Common use of Minimum Purchase Requirements Clause in Contracts

Minimum Purchase Requirements. At the end of the eighteen (18) month period following the Launch Date (the “First Review Period”) and at the end of the eighteen (18) month period following the First Extension Date (as hereinafter defined) (the “Second Review Period”), if applicable, the Company shall evaluate Distributor’s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements (“Minimum Purchase Requirements”) as set forth on Exhibit A hereto for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Period, the Company shall have the option (the “Buy Back Option”), in its sole and absolute discretion: (i) to reduce the Term of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions of this Agreement set forth on Exhibit A (the “Excluded Terms”), (ii) to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****, and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $****, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Period.

Minimum Purchase Requirements. At (a) During the end first five years, commencing with the first full calendar quarter after the First Commercial Sale of Product in the United States with FDA approval of an indication for anxiety (the "Five-Year Period"), regardless of the eighteen actual Purchase Price in effect from time to time in accordance with Section 5.3, and subject to the provisions of Sections 5.8(c) or (18d) month period following or absent reasonable cause for delay, as determined by the Launch Date Joint Development Committee, BMS shall effect and pay for minimum aggregate worldwide purchases of Finished Product in the U.S. dollar amounts set forth on ANNEX F attached hereto (the “First Review Period”"Minimum Purchase Requirement"). (b) It is expressly understood and at agreed that if, upon the end expiration of any of the eighteen periods set forth on ANNEX F. BMS shall not have taken delivery of Finished Products and effected payment for purchase thereof in the aggregate amounts indicated for such periods, Sano shall immediately establish an invoice for the difference, which amount shall be paid by BMS within 30 days thereafter. Payment by BMS of such amount shall be considered in compliance with the Minimum Purchase Requirement for the immediately preceding applicable period, notwithstanding failure by BMS to order corresponding quantities of Finished Products for delivery during such period, and shall give rise to a credit against future purchases, but such credit shall be applicable only if and when purchases of Finished Products during the current period, and payments therefor, shall exceed, when cumulated with the minimum amounts for the preceding period, the aggregate minimum for the then current period. In such case such credit, to the extent not previously used, shall first be applicable, until used in full, to such additional orders during such period or carried forward as a credit, in the same manner and to be used in the same conditions, for the next applicable period, provided that no credit following final payment shall be carried forward beyond the expiration of the Five-Year Period. (18c) month period following Notwithstanding the First Extension Date foregoing, if at any time and from time to time Sano cannot supply all Finished Product ordered by BMS pursuant to this Agreement for any reason, including but not limited to any force majeure event described in Section 12, other than failure by BMS to provide the Bulk Materials necessary to formulate such Finished Product, BMS shall be relieved of its minimum purchase obligation with respect to that amount of the aggregate Purchase Price that would have been applicable for such quantity of Finished Product, and such amount shall be deducted from the amounts set forth on ANNEX F for the applicable period(s) in which such orders were placed and all subsequent periods. (d) Notwithstanding the foregoing, it is understood and agreed that if, for reasons of commercial impossibility resulting from BMS's compliance with lawfully enacted and binding governmental mandates as hereinafter defined) (the “Second Review Period”referred to in Section 5.3(b), if applicable, the Company shall evaluate Distributor’s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements cannot be attained, the Parties will meet to discuss appropriate mechanisms for relief. (“Minimum Purchase Requirements”e) as Any payments made by BMS to Sano pursuant to this Section 5.8 shall constitute the sole remedy and the sole compensation to Sano for any failure by BMS to effect the minimum purchases set forth on Exhibit A hereto herein. The foregoing shall not limit Sano's remedies for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Period, the Company shall have the option (the “Buy Back Option”), in its sole and absolute discretion: (i) to reduce the Term a breach by BMS of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions any other Section of this Agreement set forth on Exhibit A (the “Excluded Terms”)Agreement, (ii) including but not limited to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** Sections 3.6 and to reduce the Distributor Discount on any Products other than Systems to ****, and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $****, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Period3.7.

Minimum Purchase Requirements. At the end of the eighteen (18) month period following the Launch Date (the “First Review Period”) and at the end of the eighteen (18) month period following the First Extension Date (as hereinafter defined) (the “Second Review Period”), if applicable, the Company shall evaluate Distributor’s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements (“Minimum Purchase Requirements”) as set forth on Exhibit A hereto for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Period, the Company shall have the option (the “Buy Back Option”), in its sole and absolute discretion: (i) to reduce the Term of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions of this Agreement set forth on Exhibit A (the “Excluded Terms”), (ii) to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****, and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $****, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed **** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Period.

Minimum Purchase Requirements. At the end (1) Distributor agrees to purchase and take delivery of the eighteen (18) month period following minimum amount of Products during each year during the Launch Date (the “First Review Period”) and at the end term of the eighteen (18) month period following the First Extension Date (this Agreement as hereinafter definedestablished pursuant to this Section 2(f)(1) (the “Second Review Period”), if applicable, the Company shall evaluate Distributor’s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements (“Minimum Purchase Requirements”) as ). The initial Minimum Purchase Requirements are set forth on attached Exhibit A hereto C. Distributor acknowledges that, for either the First Review Period (subject reasons stated in Section 2(a) above relating to adjustment as provided the Products being new products in the following paragraph) or early stages of introduction to the Second Review PeriodTerritory and elsewhere, EnteroMedics has limited information as of the Effective Date about market demand, pricing, the Company shall have the option (the “Buy Back Option”)desired speed of introduction, in its sole and absolute discretion: (i) other factors relating to reduce the Term of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions of this Agreement set forth on Exhibit A (the “Excluded Terms”), (ii) to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of and the Territory and/or on which to distribute itself or through any of its Affiliates any or all of base the Products to Customers within any part or all of the TerritoryMinimum Purchase Requirements. Accordingly, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****, and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives agrees that were earned during the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements set forth on Exhibit C state the minimum amounts for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), Minimum Purchase Requirements and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for 2013 and thereafter may be increased by EnteroMedics consistent with the First Review Periodstrategy that EnteroMedics adopts for development of the market in the Territory and based on information that EnteroMedics obtains through its market research and market development activities, then taking into account information and advice provided by Distributor. If the parties are unable to agree on the Minimum Purchase Requirements for 2013 or any calendar year thereafter (and for any periods within any such calendar year), EnteroMedics may exercise its remedies as provided in the First Review Period last sentence of Section 6(b) and Section 6(f). Distributor further agrees that the Minimum Purchase Requirements are not intended to state, and shall not be reduced interpreted to state, a commitment by an amount equal EnteroMedics to the LESSER of (A) $****, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems sell to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result any particular quantities of the foregoing reduction Distributor shall still have failed Products in any time period. (2) Distributor’s failure to satisfy achieve the Minimum Purchase Requirements for the First Review Period then the Company any time period shall have the right entitle EnteroMedics to exercise the Buy Back Option its remedies as provided in the preceding paragraph. In the event last sentence of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed Section 6(b) and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced aboveSection 6(f). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of acknowledges and agrees that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in it has assisted EnteroMedics to fix the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributorminimum purchase quantities stated on Exhibit C, or (ii) the minimum purchase quantities are reasonable in view of Distributor’s capabilities and market conditions in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar Territory, and (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The iii)the provisions of this Section 2.3 shall be 2(f) are essential to this Agreement as stating the Company’s sole and exclusive remedy minimum amount of Product sales which justify EnteroMedics’ grant to Distributor of distribution rights for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review PeriodProducts.

Minimum Purchase Requirements. At Subject to the terms and conditions of this Agreement (including LONZA’s capacity to manufacture and actual manufacture and supply of Product) and the last sentence of this Section 7.7, (i) until the [***] anniversary of the Initiation Date, CLIENT and its Affiliates shall order [***] of CLIENT’s aggregate production needs for Product for commercialization within the Territory from LONZA and (ii) following the [***] anniversary of the Initiation Date until the end of the eighteen (18) month period following the Launch Date (the “First Review Period”) Term, CLIENT and its Affiliates shall order at the end of the eighteen (18) month period following the First Extension Date (as hereinafter defined) (the “Second Review Period”), if applicable, the Company shall evaluate Distributor’s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements (“Minimum Purchase Requirements”) as set forth on Exhibit A hereto for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Period, the Company shall have the option (the “Buy Back Option”), in its sole and absolute discretion: (i) to reduce the Term of the Agreement to a period of least [**** ] of CLIENT’s aggregate production needs for Product for commercialization within the Territory from LONZA, in each case in accordance with the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) terms and to remove the provisions conditions of this Agreement and in all cases in accordance with the Minimum Binding Order obligations set forth in Section 7.6. For purposes of determining compliance with this Section 7.7, the measurement shall be based on Exhibit A (the “Excluded Terms”)percentage of Product ordered from LONZA compared to the Product ordered from all other sources, (ii) to designate one or more additional distributors in each case solely for sales of any or all of the Products to Customers commercialization within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, . CLIENT shall provide a Third Party auditor selected by LONZA (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****which CLIENT has no reasonable objection, and (ivshall not unreasonably withhold, delay or condition its consent) for purposes of confirming CLIENT’s compliance with this Section 7.7 and in accordance with Section 9.8.3 with reasonable documentation to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Periodevidence compliance with this Section 7.7. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed LONZA has materially breached this Agreement and such material breach is not cured within the time periods set forth in Section 14.2, CLIENT shall not be obligated to satisfy the Minimum Purchase Requirements for minimum order requirements set forth in this Section 7.7 until such time as the First Review Periodbreach is cured, at which point, the minimum order obligations set forth in this Section 7.7 shall resume. In the event that CLIENT fails to meet its minimum order requirements set forth in this Section 7.7, then at CLIENT’s election, CLIENT shall either (a) order a number of Batches to remedy such shortfall as part of the Minimum Purchase Requirements for next possible Campaign which can accommodate such Batches, but no later than [***] from discovery of the First Review Period shortfall, if such Batches cannot be added during such period, as determined by the JSC, then (b) shall be reduced by apply or (b) pay LONZA an amount equal to the LESSER then per Batch price times the number of (A) $****Batches by which CLIENT fell short from its ordering requirement. Additionally, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems any Batches ordered by CLIENT from a Third Party after LONZA notifies CLIENT under Section 7.2 that it will not be able to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor supply shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall not be deemed removed and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of taken into consideration when determining whether CLIENT met its order requirements under this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Period7.7.

Minimum Purchase Requirements. At (a) Subject to the end provisions of Article IX, during each Contract Year during the term of this Agreement (or, in the case of the eighteen first Contract Year, including the period beginning from the Effective Date through the date of the first Commercial Sale), BAS agrees to place purchase orders with SSC for a quantity of Products and/or Improvements not less than the quantity applicable to such Contract Year, as set forth in Exhibit B, which is attached hereto and incorporated herein (18) month period following hereinafter referred to as the Launch Date ("Minimum Purchase Requirements"). Subject to the “First Review Period”) and provisions of Article IX, in the event BAS, during any Contract Year during the term of this Agreement, fails to place purchase orders with SSC for a quantity of Products and/or Improvements at least as great as the quantity applicable to such Contract Year as set forth in the Minimum Purchase Requirements, if SSC is not in breach of its obligations hereunder at the end time of such failure, BAS shall, at its option, either (i) purchase from SSC the eighteen (18) month period following the First Extension Date (as hereinafter defined) (the “Second Review Period”), if applicable, the Company shall evaluate Distributor’s purchase number of units of Products under this Agreement. If Distributor fails to satisfy equaling the difference between the Minimum Purchase Requirements for such Contract Year less the number of units of Products actually purchased by BAS from SSC (“the "Shortfall"), or (ii) pay to SSC an amount equal to the Shortfall for such Contract Year multiplied by 80%-. In the event BAS satisfies the obligations set forth in either (i) or (ii) above, then this Agreement will continue on its terms. In the event that BAS does not elect option (i) or (ii) above within 60 days following the completion of any Contract Year in which it has not purchased the Minimum Purchase Requirements”) , SSC as set forth on Exhibit A hereto for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Periodits sole and exclusive remedy, the Company shall have the option (the “Buy Back Option”), in its sole and absolute discretion: (i) right to reduce the Term of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions of terminate this Agreement set forth on Exhibit A (the “Excluded Terms”), (ii) to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****, and (iv) to cease the demand payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during an amount obtained by multiplying a) the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion aggregate number of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) units comprising the Minimum Purchase Requirements for the remaining months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”)Initial Term or any renewal term, and (ii) notwithstanding the provisions of Exhibit Aas applicable, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $****, or (Bb) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result number which is eighty percent (80%) of the foregoing reduction Distributor shall still have failed per unit sales price of Products to satisfy the Minimum Purchase Requirements for the First Review Period BAS then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Periodeffect.

Minimum Purchase Requirements. At (i) The First Supply Year shall commence on the end first day of the eighteen first month included in the Initial Quarterly Forecast, and shall continue for twelve (1812) month period months thereafter. During the First Supply Year and for each Supply Year thereafter until this Agreement expires or is terminated, CUSTOMER shall purchase from POLYPEPTIDE an amount of PRODUCT to be sold or distributed in the Territory equal to at least: (a) [**] percent ([**]%) of CUSTOMER’s demand for the Territory during the Supply Year if the applicable price for PRODUCT under the Agreement during such Supply Year is at least [**] less than [**] for [**] = 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. supplying PRODUCT (in each case, in similar quantities and meeting the Specifications, (b) [**] percent ([**]%) of CUSTOMER’s demand for the Territory during the Supply Year if the applicable price for PRODUCT under the Agreement during such Supply Year is less than [**] above [**] for supplying PRODUCT (in each case, in similar quantities and meeting the Specifications), or (c) [**] percent ([**]%) of CUSTOMER’s demand for the Territory during the Supply Year if (i) the applicable price for PRODUCT under the Agreement during such Supply Year is [**] above [**] for supplying PRODUCT (in each case, in similar quantities and meeting the Specifications), but does not exceed the applicable price set forth on Appendix D hereto(1), or (ii) if CUSTOMER elects to manufacture PRODUCT internally or through an Affiliates (as applicable from time to time, the “Minimum Requirement”); provided, that, in each case, POLYPEPTIDE has demonstrated, to the satisfaction of CUSTOMER, its ability to produce and sustain the production of PRODUCT in quantities sufficient to support the applicable Minimum Requirement. If POLYPEPTIDE is unable to make such demonstration to CUSTOMER’s satisfaction, the Minimum Requirement shall be reduced to a lower percentage of CUSTOMER’s total demand for the Territory with respect to which POLYPEPTIDE is able to demonstrate its ability to produce and sustain production. Notwithstanding anything to the contrary set forth herein, the Minimum Requirement shall not exceed [**]. (ii) Within [**] days following the Launch Date (the “First Review Period”) and at the end Effective Date, CUSTOMER shall, subject to applicable confidentiality obligations, provide evidence of the eighteen (18) month period following the First Extension Date third party supplier pricing or evidence of internal manufacturing costs (as hereinafter definedthe case may be) (for Product and evidence that the “Second Review Period”), if applicable, the Company shall evaluate Distributoralternative supplier’s purchase of Products commercial product passes release testing requirements comparable to that required under this Agreement. Based on such evidence, the parties shall determine the initial Minimum Requirement. No later than [**] days prior to the first day of each Supply Year, CUSTOMER may notify POLYPEPTIDE (the “Competitive Offer Notice”) that it can purchase from a reputable third party supplier, PRODUCT that: (a) meets (1) Volume-based pricing will initially be based on aggregate supply by POLYPEPTIDE to Customer and its Affiliates and licensees in the Territory. In the event that Ironwood, or its licensees, seek to engage POLYPEPTIDE to manufacture PRODUCT for sale outside of the Territory, POLYPEPTIDE agrees to negotiate in good faith pricing schedules under this Agreement and under such additional territory agreements that fairly reflect the efficiencies associated with the manufacture of the additional volume of 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. the Specifications, and (b) is offered at a price for similar quantities (taking into consideration any other fees paid to such third party supplier that affect pricing), that is lower than the then-current price for PRODUCT purchased under this Agreement by an amount that would result in a reduction to the then-current Minimum Requirement. Upon receipt of such notice, CUSTOMER and POLYPEPTIDE shall meet and discuss whether POLYPEPTIDE can improve its cost structure within a reasonable period of time in order to match the other source. Following issuance of the Competitive Offer Notice, at the request of POLYPEPTIDE, CUSTOMER shall, subject to applicable confidentiality obligations, provide evidence of the third party offer or evidence of internal costs (as the case may be) and evidence that the alternative supplier’s commercial product passes release testing requirements comparable to that required under this Agreement. POLYPEPTIDE shall have [**] days from its receipt of the Competitive Offer Notice to notify CUSTOMER in writing that it is willing to reduce its pricing under this Agreement in order to maintain (or increase) the then-current Minimum Requirement. If Distributor POLYPEPTIDE does not deliver such notice within such time period, then the Minimum Requirement shall be reduced in accordance with Section 7.2(i) above. Reduced pricing (if applicable) shall apply to any Firm Purchase Orders issued after CUSTOMER’s receipt of POLYPEPTIDE’s written notice of price reduction. This process and its impact on the Rolling Forecast is illustrated on Appendix B. If POLYPEPTIDE reduces its pricing under this Agreement pursuant to a Competitive Bid Notice and the third party supplier with the competitive pricing fails to satisfy obtain regulatory approval for the PRODUCT or withdraws its application for regulatory approval for PRODUCT, POLYPEPTIDE’s price reduction shall be null and void and the purchase price for PRODUCT shall revert back to the purchase price prior to the price reduction. [**]. (iii) In addition to, or in lieu of, the Competitive Offer Notice, no later than [**] days prior to the first day of each Supply Year, CUSTOMER may notify POLYPEPTIDE that it intends to commence the manufacture of PRODUCT internally, or through an Affiliate. In such case, the Minimum Purchase Requirements (“Minimum Purchase Requirements”Requirement shall be reduced to [**] percent [**]%) of CUSTOMER’s demand for the Territory during the Supply Year as set forth in 7.2(i)(c) above. This process and its impact on Exhibit A hereto for either the First Review Period Rolling Forecast is illustrated on Appendix B. [**] = 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. (subject to adjustment as provided iv) Notwithstanding the above, in the following paragraphevent that: (a) CUSTOMER has placed Firm Purchase Orders with POLYPEPTIDE consistent with the Minimum Requirement, and during any period of [**] consecutive months, POLYPEPTIDE is unable to make timely delivery of the amounts set forth in the Firm Purchase Orders for any reason, or the Second Review Period(b) POLYPEPTIDE becomes bankrupt as set forth in Section 8.5, then, in either case, the Company applicable Minimum Requirement shall have the option (the “Buy Back Option”)be reduced to such amount as CUSTOMER shall, in its sole and absolute discretion: discretion (i) to reduce the Term but after consultation with POLYPEPTIDE if practicable in light of the Agreement circumstances giving rise to a period the failure of **** from the date which is **** after receipt by Distributor of the Company’s notice of exercise of the Buy Back Option (“Buy Back Effective Date”) and to remove the provisions of this Agreement set forth on Exhibit A (the “Excluded Terms”timely delivery), (ii) determine POLYPEPTIDE is able to designate one or more additional distributors for sales of any or all of the Products provide to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to ****CUSTOMER, and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Period. Notwithstanding the foregoing, Company this amount shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company. For the sole purpose of calculating the Company’s right to exercise the Buy Back Option with respect to the First Review Period only: (i) become the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $**** (the “September/October Target Amount”), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $****, or (B) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph. In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed and the Agreement (as revised) shall continue in full force and effect Requirement for the remainder of the Term (as reduced above)Term. Written notice The procedure set forth herein shall be repeated if the triggering events arise again after adjustment of the Company’s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company’s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review PeriodRequirement.