Document:

Exhibit 10.11

 

LICENSE AGREEMENT

 

by and between

 

IRONWOOD PHARMACEUTICALS, INC.

 

and

 

ASTELLAS PHARMA INC.

 

November 10, 2009

 

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

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  LICENSE GRANT

  	
  16

  
	
   

  	
  2.1.

  	
  License
  to Astellas

  	
  16

  
	
   

  	
  2.2.

  	
  License
  to Ironwood

  	
  17

  
	
   

  	
  2.3.

  	
  Joint
  Technology

  	
  17

  
	
   

  	
  2.4.

  	
  Right
  of Reference

  	
  17

  
	
   

  	
  2.5.

  	
  Extension
  of Rights to Affiliates and Third Parties

  	
  18

  
	
   

  	
  2.6.

  	
  Sublicensing

  	
  18

  
	
   

  	
  2.7.

  	
  Co-Promotion

  	
  19

  
	
   

  	
  2.8.

  	
  Expansion
  of Territory

  	
  19

  
	
   

  	
  2.9.

  	
  No
  Other Rights

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  DEVELOPMENT, REGULATORY, AND COMMERCIALIZATION

  	
  19

  
	
   

  	
  3.1.

  	
  Joint
  Steering Committee

  	
  19

  
	
   

  	
  3.2.

  	
  Development

  	
  23

  
	
   

  	
  3.3.

  	
  Regulatory
  Matters

  	
  24

  
	
   

  	
  3.4.

  	
  Manufacture
  of Products

  	
  26

  
	
   

  	
  3.5.

  	
  Commercialization
  in the Territory

  	
  27

  
	
   

  	
  3.6.

  	
  Publication
  Strategy

  	
  27

  
	
   

  	
  3.7.

  	
  Project
  Team

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CONSIDERATION

  	
  29

  
	
   

  	
  4.1.

  	
  Upfront
  Payment

  	
  29

  
	
   

  	
  4.2.

  	
  Milestones

  	
  29

  
	
   

  	
  4.3.

  	
  Royalties
  and Other Payments

  	
  29

  
	
   

  	
  4.4.

  	
  Quarterly
  Reports

  	
  32

  
	
   

  	
  4.5.

  	
  Records
  and Audits

  	
  32

  
	
   

  	
  4.6.

  	
  Taxes
  and Withholding

  	
  33

  
	
   

  	
  4.7.

  	
  Currency

  	
  36

  
	
   

  	
  4.8.

  	
  Confidentiality

  	
  36

  

 

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

 

ii

 

	
   

  	
  4.9.

  	
  Interest

  	
  36

  
	
   

  	
  4.10.

  	
  Set-Off

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COVENANTS

  	
  37

  
	
   

  	
  5.1.

  	
  Confidentiality

  	
  37

  
	
   

  	
  5.2.

  	
  Restrictions

  	
  40

  
	
   

  	
  5.3.

  	
  Compliance
  with Law

  	
  40

  
	
   

  	
  5.4.

  	
  Nonsolicitation
  of Employees

  	
  40

  
	
   

  	
  5.5.

  	
  Standstill
  Agreement

  	
  41

  
	
   

  	
  5.6.

  	
  Export
  Restrictions

  	
  42

  
	
   

  	
  5.7.

  	
  Communications
  with other Linaclotide Partners

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  43

  
	
   

  	
  6.1.

  	
  Representations
  and Warranties of Each Party

  	
  43

  
	
   

  	
  6.2.

  	
  Additional
  Representations and Warranties of Ironwood

  	
  44

  
	
   

  	
  6.3.

  	
  Additional
  Representations and Warranties of Astellas

  	
  45

  
	
   

  	
  6.4.

  	
  Representation
  by Legal Counsel

  	
  45

  
	
   

  	
  6.5.

  	
  No
  Inconsistent Agreements

  	
  45

  
	
   

  	
  6.6.

  	
  Disclaimer

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  INTELLECTUAL PROPERTY

  	
  45

  
	
   

  	
  7.1.

  	
  Disclosure

  	
  45

  
	
   

  	
  7.2.

  	
  Ownership

  	
  45

  
	
   

  	
  7.3.

  	
  Intellectual
  Property Working Group

  	
  46

  
	
   

  	
  7.4.

  	
  Prosecution
  and Maintenance of Patent Rights

  	
  46

  
	
   

  	
  7.5.

  	
  Trademarks

  	
  48

  
	
   

  	
  7.6.

  	
  Enforcement
  of Technology Rights

  	
  49

  
	
   

  	
  7.7.

  	
  Third
  Party Claims

  	
  50

  
	
   

  	
  7.8.

  	
  Patent
  Marking

  	
  51

  
	
   

  	
  7.9.

  	
  Patent
  Certifications

  	
  51

  
	
   

  	
  7.10.

  	
  No
  Implied Licenses

  	
  51

  
	
   

  	
  7.11.

  	
  Privileged
  Communications

  	
  51

  
	
   

  	
  7.12.

  	
  Recordation
  of License

  	
  52

  

 

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

 

iii

 

	
  8.

  	
  TERM AND TERMINATION

  	
  52

  
	
   

  	
  8.1.

  	
  Term

  	
  52

  
	
   

  	
  8.2.

  	
  Termination
  for Cause

  	
  52

  
	
   

  	
  8.3.

  	
  Bankruptcy

  	
  54

  
	
   

  	
  8.4.

  	
  Termination
  for Convenience

  	
  54

  
	
   

  	
  8.5.

  	
  Change
  of Control

  	
  54

  
	
   

  	
  8.6.

  	
  Effects
  of Termination

  	
  55

  
	
   

  	
  8.7.

  	
  Survival
  of Certain Obligations

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  PRODUCT LIABILITY, INDEMNIFICATION, AND INSURANCE

  	
  58

  
	
   

  	
  9.1.

  	
  Indemnification
  by Ironwood

  	
  58

  
	
   

  	
  9.2.

  	
  Indemnification
  by Astellas

  	
  58

  
	
   

  	
  9.3.

  	
  Procedure

  	
  59

  
	
   

  	
  9.4.

  	
  Insurance

  	
  59

  
	
   

  	
  9.5.

  	
  Liability
  Limitations

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  MISCELLANEOUS

  	
  60

  
	
   

  	
  10.1.

  	
  Governing
  Law; Jurisdiction; Dispute Resolution

  	
  60

  
	
   

  	
  10.2.

  	
  Force
  Majeure

  	
  62

  
	
   

  	
  10.3.

  	
  Additional
  Approvals

  	
  62

  
	
   

  	
  10.4.

  	
  Waiver
  and Non-Exclusion of Remedies

  	
  63

  
	
   

  	
  10.5.

  	
  Notices

  	
  63

  
	
   

  	
  10.6.

  	
  Entire
  Agreement

  	
  64

  
	
   

  	
  10.7.

  	
  Amendment

  	
  64

  
	
   

  	
  10.8.

  	
  Assignment

  	
  64

  
	
   

  	
  10.9.

  	
  No
  Benefit to Others

  	
  64

  
	
   

  	
  10.10.

  	
  Counterparts

  	
  64

  
	
   

  	
  10.11.

  	
  Severability

  	
  65

  
	
   

  	
  10.12.

  	
  Further Assurance

  	
  65

  
	
   

  	
  10.13.

  	
  Publicity

  	
  65

  
	
   

  	
  10.14.

  	
  Relationship of the
  Parties

  	
  65

  

 

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

 

iv

 

LICENSE
AGREEMENT

 

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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

AGREEMENT

 

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

 

1.                                     DEFINITIONS

 

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

 

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

 

1

 

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

 

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

 

1.3.                              “Agreement”
is defined in the Introduction.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

1.17.                        “Astellas”
is defined in the Introduction.

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

1.23.                        “CC”
means chronic constipation.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

1.35.                        “Commercially
Reasonable Efforts” means, for each Party, those efforts and resources
comparable to those normally used by such Party hereunder for a product or
compound owned by such Party or to which such Party has rights of the type such
Party has hereunder, taking into account, without limitation, issues of safety
and efficacy, product profile, the proprietary position of the product or
compound, the regulatory environment and status of the compound, and other
relevant scientific factors, market conditions then prevailing, including the
competitive environment, profitability, the extent of market exclusivity, the
cost to Develop the compound or product, health 

 

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

 

5

 

economic claims, and other similar factors reasonably determined by the
Party to be relevant. Without limiting the foregoing, Commercially Reasonable
Efforts as it applies to the clinical development of the Licensed Compound and
Product hereunder means implementation of the Development and Regulatory Plan
in accordance with the time lines set forth therein to the extent that such
implementation in accordance with such time lines is controllable by the Party
responsible for performing such implementation, and subject to (i) any
amendment of such Development and Regulatory Plan from time to time in
accordance with Section 3.2.1 based on the results of studies conducted
with the Licensed Compound and Product, and (ii) regulatory, safety, and
efficacy factors, [**] set forth therein. Without limiting any of the foregoing, for all
purposes of Section 4.3.4, “Commercially Reasonable Efforts” shall take
into account [**]. “Commercially Reasonable” as used in this Agreement will be
interpreted in a corresponding manner.

 

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

 

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

 

1.38.                        [**].

 

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

 

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

 

6

 

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

 

1.41.                        “Development”
means all activities performed by or on behalf of either Party in the
performance of any Development and Regulatory Plan for the Product in the Field
in the Territory. Development will include, without limitation, all activities
related to research (including, without limitation, Post-Approval Research),
preclinical testing, test method development and stability testing, toxicology,
formulation, process development, manufacturing scale-up, quality
assurance/quality control, clinical studies including Phase I, Phase II, Phase
III and pricing studies, seeking Regulatory Approval and otherwise handling
regulatory affairs, statistical analysis and report writing performed pursuant
to the Development and Regulatory Plan with respect to the Product. When used
as a verb, “Develop” means to engage in Development.

 

1.42.                        “Direct Costs” means the costs of raw materials,
utilities, and supplies directly consumed or used in Manufacturing the
Development Material and Licensed Compound, as applicable, as calculated in
accordance with United States generally accepted accounting principles as in
effect from time to time and consistently applied, and excluding, in any event
any idle capacity charges or costs, facility costs, and other depreciation
costs and general and administrative overhead.

 

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

 

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

 

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

 

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

 

1.47.                        “Fair Market
Value” means with respect to a valuation required by any provision of this
Agreement, the price which a willing buyer would pay, on an arm’s length basis,
for Astellas’s economic interests in the intellectual property assets, data,
and other rights and assets being valued, in light of the status of development
and reasonably anticipated risks and costs of further development and the
market potential for the commercialization of such assets, data or rights,
which price may include future, ongoing, and/or recurring license fees,
royalties, and other payments.  In any
case where Fair Market Value must be determined but is not determined by good
faith negotiations between the Parties, pursuant to Section 8.5.2(a), the
determination will be made by [**]. In addition, but solely
for purposes of Section 8.6.2 (and not for purposes of Section 8.5.2(a)),
if Fair Market Value is determined prior to the First Commercial Sale, such
Fair Market Value will be [**].

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.59.                        “Generic
Competition” means, with respect to a Product in a given country, that one
or more Generic Products is or was commercially available in such country. For
the avoidance of doubt, once Generic Product is commercially available in such
country, Generic Competition shall be deemed to exist in such country
regardless of whether such Generic Product subsequently remains commercially
available in such country.

 

1.60.                        “Generic
Product” means: (a) any pharmaceutical product sold in an Oral
Formulation by a Third Party for use in the Field (other than a Product sold by
Astellas, its Affiliates or Sublicensees) that contains as an active ingredient
the Licensed Compound or (b) any pharmaceutical product (other than a
Product that is Developed or 

 

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

 

8

 

Commercialized by a Party pursuant to this Agreement) that is included
in an application made before a Regulatory Authority for marketing approval in
the Territory (i) as being “generic,” “comparable,” “interchangeable with,”
“essentially similar to,” or “bioequivalent to” a Product, or as having any
other similar designation with respect to such Product as provided under
Applicable Law, or (ii) in which the applicant of such application relies,
or seeks to rely, in whole or in part on clinical data included in an
application for Regulatory Approval of a Product.

 

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

 

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

 

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

 

1.64.                        “Group”
is defined in Section 5.5.8.

 

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

 

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

 

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

 

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

 

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

 

1.70.                        “Infringement”
is defined in Section 7.6.1.

 

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

 

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

 

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

 

9

 

1.73.                        [**].

 

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

 

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

 

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

 

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

 

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

 

1.79.                        “Ironwood”
is defined in the Introduction.

 

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

 

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

 

10

 

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

 

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

 

1.83.                        “JSC” is
defined in Section 3.1.1.

 

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

 

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

 

1.86.                        “Liability”
is defined in Section 9.1.

 

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

 

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

 

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

 

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

 

1.91.                        “Net Sales”
means, on a
country-by-country basis, with respect to any period for each country in the
Territory, the gross amounts invoiced by Astellas, its Affiliates, or its
permitted Sublicensees as applicable, to unrelated Third Parties for sales of
the Product in the Field in such country, less the following deductions to the
extent included in the gross invoiced sales price for the Product or otherwise
directly paid or incurred by Astellas, its Affiliates, or its permitted
Sublicensees as applicable, with respect to the sale of the Product in such
country: (i) trade, quantity or cash discounts credits, adjustments or
allowances, including without limitation, those granted pursuant to indigent
patient programs or patient discount programs or on account of price
adjustments, billing errors, 

 

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

 

11

 

rejected
goods, or damaged goods, expired goods, returned goods, and amounts otherwise
repaid or credited by reason of defects, rejection, or recalls or retroactive
price reductions; (ii) rebates and chargebacks allowed, given or accrued
(including, but not limited to, cash, governmental and managed care rebates,
hospital or other buying group chargebacks, and governmental taxes in the
nature of a rebate based on usage levels or sales of the Product); (iii) sales,
excise, turnover, inventory, and similar taxes (not offset or refunded, except
in the case of consumption taxes) assessed on the sale of the Product; (iv) bad
debts reserved for on the basis utilized by Astellas, its Affiliates, or its
permitted Sublicensees as applicable, in its branded pharmaceutical business
generally or, if greater, bad debts actually written off, in each case which
are attributable to sales of Product; (v) freight and insurance charges;
and (vi) amounts paid or credited to customers for inventory management
services. Net Sales will be determined in accordance with GAAP for sales in
Japan and with the respective generally accepted accounting principles in each
other country in the Territory for sales in such other country. Without
limiting the generality of the foregoing, sales, transfers, or dispositions of
Product for charitable, promotional (including samples), pre-clinical,
clinical, or regulatory purposes will be excluded from Net Sales, as will sales
or transfers of Product among a Party and its Affiliates. In the event that a
Product contains the Licensed Compound in combination with one or more other
product or active ingredient (a “Combination Product”), Net Sales shall
be calculated by first determining Net Sales of such combination Product (in
its entirety) pursuant to the foregoing and then multiplying the Net Sales of
the Combination Product by the fraction A/(A+B), where A is the gross invoice
price of the Licensed Compound or Product if sold separately in a country and B
is the gross invoice price of the other product(s) included in the
Combination Product if sold separately in such country. In the event no such
separate sales are made by Astellas, its Affiliates or Sublicensees in a
country, Net Sales of the Combination Product shall be calculated by multiplying such Net Sales by a fraction
fairly and reasonably reflecting the relative value contributed by the Licensed
Compound to the total value of the Combination Product as determined by the
Parties in good faith.

 

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

 

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

 

1.94.                        “OIC”
means opioid induced constipation.

 

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

 

1.96.                        “Order”
is defined in Section 5.1.3.

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

1.116.                  “Representative”
is defined in Section 5.5.

 

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

 

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

 

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

 

1.120.                  [**].

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

1.128.                  “Tax” is
defined in Section 4.6.

 

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

 

1.130.                  “Term”
is defined in Section 8.1.

 

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

 

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

 

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

 

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

 

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

 

1.136.                  [**].

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

2.                                     LICENSE
GRANT

 

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

 

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

 

16

 

any other formulation) in the Field in the Territory (other than sales
of the Licensed Compound to Astellas pursuant to this Agreement). In addition,
Ironwood and its Affiliates will not assert any Technology against Astellas or
its Affiliates or Sublicensees on account of their Manufacture, Development,
and Commercialization of the Product in the Field in the Territory in
accordance with this Agreement.

 

2.2.                              License to
Ironwood. Subject to the terms and
conditions of this Agreement, and only to the extent permitted under Applicable
Law (including antitrust laws and regulations), Astellas hereby grants to
Ironwood (i) a royalty-free non-exclusive license, during the Term, under
the Astellas Technology and Astellas’s interest in the Joint Technology, with the
right to sublicense, in each case to the extent necessary for Ironwood to
exercise its rights and perform its obligations under this Agreement, all in
accordance with the terms of this Agreement, and (ii) a royalty-free,
exclusive (subject to Astellas’s retained rights as set forth below) license,
with the right to freely sublicense only Astellas Sublicensable Patent Rights
(only to an Ironwood licensee in connection with a license of rights in the
Licensed Compound or Product, and subject to Section 2.6.2(a) and
2.6.3, and provided that and only to the extent such corresponding rights are
granted to Astellas) without any duty to account or compensate (which
sublicenses shall survive the termination of this Agreement except as set forth
in Section 8.6) under Astellas’s interest in the Astellas Technology and
Astellas’s interest in the Joint Technology solely to (A) develop,
manufacture, and commercialize the Licensed Compound and Product in an Oral
Formulation outside of the Territory in the Field, and (B) manufacture the
Product in an Oral Formulation in the Territory for purposes of
commercialization in the Field outside the Territory. For the avoidance of
doubt, the licenses in this Section 2.2 will not prohibit Astellas from,
and Astellas expressly retains all rights required for, conducting pre-clinical
research inside or outside of the Field anywhere in the world, and
Manufacturing the Licensed Compound or Product outside of the Territory for
Development or Commercialization inside the Territory. Each Party will use
Commercially Reasonable Efforts to ensure that all Collaboration Know-How and
Collaboration Patent Rights invented, conceived, or developed by a Third Party
on behalf of such Party will be Controlled by such Party.

 

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

 

2.4.                              Right of
Reference. Ironwood hereby grants to Astellas a “Right of
Reference,” as that term is defined in 21 C.F.R. § 314.3(b) and any
foreign counterpart to such regulation in the Field in the Territory to the
data included in the Ironwood Technology to the extent necessary or useful to
Develop the Licensed Compound or Product solely for IBS-C or CC, and Astellas
hereby grants to Ironwood (and Ironwood’s partners and/or licensees, as long as
such Ironwood partners and/or licensees grant a 

 

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

 

17

 

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

 

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

 

2.6.                              Sublicensing.

 

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

 

2.6.2.                                                     In addition, to
the extent permitted under Applicable Law (including antitrust laws and
regulations), (a) each Party will require any licensee, in the case of
Ironwood, or Sublicensee, in the case of Astellas, whether within or outside
the Territory, of Technology with respect to the Licensed Compound or the
Product, to grant back to the granting Party rights to Technology arising out
of the use or exercise of the Technology licensed by such Party to the other
Party hereunder and developed by such licensee or Sublicensee relating to the
Licensed Compound or Product so that such 

 

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

 

18

 

Technology will be Controlled by the granting Party for purposes and to
the extent of the licenses to the other Party provided by Sections 2.1 and 2.2
above and (b) Astellas will require any Sublicensee to transfer ownership
of all Regulatory Submissions and Regulatory Approvals pertaining to the
Licensed Compound or Product to Astellas upon a termination of this Agreement
to the extent necessary for Astellas to assign to Ironwood such Regulatory
Submissions and Regulatory Approvals under Section 8.6.1(c) hereunder.

 

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

 

2.7.                              Co-Promotion.
Notwithstanding Section 2.6 above, Astellas may use co-promotion partners
in connection with the Commercialization of Products in the Territory, [**]. Astellas may extend all
rights under this Agreement to such partner [**] to Commercialize Products
through or with such partner, in which case such partners shall abide by the
applicable terms and conditions of this Agreement.

 

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

 

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

 

3.                                     DEVELOPMENT,
REGULATORY, AND COMMERCIALIZATION

 

3.1.                             Joint Steering
Committee.

 

3.1.1.                     Overview. The Parties
will establish a joint steering committee (“JSC”) as a forum to discuss
and coordinate issues related to the Development and Commercialization of
Products in the Field in the Territory as described in more detail herein. The
JSC will serve as a forum for discussing data, information, and 

 

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

 

19

 

strategy regarding the development and commercialization of the Product
in the Territory and outside of the Territory to the extent provided for in
this Agreement. The JSC will perform the functions assigned to it in this Section 3.1;
provided, however, that the functions and operations of the JSC may be altered
from time to time during the Term by the mutual agreement of the Parties. In
addition to the committee meetings, members of Senior Management from Ironwood
and Astellas will meet periodically as necessary or appropriate during the Term
(and in any event at least once per Year) in order to review significant issues
and developments in the Development and Commercialization of the Licensed
Compound or Product.

 

3.1.2.                     Membership. The JSC will
consist of three senior representatives from each Party. Ironwood and Astellas
will each designate a co-chair for the JSC. The co-chairs will be responsible
for calling meetings and setting the agenda (which will include a list of all
participants expected at a meeting) and circulating such agenda at least ten
days prior to each meeting and distributing minutes of the meetings within 30
days following such meeting (which minutes will be in the English language),
but will not otherwise have any greater power or authority than any other
member of the JSC. JSC members must have such expertise as appropriate to the
activities of the JSC, and from time to time the JSC may invite personnel of
the Parties having formulation, manufacturing, commercial, marketing, and other
expertise to participate in discussions of the JSC as appropriate to assist in
the activities of the JSC. Either Party may also, from time to time, designate
one or more consultants to such Party who are under written obligations of
confidentiality to such Party as JSC observers who may attend JSC meetings in
an observational capacity only.

 

3.1.3.                     Responsibilities. The JSC’s
responsibilities will include, among others: (i) approving the Development
and Regulatory Plan and any amendments to such plan (other than amendments
required to comply with Applicable Laws or requirements imposed by Regulatory
Authorities), including, without limitation, approval of any amendment to the
Development and Regulatory Plan to undertake Development of a Combination
Product that includes the Licensed Compound and another active pharmaceutical
ingredient, (ii) approving (or establishing procedures to approve)
protocols for pre-clinical or clinical studies (including Post-Approval Research)
and any amendments or modifications to such protocols or studies  and amendments thereto (other than amendments
required to comply with Applicable Laws or requirements imposed by Regulatory
Authorities), (iii) approving any proposed amendment to the Launch Plan
(other than amendments required to comply with Applicable Laws or requirements
imposed by Regulatory Authorities), (iv) performing quarterly reviews of
progress of pre-clinical and clinical studies and proposed additional studies, (v) reviewing
and commenting on the Commercialization Plan (and amendments thereto) prepared
and presented by Astellas, (vi) reviewing and commenting on Regulatory
Submissions relating to 

 

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

 

20

 

the Product prepared by Astellas, (vii) facilitating the exchange
of data and information relating to the development of the Product in and
outside the Territory, (viii) receiving updates on the strategy for
Commercializing the Product in the Field in the Territory (including strategies
related to reimbursement, advertising and promotion, brand integrity, sales,
and launch sequence), (ix) receiving updates on the annual marketing plans
and activities for the Product in the Field in the Territory, (x) commenting
on the target product profile for the Product (including current and future
formulations, indications, and delivery forms, and key labeling claims, and
(xi) performing such other functions as are expressly assigned to it in this
Agreement. The JSC may appoint additional committees as agreed by the Parties.
For the avoidance of doubt, the JSC shall not have the authority to amend or
modify any term or condition, or take any action inconsistent with or in
violation of, this Agreement.

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

(c)                                  If the
unresolved issue relates to Development, such issue will be referred to the
Parties’ respective Chief Scientific Officers or equivalent or their designees.
In the event such individuals are unable to resolve such issue within [**] Business Days, such issue
will be referred to the Chief Executive Officers of each Party or their
designees for resolution. Subject to the remaining provisions of this Section 3.1.6,
all matters relating to Development that are expressly within the scope of the
responsibilities of the JSC under Section 3.1.3, including, without
limitation, amendments and modifications to the Development and Regulatory
Plan, must be determined by consensus of the Parties, provided that (i) neither
Party shall withhold its consent unreasonably, and (ii) no consensus shall
be required with respect to Development activities (including any modifications
or amendments to the Development and Regulatory Plan, the Launch Plan, or study
protocols) that are required to comply with Applicable Laws or requirements
imposed by Regulatory Authorities, and Astellas may modify and amend the
Development and Regulatory Plan as necessary to comply with such Applicable Laws
or requirements, subject 

 

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

 

22

 

to the requirements of Section 3.2.1. If a matter for which
consensus cannot be reached is addressed by the then current Development and
Regulatory Plan, then such Development and Regulatory Plan and the activities
required thereunder will control despite any inability of the Parties to reach
consensus. Notwithstanding the foregoing, the Parties acknowledge and agree
that Astellas shall control the Development of the Product in accordance with
this Agreement and the then-effective Development and Regulatory Plan and shall
have the right to conduct the Development and implement the Development and
Regulatory Plan in its reasonable discretion in accordance with this Agreement
(including without limitation the provisions of this Section 3.1.6,
requiring that matters expressly within the responsibility of the JSC be
decided on a consensus basis) and the Development and Regulatory Plan, as long
as such activities will not adversely affect the development or
commercialization of Products for the Forest Territory or the Almirall
Territory.

 

3.2.                             Development.

 

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

 

3.2.2.                     Responsibility. Astellas will
implement and conduct the Development activities in accordance with the
Development and Regulatory Plan and Applicable Law. Upon written request from
Astellas, Ironwood will provide 

 

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

 

23

 

technology transfer activities relating to the transfer of chemistry,
manufacturing, and control technology for the Licensed Compound (“CMC
Activities”), as specified in the Development and Regulatory Plan and as
otherwise reasonably required or useful in connection with the Development.

 

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

 

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

 

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

 

3.3.                             Regulatory
Matters.

 

3.3.1.                     Responsibility
For Regulatory Interactions. Regulatory strategy for
the Product in the Territory and all decision-making with respect thereto will
be determined by Astellas consistent with the Development and Regulatory Plan.
Astellas will use Commercially Reasonable Efforts to obtain in a timely manner
Regulatory Approvals with respect to the Product to the extent contemplated by
the Development and Regulatory Plan. Astellas will be solely responsible for
conducting all activities relating to obtaining Regulatory Approvals with
respect to the Product, including without limitation, preparing and submitting
Regulatory Submissions and attending meetings with Regulatory Authorities. 

 

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

 

24

 

Notwithstanding anything contained in this Agreement to the contrary,
Astellas acknowledges and agrees that [**]. Astellas will provide
Ironwood with advanced copies of any substantive Regulatory Submissions made in
the Territory reasonably in advance of submission to a Regulatory Authority,
and will not [**] to the extent they are related to issues potentially affecting the [**] and are communicated to
Astellas in a reasonably prompt manner and in no event later than 30 Business
Days, or such shorter timeline as is reasonably determined by Astellas in order
to timely file such Regulatory Submission, from Astellas’s provision of such
copies. Astellas will not submit any Regulatory Submissions unless it has
complied with its obligations pursuant to the foregoing with respect to such
Regulatory Submissions.  In no event
shall Astellas be required to delay the filing of any Regulatory Submission
beyond the applicable timeline for comments. 
Ironwood [**] shall be responsible for any translations of Regulatory Submissions
provided by Astellas and shall bear all costs incurred in connection with the
provision, review (and translation, if applicable) of such Regulatory
Submissions pursuant to the foregoing. Ironwood will make available to Astellas
with respect to the Licensed Compound or Products any Regulatory Submissions
made pursuant to the Forest Agreement. Astellas will own all right, title, and
interest in all Regulatory Submissions and Regulatory Approvals for Products in
the Territory.

 

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

 

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

 

3.3.4.                     Adverse Events. Reasonably
promptly after the Effective Date, the Parties will enter into a
pharmacovigilance agreement, which upon such execution will be attached as Exhibit D
hereto and thereby incorporated into this Agreement by reference (the “Pharmacovigilance
Agreement”). The Parties will comply with the 

 

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

 

25

 

provisions of such agreement. Astellas will be responsible for
responding to all safety inquiries regarding the Product in the Field in the
Territory. Ironwood shall promptly, and
otherwise  in accordance
with the Pharmacovigilance Agreement, inform Astellas of adverse events or
safety inquiries regarding the Product or the Licensed Compound outside the
Territory.

 

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

 

3.4.                             Manufacture of
Products. Ironwood will be responsible for Manufacture of
Development Materials and for API Manufacturing; provided, however, that
nothing in this Agreement will prevent Ironwood from contracting with any Third
Parties to Manufacture Development Materials or to conduct API Manufacturing,
provided that such Third Parties shall comply with all requirements pursuant to
this Agreement and the Manufacturing and Supply Agreement and that Ironwood
shall be fully responsible for such Third Party’s compliance with such
requirements. Ironwood will perform all such Manufacturing activities in
accordance with GCP, GLP and GMP. Ironwood will supply Development Material and
Licensed Compound for Commercial supply to Astellas in bulk form ready for
formulation, packaging and labeling. Ironwood will be responsible for shipping
the bulk Development Material and other Licensed Compound to the locations
designated by Astellas. Development Material and Licensed Compound for
Commercial supply will be shipped to Astellas F.O.B. [**], and title to such
Development Material and other Licensed Compound will pass to Astellas upon
placement by Ironwood with a carrier for delivery to Astellas. Astellas will be
responsible, at its sole cost and expense, to complete the drug product
manufacturing, packaging, and labeling of the Licensed Compound. In furtherance
of the foregoing, the Parties will execute a manufacturing and supply agreement
promptly following the Effective Date, (a) under which Astellas will pay
Ironwood [**] for supplying
Development Material and Commercial supply of the Licensed Compound for the
Product to Astellas, [**], and (b) which will contain, at a minimum, such terms and
conditions as are described in Schedule 3.4 hereto and the last sentence
of Section 4.10 (“Manufacturing and Supply Agreement”).
Notwithstanding anything else contained herein, Astellas may not exercise its
right to Manufacture Development Materials or Licensed Compound pursuant to the
grant of rights under Section 2.1 unless (i) Ironwood has failed to
supply Development Materials or Licensed Compound for Commercialization to
Astellas under circumstances which, under the Manufacturing and Supply
Agreement, would permit Astellas to Manufacture Development Materials or

 

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

 

26

 

Licensed Compound for Commercialization, (“Failure To Supply”)
in which event, Astellas shall consult with Ironwood on the appointment of one
or more Third Parties as manufacturer of Licensed Compound and shall reasonably
consider Ironwood’s comments regarding such appointment, (ii) the
expiration of the last-to-expire of all, or the absence of any (including
because Valid Claims never issued or were otherwise invalidated), Valid Claims
in the Ironwood Patent Rights in Japan that cover the Licensed Compound (“Patent
Expiration”), (iii) Ironwood notifies Astellas that it intends to
cease Manufacture of Development Material or Licensed Compound for
Commercialization (“Cessation of Manufacture”), or (iv) an
Insolvency Event affecting Ironwood.

 

3.5.          Commercialization
in the Territory.

 

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

 

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

 

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

 

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

 

3.6.          Publication Strategy. Subject to
Ironwood’s obligations to coordinate worldwide publication strategy with Forest
under the Forest Agreement and with Almirall under the Almirall Agreement,
Astellas will coordinate with Ironwood (i) its publication strategy
involving the Product and (ii) activities involving the Product related to
scientific conferences and other presentations. The Parties intend that the
provisions of this Section 3.6 apply to Astellas and its Affiliates,
licensees and Sublicensees. For the avoidance of 

 

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

 

27

 

doubt, no Sublicensee will be permitted to publish or present materials
regarding the Product, and any Sublicense agreement hereunder will contain a
provision prohibiting such activities.

 

3.6.1.       Prior Review. Ironwood and
Forest will be afforded the opportunity to review and approve any scientific
paper, abstract, or presentation with respect to the Product proposed for
publication, presentation, or distribution by Astellas or its Affiliates, which
review will be made and approval or disapproval communicated within ten days of
receipt of any such scientific paper, abstract or presentation, or such shorter
period as may reasonably be required by applicable publication deadlines
promptly communicated to Ironwood and/or Forest. If no comments are received
by, and no disapproval was communicated to, Astellas within such ten day
period, the respective paper, abstract, or presentation shall be deemed
approved. Astellas will not unreasonably reject comments furnished by Ironwood,
will comply with Ironwood’s request to delete references to its Confidential
Information in any such publication, abstract, or presentation and will delay
publication for such reasonable period requested by Ironwood to permit the
filing of patent applications disclosed in material proposed for such
publication or presentation. Ironwood will provide to Astellas, solely for
informational purposes, prior to publication, any scientific paper, abstract,
or presentation with respect to the Product proposed for publication,
presentation, or distribution by Ironwood or its Affiliates and, to the extent
available to Ironwood and permitted under applicable agreements, its licensees.
In no event will Confidential Information of either Party be published without
the consent of that Party.

 

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

 

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

 

28

 

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

 

4.             CONSIDERATION

 

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

 

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

 

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

 

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

 

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

 

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

 

4.3.          Royalties and
Other Payments.

 

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

 

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

 

29

 

	
  Aggregate Annual Net Sales in the Territory

  	
   

  	
  Royalty rate

  	
   

  
	
  $100,000,000 or less

  	
   

  	
  [**]

  	
  %

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

  	
   

  	
  [**]

  	
  %

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

  	
   

  	
  [**]

  	
  %

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

  	
   

  	
  [**]

  	
  %

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

  	
   

  	
  [**]

  	
  %

  
	
  More than $500,000,000

  	
   

  	
  [**]

  	
  %

  

 

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

 

4.3.2.       Royalty Credit. Astellas may
deduct from the royalties owed for a particular Calendar Quarter pursuant to Section 4.3.1
the following amounts:

 

(a)           the aggregate
Transfer Price paid by Astellas for Commercial supply of Licensed Compound
pursuant to Section 3.4 in the applicable Calendar Quarter or any previous
Calendar Quarter (and not previously credited), but only up to an amount equal
to the product that is the result of multiplying (i) the aggregate
quantity of Licensed Compound included in Products actually sold (excluding,
for the avoidance of doubt, samples and other Products transferred without
consideration) in the applicable Calendar Quarter expressed in grams (“Sold
Quantity”), and (ii) the applicable Transfer Price per gram;

 

(b)           in the event of
a Failure To Supply or an Insolvency Event affecting Ironwood, any costs reasonably
incurred by Astellas or its Affiliates in connection with the manufacture, by
Astellas, its Affiliates, or a Third Party, and/or procurement of Licensed
Compound from a Third Party corresponding to the Sold Quantity (“Cover Costs”);
provided that such Cover Costs may only be deducted from royalties due
hereunder if Astellas has complied with the provisions of Section 3.4
hereof requiring Astellas to consult with Ironwood and reasonably consider
Ironwood’s comments regarding the Manufacture of Licensed Compound following
Ironwood’s failure to supply;

 

(c)           in the event of
a Manufacturing Cessation, in lieu of any deduction pursuant Sections 4.3.2(a) and
4.3.2(b), the higher of (i) Astellas’s Cover Costs, or (ii) an amount
equal to the product that is the result of 

 

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

 

30

 

multiplying (A) the Sold Quantity, and (B) Ironwood’s Fully
Absorbed Cost per gram at such time;

 

(d)           in the event of
Patent Expiration, unless Astellas continues to procure Licensed Compound from
Ironwood (in which case Astellas may continue to make deductions pursuant to
Sections 4.3.2(a) and 4.3.2(b)), an amount equal to the product that is
the result of multiplying (i) the Sold Quantity, and (ii) Ironwood’s
Fully Absorbed Cost per gram at such time;

 

(e)           any amounts
owed to an Astellas Indemnified Party in accordance with the IP Indemnity set
forth in Section 9.1; it being understood that any such amounts owed to an
Astellas Indemnified Party are not deductible pursuant to Section 4.3.4 to
the extent deducted under this clause (e).

 

In case that the deductible amounts, in any Calendar Quarter
calculation, are higher than the royalty that would otherwise be owed for such
Calendar Quarter, no payment will be due from Astellas to Ironwood, and the
difference will be credited to Astellas to be deducted from future royalty
payments owed to Ironwood.

 

In no event will Ironwood be required under this Section 4.3.2 to
refund to Astellas any Transfer Price paid by Astellas pursuant to Section 3.4,
provided that the foregoing shall not limit or otherwise affect any remedies
Astellas may have on account of a failure by Ironwood to timely supply Licensed
Compound to Astellas in accordance with the terms and conditions of this
Agreement and the Manufacturing and Supply Agreement.

 

However, Astellas will in no event be obliged to pay to Ironwood any
royalties under Section 4.3.1 in any Year in which the Transfer Price
and/or the Cover Costs paid or incurred by Astellas and/or other amounts
deductible pursuant to this Section 4.3.2, to the extent that such amounts
are creditable against royalties in accordance with the terms hereof, in such
Year exceeds the aggregate royalties that would otherwise be owed to Ironwood
in such Year, and Astellas may carry forward any such excess to be credited
against future royalty payments owed.

 

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

 

4.3.4.       Third Party
Rights. If Astellas obtains a license or similar rights from a Third Party
(including, but not limited to, pursuant to a settlement) (a) in the
absence of which it could not legally (including, without infringing any Third
Party patent rights) use or practice the Ironwood Technology (including the
Licensed Compound) in the Territory pursuant to this Agreement (“Necessary 

 

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

 

31

 

License”), or (b) that is otherwise necessary or
useful to Develop or Commercialize the Licensed Compound pursuant to this
Agreement (a “Useful License”), then [**]; provided that, in no event
(x) [**] and (y) [**]. For the avoidance of
doubt, the foregoing sentence shall not apply to a Necessary License.  If Ironwood does not [**] pursuant to this Section,
then Astellas shall have the right to [**], and Astellas shall
promptly notify Ironwood if it has made a [**]. If Astellas makes a [**], Ironwood may, [**] in accordance with this
Section. If (i) Ironwood does not bring such Claim within such period or (ii) the
Arbitrators find that Astellas has made a [**] in accordance with this Section and
Ironwood does not, [**], then Astellas will [**], with respect to the affected country or countries. If the Arbitrators
find that it would be [**]. To the extent [**]. For the avoidance of doubt, nothing in this Section 4.3.4 shall
prevent any [**], including, without limitation, pursuant to Section 4.3.2.

 

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

 

4.5.          Records and
Audits. During the Term of this Agreement, Astellas will keep and maintain
accurate and complete records regarding Net Sales during the three preceding
Years and Ironwood will keep and maintain accurate and complete records regarding
the Fully Absorbed Cost covering the three preceding Years . Upon 15 days prior
written notice from the other Party (the “Auditing Party”), the Party
required to maintain such records (as applicable, the “Audited Party”)
will permit an independent certified public accounting firm of internationally
recognized standing, selected by the Auditing Party and reasonably acceptable
to the Audited Party, to examine the relevant books and records of the Audited
Party and its Affiliates, as may be reasonably necessary to verify the royalty
reports submitted by Astellas in accordance with Section 4.4, or Fully
Absorbed Cost reported by Ironwood and the resulting Transfer Price payments
and royalty credits, as applicable. An examination by the Auditing Party under
this Section 4.5 will occur not more than once in any Year and will be
limited to the pertinent 

 

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

 

32

 

books and records for any Year ending not more than 36 months before
the date of the request. The accounting firm will be provided access to such
books and records at the Audited Party’s facility or facilities where such
books and records are normally kept and such examination will be conducted
during the Audited Party’s normal business hours. The Audited Party may require
the accounting firm to sign a standard non-disclosure agreement before
providing the accounting firm access to its facilities or records. Upon
completion of the audit, the accounting firm will provide both the Auditing
Party and the Audited Party a written report disclosing whether the reports
submitted by Astellas, or the Fully Absorbed Cost reported by Ironwood and the
resulting Transfer Price payments and royalty credits, as applicable, are
correct or incorrect and the specific details concerning any discrepancies. No
other information will be provided to the Auditing Party. If the report or
information submitted by the Audited Party results in an underpayment or
overpayment, the Party owing underpaid or overpaid amount will promptly pay
such amount to the other Party, and, if, as a result of such inaccurate report
or information, such amount is more than five percent of the amount that was
owed the Audited Party will reimburse the Auditing Party for the reasonable
expense incurred by the Auditing Party in connection with the audit.

 

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

 

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

 

33

 

tax information reporting with respect to any payments under the
Agreement that may be deemed to arise in the Territory.

 

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

 

(a)           Assignment by
Astellas or Astellas Change of Ownership. Notwithstanding Section 10.8,
Astellas may not delegate to any of its Affiliates its obligation to pay
Ironwood an amount or amounts due in accordance with Section 4.1, Section 4.2,
and/or Section 4.3 of this Agreement, except as provided in this Section 4.6.1(a).
Astellas may, on written notice to Ironwood, delegate any or all of the
foregoing obligations to any of its Affiliates, whether or not created or
organized in the United States or under the law of the United States or of any
State within the United States; provided, however, that if, as a
result of such delegation (or as a result of any change of ownership of
Astellas), a deduction or withholding of Tax on any payment to Ironwood under Section 4.1,
Section 4.2, and/or Section 4.3 is required by any applicable law
(other than the law of the United States or any State within the United States)
that would not have been required absent such delegation (or change of
ownership of Astellas), then Astellas (including its successors, transferees,
and assigns) will pay (or authorize payment) to Ironwood such additional amount
as is necessary to ensure that the net amount actually received by Ironwood
(free and clear of any Tax, including any Tax imposed on or with respect to the
additional amount, whether assessed against Astellas or Ironwood) will equal
the full amount Ironwood would have received had no such deduction or
withholding been required. For purposes of this Section 4.6.1(a), the term
“Tax” will not include taxes imposed upon or measured by the net income of
Ironwood, in each case imposed by the jurisdiction in which Ironwood’s
principal place of business is located or by any jurisdiction in which Ironwood
conducts business through an office, branch or permanent establishment.
Ironwood will make Commercially Reasonable Efforts to assist Astellas in
obtaining an exemption from, or refund of, any deduction or withholding of Tax
on any payment to Ironwood under Section 4.1, Section 4.2, and/or Section 4.3
pursuant to the foregoing. In the event that Astellas (including its
successors, transferees, and assigns) makes an additional payment to Ironwood
under this paragraph and Astellas’s deduction or withholding of Tax results in
a Tax Benefit Amount (as defined below) for any taxable year, Ironwood will so
notify Astellas and, within 12 months of the close of the taxable year,
promptly pay to Astellas the Tax Benefit Amount.  “Tax Benefit Amount” means the amount,
if any, that is equal to the excess of the United States federal, state or
other income taxes that would have been imposed on Ironwood had there been no
deduction or withholding giving rise to an additional payment over the United
States federal, state or other 

 

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

 

34

 

income taxes actually imposed on Ironwood when there is such deduction
or withholding.

 

(b)           Assignment by Ironwood or Ironwood Change.
Notwithstanding Section 10.8,
Ironwood may not assign to any of its Affiliates its right to receive an amount
or amounts due from Astellas in accordance with Section 4.1, Section 4.2,
and/or Section 4.3 of this Agreement,
except as provided in this Section 4.6.1(b). Ironwood may, on written
notice to Astellas, assign any or all of the foregoing rights to any of its
Affiliates, whether or not created or organized in the United States or under
the law of the United States or of any State within the United States; provided,
however, that if, as a result of such assignment (or as a result
of any change of ownership of Ironwood), a
deduction or withholding of Tax on any payment to Ironwood under Section 4.1,
Section 4.2, and/or Section 4.3
is required by any applicable law and Astellas is the paying Party, then such
payment obligation(s) by Astellas (including its successors, transferees,
and assigns) hereunder shall be reduced by the amount(s) required to be
deducted or withheld. For any Taxes withheld or to be withheld, each Party
agrees to timely deliver all certificates and forms as may be necessary and
appropriate to file Tax returns as would be necessary with respect to such
Taxes.

 

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

 

(a)           Upfront Payment
and Milestones. With respect to the Upfront Payment under Section 4.1
and any Milestone payments under Section 4.2 only, Astellas (including its
successors, transferees, and assigns) will pay (or authorize payment) to
Ironwood such additional amount as is necessary to ensure that the net amount
actually received by Ironwood (free and clear of any Tax, including any Tax
imposed on or with respect to the additional amount, whether assessed against
Astellas or Ironwood) will equal the full amount Ironwood would have received
had no such deduction or withholding been required. For purposes of this Section 4.6.2(a),
the term “Tax” will not include taxes imposed upon or measured by the net
income of Ironwood, in each case imposed by the jurisdiction in which Ironwood’s
principal place of business is located or by any jurisdiction in which Ironwood
conducts business through an office, branch or permanent establishment.
Ironwood will make Commercially 

 

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

 

35

 

Reasonable Efforts to assist Astellas in obtaining an exemption from,
or refund of, any deduction or withholding of Tax on any payment to Ironwood
under Section 4.1 or Section 4.2 pursuant to the foregoing. In the
event that Astellas (including its successors, transferees, and assigns) makes
an additional payment to Ironwood under this paragraph and Astellas’s deduction
or withholding of Tax results in a Tax Benefit Amount for any taxable year,
Ironwood will so notify Astellas and, within 12 months of the close of the
taxable year, promptly pay to Astellas the Tax Benefit Amount.

 

(b)           Royalty
Payments. With respect to royalties payable to Ironwood
under Section 4.3 only, Astellas may
reduce its payment obligation under Section 4.3 by the amount required to be deducted or
withheld. For any Taxes withheld or to be withheld, each Party agrees to timely
deliver all certificates and forms as may be necessary and appropriate to file
Tax returns as would be necessary with respect to such Taxes.

 

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

 

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

 

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

 

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

 

36

 

Party, such interest will accrue from the date the overpayment was
made. Notwithstanding the preceding, if a Party contests any amounts due hereunder
in good faith and promptly notifies the other Party of such dispute, interest
will not accrue as to amounts being so contested until [**] following the presentation
of such notice to the other Party.

 

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

 

5.             COVENANTS

 

5.1.          Confidentiality.

 

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

 

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

 

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

 

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

 

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

 

37

 

 

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

 

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

 

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

 

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

 

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

 

5.1.5.       Destruction of
Confidential Information. Upon the expiration or earlier termination
of this Agreement, the Receiving Party will (a) destroy all tangible
embodiments of Confidential Information of the Disclosing Party, including any
and all copies thereof, and those portions of any documents, memoranda, notes,
studies, and analyses prepared by the Receiving Party or its Authorized
Recipients that contain or incorporate such Confidential Information and
provide written certification of such destruction to the Disclosing Party in a
form reasonably acceptable to the Disclosing Party, provided that the legal
department of the 

 

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

 

38

 

Receiving Party will have the right to retain one copy of any such
tangible embodiments (i) for archival purposes, and (ii) as may be
required to comply with Applicable Law, provided such copy will continue to be
maintained on a confidential basis subject to the terms of this Agreement, and (b) immediately
cease, and will cause its Authorized Recipients to cease, use of such
Confidential Information as well as any information or materials that contain
or incorporate from such Confidential Information.

 

5.1.6.       Use of Name and
Disclosure of Terms. Each Party will keep the existence and the terms
of this Agreement confidential and will not disclose such information to any
other Person through a press release or otherwise, or mention or otherwise use
the name, insignia, symbol, trademark, trade name, or logotype of the other
Party or its Affiliates in any manner without the prior written consent of the
other Party in each instance (which will not be unreasonably withheld) except
as otherwise expressly permitted in this Agreement. The restrictions imposed by
this Section 5.1.6 will not prohibit either Party from making any
disclosure (a) pursuant to Section 7.12, or (b) that is required
by Applicable Law, rule, or regulation or the requirements of a national
securities exchange or another similar regulatory body including disclosing
such information in any clinical trial database maintained by or on behalf of a
Party or to (i) potential investors and advisors, (ii) attorneys and
consultants, and (iii) Affiliates and potential Sublicensees and marketing
partners, under an obligation of confidentiality. Further, the restrictions
imposed on each Party under this Section 5.1.6 are not intended, and will
not be construed, to prohibit a Party from identifying the other Party in its
internal business communications, provided that any Confidential Information in
such communications remains subject to this Section 5.1.6.

 

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

 

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

 

39

 

intended, or will be construed, to limit the Parties’ rights to
equitable relief or any other remedy for a breach of any provision of this
Agreement.

 

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

 

5.3.          Compliance with
Law. Each Party hereby covenants and agrees to comply with all Applicable
Law applicable to its activities connected with the Development, Manufacture,
and Commercialization (as applicable) of Products. Without limiting the
generality of the foregoing:

 

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

 

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

 

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

 

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

 

40

 

written consent of such other Party, unless such other Party had
previously terminated the employment of such former employee.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

to Astellas pursuant to the terms and conditions of this Agreement and
the Manufacturing and Supply Agreement).

 

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

 

6.             REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

7.             INTELLECTUAL PROPERTY

 

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

 

7.2.          Ownership.

 

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

 

45

 

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

 

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

 

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

 

7.4.          Prosecution and
Maintenance of Patent Rights.

 

7.4.1.       Patent
Prosecution and Maintenance.

 

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

 

(b)           Subject to the
remaining provisions of this Section 7.4.1, each Party will provide the
other with advance copies of, and a reasonable opportunity to comment upon,
proposed patent filings, related prosecution strategies and proposed
correspondence with patent offices or other Third Parties relating to Ironwood
Patent Rights in the Territory, in the case of 

 

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

 

46

 

Ironwood, and Astellas Patent Rights, in the case of Astellas
(collectively, “Patent Filing Materials”), and will consider comments
received in good faith and will not unreasonably reject such comments.

 

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

 

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

 

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

 

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

 

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

 

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

 

47

 

 

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

 

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

 

7.5.          Trademarks.

 

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

 

7.5.2.       Trademark Use. The manner of
use of the Trademarks will be determined by Astellas in its reasonable
discretion. Neither Party will use a trademark 

 

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

 

48

 

confusingly similar to one of the Trademarks with any of its other
products or, except as otherwise provided herein.

 

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

 

7.6.          Enforcement of
Technology Rights.

 

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

 

7.6.2.       Enforcement. Astellas has
the first right (but not the obligation) to enforce any Ironwood Technology,
Astellas Technology, and Collaboration Technology (including Joint Technology),
to the extent either Party has the legal power to enforce such Technology (“Subject
Technology”), against an Infringement in the Territory, provided that
Astellas may not admit the invalidity or unenforceability of any Ironwood
Technology without first consulting with Ironwood and obtaining Ironwood’s
prior written consent. If Astellas exercises its right to enforce any Subject
Technology against an infringer pursuant to this Section 7.6.2, (i) Ironwood
shall reasonably cooperate with Astellas with respect to such enforcement,
including by joining any lawsuit or proceeding as a party where such joinder is
required under applicable law to enforce the Subject Technology, and (ii) Astellas
shall pay all expenses incurred in connection with such enforcement, including
reasonable expenses incurred by Ironwood in connection with its cooperation in
such enforcement. In the event that Astellas declines to enforce the Subject
Technology against an Infringement within 90 days (or such shorter period as
may be required to comply with legal or regulatory deadlines which relate to
such Infringement) of becoming aware thereof, Ironwood will have the right to
so enforce the Subject Technology at its own expense. Irrespective of which
Party controls an action pursuant to this Section, the Parties 

 

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

 

49

 

will collaborate with respect to such action and the comments of the
other Party will not be unreasonably rejected with respect to strategic
decisions and their implementation with respect to such action. In furtherance
of the foregoing, the Party responsible for any such action will keep the other
Party reasonably informed, in person or by telephone, regarding the status and
costs of such action or proceeding prior to and during any such enforcement.
Neither Party will settle any such action without the written consent of the
other Party, such consent not to be unreasonably withheld. Neither Party will
incur any liability to the other as a consequence of such litigation or any
unfavorable decision resulting therefrom, including any decision holding any
such Subject Technology invalid, not infringed, not misappropriated or
unenforceable.

 

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

 

7.7.          Third Party
Claims.

 

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

 

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

 

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

 

50

 

payment of any damages to the Third Party, will be paid by the Sued
Party. Notwithstanding the foregoing, if the Sued Party seeks an
indemnification pursuant to Section 9.1 or Section 9.2, then the
provisions of such Section 9.1 or Section 9.2, and the provisions of Section 9.3
will apply and will control and will supersede this Section 7.7.2. to the
extent it is inconsistent with Section 9.1, Section 9.2, or Section 9.3.

 

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

 

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

 

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

 

7.11.        Privileged
Communications. In furtherance of this Agreement, it is expected
that Astellas and Ironwood will, from time to time, disclose to one another
privileged communications with counsel, including opinions, memoranda, letters
and other written, electronic and verbal communications. Such disclosures are
made with the understanding that they will remain confidential, they will not
be deemed to waive any applicable attorney-client privilege and that they are
made in connection with the shared community of legal interests existing
between Ironwood and Astellas, including the community of legal interests in
avoiding infringement of any valid, enforceable patents of Third Parties and
maintaining the validity of Ironwood Patent Rights, Astellas Patent Rights and
Joint Patent Rights.

 

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

 

51

 

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

 

8.                                      TERM AND
TERMINATION

 

8.1.          Term. The term of
this Agreement will commence on the Effective Date and, unless earlier
terminated as provided in this Section 8, will continue in full force and
effect until the later of (i) the last-to-expire Valid Claim in the
Ironwood Patent Rights in the Territory that covers the Licensed Compound has
expired or was invalidated, and (ii) Astellas is no longer Developing or
Commercializing any Products in the Territory (the “Term”), following
which all licenses granted by each Party to the
other pursuant to Section 2 of this Agreement will become fully paid up,
irrevocable, perpetual licenses.

 

8.2.          Termination for
Cause.

 

8.2.1.       Termination for
Material Breach by Ironwood.

 

(a)           Fundamental
Breach. This Agreement may be terminated by Ironwood, with the consequences
set forth in Section 8.6.1, by written notice by Ironwood, in the event of
a material breach by Astellas of its material obligations hereunder relating to
the Development and Commercialization of Products (A) which material
breach (x) (i) substantially adversely impacts the Development and
Commercialization of Products in the Territory in a manner that essentially
precludes successful Development and Commercialization of Products in the
Territory as contemplated in this Agreement, and (ii) is of a nature and
severity so that other remedies at law or in equity would be inadequate, or (y) has
or, unless abated will have, a material adverse effect on the successful
development and commercialization of the Licensed Compound or Product outside
of the Territory and/or results or, unless abated will result, in Ironwood’s
breach of its obligations to Forest or Almirall under the Forest Agreement or
the Almirall Agreement, as applicable, and (B) which material breach
remains uncured for [**] days measured from the date written notice of such breach is given to
Astellas, which notice will specify the nature of the breach and demand its
cure; provided, however, that if such breach is not capable of being cured
within the stated period and Astellas uses Commercially Reasonable Efforts to 

 

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

 

52

 

cure such breach during such period and presents a reasonable
remediation plan for such breach, this Agreement may not be terminated by
Ironwood and the cure period will be extended for such period provided in the
remediation plan as long as Astellas continues to use Commercially Reasonable
Efforts to pursue the cure as provided in such remediation plan; and provided
further that if Astellas disputes the alleged breach in good faith, such cure
period shall be tolled until such dispute is finally resolved in favor of
Ironwood.

 

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

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

8.5.          Change of
Control.

 

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

 

8.5.2.       Consequences of
a Change of Control.

 

(a)           In the event
that Astellas is subject to a Change of Control which could reasonably be
expected to lead to an Impairment (as defined below), Astellas will notify
Ironwood at least [**] days prior to the closing of such transaction, and Ironwood may elect,
in its sole discretion, to (i) continue this Agreement in accordance with
its terms, (ii) terminate this Agreement 

 

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

 

54

 

on [**] months notice, during
which period this Agreement would continue in effect in accordance with its
terms, such notice to be delivered within [**] days after the Fair Market Value is determined pursuant to
this Section 8.5.2(a). Within [**] days following Ironwood’s
receipt of notice from Astellas of a Change of Control that could reasonably be
expected to lead to an Impairment, Ironwood will provide notice to Astellas
requesting a determination of the Fair Market Value upon a termination of this
Agreement pursuant to this Section 8.5.2(a), and the failure to so request
such
valuation will be deemed the election to continue this Agreement in accordance
with its terms. Such determination must be made by the Parties in good faith,
and if such determination is not made within [**] days of the request, then
as determined by a Valuation Panel. In connection with such termination,
Ironwood will be required to pay Astellas an amount equal to the upfront
portion of the Fair Market Value within ten days of the effective date of the
termination, and, as they become due, payment of any ongoing, and/or recurring
license fees, royalties, and other payments that may be part of Fair Market
Value.

 

(b)           For purposes of
this Section 8.5.2, an “Impairment” will only be deemed to occur if
(a) it is reasonably anticipated that the entity resulting from such
Change of Control will be unable to perform its obligations in accordance with
the terms of this Agreement, as reasonably determined based on objective
criteria available to both Parties, including without limitation, the new
entity’s financial position and product pipeline, (b) the product line of
the entity that survives following the Change of Control includes a product in
an Oral Formulation in the Field that is in clinical development which is
indicated for the treatment of IBS-C, CC, OIC (unless as to any such
indication, the JSC has determined not to pursue Development for such
indication) or any other indication for which the Product is then being
Commercialized in the Territory pursuant to this Agreement.

 

8.6.          Effects of
Termination.

 

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

 

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

 

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

 

55

 

(b)           All licenses granted by Astellas to
Ironwood hereunder will become fully paid up, irrevocable, perpetual,
royalty-free licenses for the Relevant Countries in the event of a termination
pursuant to Sections 8.2.1(a), 8.3, or 8.4.  In the event of a termination pursuant to Sections
8.2.1(b) or 8.5, such licenses shall be subject to such payments as may be
required as part of the determination of Fair Market Value.

 

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

 

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

 

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

 

(f)            If termination
is effective for the entire Territory, Astellas will furnish Ironwood with
reasonable cooperation to assure a smooth transition of any clinical or other
studies in progress related to the Licensed Compound or Product which Ironwood
determines to continue in

 

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

 

56

 

 

compliance with Applicable Law and ethical guidelines applicable to the
transfer or termination of any such studies.

 

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

 

8.6.2.       If this
Agreement is terminated by Ironwood under Section 8.2.1(b), then the
provisions of Section 8.6.1(a) through 8.6.1(g) will apply in
connection with such termination, subject to Ironwood paying to Astellas an
amount equal to the Fair Market Value, which Fair Market Value shall be
determined as described in Section 8.5.2(a) (and shall include
Astellas’s total documented expenditures on Development of the Licensed
Compound and the Product during the Term of this Agreement).

 

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

 

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

 

8.7.          Survival of
Certain Obligations. Survival. The following Sections of this
Agreement will, to the extent applicable, survive expiration or termination and
will continue in full force and effect: 1 (Definitions), 2.3 (Joint
Technology), 2.9 (No Other Rights), 4.5 (Records and Audits) (for a period of
one year from termination or expiration), 4.8 (Confidentiality), 4.10 [**], 5.1 (Confidentiality), 5.2
(Restrictions) (for [**] months after termination, in accordance with the terms of such
Section), 5.4 (Nonsolicitation of Employees) (for [**] year after termination, in
accordance with the terms of such Section), 5.5 (Standstill Agreement) (for
three years after termination, in accordance with the terms of such Section),
6.6 (Disclaimer), 7.2.1 (Ownership of Technology), 7.10 (No Implied Licenses),
7.11 (Privileged
Communications), 8.7 (Survival), 8.5.2 (Consequences of a Change of
Control), 8.6 (Effects of Termination), 8.7 (Survival of Certain Obligations),
9.1 through 9.3 (Indemnification, Procedure) (solely with respect to claims
concerning events prior to termination), 9.5 (Liability Limitations), and 10
(Miscellaneous).  In addition, expiration
or termination of this Agreement will not relieve the Parties of any obligation
accruing before such expiration or termination. Any expiration or early
termination of this Agreement will be without 

 

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

 

57

 

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

 

9.             PRODUCT LIABILITY,
INDEMNIFICATION, AND INSURANCE

 

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

 

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

 

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

 

58

 

use of the Licensed Compound in the Product; or (iv) any recall or
withdrawal of the Product in the Field in the Territory, to the extent
attributable to acts of Astellas; except in each case, to the extent caused by
the negligence or willful misconduct of Ironwood or any Ironwood Indemnified
Party, or by breach of this Agreement by Ironwood.

 

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

 

9.4.          Insurance. Each Party
further agrees to use Commercially Reasonable Efforts to obtain and maintain,
during the Term of this Agreement, commercial general liability insurance,
including products liability insurance, with reputable and financially secure
insurance carriers to cover its indemnification obligations under Sections 9.1
or 9.1, as applicable, or self-insurance, with limits of not less than [**] million dollars per
occurrence and [**] million dollars in the aggregate ($[**] in the aggregate from and
after Commercial Launch).

 

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

 

59

 

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

 

10.          MISCELLANEOUS.

 

10.1.        Governing Law;
Jurisdiction; Dispute Resolution.

 

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

 

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

 

For Ironwood:    Its Chief
Executive Officer or his designate

For Astellas:       Its Chief
Executive Officer or his designate

 

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

 

10.1.3.     Arbitration.

 

(a)           Claims. Any claim,
dispute, or controversy of whatever nature arising between the Parties out of
or relating to this Agreement that is not resolved under Section 10.1.2
within the required [**] time period, including without limitation, any action or claim based
on tort, contract, or statute (including any claims of breach or violation of
statutory or common law protections from discrimination, harassment and hostile
working environment), or concerning the interpretation, effect, termination,
validity, performance and/or breach of this Agreement (“Claim”), will be

 

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

 

60

 

resolved by final and binding arbitration before a panel of three
experts with relevant industry experience (the “Arbitrators”). One
Arbitrator will be chosen by Ironwood and one Arbitrator will be chosen by
Astellas within 15 days from the notice of initiation of arbitration. The third
Arbitrator will be chosen by mutual agreement of the Arbitrator chosen by
Ironwood and the Arbitrator chosen by Astellas within 15 days of the date that
the last of such Arbitrators were appointed. The Arbitrators will be
administered by the International Chamber of Commerce (the “Administrator”)
in accordance with its then existing arbitration rules or procedures
regarding commercial or business disputes. The arbitration will be held in
Tokyo, Japan, if requested by Ironwood and in New York, New York, if requested
by Astellas. The Arbitrators will be instructed by the Parties to complete the
arbitration within 90 days after selection of the final Arbitrator.

 

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

 

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

 

(d)           Compliance with
this Agreement. Unless the Parties otherwise agree in writing,
during the period of time that any arbitration proceeding is pending under this
Agreement, the Parties will continue to comply with 

 

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

 

61

 

all those terms and provisions of this Agreement that are not the
subject of the pending arbitration proceeding.

 

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

 

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

 

10.3.        Additional
Approvals. Astellas and Ironwood will cooperate and use
respectively all reasonable efforts to make all other registrations, filings
and applications, to give all notices and to obtain as soon as practicable all
governmental or other consents, transfers, approvals, orders, qualifications
authorizations, permits and waivers, if any, and to do all other things
necessary or desirable for the consummation of the transactions as contemplated
hereby. Neither Party will be required, however, to divest or out-license 

 

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

 

62

 

products or assets or materially change its business if doing so is a
condition of obtaining any governmental approvals of the transactions
contemplated by this Agreement.

 

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

 

10.5.        Notices.

 

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

 

10.5.2.     Address for
Notice.

 

For
Ironwood:

 

Ironwood
Pharmaceuticals, Inc.

320
Bent Street

Cambridge,
MA 02141

Fax:         617-494-0908

Attn:       Vice President, Business
Development

 

With
a copy to:

 

Ropes &
Gray LLP

One
International Place

Boston,
MA 02110

 

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

 

63

 

Fax:         617-951-7050

Attn:       Marc Rubenstein

 

For
Astellas:

 

Astellas
Pharma Inc.

3-11,
Nihonbashi-Honcho 2-chome

Chuo-ku,
Tokyo 103-8411, Japan

Fax:
+81 3-3244-3245

Attn:
Vice President, Licensing & Alliances

 

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

 

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

 

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

 

10.9.        No Benefit to
Others. The provisions of this Agreement are for the sole benefit of the
Parties and their successors and permitted assigns, and they will not be
construed as conferring any rights in any other persons except as otherwise
expressly provided in this Agreement.

 

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

 

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

 

64

 

delivered by facsimile transmission will be as effective as an original
executed signature page.

 

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

 

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

 

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

 

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

 

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

 

65

 

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

 

 

	
  IRONWOOD
  PHARMACEUTICALS, INC.

  	
   

  	
  ASTELLAS
  PHARMA INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Peter Hecht

  	
   

  	
  By:

  	
  /s/
  Yoshihiko Hatanaka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Peter
  Hecht

  	
   

  	
  Name:

  	
  Yoshihiko
  Hatanaka

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
  Title:

  	
  Senior
  Corporate Executive

  

 

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

 

66

 

EXHIBIT A

 

LAUNCH PLAN

 

[**]

 

	
  Functional

  Group

  	
   

  	
  Start (based on

  expected

  launch)

  	
   

  	
  Key action, Program, Activities

  	
   

  	
  Duration (approximate

  and non-binding)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[**]

 

EXHIBIT B

 

PRODUCT SPECIFICATION

 

[**]

 

	
  Attributes

  	
   

  	
  Analytical Procedure

  (Test ID)

  	
   

  	
  Specifications

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[**]

 

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

 

67

 

EXHIBIT C

 

INITIAL DEVELOPMENT AND
REGULATORY PLAN

 

[**]

 

	
  Phase

  	
   

  	
  I

  	
   

  	
  I

  	
   

  	
  IIb

  	
   

  	
  III

  	
   

  	
  III

  
	
  Study Title

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Objectives

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Design

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Subjects

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Control

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Doses

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Formulation

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Dosing Duration

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  No. of Subjects

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Assessment

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Study Period

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Area

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Study Cost

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  Remarks

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

EXHIBIT D

 

PHARMACOVIGILANCE AGREEMENT

(To be entered into by the parties)

 

SCHEDULE 1.87

 

LICENSED COMPOUND

 

[**]

 

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

 

68

 

SCHEDULE 3.4

 

MANUFACTURING AND SUPPLY –
MINIMUM TERMS

 

[**]

 

SCHEDULE 4.6

 

TAX TREATY DOCUMENTATION

 

·                  Attachment Form for Limitation on
Benefits Article

·                  Application Form for Income Tax
Convention

·                  U.S. Treasury Residency Certification

 

SCHEDULE 5.2

 

EXCLUDED PRODUCTS

 

	
  Product
  or Candidate Name

  	
   

  	
  Target Indication

  	
   

  	
  Mechanism of Action

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[**]

 

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

 

69

 

SCHEDULE 6.2(a)

 

IRONWOOD PATENT RIGHTS

 

	
  Country

  Name

  	
   

  	
  Title

  	
   

  	
  Serial #

  	
   

  	
  Filing Date

  	
   

  	
  Publication #

  	
   

  	
  Status

  
	
  JAPAN

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  2006-503109

  	
   

  	
  1/28/2004

  	
   

  	
   

  	
   

  	
  PENDING

  
	
  SOUTH KOREA

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  10-2005-7013966

  	
   

  	
  1/28/2004

  	
   

  	
  10-2005-0106404

  	
   

  	
  PUBLISHED

  
	
  PHILLIPINES

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  1-2005-501375

  	
   

  	
  1/28/2004

  	
   

  	
   

  	
   

  	
  PENDING

  
	
  JAPAN

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  2007-502956

  	
   

  	
  3/8/2005

  	
   

  	
   

  	
   

  	
  PENDING

  
	
  SOUTH KOREA

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  10-2006-7020883

  	
   

  	
  3/8/2005

  	
   

  	
  10-2007-0007332

  	
   

  	
  PUBLISHED

  
	
  PHILLIPINES

  	
   

  	
  Methods and Compositions for the Treatment of Gastrointestinal
  Disorders

  	
   

  	
  1-2006-501699

  	
   

  	
  3/8/2005

  	
   

  	
   

  	
   

  	
  PENDING

  
	
  WIPO

  	
   

  	
  Protein Expression Methods

  	
   

  	
  PCT/US2009/003879

  	
   

  	
  6/30/2009

  	
   

  	
   

  	
   

  	
  PENDING

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

SCHEDULE 6.3

 

ASTELLAS PRODUCTS

 

	
  Product
  or Candidate Name

  	
   

  	
  Target Indication

  	
   

  	
  Mechanism of Action

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

[**]

 

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

 

70Converted by EDGARwiz

Exhibit 10.2

ADDENDUM TO SHARE EXCHANGE AGREEMENT

THIS ADDENDUM to the SHARE EXCHANGE AGREEMENT  

is entered into by and among

ZERO EMISSION PEOPLE, LLC., a Delaware corporation (hereafter “ZEP”)

and

WIND WORKS POWER CORP., a Nevada corporation (hereafter “WW”)

as of January 21, 2010, all parties referred to both individually and collectively as the “Party” or the “Parties”.

WHEREAS the Parties have entered a SHARE EXCHANGE AGREEMENT (hereafter “SHARE EXCHANGE AGREEMENT”)  with each other dated 27th October 2009, in terms of which WW has agreed to issue a total amount of 31,000,000 shares to ZEP at dates specified therein as consideration for WW receiving equity stakes in the following projects:

Project Name

Equity Stake

1.

Grey Highlands

100%

2.

Snowy Ridge 

100%

3.

Whispering Woods

50%

4.

Clean Breeze 

50%

5.

Zorra Festival 

50%

6.

Settlers Landing 

50%

7.

Pleasant Bay

50%

8.

 Polar Bear 

50%

9.

Grand Prairie

100%

10.

Baker 

90%

AND WHEREAS the Parties have entered a Joint Venture Agreement with each other dated 18th September 2009 in terms of which WW has agreed to issue a total amount of 1,500,000 shares to ZEP as consideration for WW receiving equity stakes in the following projects:

Project Name

Equity Stake

1.

Grey Highlands

50%

2.

Snowy Ridge 

50%

AND WHEREAS the Parties have entered a Joint Venture Agreement with SUNBEAM, LLC, a Limited Liability company formed under the laws of the State of Delaware, (hereafter “SUN”), dated 20th September 2009 in terms of which the Parties have agreed to issue a total amount of 9,800,000 shares to SUN as consideration for the Parties receiving equity stakes in the following projects:

Project Name

Equity Stake

1.

Whispering Woods

50%

2.

Clean Breeze 

50%

3.

Zorra Festival 

50%

4.

Settlers Landing 

50%

5.

Pleasant Bay

50%

6.

 Polar Bear 

50%

AND WHEREAS the Parties have entered a Term Sheet Agreement with GLOBAL WINDS HARVEST, LLC, a Limited Liability company formed under the Laws of the State of Delaware, (hereafter “GWH”), dated 27th October 2009 in terms of which the Parties have agreed to issue a total amount of 18,700,000 shares to GWH as consideration for the Parties receiving equity stakes in the following projects:

Project Name

Equity Stake

1.

 Grand Prairie

100%

2.

Baker 

90%

AND WHEREAS the Parties have issued a number of shares in furtherance of their obligations under the above mentioned agreements,

 

AND WHEREAS the Parties wish to add and acknowledge certain provisions to be included into the SHARE EXCHANGE AGREEMENT,

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto hereby agree as follows:

I.

SHARE ISSUANCE AS PER SECTION 2.2.  The Parties hereto agree to defer the issuance date of the shares due on 15th January 2010 as per Section 2.2. of the SHARE EXCHANGE AGREEMENT until the earlier of

1.

ZEP delivering its audited financial statements as per closing deliveries

or

2.

1st March 2010

I.

PREVIOUS AGREEMENTS.

a.

The Parties hereto agree that any provisions in regards to considerations in shares made in the agreements referred to above shall be herewith superseded by the SHARE EXCHANGE AGREEMENT in the terms and provisions made therein for consideration. 

b.

The Parties hereto further acknowledge that any amount of shares issued by WW as consideration as per provisions contained in any of the previous agreements, attached hereto as shall be subtracted from the overall amount of shares due under the SHARE EXCHANGE AGREEMENT if such a previous issuance does concern a Project that is part of both the agreement under which the shares were issued previously and the SHARE EXCHANGE AGREEMENT.

	 

	 

	

[Signatures on following page]

IN WITNESS WHEREOF, this ADDENDUM to THE SHARE EXCHANGE AGREEMENT has been duly executed and delivered by the duly authorized representatives of the parties hereto as of the date first above written.

Wind Works Power Corporation

By: 

Name:

Ingo Stuckmann

Title:   CEO

Zero Emission People, LLC

By: 

Name:

Ingo Stuckmann

Title:   Managing Member

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