and entities are required to comply with the
restrictions on use and disclosure in Section 10.1(b) (other than investment bankers, investors and lenders, which must be bound prior to
disclosure by commercially reasonable obligations of confidentiality). With respect to disclosure of the Collaboration Targets to a potential acquirer or assignee, Tranzyme agrees to disclose the
Collaboration Targets only at such time as the
definitive acquisition document is in bona fide negotiation and Tranzyme is reasonably confident that such acquisition or assignment is more than likely to occur and not before such time. 

42

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        10.2    Publications.    Notwithstanding any matter set forth in this Agreement to the contrary, either Party may
propose publication of the results of its activities within the Research Program following scientific review by the JSC (if in existence) and subsequent approval by Tranzyme's and BMS's management,
which approval shall not be unreasonably withheld. After receipt of the proposed publication by both BMS's and Tranzyme's management's written approval or disapproval shall be provided within thirty
(30) days. Both Parties understand that a reasonable commercial strategy may require delay of publication of information (including chemical structures) or filing of patent applications,
therefore the Parties agree to review and consider delay of publication and filing of patent applications under certain circumstances. If the Parties are unable to agree on whether to publish or
disclose the same, the matter shall be referred to the JSC for resolution. Once publications have been reviewed by each Party and have been approved for publication, the same publications do not have
to be provided again to the other Party for review for a later submission for publication. Expedited reviews for abstracts or poster presentations may be arranged if mutually agreeable to the Parties.
Each Party also shall have the right to require that its Confidential Information that would be disclosed in any such proposed publication be deleted prior to such publication. Each Party shall
acknowledge the other Party's contributions in any such publication unless otherwise instructed by such other Party. 

        10.3    Terms of this Agreement; Publicity.    

        (a)    Restrictions.    The Parties agree that the terms of this Agreement shall be treated as Confidential
Information of both Parties, and thus may be disclosed only as permitted by Section 10.1(d). Except as required by law, each Party agrees not to
issue any press release or public statement disclosing information relating to this Agreement or the transactions contemplated hereby or the terms hereof without the prior written consent of the other
Party, except as permitted by Section 10.3(b). 

        (b)    Tranzyme Press Releases.    The Parties agree that Tranzyme may issue a press release promptly following the
Effective Date in a to be agreed upon form, a draft of which is attached hereto  Exhibit 10.3(b). In addition, Tranzyme shall have the right to issue a press release disclosing publicly the
achievement of Milestone Events and
payment of applicable Milestone Payments (but not the amounts of such payments or the identity of any Collaboration Target or compound). In the event Tranzyme desires to issue a press release or other
public statement disclosing such information, Tranzyme shall provide BMS with a copy of the proposed press release or public statement (the "Release").
BMS shall have fifteen (15) days to provide any comments on such Release, and if BMS fails to provide any comments during such 15-day period, BMS shall be deemed to have consented
to the issuance of such Release. If BMS provides any comments, the Parties shall consult on such Release and work in good faith to prepare a mutually acceptable Release. Tranzyme or BMS may
subsequently publicly disclose any information previously contained in any approved release. 

43

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        10.4    Relationship to the Confidentiality Agreement.    This Agreement supersedes that certain Mutual Confidential
Disclosure Agreement between the Parties dated July 24, 2009 (the "Confidentiality Agreement"); provided
that all "Confidential Information" disclosed or received by the Parties thereunder shall be deemed "Confidential Information" hereunder and shall be subject to the terms and
conditions of this Agreement. 

11.   Warranties; Limitations of Liability; Indemnification.  

        11.1    Representations, Warranties and Covenants.    

        (a)   Each
Party hereby represents, warrants and covenants (as applicable) to the other Party as of the Effective Date that: (i) it has the legal right and power to
enter into this Agreement, to extend the rights and licenses granted or to be granted to the other in this Agreement, and to fully perform its obligations hereunder, (ii) its execution,
delivery and performance of this Agreement shall not conflict in
any material fashion with the terms of any other agreement or instrument to which it is or becomes a party or by which it is or becomes bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having authority over it, and (iii) in the course of the Development of Licensed Products, such Party has not used prior to the Effective
Date and shall not use, during the Term, any employee, agent or independent contractor who has been debarred by any Regulatory Authority, or, to the best of such Party's knowledge, is the subject of
debarment proceedings by a Regulatory Authority. 

        (b)   Tranzyme
(i) represents and warrants to BMS as of the Effective Date that it has not granted as of the Effective Date, and covenants that it shall not grant after
the Effective Date and during the Term, any right, license or interest in or to, or an option to acquire any of the foregoing with respect to, the Patents and Know-How licensed to BMS
hereunder that would be in conflict with the rights or licenses granted to BMS under this Agreement; (ii) covenants that any assignment or other transfer of any Tranzyme Core Technology,
Tranzyme Patent or Tranzyme Know-How licensed to BMS hereunder shall not prevent BMS from exercising in any material respect the licenses granted to BMS hereunder, and
(iii) represents as of the Effective Date that Tranzyme is not aware that the practice of any Tranzyme Core Technology as contemplated in the Research Plan as attached hereto would infringe or
misappropriate the intellectual property rights of any Third Party. 

44

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        11.2    Disclaimers.    Without limiting the respective rights and obligations of the Parties expressly set forth
herein, Tranzyme specifically disclaims any guarantee that the Research Program shall be successful, in whole or in part. The failure of the Parties to successfully identify a Collaboration Lead or a
Licensed Product shall not, of itself, constitute a breach of any representation or warranty under this Agreement. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY TRANZYME CORE TECHNOLOGY, TRANZYME PATENTS, TRANZYME KNOW-HOW, BMS TECHNOLOGY,
COLLABORATION COMPOUND, COLLABORATION TARGETS, COLLABORATION HITS, COLLABORATION LEAD, MATERIALS, LICENSED PRODUCTS OR RESEARCH PROGRAM KNOW-HOW, INCLUDING WARRANTIES OF VALIDITY OR
ENFORCEABILITY OF ANY PATENT RIGHTS, TITLE, QUALITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, PERFORMANCE, AND NONINFRINGEMENT OF ANY THIRD PARTY PATENTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS. 

        11.3    No Consequential Damages.    EXCEPT FOR AMOUNTS PAYABLE TO THIRD PARTIES BY A PARTY FOR WHICH IT SEEKS
REIMBURSEMENT OR INDEMNIFICATION PROTECTION FROM THE OTHER PARTY PURSUANT TO SECTION 11.5, AND EXCEPT FOR BREACH OF  SECTION 2.4(c)(ii) or
ARTICLE 10, NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR ANY THIRD PARTY
WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT FOR ANY INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF SUCH PARTY HAS BEEN INFORMED OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH
DAMAGES. 

        11.4    Performance by Others.    The Parties recognize that each Party may perform some or all of its obligations
under this Agreement through Affiliates and permitted subcontractors provided, however, that each Party shall remain responsible and liable for the performance by its Affiliates and permitted
subcontractors and shall cause its Affiliates and permitted subcontractors to comply with the provisions of this Agreement in connection therewith. 

45

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        11.5    Indemnification.    

        (a)    Indemnification by BMS.    BMS shall indemnify Tranzyme, its Affiliates and their respective directors,
officers, employees, Third Party licensors and agents, and their respective successors, heirs and assigns (collectively, "Tranzyme Indemnitees"), and
defend and save each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys' fees and expenses) (collectively,
"Losses") in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, "Third Party
Claims") arising from or occurring as a result of: (i) the material breach by BMS of any term of this Agreement; (ii) any gross negligence or willful misconduct
on the part of BMS in performing its obligations under this Agreement; (iii) any and all Third Party Claims relating to any alleged infringement or misappropriation of Patents or other
intellectual property rights in connection with the Development or Commercialization of Licensed Products; or (iv) the Development or Commercialization by BMS or any of its Affiliates or
Sublicensees of the Collaboration Lead, or the Licensed Products, including any such Third Party Claims relating to any alleged infringement or misappropriation of Patents or other intellectual
property rights or relating to death or bodily injury, except in each case for those Losses as to which Tranzyme has an obligation to indemnify BMS pursuant to  Section 11.5(b), as to which Losses
each Party shall indemnify the other to the extent of their respective liability;  provided however, that BMS shall not be obligated to indemnify any Tranzyme Indemnitees for any Losses to the extent
that such Losses arise as a result
of the gross negligence or willful misconduct on the part of a Tranzyme Indemnitee. 

        (b)    Indemnification by Tranzyme.    Tranzyme shall indemnify BMS, its Affiliates and Sublicensees and their
respective directors, officers, employees and agents, and their respective successors, heirs and assigns (collectively, "BMS Indemnitees"), and defend
and save each of them harmless, from and against any
and all Losses in connection with any and all Third Party Claims arising from or occurring as a result of: (i) the material breach by Tranzyme of any term of this Agreement; (ii) any
gross negligence or willful misconduct on the part of Tranzyme in performing its obligations under this Agreement; or (iii) any such Third Party Claims relating to any alleged infringement or
misappropriation of Patents or other intellectual property rights by Tranzyme in conducting its activities under the Research Program based on use of the Tranzyme Core Technology (but not with respect
to any Collaboration Targets, Collaboration Hits or Collaboration Lead), except in each case for those Losses as to which BMS has an obligation to indemnify Tranzyme pursuant to  Section 11.5(b), as
to which Losses each Party shall indemnify the other to the extent of their respective liability;  provided however, that Tranzyme shall not be obligated to indemnify any BMS Indemnitees for any Losses
to the extent that such Losses arise as a result
of the gross negligence or willful misconduct on the part of a BMS Indemnitee. 

        (c)    Notice of Claim.    All indemnification claims provided for in  Section 11.5(a) and 11.5(b)
 shall be made solely by such Party to this Agreement (the
"Indemnified Party"). The Indemnified Party shall promptly notify the indemnifying Party (an "Indemnification Claim
Notice") of any Losses or the discovery of any fact upon which the Indemnified Party intends to base a request for indemnification under  Section 11.5(a) or 11.5(b), but in no event shall the indemnifying Party be liable for any Losses
that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and
amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and
Third Party Claims. 

46

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (d)    Defense, Settlement, Cooperation and Expenses.    

          (i)  Control of Defense.    At its option, the indemnifying Party may assume the defense of any Third Party Claim
by giving written notice to the Indemnified Party within thirty (30) days after the indemnifying Party's receipt of an Indemnification Claim Notice. The assumption of the defense of a Third
Party Claim by the indemnifying Party shall not be construed as an acknowledgment that the indemnifying Party is liable to indemnify the Indemnified Party in respect of the Third Party Claim, nor
shall it constitute a waiver by the indemnifying Party of any defenses it may assert against the Indemnified Party's claim for indemnification. Upon assuming the defense of a Third Party Claim, the
indemnifying
Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the indemnifying Party (the indemnifying Party shall consult with the Indemnified Party with
respect to a possible conflict of interest of such counsel retained by the indemnifying Party). In the event the indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party
shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim. In the event
that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Third Party Claim, the Indemnified Party
shall reimburse the indemnifying Party for any and all costs and expenses (including attorneys' fees and costs of suit) and any Third Party Claims incurred by the indemnifying Party in its defense of
the Third Party Claim. 

         (ii)  Right to Participate in Defense.    Without limiting  Section 11.5(d)(i), any Indemnified Party shall be entitled to participate in, but not
control, the defense of such Third Party Claim and to
employ counsel of its choice for such purpose; provided, however, that such participation shall be at the Indemnified Party's own cost and expense. 

        (iii)  Settlement.    With respect to any Third Party Claims relating solely to the payment of money damages in
connection with a Third Party Claim and that shall not result in the Indemnified Party's becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified
Party in any manner, and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the indemnifying Party shall have the sole
right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate.
With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defense of the Third Party Claim in accordance with  Section 11.5(d)(i), the
indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld). The indemnifying Party shall not be liable for any
settlement or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the indemnifying Party. Regardless of whether the indemnifying Party chooses to defend
or prosecute any Third Party Claim, no Indemnified Party shall admit any liability with respect to or settle, compromise or discharge, any Third Party Claim without the prior written consent of the
indemnifying Party, such consent not to be unreasonably withheld. 

47

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (iv)  Cooperation.    Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party
Claim, the Indemnified Party shall, and shall cause each other Indemnified Party to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide
such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during
normal business hours afforded to indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and
making Indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the
indemnifying Party shall reimburse the Indemnified Party for all its reasonable out-of-pocket costs and expenses in connection therewith. 

         (v)  Costs and Expenses.    Except as provided above in this  Section 11.5(d), the costs and expenses, including attorneys' fees and expenses,
incurred by the Indemnified Party in connection with any claim
shall be reimbursed on a calendar quarter basis by the indemnifying Party, without prejudice to the indemnifying Party's right to contest the Indemnified Party's right to indemnification and subject
to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party. 

        11.6    Insurance.    Each Party shall maintain at its sole cost and expense, an adequate liability insurance or
self-insurance program (including product liability insurance) to protect against potential liabilities and risk arising out of activities to be performed under this Agreement and any
agreement related hereto and upon such terms (including coverages, deductible limits and self-insured retentions) which are consistent with normal business practices of prudent companies
similarly situated to such Party for the activities to be conducted by such Party under this Agreement. Subject to the preceding sentence, such liability insurance or self-insurance
program shall insure against all types of liability, including personal injury, physical injury or property damage arising out of the manufacture, sale, use, distribution or marketing of a Licensed
Product. The coverage limits set forth herein shall not create any limitation on a Party's liability to the other under this Agreement. 

12.   Term and Termination.

        12.1    Term.    This Agreement shall commence as of the Effective Date and, unless sooner terminated in accordance
with the terms hereof or by mutual written consent, shall continue on a Licensed Product-by-Licensed Product and country-by-country basis, until there
are no more payments owed Tranzyme on such Licensed Product in such country (the longest such period of time for any Licensed Products hereunder, the
"Term"). Upon there being no more such payments hereunder for any such Licensed Product in such country, the licenses contained in  Section 5.2 for
Tranzyme Know-How, as applicable, shall become non-exclusive, fully paid up with respect to such Licensed
Product in such country. 

        12.2    Termination by Tranzyme.    In the event of any material breach by BMS of any terms and conditions of this
Agreement (including Section 4.2), Tranzyme shall have the right to terminate this Agreement with respect to the (i) Licensed Product
(where applicable) or (ii) the Collaboration Target, and all Collaboration Hits and Collaboration Leads for such Collaboration Target (where no Licensed Product exists), to which such material
breach primarily relates; provided that Tranzyme provides notice of such breach to BMS specifying the nature of the alleged breach and such breach has
not been cured within ninety (90) days after such notice thereof, provided, however, that to the extent such material breach involves the failure
to make a payment when due, such breach must be cured within thirty (30) days after written notice thereof is given by Tranzyme to BMS. 

48

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        12.3    Termination by BMS.    

        (a)    Breach.    BMS shall have the right to terminate this Agreement on a Licensed
Product-by-Licensed Product or Collaboration Target-by-Collaboration Target basis upon delivery of written notice to Tranzyme in the event of any
material breach by Tranzyme of any terms and conditions of this Agreement, provided that BMS provides notice of such breach to Tranzyme specifying the
nature of the alleged breach and such breach has not been cured within ninety (90) days after such notice thereof. 

        (b)    Breach of Exhibit 2.1(c).    At any time prior to September 30, 2010, BMS shall have the right to
terminate this Agreement in its entirety effective upon delivery of written notice (specifying the nature of the alleged breach) to Tranzyme in the event of any material breach by Tranzyme of any
obligation set forth on Exhibit 2.1(c). BMS shall provide notice to Tranzyme no later than July 30, 2010 if BMS intends to exercise its
rights under this Section 12.3(b), and the Parties shall discuss in good faith the ability for Tranzyme to cure such breach. In the event of a
good faith dispute as to whether Tranzyme is in material breach of any obligation set forth on Exhibit 2.1(c), the Parties shall refer the matter
for expedited dispute resolution pursuant to Section 13.1; provided that the time periods for
dispute resolution shall be reduced by fifty percent (50%), and the effective date of such termination under this Section 12.3(b) shall be tolled pending the resolution of the dispute. 

        (c)    Termination by BMS without cause.    If BMS determines that it will not pursue the Development or
Commercialization of one or more Licensed Products (or Collaboration Targets), then BMS may terminate this Agreement on a Licensed Product-by-Licensed Product (or Collaboration
Target-by-Collaboration Target) basis upon ninety (90) days' prior written notice to Tranzyme, provided no such termination shall become effective before the end of the
Research Program Term and/or the payment in full of the amounts owed by BMS to Tranzyme under Section 6.2. 

        12.4    Rights in Bankruptcy.    

        (a)   Either
Party may, but is not required to, terminate this Agreement if, at any time, the other Party shall file in any court or agency pursuant to any statute or
regulation of any state, country or jurisdiction, 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 shall be served with an involuntary petition against it, filed in any
insolvency proceeding (other than as may be initiated by the other Party), and such petition shall not be dismissed within sixty (60) days after the filing thereof, or if the other Party shall
propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of its creditors. 

49

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (b)   All
rights and licenses granted under or pursuant to this Agreement by one Party to the other are, for all purposes of Section 365(n) of Title 11 of the United
States Code ("Title 11"), licenses of rights to "intellectual property" as defined in Title 11, and, in the event that a case under Title 11 is
commenced by or against either Party (the "Bankrupt Party"), the other Party shall have all of the rights set forth in Section 365(n) of Title 11
to the maximum extent permitted thereby. During the Term, each Party shall create and maintain current copies to the extent practicable of all such intellectual property. Without limiting the Parties
rights under Section 365(n) of Title 11, if a case under Title 11 is commenced by or against the Bankrupt Party, the other Party shall be entitled to a copy of any and all such intellectual
property and all embodiments of such intellectual property, and the same, if not in the possession of such other Party, shall be promptly delivered to it (a) before this Agreement is rejected
by or on behalf of the Bankrupt Party, within thirty (30) days after the other Party's written
request, unless the Bankrupt Party, or its trustee or receiver, elects within thirty (30) days to continue to perform all of its obligations under this Agreement, or (b) after any
rejection of this Agreement by or on behalf of the Bankrupt Party, if not previously delivered as provided under clause (a) above. All rights of the Parties under this  Section 12.4(b) and
under Section 365(n) of Title 11 are in addition to and not in substitution of any and all other rights, powers, and
remedies that each Party may have under this Agreement, Title 11, and any other Applicable Law. 

          (i)  The
Parties agree that they intend the foregoing non-Bankrupt Party rights to extend to the maximum extent permitted by law and any provisions of applicable
contracts with Third Parties, including for purposes of Title 11, (i) the right of access to any intellectual property (including all embodiments thereof to the extent protected by
non-bankruptcy law) of the Bankrupt Party or any Third Party with whom the Bankrupt Party contracts to perform an obligation of the Bankrupt Party under this Agreement, and, in the case of
the Third Party, which is necessary for the Development and Commercialization of Licensed Products and (ii) the right to contract directly with any Third Party described in (i) in this
sentence to complete the contracted work. 

         (ii)  Any
intellectual property provided pursuant to the provisions of this Section 12.4(b) shall be subject to the
licenses set forth elsewhere in this Agreement and the payment obligations of this Agreement, which shall be deemed to be royalties for purposes of Title 11. 

        (iii)  In
the event that Tranzyme enters into a license agreement with a Third Party with respect to any material intellectual property that will be sublicensed to BMS
hereunder, Tranzyme will use commercially reasonable efforts to pass through the rights under such agreements to BMS in the event that Tranzyme becomes a Bankrupt Party. 

        (iv)  Notwithstanding
anything to the contrary in Article 8, in the event that Tranzyme is the Bankrupt Party and
unable to take action regarding the Subject Patents, BMS may take appropriate actions in connection with the Prosecution and Maintenance and enforcement or defense of any Subject Patent without being
required to consult with Tranzyme before taking any such actions, provided that such actions are consistent with this Agreement. 

        12.5    Effects of Termination.    

        (a)    Generally.    Upon termination by either Party under  Sections 12.2, 12.3
or 12.4 either in its
entirety or with respect to one or more Collaboration Targets or Licensed Products pursuant to the applicable Section (all such terminated Collaboration Targets and Licensed Products, the
"Terminated Rights") (i) all Collaboration Compounds, Collaboration Leads and Licensed Products for such Collaboration Target shall be within the
Terminated Rights upon termination of this Agreement for such Collaboration Target and subject to the remainder of this Section 12.5 and
(ii) the rights and obligations of the Parties as to the remaining Collaboration Targets and, applicable Licensed Products in which termination under the applicable Section has not yet
occurred, shall be unaffected by such termination. 

50

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (b)   All
rights and licenses granted by Tranzyme to BMS in Article 5 shall terminate with respect to the Terminated
Rights (other than Section 5.4). BMS and its Affiliates and Sublicensees shall cease all Development and Commercialization of any Collaboration
Compounds active against such Collaboration Target and any Collaboration Leads, and Licensed Products within the Terminated Rights (collectively, "Terminated
Compounds"). Section 2.3(a) shall terminate with respect to any Collaboration Target or Collaboration Lead, respectively,
within the Terminated Rights. 

        (c)   BMS
agrees to assign those Subject Patents Covering the Terminated Compounds back to Tranzyme with respect to the Terminated Rights. 

        (d)   Upon
request of Tranzyme, BMS would agree to negotiate in good faith to grant a license (and would not unreasonably withhold such grant) under any Know-How
or Patents Controlled by BMS, data and regulatory filings to allow Tranzyme to continue the development and commercialization of such Terminated Compound on commercially reasonable terms. In the event
that the Parties fail to agree on the terms of a definitive license where reasonably requested by Tranzyme (and such matter is not resolved under the terms of  Article 12), then BMS shall not, alone
or in collaboration with any of its Affiliates or any Third Party (including the grant of any license or
right), Develop or commercialize any Terminated Compounds. BMS shall have the right to refuse to grant any licenses in the event that BMS permanently discontinues the Development or Commercialization
of any Licensed Product (and any related Collaboration Compound) upon a determination in good faith by BMS that the continued Development or Commercialization of such Licensed Product is unsafe or
unethical to continue consistent with prudent and ethical scientific practices. 

        (e)   In
the event of any termination of this Agreement by BMS pursuant to Section 12.3(b), then, as its sole and
exclusive remedy, the following shall apply: 

          (i)  BMS
shall have the right to receive any updates and structures, existing as of the effective date of such termination, to the
HITCREATETM Library previously provided to BMS pursuant to  Section 2.2(e) and the lesser of fifty percent (50%) of Tranzyme's supply or 1mg (but
in no event less than 100ug) of all
HITCREATETM Library compounds. 

         (ii)  BMS
shall have the right to use the HITCREATETM Library on a non-exclusive basis (without the
right to transfer to any Third Party) for the screening of compounds against any target (other than targets know as ghrelin or motilin) and BMS shall have a royalty-free
non-exclusive license under any Tranzyme Patent existing as of the date of such termination that is necessary to use the
HITCREATETM Library in accordance with the terms of this subsection (ii). 

        (iii)  BMS
shall have no financial obligations to Tranzyme for its use of the HITCREATETM Library other than
amounts payable under this Agreement prior to the date of such transfer and as provided in subsection (iv) below with respect to NPY2. 

        (iv)  In
the event that, as of the effective date of termination, a Collaboration Compound exists that satisfies the JSC-approved criteria to be an Optimized
Collaboration Hit for the NPY2 target, then the milestone and royalty obligations in Article 6 shall survive with respect to any Collaboration
Compound targeting NPY2, provided that the foregoing payment amounts shall be reduced by fifty percent (50%) for any Collaboration Lead or Licensed
Product incorporating or based upon any Collaboration Compound targeting NPY2; and further provided, BMS will not be obligated to pay the first Milestone Payment under  Section 6.3(a) for the
Milestone Event listed as "Selection of an ECN by BMS." 

         (v)  In
addition to the terms of Section 12.7, the following provisions shall survive any termination under Section 12.3(b) solely as they apply to the NPY2
target (as described in subsection (iv) above): Sections 5.6, and 6.3-6.5. 

51

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        12.6    Technology Transfer Rights Upon Certain other Material Breaches.    

        (a)    Material Breach of the Research Plan.    In the event that Tranzyme materially breaches (and does not cure such
breach within a ninety (90) day period from notice thereof), and BMS has not opted to terminate this Agreement under Section 12.3(a), then
BMS shall have the right to request a transfer within thirty (30) days following the expiration of the applicable cure period of the Tranzyme Research Materials (defined below) for one or all,
at BMS' sole election, Collaboration Targets (for which a Collaboration Lead has not been identified) then subject to the terms of this Agreement. Following such transfer, BMS will have the right to
use (without the right to transfer to any Third Party) such Tranzyme Research Materials solely for performing the activities otherwise to have been performed under  Section 2.2(h) for which a
Collaboration Lead has not been identified or the phenotypic screens in  Section 2.2(f) and for no other purpose. For purpose of this Section 12.6,

"Tranzyme Research Materials" means the HITCREATETM Library and a copy of Tranzyme's
solid-phase chemistry procedures in each case Controlled by Tranzyme. In addition to the foregoing, the milestone and royalty obligations in  Article 6 shall be reduced by fifty percent (50%) for
each Collaboration Target where at least one (1) Collaboration Lead did not exist as
of the date of such technology transfer. For clarity, the milestone and royalty obligations in Article 6 shall not be reduced for any
Collaboration Targets where a Collaboration Lead has previously been identified. 

        (b)    Material Breach Following a Change of Control of Tranzyme.    Upon any Change of Control of Tranzyme, Tranzyme
shall take reasonable steps to limit data access and sharing between Tranzyme personnel working on the Research Program or having access to data from the Research Program or any BMS Confidential
Information and Tranzyme personnel working on other research programs. In the event that Tranzyme (or its Affiliate) materially breaches the foregoing obligation (and does not cure such breach within
a thirty (30) day period from notice thereof), then BMS will have the option to trigger a technology transfer subject to the terms described above in Section 12.6(a). 

        (c)    General Restrictions.    BMS's rights under this  Section 12.6 to use the HITCREATETM Library shall be limited solely to the rights
licensed hereunder and to the performance of such activities that are expressly permitted by this Agreement. The Parties agree that BMS's election under this  Section 12.6, shall on a Collaboration
Target-by-Collaboration Target basis terminate BMS's obligation to pay Tranzyme
for any costs to be incurred by Tranzyme (including FTE costs and Research Program support pursuant to Section 6.2) for such terminated
Collaboration Target following the date that BMS triggers such technology transfer. Except as expressly limited by the terms of this  Section 12.6, the terms and conditions of this Agreement shall
continue to remain in force and effect. 

        12.7    Survival.    In addition to the termination consequences set forth in  Section 12.5, the following provisions shall
survive termination or expiration of this Agreement, as well as any other provision which by its
terms or by the context thereof (including applicable definitions and accrued rights and licenses vested in a Party under Sections 2.2(f) and  2.2(g)),
is intended to survive such termination: Articles 7,  10 and 13, as well as Sections 2.4,  5.4, 5.6, 6.5,  11.2-11.6, and 12.5-12.7. Termination or expiration of this Agreement shall not
relieve the Parties of any rights, liability or obligation which accrued hereunder prior to the effective date of such termination or expiration nor preclude either Party from pursuing all rights and
remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement nor prejudice either
Party's right to obtain performance of any obligation. All other rights and obligations shall terminate upon expiration of this Agreement. 

52

 

 
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

13.   General Provisions.  

        13.1    Dispute Resolution.    

        (a)    Disputes.    Disputes arising under or in connection with this Agreement shall be resolved pursuant to this  Section 13.1; provided, however, that in the event a dispute cannot be resolved without an adjudication of the rights or obligations of a Third
Party (other than any Tranzyme Indemnitees or BMS Indemnitees identified in Section 11.5), the dispute procedures set forth  Section 13.1(c) shall
be inapplicable as to such dispute. 

        (b)    Dispute Escalation.    In the event of a dispute between the Parties, the Parties shall first attempt in good
faith to resolve such dispute by negotiation and consultation between themselves or the Alliance Managers. In the event that such dispute is not resolved on an informal basis within twenty
(20) days, any Party may, by written notice to the other, have such dispute referred to the Chief Executive Officer of Tranzyme and the Senior Vice President of Discovery Chemistry of BMS or,
in either case, his or her designee (who shall be a direct report to such executive), who shall attempt in good faith to resolve
such dispute by negotiation and consultation for a thirty (30) day period following receipt of such written notice. 

        (c)    Arbitration.    In the event the Parties are not able to resolve such dispute by the escalation process set
forth in Section 13.1(b), then for all disputes, either Party may at any time after such periods referenced in  Section 13.1(b) submit such
dispute to be finally settled by arbitration administered in accordance with the rules of Judicial Administration and
Arbitration Services ("JAMS") in effect at the time of submission, as modified by this Section 13.1. The arbitration shall be heard and
determined by three (3) arbitrators who are retired judges or attorneys with at least ten (10) years of experience in the pharmaceutical and biotechnology industry. Each Party shall
appoint one arbitrator and the third arbitrator shall be selected by the two Party-appointed arbitrators, or, failing agreement within thirty (30) days following the date of receipt by the
respondent of the claim, by JAMS. Such arbitration shall take place in New York, NY, USA. The arbitration award so given shall be a final and binding determination of the dispute, shall be fully
enforceable in any court of competent jurisdiction, and shall not include any damages expressly prohibited by Section 11.3. Fees, costs and
expenses of arbitration are to be divided by the Parties in the following manner: BMS shall pay for the arbitrator it chooses, Tranzyme shall pay for the arbitrator it chooses, and the Parties shall
share payment for the third arbitrator. Except in a proceeding to enforce the results of the arbitration or as otherwise required by law, neither Party nor any arbitrator may disclose the existence,
content or results of any arbitration hereunder without the prior written agreement of both Parties or as required by law (and only to the extent that the disclosing Party is advised by its counsel in
writing that it is required to disclose). The arbitrator shall have the discretion to award to the prevailing Party all out-of-pocket fees, costs and expenses (including those
of attorneys, professionals and accountants and all those arising from appeals and investigations) incurred by the prevailing Party in connection with such arbitration or suit. The Parties shall
instruct that any disputes regarding a breach by Tranzyme of its obligations under Exhibit 2.1(c) be resolved in an expedited manner within sixty
(60) days of such dispute being referred to the arbitrator for resolution. 

53

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        (d)    Injunctive Relief.    Notwithstanding the dispute resolution procedures set forth in this  Section 13.1, in the event of
an actual or threatened breach hereunder, the aggrieved Party may seek equitable relief (including restraining
orders, specific performance or other injunctive relief) in any court or other forum, without first submitting to any dispute resolution procedures hereunder. 

        (e)    Tolling.    The Parties agree that all applicable statutes of limitation and time-based defenses
(such as estoppel and laches) shall be tolled while the dispute resolution procedures set forth in this Section 13.1 are pending, and the Parties
shall cooperate in taking all actions reasonably necessary to achieve such a result. 

        13.2    Cumulative Remedies and Irreparable Harm.    All rights and remedies of the Parties hereunder shall be
cumulative and in addition to all other rights and remedies provided hereunder or available by agreement, at law or otherwise. Each Party acknowledges and agrees that breach of any of the terms or
conditions of Section 2.4(c)(ii) or Article 10 of this Agreement would cause irreparable
harm and damage to the other and that such damage may not be ascertainable in money damages and that as a result thereof the non breaching Party would be entitled to seek from a court equitable or
injunctive relief restraining any breach or future violation of the terms contained herein by the breaching Party without the necessity of proving actual damages or posting bond. Such right to
equitable relief is in addition to whatever remedies either Party may be entitled to as a matter of law or equity, including money damages. 

        13.3    Change of Control    

        (a)    Consequences of Change of Control.    In the event of any Change in Control of a Party (whether by the
acquisition of a Party or by a Third Party) (in each case such Third Party, hereinafter referred to as an "Acquiror"), then the intellectual property of
such Acquiror held or developed by such Acquiror prior to or after such acquisition (other than intellectual property developed by such Acquiror in the course of conducting the acquired Party's
activities under this Agreement) shall be excluded from the Tranzyme Core Technology, Tranzyme Patents, Tranzyme Know-How or BMS Technology, as applicable, and such Acquiror (and
Affiliates of such Acquiror which are not controlled by (as defined under the Affiliate definition in Article 1) the acquired Party itself) shall
be excluded from the Affiliate definition solely for purposes of the applicable components of the Tranzyme Core Technology, Subject Patent, Tranzyme Patents, Tranzyme Know-How or the BMS
Technology. For clarity, any intellectual property developed by the Acquiror in the course of conducting the acquired Party's activities under this Agreement shall be included within Tranzyme Core
Technology, Subject Patents, Tranzyme Patents, Tranzyme Know-How and BMS Technology to the extent such intellectual property would have been so included had it been developed by the
acquired Party. In addition, at BMS's election within sixty (60) days following a Change of Control of Tranzyme, Tranzyme's participation in the JSC shall cease and BMS will have an obligation
to provide updates to Tranzyme on an annual basis regarding the Development of Collaboration Leads in accordance with Section 4.3. 

        13.4    Relationship of Parties.    Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all,
specifically provided therein. There are no express or implied Third Party beneficiaries hereunder (except for Tranzyme Indemnitees and BMS Indemnitees for purposes of  Section 11.5). 

54

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        13.5    Compliance with Laws.    Each Party shall perform or cause to be performed any and all of its obligations or
the exercise of any and all of its rights hereunder in good scientific manner and in compliance with all Applicable Law. 

        13.6    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, USA without respect to its conflict of laws rules, provided that any dispute relating to the scope, validity, enforceability or
infringement of any Patents or Know-How shall be governed by, and construed and enforced in accordance with, the substantive laws of the jurisdiction in which such Patents or
Know-How apply. 

        13.7    Counterparts; Facsimiles.    This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, and all of which together shall be deemed to be one and the same instrument. Facsimile or PDF execution and delivery of this Agreement by either Party shall constitute a legal,
valid and binding execution and delivery of this Agreement by such Party 

        13.8    Headings.    All headings in this Agreement are for convenience only and shall not affect the meaning of any
provision hereof. 

        13.9    Waiver of Rule of Construction.    Each Party has had the opportunity to consult with counsel in connection
with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting party shall not apply. 

        13.10    Interpretation.    Whenever any provision of this Agreement uses the term "including" (or "includes"), such
term shall be deemed to mean "including without limitation" (or "includes without limitations"). "Herein," "hereby," "hereunder," "hereof" and other equivalent words refer to this Agreement as an
entirety and not solely to the particular portion of this Agreement in which any such word is used. All definitions set forth herein shall be deemed applicable whether the words defined are used
herein in
the singular or the plural. Unless otherwise provided, all references to Articles, Sections and Exhibits in this Agreement are to Articles, Sections and Exhibits of this Agreement. References to any
Sections include Sections and subsections that are part of the related Section (e.g., a section numbered
"Section 2.2(a)" would be part of "Article 2", and references to
"Section 2.2(a)" would also refer to material contained in the subsection described as
"Section 2.2(h)(i)"). 

        13.11    Binding Effect.    This Agreement shall inure to the benefit of and be binding upon the Parties, their
Affiliates, and their respective lawful successors and assigns. 

        13.12    Assignment.    This Agreement may not be assigned by either Party, nor may either Party delegate its
obligations or otherwise transfer licenses or other rights created by this Agreement, except as expressly permitted hereunder or otherwise without the prior written consent of the other Party, which
consent shall not be unreasonably withheld; provided that (i) BMS may assign this Agreement in full to an Affiliate or to its successor in
connection with the merger, consolidation, or sale of all or substantially all of its assets pertaining to the therapeutic fields that primarily relate to the subject matter of this Agreement, and
(ii) Tranzyme may assign this Agreement in full to an Affiliate or to its successor in connection with the merger, consolidation, sale of substantially all of its outstanding capital stock, or
sale of all or substantially all of its assets or that portion of its business in the Field pertaining to the subject matter of this Agreement. Any permitted successor or assignee of rights and/or
obligations hereunder shall, in a writing to the other Party, expressly assume performance of such rights and/or obligations (and in any event, any Party assigning this Agreement to an Affiliate shall
remain bound by the terms and conditions hereof). Any assignment or attempted assignment by either Party in violation of the terms of this  Section 13.12 shall be null, void and of no legal effect.
Any permitted assignment shall be binding on the successors of the assigning Party. 

55

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        13.13    Notices.    All notices, requests, demands and other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers: 

 

 

			
	If to Tranzyme:	 	Tranzyme, Inc.

4819 Emperor Blvd. Suite 400

Durham, NC 27703

Attention:    [***]

Chief Financial Officer

Facsimile:    [***]
	
 With a copy to:	
 	
Cooley Godward Kronish LLP

One Freedom Square, Reston Town Center

11951 Freedom Drive

Reston, VA 20190-5656

Attention:    [***]

Facsimile:    [***]
	
 If to BMS:	
 	
Bristol-Myers Squibb Company

Route 206 & Province Line Road

Princeton, NJ 08543-4000 USA

Attention:    [***]

                     [***]

Facsimile:    [***]
	
 With a copy to:	
 	
Bristol-Myers Squibb Company

Route 206 & Province Line Road

Princeton, NJ 08543-4000 USA

Attention:    [***]

Facsimile:    [***]
	

Invoices from Tranzyme should be sent to:
	

 	
 	
Bristol-Myers Squibb Company

Route 206 & Province Line Road

Princeton, NJ 08543-4000 USA

Attention:    [***]

Facsimile:    [***]
	
 With a copy to:	
 	
Bristol-Myers Squibb Company

Route 206 & Province Line Road

Princeton, NJ 08543-4000 USA

Attention:    [***]

Facsimile:    [***]

 

 Either
Party may change its designated address and facsimile number by notice to the other Party in the manner provided in this Section 13.13. 

56

 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        13.14    Amendment and Waiver.    This Agreement may be amended, supplemented, or otherwise modified only by means of
a written instrument signed by both Parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar. 

        13.15    Severability.    In the event that any provision of this Agreement shall, for any reason, be held to be
invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and the Parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent. 

        13.16    Entire Agreement.    This Agreement is the sole agreement with respect to the subject matter and supersedes
all other agreements and understandings between the Parties with respect to same. 

        13.17    Force Majeure.    Neither BMS nor Tranzyme shall be liable for failure of or delay in performing obligations
set forth in this Agreement (other than any obligation to pay monies when due), and neither shall be deemed in breach of such obligations, if such failure or delay is due to force majeure (defined
below); provided that the Party affected shall promptly notify the other of the force majeure condition and shall exert reasonable efforts to eliminate,
cure or overcome any such causes and to resume performance of its obligations as soon as possible. For purposes of this Agreement, "force majeure" shall include conditions beyond the control of the
Parties, including an act of God, acts of terrorism, voluntary or involuntary compliance with any regulation, law or order of any government,
war, civil commotion, epidemic, failure or default of public utilities or common carriers, destruction of production facilities or materials by fire, earthquake, storm or like catastrophe. 

[Remainder of this Page Intentionally Left Blank] 

[Signature Page Follows]

57

  
PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

        IN
WITNESS WHEREOF, the Parties have caused this Strategic Collaboration Agreement to be executed by their respective duly authorized officers as of the Effective Date. 

 

 

					
	  TRANZYME, INC.
	 	 
	 By:
	 	 /s/ Vipin K. Garg

  (Signature)	 	 
	 Name:
	 	 Vipin K. Garg

 	 	 
	 Title:
	 	 President & CEO

 	 	 
	 Date:
	 	 December 4, 2009

 	 	 
	  BRISTOL-MYERS SQUIBB COMPANY
	 	 
	 By:
	 	 /s/ Graham R. Brazier

  (Signature)	 	 
	 Name:
	 	 Graham R. Brazier

 	 	 
	 Title:
	 	 VP Strategic Transactions Group

 	 	 
	 Date:
	 	 December 4, 2009

 	 	 

 

 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  Exhibit 1.10
  Collaboration Targets    
    

        For each Collaboration Target, the JSC shall confirm the Hit Criteria applicable to such Collaboration Target prior to such
Collaboration Target entering the Hit Identification Stage. 

 Collaboration Targets:  

        [***] 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT; [***] DENOTES OMISSIONS. 

 
 

  Exhibit 2.1(b)
  Research Plan    
    

 Research Plan Overview  

        Tranzyme and BMS have agreed on the Collaboration Targets set forth on  Exhibit 1.10, which includes [***], for which Tranzyme has
identified preliminary hits. As the collaboration progresses,
the inclusion or removal of targets will be conducted by the Joint Steering Committee (JSC) and the Parties in accordance with the terms of the Agreement. After June 30, 2010, it is assumed
that the [***] FTEs allocated to the Research Plan activities will be arranged by Tranzyme in teams as appropriate to carry out the Hit Validation and
Hit-to-Lead stages described below. 

 HITCREATE Library  

        Tranzyme will ship the HITCREATE Library to BMS as described in the Agreement. The HITCREATETM Library consists initially of
approximately 21,200 macrocyclic compounds and is formatted in 96 well microtiter plates. The compounds are stored at -70?C and will be provided as a 5 mM stock in DMSO. The
purity of 10% of these compounds was analyzed and determined to be in the range of 60-95% with an average purity of >70% as determined on a plate basis. The compounds will be shipped to
BMS in Styrofoam boxes on dry ice. 

 Hit Identification  

        BMS will screen the HITCREATETM Library against Collaboration Targets. Target specific assays, provided by BMS, will also be
run at Tranzyme to confirm hits and to test compounds as they are synthesized. 

 Hit Validation  

        BMS will promptly report hits to Tranzyme. Tranzyme will confirm hits and perform a purity check on the hits. Tranzyme will reveal
structures of confirmed hits to BMS, and synthesize a hit validation library of approximately 150 compounds that will include both the original hits and new compounds for initial SAR assessment. These
compounds will be purified to at least 95% purity unless a lower level is deemed acceptable for a compound by the JSC. Tranzyme and BMS will both have the ability to screen new chemical entities
generated along the hit-to-ECN optimization path. Spot-checking of salient compounds will be performed by both parties. 

 Hit-to Lead  

        It is anticipated that the initial SAR library and subsequent iterations of SAR libraries produced using solid phase synthesis methods
will be constructed by Tranzyme. The BMS chemistry contribution at this point of the work flow will be to provide CADD, and to produce building blocks for library construction at the BMS/Biocon
Research Center (BBRC). Crystallization of target—hit complexes may be included in the work flow, with crystallization performed by BMS. In vitro ADME and liability profiling of compounds
will be performed at BMS as required. Tranzyme will scale up compounds as required for studies. As the work flow on a particular target transitions to the point where solution phase medicinal
chemistry is appropriate, then BMS will assume the additional responsibility of advancing the chemistry effort in collaboration with Tranzyme. 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 Lead Optimization  

        BMS will assume the primary role in the Lead Optimization Phase as specified in the Agreement. This will include solution phase
synthesis of Collaboration Lead compounds, as well as evaluation of pharmacology, toxicology, and ADME. 

 Governance and Reporting  

        The collaboration will be managed on a day-to-day basis via a weekly teleconference between Program Directors
and their associates at BMS and Tranzyme. Formal reporting of results and decision making will be performed at JSC meetings. 

 Phenotypic Screen  

        It is anticipated that BMS will conduct a phenotypic screen with the HITCREATETM library from Tranzyme within the first nine
(9) months of the Research Program Term. BMS will assume responsibility for following up the results of this screen (biological deconvolution). Tranzyme will enable BMS to support the chemistry
portion of this effort (e.g. tagging of hit compounds). The results of activities related to the phenotypic screen, along with future plans, will be governed by the terms of the Agreement. 

 Library Expansion  

        In parallel with the efforts in the research plan described above, Tranzyme and BMS will collaborate on the addition of up to 20,000
compounds to the HITCREATETM library. For the first six (6) months of the research agreement, BMS and Tranzyme will collaborate on the design of the library. During this period,
Tranzyme will also hire the requisite [***] chemists required to assemble the library, and equip its facilities as appropriate to support the effort. Progress in the synthesis
of the library will occur as follows: months 7 - 12, 2500 compounds; months 13 - 24, 10,000 additional compounds; months
25 - 30 (if BMS elects to extend the Research Program Term with proper notice as provided for in the Agreement), 7,500 additional compounds, for a total of 20,000 compounds.
The numbers and timelines above may be modified by the JSC based upon the design of the library. As they are produced, the new compounds will be made available to BMS on a quarterly basis or other
timing as agreed upon by the JSC for screening against Collaboration Targets. The results of activities related to the library expansion, along with future plans, will be presented via the governance
mechanisms described above. 

 Budget for external costs of Tranzyme to be agreed by the Parties.  

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  EXHIBIT 2.1(c)
  TRANZYME CAPABILITIES EXPANSION    
    

        [***] 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 
 

  EXHIBIT 2.2(e)
  HITCREATE LIBRARY DESCRIPTION    
    

        1.     The
HITCREATETM Library is a MATCHTM Based Drug Discovery Library consisting of 21,200 macrocycles available for screening as of the Effective Date
of the Agreement. 

        2.     The
HITCREATETM Library will be provided in a bar-coded standard 96 well format with 80 wells per plate occupied with compound. 

        3.     The
identity of each well has been confirmed by MS. 

        4.     Macrocycles
will be provided in an amount of 100ug per well on average, at a concentration of 5mM in a DMSO solvent. 

        5.     The
average purity of the macrocycles is 3 70% determined upon diagonal selection of 10% per plate, and confirmed by
LC-MS, ELSD and CLSD. 

        6.     The
HITCREATETM Library has been stored at -70°C 

        7.     Availability
of resupply from separate source. Tranzyme retains one copy of the entire library for re-supply purposes as needed. Additionally, recently
synthesized validation libraries have been retained, at least in part, as powders and/or solutions thereof. 

 

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

Exhibit 10.3(b)

Tranzyme Press Release

PRESS RELEASE  

 For Immediate Release—December 8, 2009  

 
    Tranzyme Pharma Enters Into Strategic Drug Discovery Collaboration with Bristol-Myers Squibb    
    

        RESEARCH TRIANGLE PARK, N.C. (December 8, 2009)—Tranzyme Pharma today announced that it has entered into a strategic
collaboration agreement with Bristol-Myers Squibb Company (NYSE: BMY) to discover, develop and commercialize novel macrocyclic compounds directed against targets of interest to Bristol-Myers Squibb. 

        The
collaboration will deploy Tranzyme's proprietary drug discovery technology, Macrocyclic Template Chemistry (MATCHTM), to identify and develop new drug candidates for
multiple targets in diverse therapeutic areas. 

        Under
the terms of the agreement, Tranzyme will be primarily responsible for early lead discovery, and Bristol-Myers Squibb will take primary responsibility for optimizing the identified
lead compounds. Bristol-Myers Squibb will be solely responsible for completing preclinical and clinical development of all products arising from the collaboration, and for their commercialization
globally. 

        Bristol-Myers
Squibb will provide an upfront payment of $10 million and an additional $3 to $6 million in research funding to Tranzyme for an initial two-year
term. Tranzyme will receive further funding if the agreement is extended beyond the initial term. In addition, Tranzyme is eligible to receive development and regulatory milestones and tiered
royalties for each product resulting from the collaboration. Total milestone payments under the agreement, excluding royalties, could reach up to approximately $80 million for each target
program. 

        The
goal of the collaboration is to explore the molecular chemistry space accessed by MATCHTM to discover novel bioactive macrocycles. These macrocycles represent a distinct
and underexplored compound class that displays favorable characteristics exhibited by large biomolecules, such as high potency and selectivity, while maintaining the benefits typically associated with
small molecule drugs, such as high oral availability and low cost of goods. 

        "We
are excited to be joining forces with Bristol-Myers Squibb; we believe they will be an ideal partner to exploit the versatility of our proprietary chemistry," said Vipin K. Garg,
PhD, Tranzyme's President and CEO. "In addition to Tranzyme's current focus on gastrointestinal and metabolic disease targets, MATCHTM has broad applicability in the treatment of other
diseases that involve hormones, peptides, ion channels or protein-protein interaction pathways." 

 About Tranzyme Pharma  

        Tranzyme Pharma is a late stage biopharmaceutical company developing novel small molecule macrocyclic drugs for both acute care
(hospital-based) and chronic indications with significant unmet medical need. The Company's pipeline is derived from its proprietary MATCHTM technology and targets two validated GPCR
drug targets, ghrelin and motilin. 

        For
more information on Tranzyme, please visit: www.tranzyme.com. 

PORTIONS
OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE SECRETARY OF THE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT;
[***] DENOTES OMISSIONS. 

 Contacts  

 

 

					
	Vipin K. Garg, PhD	 	Jennifer A. Filbey, PhD	 	Susan S. Josselyn
	
President and CEO	
 	
VP, Business Development	
 	
Corporate Communications Manager
	
(919) 313-4764	
 	
(256) 417-8568	
 	
(919) 313-4761
	
vgarg@tranzyme.com	
 	
jfilbey@tranzyme.com	
 	
sjosselyn@tranzyme.com

 

 

QuickLinks

Exhibit 10.2

STRATEGIC COLLABORATION AGREEMENT by and between TRANZYME, INC. and BRISTOL-MYERS SQUIBB COMPANY December 4, 2009

Table of Contents

List of Exhibits

STRATEGIC COLLABORATION AGREEMENT

Exhibit 1.10 Collaboration Targets

Exhibit 2.1(b) Research Plan

EXHIBIT 2.1(c) TRANZYME CAPABILITIES EXPANSION

EXHIBIT 2.2(e) HITCREATE LIBRARY DESCRIPTION

Tranzyme Pharma Enters Into Strategic Drug Discovery Collaboration with Bristol-Myers Squibb

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00181-of-00352.parquet"}]]