Confidential Materials
  omitted and provided separately with the

  	
   

  	
  Exhibit
  10.30

  
	
   

  	
   

  	
  Securities and
  Exchange Commission. Asterisks denote omissions.

  	
   

  	
   

  



EXECUTION COPY


ELAN PHARMA INTERNATIONAL


LIMITED


AND


NITROMED,
INC.






LICENSE AGREEMENT















INDEX


	
  1.

  	
   

  	
  Definitions and Interpretation

  	
   

  
	
  2.

  	
   

  	
  The License

  	
   

  
	
  3.

  	
   

  	
  Intellectual Property

  	
   

  
	
  4.

  	
   

  	
  Non-Competition

  	
   

  
	
  5.

  	
   

  	
  Registration, Marketing and the Promotion of the
  Product

  	
   

  
	
  6.

  	
   

  	
  Production License

  	
   

  
	
  7.

  	
   

  	
  Financial Provisions

  	
   

  
	
  8.

  	
   

  	
  Payments, Reports and Audits

  	
   

  
	
  9.

  	
   

  	
  Duration and Termination

  	
   

  
	
  10.

  	
   

  	
  Consequences of Termination

  	
   

  
	
  11.

  	
   

  	
  Warranties, Indemnification and Liability

  	
   

  
	
  12.

  	
   

  	
  Confidentiality

  	
   

  
	
  13.

  	
   

  	
  Miscellaneous Provisions

  	
   

  
	
  Schedule
  1

  	
   

  	
  Technological Competitors of Elan

  	
   

  
	
  Schedule
  2

  	
   

  	
  Key Terms for Supply Agreement

  	
   

  
	
  Schedule
  3

  	
   

  	
  Product Manufacturing Costs

  	
   

  



 
















THIS AGREEMENT
is dated 9 February, 2007.


PARTIES:


(1)                                 ELAN PHARMA INTERNATIONAL LIMITED, a public limited company incorporated
under the laws of Ireland, having its registered office at Monksland Industrial
Estate, Athlone, County Westmeath Ireland (“Elan”);
and


(2)                                 NITROMED,
INC., a Delaware corporation, having its principal place of business at 125
Spring Street, Lexington MA 02421-7801 (“NitroMed”).


BACKGROUND:


(A)                              Elan
possesses certain proprietary technology and confidential information used or
useful in the manufacture and use of pharmaceutical products displaying a
sustained or modified release profile, as described more fully below.


(B)                                NitroMed
is developing pharmaceutical formulations containing the Compound, as defined
below.


(C)                                NitroMed
wishes to enter into this Agreement to obtain the right to utilize the Elan
Intellectual Property (as defined below) to import, use, offer for sale and
sell the Product in the Field in the Territory, on the terms and conditions set
out below.


(D)                               Simultaneously
with this Agreement, Elan’s Affiliate EDDI (as defined below) and NitroMed have
entered into a Development Agreement whereby EDDI is to develop the Product
(the “Development Agreement”).


TERMS:


The parties agree as follows:


1.                                      DEFINITIONS AND INTERPRETATION


1.1.                              Definitions.  In this Agreement:


“Affiliate” means any corporation or
entity controlling, controlled or under common control with Elan or NitroMed,
as the case may be.  For the purposes of
this Agreement, “control” means the direct or indirect ownership of more than
50% of the issued voting shares or other voting rights of the subject entity to
elect directors, or if not meeting the preceding criteria, any entity owned or
controlled by or owning or controlling at the maximum control or ownership right
permitted in the country where such entity exists.


“Agreement” means this license agreement
(which expression shall be deemed to include its Recitals and Schedules).


“BiDil” means the existing immediate
release product containing the Compound that is currently marketed in the
United States by NitroMed.



 2
 









“Business Days” means Monday to Friday
inclusive, excluding any days on which the clearing banks are generally closed
in Dublin and/or New York.


“Claims” means all and any claims
(whether successful or otherwise), loss, liability, damages and expenses,
including reasonable attorneys’ fees and expenses and legal costs.


“CMC Section” means the chemistry,
manufacturing, and controls section of the Regulatory Application in the USA as
defined in 21 C.F.R. Section 314.50 (1) relating to the Product, as may be
amended from time to time, and/or its equivalent in other Regulatory
Applications.


“Competitive Product” means any
pharmaceutical product (other than the Product itself) that has received final
regulatory approval (including marketing, pricing, reimbursement and any other
applicable approval) from the applicable Governmental Authority in a country in
the Territory for use solely for the treatment of heart failure as an adjunct
to current standard therapy in self-identified black patients to improve
survival.


“Compound” means the combination of the
active drug substances isosorbide dinitrate and hydralazine HCl and/or other
salts, bases and isomeric forms of each.


“Compound Data” means data relating to
the Compound generated by NitroMed or EDDI pursuant to the R&D Program.


“DMF” means the Drug Master File, as
defined in the 21 C.F.R., Section 314.420  and/or its
equivalent in the other countries of the Territory, which Elan (or an
Affiliate) may file in respect of the Elan Technology and the application of
the Elan Technology as regards the Product.


“EDDI” means Elan Drug Delivery  Inc., a Delaware corporation, having its
principal place of business at 3000 Horizon
Drive, King of Prussia, PA 19406


“EEA” means the Member States of the
European Economic Area, as same may change from time to time in terms of Member
States.


“EHI” means Elan Holdings, Inc a
Delaware corporation having its principal place of business at 1300 Gould
Drive, Gainesville, GA 30504, USA.


“Effective Date” means the date of this
Agreement as first set forth above.


“Elan Improvements” means any and all
improvements to the Elan Patents, the Elan Know-How, the Elan Technology and/or
the Product Patents that have been conceived, created, developed and/or
otherwise invented by Elan and/or NitroMed under the R&D Program, or
otherwise pursuant to this Agreement.


“Elan Intellectual Property” means the
Elan Know-How, the Elan Patents, the Elan Improvements and the Product Patents.


“Elan Know-How” means any and all rights
owned, licensed or controlled by Elan as of the Effective Date to any
scientific, pharmaceutical or technical information, data, discovery, invention
(whether patentable or not), know-how, substances, techniques, processes,
systems, formulations, designs and expertise relating to the Elan Technology
which is not generally known to the public.



 3
 









“Elan Patents” means any and all Patent
Rights now existing, currently pending or hereafter filed by Elan relating to
the Elan Technology.


“Elan Technology” means the SODASâ oral controlled release formulation technology
that comprises the formation of 0.5-5mm beads containing an active agent and
excipients which can be coated with a product-specific modified release polymer
and then formulated into a final formulation such as a sprinkle, a tablet or a
capsule, as applied in the Elan Know-How.


“Elan Trademark” means SODAS® or such other trade marks as Elan may from
time to time reasonably specify.


“EXW” (ex works) has the same meaning as
in the ICC Incoterms 2000, International Rules for the Interpretation of Trade
Terms, ICC Publication No. 560.


“FDA” means the United States Food and
Drug Administration or any other successor agency whose approval is necessary
to market the Product in the United States of America.


“Field” means the use as a prescription
or over-the-counter pharmaceutical product in humans.


“Force Majeure” means any cause or
condition beyond the reasonable control of the party obliged to perform,
including acts of God, acts of government (in particular with respect to the
refusal to issue necessary import or export licenses), fire, flood, earthquake,
war, acts of terrorism, riots or embargoes, strikes or other labour
difficulties affecting a party.


“Governmental Authority” means all
governmental and regulatory bodies, agencies, departments or entities, whether
or not located in the Territory, which regulate, direct or control commercial
and other related activities in or with the Territory.


“In Market” means the sale of the
Product in the Territory by NitroMed, or where applicable, by a permitted
sub-licensee, to an unaffiliated third party, such as a wholesaler,
distributor, managed care organisation, hospital or pharmacy, and shall exclude
the transfer pricing of the Product by one NitroMed Affiliate to another
NitroMed Affiliate or a permitted sub-licensee.


“Major Market(s)” means the United
States, the United Kingdom, France, Germany, Spain and Italy and such
additional countries as may be agreed by the parties from time to time.


“Major Territories” means the United
States, the United Kingdom, France, Germany, Spain, Italy, Canada, Australia,
New Zealand, Japan, South Korea and Brazil.


“Net Sales” shall, subject to the
provisions of Clause 7.4, mean in the case of Product sold by NitroMed, or by a
permitted sub-licensee, the aggregate gross In Market sales proceeds billed for
the Product by NitroMed, or by a permitted sub-licensee, as the case may be, in
accordance with generally accepted accounting principles, less the following:


(i)                                     trade,
cash or quantity discounts, allowances, adjustments and rejections;


(ii)                                  rebates,
recalls (other than where the Product is replaced without charge) and returns;


(iii)                               price reductions or
rebates imposed by Governmental Authorities;



 4
 









(iv)                              debts
arising from failure to collect on customer accounts (such debts not to exceed
1% of gross In Market sales);


(v)                                 sales,
excise, turnover, inventory, value-added and similar taxes assessed on the
royalty-bearing sale of such Product, but not including any taxes on income
paid by or assessed against NitroMed or a permitted sub-licensee;


(vi)                              transportation,
importation, shipping, insurance and other handling expenses directly
chargeable to the royalty-bearing sale of the Product, but only to the extent
that such expenses are separately delineated in the applicable invoices; and


(vii)                           chargebacks granted to drug
wholesalers or their customers in cases where there are not direct shipments to
such customers by NitroMed or its permitted sublicense.


Any discretionary rebates, discounts or adjustments shall be
commercially reasonable and consistent with standard industry practices.


“NitroMed Improvements” means any and
all improvements to the NitroMed Patents, the NitroMed Know-How and/or the
Compound that have been conceived, created, developed and/or otherwise invented
by NitroMed and/or Elan under the R&D Program, or otherwise pursuant to
this Agreement.


“NitroMed Intellectual Property” means
the NitroMed Know-How, the NitroMed Patents and the NitroMed Improvements.


“NitroMed Know-How” means any and all
rights owned, licensed or controlled by NitroMed (otherwise than pursuant to
the Elan License) to any scientific, pharmaceutical or technical information,
data, discovery, invention (whether patentable or not), know-how, substances,
techniques, processes, systems, formulations and designs and expertise relating
to the Compound which is not generally known to the public.


“NitroMed Patents” means any and all
Patent Rights now existing, currently pending or hereafter filed, or acquired
or licensed by NitroMed relating to the Compound.


“NitroMed Trademark” means NitroMed’s
rights to use the trademark(s) NitroMed®,  BiDil®, NitRx®, the NitroMed “N” logo and such other
trademarks as NitroMed may from time to time reasonably specify.


“Patent Rights” means any and all rights
under any and all patent applications and/or issued or granted patents, now
existing, currently pending or hereafter filed, including, but not limited to,
provisional applications, substitutions, divisionals, continuations,
continuations-in-part, renewals and any foreign counterparts thereof or
equivalents thereto, including the right to claim priority from any of the
foregoing under the Paris Convention, and all patents issuing or granted on any
of the foregoing, and any foreign counterparts thereof, together with all
registrations, reissues, re-examinations, supplemental protection certificates,
or extensions thereof, and any foreign counterparts thereof, or any other
government-issued rights substantially equivalent to the foregoing.


“Product” means the once or twice-daily
oral tablet or oral capsule formulation(s) incorporating the Elan Technology
and containing the Compound as its sole active combination of ingredients,
being developed pursuant to the R&D Program.



 5
 









“Product Patents” means Patent Rights
specifically exemplifying or claiming the Product.  For the avoidance of doubt, Product Patents
do not include the NitroMed Patents or the Elan Patents.


“Prosecute” means in relation to a class
of intellectual property:


(a)                                  to
secure the grant of any patent application within such class;


(b)                                 to
file and prosecute patent applications on patentable inventions and discoveries
relating to that class;


(c)                                  to
defend all such applications against third party oppositions; and


(d)                                 to
maintain in force any issued letters patent relating to the same


and “Prosecution” has a corresponding
meaning.


“R&D Program” means the research and
development program set forth in the Development Agreement.


“Regulatory Application” means any
regulatory application or any other application for marketing approval for the
Product, which NitroMed may file in the Territory, including any supplements or
amendments thereto which NitroMed may file.


“Regulatory Approval” means the final
approval to market the Product in any country of the Territory, including all
approvals which are required to launch the Product in the normal course of
business.


“Supply Agreement” means the
manufacturing and supply agreement to be negotiated in good faith between Elan
and NitroMed whereby Elan will supply substantially all of NitroMed’s
commercial requirements of the Product, subject to the terms herein and
therein, and which shall incorporate the key terms set out in Schedule 2.


“Technical Failure” means the inability
to achieve a pharmacokinetic profile for Product (assessing Cmax (maximum
concentration) and AUC (area under the curve) criteria within 80-125% of mean
data) consistent with that of BiDil administered three times daily (at 6 hour
intervals).


“Technological Competitor” means a
person or entity listed in Schedule 1, and divisions, subsidiaries and
successors thereof, and such other corporate entities that, other than as a de
minimis activity, develop oral drug delivery technology displaying a sustained
release or modified release profile and/or manufacture products displaying a
sustained or modified release profile that Elan may request to add to Schedule
1 from time to time, subject to the consent of NitroMed, which consent may not
be unreasonably withheld or delayed.


“Term” means the term of this Agreement,
as set out in Clause 9.


“Territory” means all of the countries
of the world.


“$” and “US$”
mean United States Dollars.


1.2.                              Further
Definitions.  In addition, the
following definitions have the meanings in the Clauses corresponding thereto,
as set forth below:



 6
 









 


	
   

  	
  Definition

  	
   

  	
  Clause

  
	
   

  	
  “Alternate Source”

  	
   

  	
  6.1

  
	
   

  	
  “Bankruptcy Code”

  	
   

  	
  2.3

  
	
   

  	
  “Confidential Information”

  	
   

  	
  12.1

  
	
   

  	
  “Development Agreement”

  	
   

  	
  Recital (D)

  
	
   

  	
  “Disclosing Party”

  	
   

  	
  12.12

  
	
   

  	
  “Due Date”

  	
   

  	
  8.8

  
	
   

  	
  “Elan License”

  	
   

  	
  2.1

  
	
   

  	
  “Estimated Statement”

  	
   

  	
  8.1

  
	
   

  	
  “Final Statement”

  	
   

  	
  8.1

  
	
   

  	
  “Firm”

  	
   

  	
  3.5.5

  
	
   

  	
  “Infringement Claim”

  	
   

  	
  3.4.1

  
	
   

  	
  “Initial Term”

  	
   

  	
  9.1

  
	
   

  	
  “License Milestone Payments”

  	
   

  	
  7.1

  
	
   

  	
  “Manufacturer”

  	
   

  	
  6.1.2

  
	
   

  	
  “Second Source”

  	
   

  	
  6.1

  
	
   

  	
  “Tech Transfer Program”

  	
   

  	
  6.2

  
	
   

  	
  “Notice”

  	
   

  	
  13.11.1

  
	
   

  	
  “Notified Party”

  	
   

  	
  3.5.1

  
	
   

  	
  “Notifying Party”

  	
   

  	
  3.5.1

  



 


1.3.                              Interpretation.  In this Agreement:


1.3.1                        the singular includes the
plural and vice versa, and unless the context or subject otherwise requires,
references to words in one gender include references to the other genders;


1.3.2                        references to persons include
all natural or legal persons including unincorporated associations;


1.3.3                        unless the context otherwise
requires, reference to a recital, article, paragraph, provision, clause or
schedule is to a recital, article, paragraph, provision, clause or schedule of
or to this Agreement;


1.3.4                        the headings in this Agreement
are inserted for convenience only and do not affect its construction; and


1.3.5                        the expressions “include”, “includes”,
“including”, “in particular” and similar expressions shall be construed without
limitation.


2.                                      THE LICENSE


2.1.                              Elan
License to NitroMed.  Subject to the
terms of this Agreement, Elan hereby grants to NitroMed for the Term an
exclusive license (the “Elan License”)
to the Elan Intellectual Property to import, use, offer for sale and sell the
Product in the Field in the Territory. For the avoidance of doubt, the Elan
License does not include the right to perform any formulation and/or process
development activities for the Product.



 7
 









2.2.                              Sub-licensing.  NitroMed shall be entitled to grant
sub-licenses in respect of the Elan Intellectual Property in one or more
countries of the Territory, subject to the following conditions:


2.2.1                        NitroMed shall have the right
to grant a sub-license to a Technological Competitor solely for the purposes of
co-promotion, distribution and/or marketing in countries where a DMF or
equivalent procedure exists such that Elan will not be required to disclose to
the sub-licensee or publicly Elan’s Confidential Information; outside of these
countries NitroMed shall have the right to grant a sub-license to a
Technological Competitor for the purposes aforementioned provided all of the
following conditions are met (and in the case of a Technological Competitor
acquiring control of NitroMed pursuant to Clause 13.2.4, or the assignment of
this Agreement to a Technological Competitor pursuant to Clause 13.2.2, the
requirements of this Clause 2.2.1 shall apply):


(a) the potential sub-licensee does not generate a majority of its
revenues in connection with activities in relation to oral controlled release
technologies;


(b) the commercialisation activities in relation to the Product will be
carried out by a separate division that is 
not  involved in any activities
related to sub-licensee’s oral controlled release technology;


(c) NitroMed has used its reasonable best efforts to ensure that the
potential sub-licensee does not gain access to Elan’s confidential information
in relation to the chemistry, manufacturing and control processes for the
Product and to this end the parties agree to negotiate in good faith an
appropriate three-way confidentiality agreement between NitroMed, Elan and the
potential sub-licensee; and


(d) if such access to information cannot be avoided then Elan and
NitroMed shall discuss in good faith the establishment of mechanisms to allow
for the maximum reasonable protection of Elan’s confidential information whilst
permitting the commercialisation of the Product in such countries, which will
ensure that the potential sub-licensee provides, directly to Elan, appropriate
undertakings, with appropriate rights of enforcement of those undertakings.


2.2.2                        NitroMed shall not grant a
sub-license to a person selling Competitive Products, and any sub-license shall
automatically terminate upon the sub-licensee selling Competitive Products;


2.2.3                        Any sub-license granted shall
be in the same terms as the terms of this Agreement insofar as they are applicable,
mutatis mutandis, but excluding the right to grant a sub-license or a
production license;


2.2.4                        For the avoidance of doubt,
NitroMed shall ensure that Elan shall have the same rights of audit and
inspection vis-à-vis a sub-licensee as Elan has vis-à-vis NitroMed pursuant to
this Agreement;


2.2.5                        NitroMed shall be liable to
Elan for all acts and omissions of any sub-licensee as though such acts and
omissions were by NitroMed; and


2.2.6                        NitroMed
shall undertake to protect the confidentiality of Elan’s chemistry,
manufacturing and control processes for the Product in its dealings with
permitted sub-



 8
 









licensees and shall not disclose any information from the CMC Section
to a any third party, including a permitted sub-licensee, without the prior
written consent of Elan, which consent shall not be unreasonably withheld or
delayed, other than as contemplated pursuant to the terms of Clause 2.2.1.


2.3.                              Section
365(n) of the Bankruptcy Code.  The
licenses granted under this Agreement shall be treated as licenses of rights to
“intellectual property” (as defined in Section 101(56) of Title 11 of the
United States Code, as amended (the “Bankruptcy Code”))
for purposes of Section 365(n) of the Bankruptcy Code.  The parties agree that each party may elect
to retain and may fully exercise all of its rights and elections under the
Bankruptcy Code; provided  that the electing party complies with
the terms of this Agreement.


3.                                      INTELLECTUAL PROPERTY


3.1.                              Ownership
of Intellectual Property.


3.1.1                        Elan shall be and remain the
owner of the Elan Intellectual Property.


3.1.2                        NitroMed shall be and remain
the owner of the NitroMed Intellectual Property.


3.2.                              Patent
Prosecution and Maintenance.


3.2.1                        Elan, at its sole discretion
and expense, may Prosecute the Elan Intellectual Property in the Territory.


3.2.2                        NitroMed, at its sole
discretion and expense, may Prosecute the NitroMed Intellectual Property in the
Territory.


3.2.3                        Elan shall promptly notify
NitroMed of any developments that fall within the NitroMed Intellectual
Property.  NitroMed shall promptly notify
Elan of any developments that fall within the Elan Intellectual Property.


3.2.4                        Each party shall provide the
other with reasonable support in the Prosecution of the Elan Intellectual
Property and the NitroMed Intellectual Property in respect of any inventions
that were developed under this Agreement and shall provide all information
and/or data in its possession that is necessary to support any relevant patent
application in the Territory.


3.2.5                        NitroMed and Elan shall discuss
the filing strategy for any proposed patent application(s) in the Territory and
shall co-ordinate the filing of such patent application(s) between the two
parties in order to protect the intellectual property rights of both parties in
the Territory.


3.2.6                        In the event that Elan does not
wish to Prosecute the Elan Intellectual Property, or some part thereof, in a
particular country, Elan shall notify NitroMed prior to ceasing Prosecution,
and NitroMed shall then have the right to assume such further action at its own
expense.


3.3.                              Enforcement.



 9
 









With respect to infringement of the Elan Intellectual Property or the
NitroMed Intellectual Property as it relates to the Product or a Competitive
Product the parties agree as follows:


3.3.1                        Elan and NitroMed shall promptly
inform each other in writing of any actual or alleged unauthorized use of the
Elan Intellectual Property or the NitroMed Intellectual Property by a third
party of which it becomes aware and provide the other party with any available
evidence of such unauthorized use.


3.3.2                        Subject to Clause 3.3.5, Elan
shall have the right to enforce for Elan’s own benefit (including by agreement
or by litigation) Elan’s intellectual property rights at its own
instigation.  To the extent such rights
relate to Elan Improvements and/or Product Patents, NitroMed shall reasonably
cooperate with Elan to enforce such rights, provided that NitroMed is
indemnified for any out-of-pocket expenses incurred in providing such
cooperation.  NitroMed shall be kept
advised at all times of all such suits or proceedings under this Clause 3.3.2
brought by Elan. Any recovery, lump-sum settlement, royalty payment or other
consideration received by Elan for past infringement or misappropriation as a
result of litigation related to the Elan Improvements and/or Product Patents
shall be disbursed as follows:


3.3.2.1               first, Elan and NitroMed shall be
reimbursed pro rata for the expenses of the suit actually incurred by them in
connection with the alleged infringement or misappropriation including, without
limitation, attorney’s fees and court costs;


3.3.2.2               second, any amount awarded in relation
to actual damage (calculated on the basis of lost sales, reasonable royalty,
account of profits or otherwise) shall be paid [**]% to Elan and [**]% to NitroMed;
and


3.3.2.3               third, all other amounts shall be paid
[**]% to Elan and [**]% to NitroMed.


3.3.3                        In the event Elan elects not to
enforce the Elan Improvements and/or Product Patents pursuant to Clause 3.3.2
as a result of an actual unauthorised use of such Elan intellectual property by
a third party and NitroMed has actual money damages from such unauthorised use,
NitroMed may institute such infringement suit at its own expense. Elan shall
reasonably cooperate with NitroMed to enforce such rights, provided that Elan
is indemnified for any out-of-pocket expenses incurred in providing such
cooperation. Elan shall be kept advised at all times of all such suits or
proceedings under this Clause 3.3.3 brought by NitroMed. NitroMed shall not
settle or compromise any such infringement suit without the prior written
consent of Elan which shall not be unreasonably withheld. Any recovery, lump
sum settlement, royalty payment or other consideration received by NitroMed for
past infringement or misappropriation as a result of litigation related to the
Elan Improvements and/or Product Patents shall be disbursed in the same manner
as laid down in Clause 3.3.2.


3.3.4                        Subject to
Clause 3.3.5, NitroMed shall have the right to enforce for NitroMed’s own
benefit (including by agreement or through litigation) NitroMed’s intellectual
property rights at its own instigation. 
To the extent such rights relate to NitroMed Improvements, Elan shall
fully cooperate with NitroMed to enforce such rights, provided that Elan is
indemnified for out-of-pocket expenses incurred in providing such 



 10
 









cooperation.  Elan shall be kept
advised at all times of all such suits or proceedings under this Clause 3.3.4
brought by NitroMed.


3.3.5                        In the event that Elan and
NitroMed Orange Book listed patents are collectively challenged, the Parties
shall have joint enforcement rights. In particular under the foregoing
circumstances where a “Paragraph IV Certification” (as defined in CFR Title 21)
is filed by a third party against Product in the United States, the parties
shall consult as to the commercial reasonableness of suing such third party for
patent infringement within 15 days of receipt of such notice.  Following such discussion, the parties shall
be entitled jointly to commence such action within 45 days of the date of such
notice, except that no action shall be taken in relation to a party’s patent
where that same party’s litigation counsel believes such claim to be baseless
(even considering the doctrine of equivalents).


3.4.                              Defense
of and Liability for Infringement Claims.


3.4.1                        Each of the parties shall
promptly notify the other party in writing of any Claim made or brought against
either of them alleging infringement or other unauthorised use of the
proprietary rights of a third party arising from the development, manufacture,
importation, use, offer for sale, sale or other commercialization of the
Product in the Territory (“Infringement Claim”).


3.4.2                        NitroMed shall indemnify and
hold harmless Elan against all Infringement Claims resulting from:


3.4.2.1               a breach by NitroMed of its
representations and warranties set forth in Clauses 11.2.3 or 11.2.4; or


3.4.2.2               intellectual property which is owned by,
licensed to or controlled by NitroMed, any Affiliate of NitroMed or a permitted
sub-licensee in the country in question, or which is/was generated pursuant to
some agreement between NitroMed (or an Affiliate or permitted sub-licensee) on
the one hand and a third party on the other.


3.4.3                        Subject to Clauses 3.4.4, 3.4.5
and 3.4.6 Elan shall indemnify and hold harmless NitroMed against all
Infringement Claims resulting from a breach by Elan of its representations and
warranties set forth in Clauses 11.1.3 and 11.1.4. For the avoidance of doubt,
the parties agree that NitroMed shall indemnify and hold harmless Elan against
all claims (whether successful or otherwise), damages, losses, liabilities and
expenses (including reasonable attorney’s fees) which may arise in connection
with any Infringement Claim where such Infringement Claim does not result from a
breach by Elan of any of its representations or warranties set forth in Clauses
11.1.3 and 11.1.4 or by NitroMed of its representations and warranties set
forth in Clauses 11.2.3 and 11.2.4.


3.4.4                        Subject to Clauses 3.4.5 and
3.4.6, Elan’s aggregate cumulative liability pursuant to Clause 3.4.3 (and/or
under any other provision of this Agreement) in respect of those Infringement
Claims for which Elan is liable under Clause 3.4.3 (“Infringement
Claim Fees”) shall not exceed certain limitations as follows:


 



 11















 


3.4.4.1                                           [**]% of any lump sum payment due to a third party as a result of a
court order or settlement in respect of the Infringement Claim (including a
claim for damages); and


3.4.4.2                                           [**]% of any license fees due to a third party under any license entered
into hereunder in order to develop, manufacture, sell or otherwise
commercialize the Product in the Territory under this Agreement.


3.4.5                             NitroMed will be entitled to recover amounts due by Elan to NitroMed
under Clause 3.4.4 solely as a credit against the royalties payable by NitroMed
to Elan under the provisions of Clause 7.3, provided, however, that the maximum
credit which may be claimed by NitroMed in any one such year will be [**]% of
the royalty otherwise payable to Elan until such time as the aggregate amount
of the credit due by Elan to NitroMed pursuant to this clause exceeds the
amount that represents all royalties that have previously been paid by NitroMed
to Elan under the provisions of Clause 7.3, after which such time the maximum
credit shall be reduced to [**]% of the royalty otherwise payable to Elan.


3.4.5.1                                           Any deficit remaining in NitroMed’s recovery of amounts due by Elan to
NitroMed under Clauses 3.4.3 and 3.4.4 following recovery by NitroMed within
the limitations set forth in this Clause 3.4.5 shall be borne by NitroMed and
Elan shall have no liability to NitroMed in relation thereto.


3.4.5.2                                           For the avoidance of doubt, NitroMed shall indemnify and hold harmless
Elan against all Infringement Claims to the extent they are in excess of the
limits set forth in Clause 3.4.4 and this Clause 3.4.5.


3.4.6                                                                                 Save as specifically provided
otherwise in this Clause 3.4, the provisions of Clause 11.7 shall apply as
regards the conduct of any Infringement Claim.


3.4.6.1                   With
reference to the provisions of Clause 11.7.4, Elan and NitroMed shall consult
as regards any actions Elan or NitroMed proposes to take in order to mitigate
any loss or liability in respect of any Infringement Claim, such as NitroMed
ceasing to sell the Product, the parties agreeing to modify the Product, or
either or both of the parties entering into a licensing or settlement
negotiation with the third party.


3.4.6.2                   In
the event that NitroMed and Elan fail to reach agreement on the course of such
actions, the party directing such actions shall indemnify and hold the other
party harmless against all Infringement Claims to the extent that such
Infringement Claims (i) relate to the period after the date that  the parties were unable to reach final
agreement on such action and (ii) arose as a direct result of the failure of
NitroMed and Elan to reach final agreement on such action.  For the avoidance of doubt, the Elan’s
aggregate cumulative liability pursuant to Clause 3.4.4 and the NitroMed
recovery mechanism pursuant to Clause 3.4.5 shall apply to this Clause 3.4.6.


3.5.                                   Third Party Licenses


3.5.1                             Notice.  If during the Term either party reasonably
believes that the importation, use, offer for sale or sale of the Product in
the Field in the Territory would infringe the



 12
 









intellectual property rights of a third party
and that such infringement arises from or relates to use of the Elan Technology
in the Product, that party (the “Notifying Party”)
shall so inform the other party (the “Notified Party”)
by written notice, which shall include documents supporting the Notifying Party’s
position.  If the Notifying Party
believes a license from such third party is necessary or advisable to exercise
its rights and obligations under this Agreement, including without limitation
to sell the Product and/or mitigate any potential liability arising therefrom
(a “Third Party License”), the notice shall
include reference to such Third Party License.


3.5.2                             Counter-Notice.  The Notified Party shall have fifteen (15)
working days to review the notice issued pursuant to Clause 3.5.1 from the
Notifying Party and to agree or disagree with the Notifying Party’s belief by
written counter-notice.  If the Notified
Party disagrees with the Notifying Party’s belief, then the Notified Party
shall provide the Notifying Party with documents supporting the Notified Party’s
position.  The Notifying Party shall have
fifteen (15) working days from the date of receipt to review the documents from
the Notified Party.  Failure to respond
to the other party’s notice shall be taken for the purposes of the decision as
to whether to obtain a license under this Clause 3.5.2 (but for the avoidance
of doubt, not for any other purpose whatsoever) as accession to the position of
the other party.  The parties agree that
the time periods as set forth in this Clause 3.5.2 may be reasonably extended
by the mutual written agreement of the parties.


3.5.3                             Use of Documents.  All documents exchanged by the parties shall
be maintained in confidence and shall not be used for any other purpose than the
resolution of the scope of a third party’s intellectual property rights as it
pertains to the importation, use, offer for sale or sale of the Product as set
forth in this Agreement.


3.5.4                             Resolution.  If the Notified Party disagrees with the
Notifying Party’s position pursuant to the terms as set forth in Clause 3.5.2
herein and if the Notifying Party maintains its original position after such
review period, then the matter shall be referred first to the officers of Elan
and NitroMed having responsibility for the subject matter of the dispute, or
their designees.  Such officers, or their
designees, as the case may be, shall negotiate in good faith to resolve such
dispute in a mutually satisfactory manner. 
If such efforts do not result in a mutually satisfactory resolution of
the dispute within fifteen (15) working days of such referral, the matter shall
be referred to the chief executive officer of each party, or their respective
designees.


3.5.5                             Final Resolution.  If the parties’ chief executive officers or
their designees do not resolve the dispute within fifteen (15) working days of
the matter being referred to them (or such longer time periods as may be
mutually agreed in writing by the parties), an independent mutually acceptable
Third Party law firm with suitable expertise in the field of intellectual
property in pharmaceuticals (the “Firm”) shall be
appointed to determine whether, in its opinion, the sale of the Product would
infringe such third party intellectual property. The Firm’s opinion shall be
binding on both parties.  An appropriate
community of interest agreement shall be entered into so that the benefit of
the Firm’s opinion shall inure to both parties. 
Once appointed, the Firm shall not be used by either party for matters
pertaining to the Elan Intellectual Property or the NitroMed Intellectual
Property, other than subsequent disputes under this Clause 3.5.  The costs of the Firm shall be borne by the
party with whom the Firm disagrees.



 13
 









3.5.6                             Disputes Not To Be Reopened.  The procedure in Clauses 3.5.1 to 3.5.5 shall
not be used more than once in relation to any particular third party
intellectual property allegedly infringed, absent new and relevant facts.


3.5.7                             Negotiation.  If the parties or the Firm determine that a
license should be obtained, Elan shall have the initial right to negotiate such
license.  Elan shall not agree to or
settle any license negotiations for an amount that exceeds its obligation to
pay pursuant to Section 3.4 without NitroMed’s prior written approval.  To the extent Elan violates the foregoing,
Elan shall be fully liable for the monetary obligation arising from the
agreement and/or settlement as a result thereof.  In the event that Elan is unsuccessful in
obtaining such a license within [**] days of the determination to seek a
license from such third party, then NitroMed shall have the right to negotiate
such license.  In the event that NitroMed
obtains the right to negotiate a third party license pursuant to this Clause
3.5.7, and chooses to exercise such right, NitroMed shall not, without Elan’s
prior written approval, propose nor agree to the grant of any right whatsoever
under the Elan Intellectual Property as a part of those negotiations or as a
part of any settlement arising from such negotiations.


3.5.8                             Terms.  The party attempting to negotiate the license
shall:


3.5.8.1                                           use all commercially reasonable efforts to achieve commercially
reasonable terms;


3.5.8.2                                           keep the other party reasonably informed of such negotiations;


3.5.8.3                                           submit to the other party any draft terms for approval;


3.5.8.4                                           reasonably take into account any comments the other party may have; and


3.5.8.5                                           without prejudice to the generality of the foregoing, use all
commercially reasonable efforts to ensure that the license is sub-licensable to
NitroMed (in the case of Elan) or sub-licensable and freely transferable to
Elan (in the case of NitroMed).


3.5.9                             Third Party Royalties. Regardless
as to whether Elan or NitroMed is responsible for negotiating any Third Party
License pursuant to this Clause 3.5 the costs of obtaining such Third Party
License shall be apportioned as follows:


3.5.9.1                                           Elan shall be responsible for [**] of all such costs, including license
fees, milestone payments and royalties up to a maximum aggregate responsibility
under all Third Party Licenses (“Third Party Royalties”)
in any given calendar quarter up to [**] of the royalties otherwise payable to
Elan under this Agreement in that quarter, subject to the provisions of Clause
3.4;


3.5.9.2                                           NitroMed shall be responsible for any Third Party Royalties in any
calendar quarter of the Term in excess in excess of the limits set forth in
Clause 3.5.9.1; and


3.5.9.3                                           Notwithstanding the foregoing, any amounts payable by NitroMed under
Clause 3.5.9.2 may be carried forward to subsequent calendar quarters of



 14
 









the Term until exhausted. Such carry forward shall
remain subject to the limit of [**] of the royalties otherwise payable to Elan
under this Agreement in such calendar quarter, except as otherwise provided
herein.


3.5.10                       Unrelated Licenses.  Nothing in this Clause 3.5 shall be construed
as affecting NitroMed’s rights to obtain licenses wholly unrelated to the
incorporation of the Elan Technology in the Product, at its own expense.


3.6.                                   Notwithstanding any provision to the contrary in this Agreement and for
clarity, Elan’s maximum aggregate liability for Third Party Royalties and
Infringement Claim Fees shall be limited to a maximum of [**] of the royalties
otherwise payable to Elan under this Agreement, except as otherwise provided in
Clause 3.4, but NitroMed shall be entitled to recover any Third Party Royalties
or Infringement Claim Fees for which (in each case) Elan is responsible in
excess of such quarterly limit as a credit against any royalties due to  Elan in subsequent quarters of the Term up to
[**] of the royalties otherwise payable to Elan under this Agreement in such
quarter, except as otherwise provided in Clause 3.4.


3.7.                                   Trademarks.


3.7.1                             NitroMed Trademark.


3.7.1.1                                           NitroMed shall market the Product in the Territory under the NitroMed
Trademark.


3.7.1.2                                           NitroMed grants to Elan and its Affiliates for the Term a royalty free,
worldwide, non-exclusive license to the NitroMed Trademark and, if different,
trademarks showing NitroMed’s corporate logo, for the purpose of Elan’s promotion
of its activities and of the Elan Technology.


3.7.1.3                                           Elan shall ensure that each reference to and use of the NitroMed
Trademark by Elan is in a manner from time to time approved by NitroMed and
accompanied by an acknowledgement, in a form approved by NitroMed, that the
same is a trademark (or registered trademark) of NitroMed.


3.7.1.4                                           Elan shall not use the NitroMed Trademark in any way which might
materially prejudice its distinctiveness or validity or the goodwill of
NitroMed therein.


3.7.1.5                                           Elan shall not use in the Territory any trademarks or trade names so
resembling the NitroMed Trademark as to be likely to cause confusion or
deception.


3.7.1.6                                           NitroMed shall, at its sole discretion and expense, file and prosecute
applications to register and maintain registrations of the NitroMed Trademark
in the Territory.


3.7.1.7                                           NitroMed will be entitled to conduct all enforcement proceedings
relating to the NitroMed Trademark and shall at its sole discretion decide what
action, if any, to take in respect of any infringement or alleged infringement
of the NitroMed Trademark or passing-off or any other claim



 15
 









or counter-claim brought or threatened in respect of
the use or registration of the NitroMed Trademark.  Any such proceedings shall be conducted at
NitroMed’s expense and for its own benefit.


3.7.2                             Elan Trademark.


3.7.2.1                                           To the extent permitted under applicable law, NitroMed shall prominently
display the Elan Trademark on the packaging of the Product and on all
promotional materials in relation to the Product to acknowledge that the Elan
Technology has been applied in developing and manufacturing the Product.


3.7.2.2                                           Elan grants to NitroMed for the Term a paid-up, worldwide, non-exclusive
license to the Elan Trademark, solely for the purpose of fulfilling NitroMed’s
obligations under this Clause 3.7.2.


3.7.2.3                                             NitroMed shall ensure that each reference to and use of the Elan
Trademark by NitroMed is in a manner from time to time approved by Elan and
accompanied by an acknowledgement, in a form approved by Elan, that the same is
a trademark (or registered trademark) of Elan.


3.7.2.4                                           NitroMed shall not use the Elan Trademark in any way which might
materially prejudice its distinctiveness or validity or the goodwill of Elan
therein.


3.7.2.5                                           NitroMed shall not use in the Territory any trademarks or trade names so
resembling the Elan Trademark as to be likely to cause confusion or deception.


3.7.2.6                                           Elan shall, at its sole discretion and expense, file and prosecute
applications to register and maintain registrations of the Elan Trademark in
the Territory.


3.7.2.7                                           Elan will be entitled to conduct all enforcement proceedings relating to
the Elan Trademark and shall at its sole discretion decide what action, if any,
to take in respect of any infringement or alleged infringement of the Elan
Trademark or passing-off or any other claim or counter-claim brought or
threatened in respect of the use or registration of the Elan Trademark.  Any such proceedings shall be conducted at
Elan’s expense and for its own benefit.


4.                                           NON-COMPETITION


4.1.                                   NitroMed.  Following the earlier of (i) achievement of a
pharmacokinetic profile for Product (assessing Cmax (maximum concentration) and
AUC (area under the curve) criteria within 80-125% of mean data) consistent
with that of BiDil administered three times daily (at 6 hour intervals) or (ii)
achievement of such other pharmacokinetic profile for the Product as may be
defined by the FDA, NitroMed shall not, and shall procure that its Affiliates
do not develop, market or sell any oral dosage formulation containing the
Compound other than (a) the Product, (b) BiDil in its current formulation or
any other immediate release formulation, (c) the current formulation of BiDil
or any other immediate



 16
 









release
formulation of BiDil in combination with any other compound in the Territory
and (d) any such formulation containing hydralazine as its sole active
ingredient,  during the Term; (provided,
however, that to the extent EEA laws and regulations specifically so require,
this restriction shall apply in the EEA for a period of five years beginning on
the date of First Commercial Sale of the Product in the EEA, or such other
maximum time period as EEA laws and regulations shall specifically so require).


4.2.                                   Elan.  Elan shall not license, develop, manufacture
or sell any oral dosage formulation (i) applying the Elan Intellectual Property
to the Compound, (ii) applying the Elan Improvements to either constituent
ingredient of the Compound as the sole active ingredient or (iii) applying the
Elan Intellectual Property to hydralazine as the sole active ingredient: in the
Territory during the Term;(provided, however, that to the extent EEA laws and
regulations specifically so require, this restriction shall apply in the EEA
for a period of five years beginning on the date of First Commercial Sale of
the Product in the EEA, or such other maximum time period as EEA laws and
regulations shall specifically so require).


5.                                           REGISTRATION, MARKETING AND THE PROMOTION OF THE
PRODUCT


5.1.                                   Regulatory Matters.  Except as specified otherwise in this
Agreement or in the Development Agreement and/or Supply Agreement, NitroMed
shall own and shall be responsible for filing for and maintaining all necessary
Regulatory Approvals and any necessary export or import licenses in relation to
the Compound and/or the Product.


5.2.                                   Diligent Efforts.  NitroMed shall use commercially reasonable
efforts, and at least the same level of effort as used by it with other similar
products of similar sales potential:


5.2.1                             to obtain Regulatory Approvals for the Product; and


5.2.2                             to market and promote the Product with a view to achieving maximum
market impact and concentration throughout the Territory.


5.3.                                   Reporting: NitroMed shall promptly
notify Elan in writing of (i) the submission date of all Regulatory
Applications; (ii) the date that such submissions are accepted for filing by
the relevant regulatory authority and (iii) the date of all Regulatory
Approvals.


5.4.                                   Promotional Campaigns  NitroMed shall:


5.4.1                             control and be responsible for the content and format of each
promotional campaign to be submitted to the relevant Governmental Authority but
shall inform Elan thereof in a reasonably detailed manner;


5.4.2                             within a reasonable period of time after the filing of the first
Regulatory Application in the Territory, NitroMed will outline to Elan the
structure of the promotional activities to be carried out by NitroMed for the
period up to the first launch of the Product and for a period of one year
thereafter;


5.4.3                             prior to the launch of the Product, communicate with Elan regarding its
objectives for  the Product in the
Territory.


5.5.                                   Meetings. Following the first
Regulatory Approval of the Product, the parties shall meet as often as
reasonably requested by the other (not more than once per calendar quarter). At



 17
 









such
meetings NitroMed shall report on the ongoing sales performance of the Product
in each country of the Territory, including overviews of marketing, promotional
and educational campaigns, information on performance of the Product in the market
and plans for the next quarterly period. Such meetings may be held by
telephone. If held in person, each party shall be responsible for its own costs
in respect of travel and accommodation expenses in attending such meetings.


5.6.                                   Required Markings.  All trade packaging and marketing materials
shall:


5.6.1                             to the extent permitted by law, include due acknowledgement that the
Product is manufactured by an Affiliate of Elan; and


5.6.2                             have marked representative patent number(s) including that of the formulation
patent in respect of the Elan Patents on all Product, or otherwise reasonably
communicate to the trade the existence of any Elan Patents for the countries
within the Territory in such a manner as to ensure compliance with, and
enforceability under, applicable laws.


5.7.                                   Launch.  NitroMed shall effect the first full scale
national commercial launch of the Product:


5.7.1                             in each Major Market, within [**] days after the Regulatory Approval in
that Major Market is obtained, subject to the timely receipt of launch stocks;
and


5.7.2                             in each of the other countries of the Territory, within [**] days after
the relevant Regulatory Approval in that country is obtained, subject to the
timely receipt of launch stocks.


6.                                           PRODUCTION LICENSE  


6.1.                                   Qualification.  NitroMed shall be entitled at its own expense
to qualify another facility as an alternate to supply of the Product by Elan or
its affiliates  (“Alternate
Source”), subject to the following provisions if the operator of
NitroMed’ desired facility is not NitroMed or an Affiliate of NitroMed:


6.1.1                             The facility shall be subject to the written approval of Elan, which
shall not be unreasonably withheld.


6.1.2                             The operator of the facility (the “Manufacturer”)
shall have undertaken to Elan, in terms reasonably satisfactory to Elan, to
protect the confidentiality of Elan’s manufacturing processes related to
Product and not use them for any other purpose.


6.2.                                   Technology Transfer Program.  In the event that NitroMed wishes to qualify
an Alternate Source, it shall so notify Elan in writing.  Thereafter, the parties shall negotiate in
good faith a technology transfer program (“Tech Transfer  Program”) consistent with this Agreement.  Elan may specify that its activities shall be
carried out by Elan or another Affiliate. 
Such Tech Transfer Program shall have due regard to the commercial
interests of Elan in relation to the manufacture of the Product and other
products, and shall be such that the Program will be completed with due
dispatch but without undue disruption to Elan’s   other commercial activities.



 18
 









6.3.                                   Assistance.  At NitroMed’s request, it shall be part of
the Tech Transfer Program that Elan shall use commercially reasonable efforts
to assist in qualifying the Alternate Source as an alternative site of
manufacture of the Product.  Pursuant to
this obligation, Elan shall:


6.3.1                             provide NitroMed or the Manufacturer (at NitroMed’s request) with any
information necessary to manufacture the Product;


6.3.2                             provide to NitroMed or the Manufacturer (at NitroMed’s request) the
documentation constituting the required material support, more particularly
practical performance advice, shop practice, specifications as to materials to
be used and control methods;


6.3.3                             assist NitroMed and/or the Manufacturer (at NitroMed’s request) with the
working up and use of the technology and with the training of Manufacturer’s
personnel to the extent which may reasonably be necessary in relation to the
manufacture of the Product by the Manufacturer. 
In this regard, Elan will receive the NitroMed’s and/or Manufacturer’s
scientific staff, as applicable, in its premises for certain periods, the term
of which will be agreed by the parties; and


6.3.4                             comply with the other obligations and responsibilities of Elan relating
to technology transfer to the Alternate Source, as set forth in the Tech
Transfer Program.


6.4.                                   NitroMed Obligations.  NitroMed shall comply with its obligations
and responsibilities set forth in the Tech Transfer Program.


6.5.                                   Technological Competitors.  Under no circumstances may the Manufacturer
be a Technological Competitor.  In the
event of a Manufacturer becoming a Technological Competitor or an Affiliate of
a Technological Competitor, all manufacturing rights of the Manufacturer shall
cease.  In such event, Elan shall on
request negotiate in good faith terms for qualifying and using a different
Alternate Source.


6.6.                                   Supply of Product from Alternate Source.  NitroMed may acquire from the Alternate
Source only such quantities of Product as are permitted to be so sourced under
the terms of the Supply Agreement, as amended from time to time.


7.                                           FINANCIAL PROVISIONS


7.1.                                   License Milestone Payments.  In consideration of the grant of the Elan
License, NitroMed shall pay to Elan the following non-refundable amounts:


7.1.1                             a milestone payment of US$[**] dollars) upon the execution of this
Agreement by both NitroMed and Elan;


7.1.2                             a milestone payment of US$[**] dollars) upon the delivery by EDDI of
clinical supplies of the Product for the first pivotal study of the Product
(Phase II or Phase III) or, if earlier, upon the License Milestone Payment
referred to in Clause 7.1.3 becoming payable (in addition to such payment);


7.1.3                             a milestone payment of US$[**] dollars) upon the first filing of a DMF
supportive of a Regulatory Application, provided that Elan is not notified by
the FDA or its equivalent in another country within thirty (30) days of filing
of the rejection thereof, in which



 19
 









case such milestone payment shall be payable
upon notice of acceptance of such DMF filing, or if earlier, Regulatory
Approval of the Product in that country;


7.1.4                             a milestone payment of US$[**] dollars) upon the first Regulatory
Approval of the Product.


(the payments described in Clauses 7.1.1 to 7.1.4
being “License Milestone Payments”).


The License Milestone Payments shall be payable in
respect of each of the once-daily and twice —daily formulations of the Product,
as and when applicable, but in no circumstances will such License Milestone
Payments be payable more than twice each.


7.2.                                   Not Subject to Future Performance Obligations.  The License Fee and the License
Milestone Payments shall not be subject to future performance obligations of
Elan to NitroMed and shall not be applicable against future services provided
by Elan to NitroMed.


The terms of Clause 7.1 relating to the License Fee
and License Milestone Payments are independent and distinct from the other
terms of this Agreement.


7.3.                                   Royalty on Sales.  In further consideration of the grant of the
Elan License, NitroMed shall pay to Elan a non-refundable royalty calculated by
reference to the table set out below, being the royalties within the bands of
aggregate Net Sales below for the applicable formulation as from the date of
its first commercial sale at the corresponding royalty percentage below:




	
  Formulation

  	
  Annual Net Sales Bands

  	
  Applicable Royalty Rate

  
	
   

  	
   

  	
   

  
	
  Once-daily

  	
  First US$[**]

  	
  [**]% of Net Sales

  
	
   

  	
   

  	
   

  
	
   

  	
  Next US$[**]

  	
  [**]% of Net Sales

  
	
   

  	
   

  	
   

  
	
   

  	
  Increments above US$[**]

  	
  [**]% of Net Sales

  
	
   

  	
   

  	
   

  
	
  Twice-daily

  	
  First US$[**]

  	
  [**]% of Net Sales

  
	
   

  	
   

  	
   

  
	
   

  	
  Next US$[**]

  	
  [**]% of Net Sales

  
	
   

  	
   

  	
   

  
	
   

  	
  Increments above US$[**]

  	
  [**]% of Net Sales

  






 


By way of example for
the purposes of clarifying the intention of the parties, if: (a) prior to
commencement of a given calendar quarter, aggregate Net Sales to date are $[**]
for the once daily formulation and $[**] for the twice daily formulation; and
(b) Net Sales in the calendar quarter are $[**] for each formulation, the
royalty payable shall be:


Once-daily —first
band:  ($[**] - $[**]) x [**]%


PLUS


Once-daily —second
band:  ($[**] - ($[**] - $[**]) x [**]%



 20
 









PLUS


Twice-daily — first
band:  $[**] x [**]%


= $[**] + $[**] +
$[**] = $[**]


7.4.                                   Bundling.  In the event that NitroMed or a permitted
sub-licensee shall sell the Product together with other products to third
parties (by the method commonly known in the pharmaceutical industry as “bundling”),
the price attributable to the Product shall be discounted by reference to the
average price of “arms length” sales by no more than the discount applied to
any other product with which it is bundled.


7.5.                                   Method of calculation of fees.  The parties acknowledge and agree that the
methods for calculating the royalties and fees under this Agreement are for the
purposes of the convenience of the parties, are freely chosen and not coerced.


8.                                           PAYMENTS, REPORTS AND AUDITS  


8.1.                                   Records.  NitroMed shall keep true and accurate records
of gross sales of the Product, the items deducted from the gross amount in
calculating the Net Sales, the Net Sales and the royalties payable to Elan
under Clause 7.3.  NitroMed shall deliver
to Elan a written estimated statement (the “Estimated
Statement”) thereof within 45 days following the end of each
calendar quarter, (or any part thereof in the first or last calendar quarter of
this Agreement) for such calendar quarter, with a written final statement (the “Final Statement”) to be delivered by NitroMed to Elan no
later than 75 days following the end of each calendar quarter.  The Estimated Statement shall outline on a
country-by-country basis, the calculation of the Net Sales from gross revenues
during that calendar quarter, the aggregate Net Sales of each formulation from
its first commercial sale to the end of that calendar quarter, the applicable
percentage rate, and a computation of the sums due to Elan.  Following the delivery of the Final Statement
for each calendar quarter, the parties shall reconcile the Estimated Statement
and the Final Statement.  If the Final
Statement reports a greater amount of royalties due than were initially
reported in the Estimated Statement, NitroMed shall pay the difference to
Elan.  If the Final Statement reports a
lesser amount of royalties due that was initially reported in the Estimated
Statement, Elan shall refund the difference to NitroMed.  In either case, the additional amount due to
Elan or the refund due to NitroMed shall be paid by the other party, as the
case may be, within 30 days of delivery of the Final Statement.  The parties’ financial officers shall agree
upon the precise format of the Estimated Statement and the Final Statement.


8.2.                                   Foreign Currency.  Net Sales of the Product based on sales
amounts in a currency other than US$ shall be converted to US$ on the basis of
the median exchange rate in effect for the purchase of US$ with such foreign
currency quoted in the Wall Street Journal (or comparable publication if not
quoted in the Wall Street Journal) at the closing of the Business Days during
the calendar quarter in question, prior to being included in the Estimated
Statement or the Final Statement.


8.3.                                   VAT.  All payments to Elan are exclusive of any
applicable value added or any other sales tax for which NitroMed will be
additionally liable if applicable.


 



 21















 


8.4.                                   Taxes.  If NitroMed is required by law to pay or
withhold any income or other taxes on behalf of Elan with respect to any monies
payable to Elan under this Agreement:


8.4.1                             NitroMed shall deduct them from the amount of such monies due;


8.4.2                             any such tax required to be paid or withheld shall be an expense of and
borne solely by Elan;


8.4.3                             NitroMed shall promptly provide Elan with a certificate or other
documentary evidence to enable Elan to support a claim for a refund or a
foreign tax credit.


8.5.                                   Double Tax Co-operation.  Elan and NitroMed agree to co-operate in all
respects necessary to take advantage of any double taxation agreements or
similar agreements as may, from time to time, be available in order to enable
NitroMed to make such payments to Elan without any deduction or withholding.


8.6.                                   Timing.  Payments to Elan shall be made as follows:


8.6.1                             each of the License Milestone Payments shall be paid within 45 days of
the achievement of the relevant event to which they relate; and


8.6.2                             payment of royalties shall be made upon provision of the Estimated
Statement (subject to applicable further payment or refund in the event the
Final Statement reports a greater or lesser amount of royalties due, as the
case may be).


8.7.                                   Manner of Payment.  All payments due hereunder shall be made in
US$ to the designated bank account of Elan in accordance with such timely
written instructions as Elan shall from time to time provide.


8.8.                                   Interest.  Without prejudice to Elan’s other remedies
hereunder, NitroMed shall pay interest to Elan on sums not paid to Elan on the
date on which payment should have been made pursuant to the applicable
provisions of this Agreement (“Due Date”) over
the period from the Due Date until the date of actual payment (both before and
after judgement) at the Prime Rate publicly announced by Morgan Guaranty Trust
Company of New York at its principal office on the Due Date (or next to occur
Business Day, if such date is not a Business Day) plus 5%, such interest to
payable on demand from time to time and compounded monthly.  Interest shall be payable both before and
after judgment.


8.9.                                   Audit.  For the 180 day period following the close of
each calendar year of the Agreement, NitroMed will, in the event that Elan
reasonably requests such access, provide Elan’s independent certified
accountants (reasonably acceptable to the other party) with access, during
regular business hours and subject to the confidentiality provisions as
contained in this Agreement, to NitroMed’s books and records relating to the
Product, solely for the purpose of verifying the accuracy and reasonable
composition of the calculations under this Agreement for the calendar year then
ended.


8.10.                             Correction of Discrepancies.  In the event of a discovery of a discrepancy,
a correcting payment shall be made forthwith by NitroMed to Elan or Elan to
NitroMed, as the case may be, together with interest at the rate specified in
Clause 8.8.  If the discrepancy exceeds
5% of the amount due or charged by a party for any period and provided that the
amount of the



 22
 









discrepancy
exceeds US$25,000, then additionally the cost of such accountants shall be
borne by the audited party.


9.              DURATION AND TERMINATION


9.1.                                   Initial Term.  This Agreement shall be deemed to have come
into force on the Effective Date and, subject to the rights of termination
outlined in this Clause 9 and the provisions of applicable laws, will expire:


9.1.1                             In the US:  on (a) the 20th
anniversary of the date of the first In Market sale of the Product; or (b) the
expiration of the last-to-expire patent for the Product listed in the Food and
Drug Administration’s “Orange Book”; and


9.1.2                             Elsewhere in the Territory, on a country by country basis: on (a) the 20th anniversary of the date of the
first In Market sale of the Product in the country concerned; or (b)  the expiration of the life of the last to
expire patent included in the Elan Intellectual Property in that country;


in each case whichever date is later to occur (the “Initial Term”).


9.2.                                   Continuation.  At the end of the Initial Term, the Agreement
shall continue automatically for rolling 3 year periods thereafter, unless the
Agreement has been terminated by either of the parties by serving 1 year’s
written notice on the other party immediately prior to the end of the Initial
Term or any such additional 3 year period.


9.3.                                   Breach / Insolvency.  In addition to the rights of termination
provided for elsewhere in this Agreement, either party will be entitled
forthwith to terminate this Agreement by written notice to the other party if:


9.3.1                             that other party commits a material breach of any of the provisions of
this Agreement, and fails to cure the same within [**] days after receipt of a
written notice from another party hereto giving full particulars of the breach
and requiring it to be remedied; provided, that if the breaching party has
proposed a course of action to cure the breach and is acting in good faith to
cure same but has not cured the breach by the [**] day, such period shall be
extended by such period as is reasonably necessary to permit the breach to be
cured, provided that such period shall not be extended by more than 90 days,
unless otherwise agreed in writing by the parties;


9.3.2                             that other party goes into liquidation under the laws of any applicable
jurisdiction (except for the purposes of amalgamation or reconstruction and in
such manner that the company resulting therefrom effectively agrees to be bound
by or assume the obligations imposed on that other party under this Agreement);


9.3.3                             a receiver, administrator, examiner, trustee or similar officer is
appointed over all or substantially all of assets of that other party under the
laws of any applicable jurisdiction; or


9.3.4                             any proceedings are filed or commenced by that other party under
bankruptcy, insolvency or debtor relief laws, or anything analogous to any of
the foregoing under the laws of any applicable jurisdiction occurs in relation
to that other party.



 23
 









9.4.                                   Additional Elan Rights.  In further addition to the rights and
termination provided for elsewhere in this Agreement, Elan shall be entitled to
terminate this Agreement with respect to any particular country in the
Territory in the event that NitroMed, in such particular country:


9.4.1                             fails to use commercially reasonable efforts to develop and promote the
Product in any Major Territory;


9.4.2                             notifies Elan that it does not wish to commercialise the Product in a
Major Market or does not notify Elan within [**] months of the later of the
completion of the R&D Program or the conclusion of the Phase III clinical
trial program as regards a Major Market that it wishes to advance to
commercialisation of the Product; or


9.4.3                             fails to obtain Regulatory Approval in a Major Market in Europe within
[**] months of receiving marketing authorisation in that country, or under the
mutual recognition procedure, as the case may be, unless such failure is due to
circumstances beyond NitroMed’s control (including governmental action,
inaction and / or delay).


Elan
agrees that, prior to exercising its termination rights under this Clause 9.4,
it shall (i) consult with NitroMed, and (ii) grant extensions to the above
timelines (the duration of which shall be at Elan’s sole discretion), provided
Elan has been in receipt of information from NitroMed that has demonstrated (either
pursuant to the meetings referred to in Clause 5.5 or otherwise) that such
extensions are reasonably required.


9.5.                                   Cross-Termination.  This Agreement shall automatically terminate
upon the termination of the Development Agreement or the termination of the
Supply Agreement.  For the purposes of
Clause 10, such a termination of this Agreement shall be treated:


9.5.1                             if termination of the Development Agreement or Supply Agreement is on
the ground of a material breach by NitroMed or EDDI / EHI (as the case may be),
as if this Agreement were terminated on the ground of a material breach by
NitroMed or Elan, as the case may be; and


9.5.2                             if termination of the Development Agreement or the Supply Agreement is
on the ground of the insolvency of NitroMed or EDDI / EHI (as the case may be),
as if this Agreement were terminated on the ground of the insolvency of
NitroMed or Elan, as the case may be.


9.6.                                   Additional NitroMed Termination Rights.  In further addition to the rights and
termination provided for elsewhere in this Agreement, NitroMed shall be
entitled to terminate this Agreement in the event of a Technical Failure.


10.            CONSEQUENCES OF TERMINATION


10.1.                             General Consequence.  Upon exercise of those rights of termination
specified in Clause 9 or elsewhere in this Agreement, this Agreement shall,
subject to Clause 10.2, automatically terminate forthwith and be of no further
legal force or effect.


10.2.                             Specific Consequences.  Upon termination of the Agreement by either
party, or upon termination by Elan of a license for a particular country under
Clause 9.4, the following shall be the consequences relating to the Territory
or the particular country, as applicable:



 24
 









10.2.1                       any sums that were due from NitroMed to Elan under the provisions of
this Agreement prior to its termination or expiry shall be paid in full within
14 days of termination of this Agreement and Elan shall not be liable to repay
to NitroMed any amount of money paid or payable by NitroMed to Elan up to the
date of the termination of this Agreement;


10.2.2                       all representations and warranties shall insofar as are appropriate
remain in full force and effect;


10.2.3                       the provisions of this Agreement regarding with respect to
confidentiality and non-use of materials or confidential information shall remain
in effect for a further period of 7 (seven) years.


10.2.4                       the rights of inspection and audit shall continue in force for the
period referred to in the relevant provisions of this Agreement;


10.2.5                       the license granted by Elan to NitroMed of the Elan Trademark under
Clause 3.7.2.2 shall automatically terminate; provided, however, that NitroMed
may utilize such license for a period not exceeding six (6) months after
termination in connection with the sale of any inventory existing at the time
of termination subject to the provisions of this Agreement regarding royalties
in respect thereof;


10.2.6                       any other provision of this Agreement which, by its nature, is intended
to continue after termination, shall survive termination; and


10.2.7                       any sub-license granted under Clause 2.2 shall automatically terminate.


11.            WARRANTIES, INDEMNIFICATION AND LIABILITY


11.1.                             Elan Warranties.  Elan represents and warrants to NitroMed as
of the Effective Date, as follows:


11.1.1                       Elan has the right to enter into this Agreement and grant the Elan
License.


11.1.2                       There are no agreements between Elan and any third party that conflict
with the Elan License.


11.1.3                       Elan has not been notified of, nor to the best of its knowledge with no
special search are there any, infringement proceedings, actions, suits or
complaints pending against nor any outstanding injunctions, judgments, orders,
decrees, rulings or other charges against, Elan or any Affiliate of Elan in
connection with the Elan Patents, the Elan Technology or the Elan Know How in
the Territory that may affect the making, using, or selling of the Product.


11.1.4                       Elan has not been notified of any allegation by a third party that the
application of the Elan Patents, the Elan Technology or the Elan Know-How in
the Territory as it may concern the making, using, or selling of the Product
infringes the intellectual property rights of a third party, nor to the best of
its knowledge with no special search has any such allegation been made.



 25
 









11.2.                             NitroMed Warranties.  NitroMed represents and warrants to Elan as
of the Effective Date, as follows:


11.2.1                       NitroMed has the right to enter into this Agreement.


11.2.2                       There are no agreements between NitroMed and any third party that conflict
with this Agreement.


11.2.3                       NitroMed has not been notified of, nor to the best of its knowledge with
no special search are there any, infringement proceedings, actions, suits or
complaints pending against nor any outstanding injunctions, judgments, orders,
decrees, rulings or other charges against, NitroMed or any Affiliate of
NitroMed in connection with the NitroMed Patents or the NitroMed Know How in
the Territory that may affect the making, using, or selling of the Product.


11.2.4                       NitroMed has not been notified of any allegation by a third party that
the application of the NitroMed Patents or the NitroMed Know-How in the
Territory as it may concern the making, using, or selling of the Product
infringes the intellectual property rights of a third party, nor to the best of
its knowledge with no special search has any such allegation been made.


11.3.                             Mutual Indemnification.  Each of the parties shall indemnify and hold
harmless the other party against all Claims insofar as they arise out of any
breach by the first party of any of its obligations or warranties under this
Agreement or from the first party’s fraud or wilful misconduct.


11.4.                             Infringement Claims.  The parties acknowledge that Clause 3.4
contains the parties’ full agreement as regards liability for Infringement
Claims, save to the extent that Clause 3.4 incorporates other provisions of
this Agreement by specific cross-reference.


11.5.                             Indemnification (Medical Claims). NitroMed
shall indemnify Elan against all Claims made or brought against Elan seeking
damages for personal injury (including death) and/or for the cost of medical
treatment, caused by or attributed to the Product, but without prejudice to any
right of indemnification NitroMed may have against EDDI or EHI under the
Development Agreement or the Supply Agreement respectively.


11.6.                             Sub-licensees.  With reference to Clause 2.2.5, NitroMed
shall indemnify and hold harmless Elan to the extent that any Claims arise out
of any such acts or omissions of any sub-licensee.


11.7.                             Conduct of Claims.  Subject to Clause 11.8, the party seeking an
indemnity shall:


11.7.1                       fully and promptly notify the other party of any claim or proceedings,
or threatened claim or proceedings;


11.7.2                       permit the indemnifying party to take full control of such claim or
proceedings, with counsel of the indemnifying party’s choice, provided that the
indemnifying party shall reasonably and regularly consult with the indemnified
party in relation to the progress and status of such claim or proceedings;


11.7.3                       co-operate in the investigation and defense of such claim or
proceedings; and



 26
 









11.7.4                       take all reasonable steps to mitigate any loss or liability in respect
of any such claim or proceedings.


The indemnifying party may settle a Claim on terms
which provide only for monetary relief and do not include any admission of
liability.  Save as aforesaid, neither
the indemnifying party nor the party to be indemnified shall acknowledge the
validity of, compromise or otherwise settle any Claim without the prior written
consent of the other, which shall not be unreasonably withheld.


11.8.                             Pursuant to the procedure set out in Clause 3.5 and the monetary limits
set out therein, NitroMed may settle an Infringement Claim of the type referred
to therein on terms which provide only for monetary relief and/or the grant by
the plaintiff in such Infringement Claim of a license solely relating to the
Product and not to any other product and do not include any admission of
liability, infringement, or invalidity or unenforceability of any of the Elan
Intellectual Property.  Save as aforesaid, neither Elan nor NitroMed shall
acknowledge the validity of, compromise or otherwise settle any such
Infringement Claim without the prior written consent of the other, which shall
not be unreasonably withheld.


11.9.                             Exclusion of Implied Warranties.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NITROMED ACKNOWLEDGES THAT THE ELAN LICENSE IS GRANTED ON AN “AS IS”
BASIS, WITHOUT REPRESENTATION OR WARRANTY WHETHER EXPRESS OR IMPLIED INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY
DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS.


11.10.                       Exclusion of Consequential Loss.  WITHOUT PREJUDICE TO THE OBLIGATION OF EITHER
PARTY TO INDEMNIFY THE OTHER IN RESPECT OF CLAIMS BY A THIRD PARTY,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND NITROMED
SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY,
CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS
OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE LOSS
OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE
VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE
PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.


11.11.                       Extension of Indemnification.  Where this Agreement provides for the
indemnification of a party to this Agreement or for the limitation of a party’s
liability, such indemnification and/or limitation (as the case may be) shall
also apply for the benefit of such party’s Affiliates and the employees,
officers, directors and agents of any of them, acting in such capacity.


11.12.                       Inherent Risk.  It is hereby acknowledged that there are
inherent uncertainties involved in the development and registration of
pharmaceutical products and such uncertainties form part of the business risk
involved in undertaking the form of commercial collaboration outlined in this
Agreement.  Accordingly, Elan and
NitroMed shall have no liability to each other as a result of the failure of
the Product to obtain Regulatory Approval, and Elan will



 27
 









have
no liability to NitroMed as a result of any failure or delay of the Product to
achieve the Product Specifications (as defined in the Development Agreement) or
one or more of the milestones set out in the R&D Program and/or to obtain
Regulatory Approval in one or more countries of the Territory.  The foregoing shall not derogate from the
responsibilities and obligations of each of Elan and NitroMed pursuant to the
terms of this Agreement.


11.13.                       Insurance.  Throughout the Term, and for a period of five
(5) years thereafter, each party shall maintain comprehensive general business
liability insurance coverage, with minimum limits of $10,000,000 per occurrence
and $10,000,000 annual aggregate of all claims.  In addition, from and after the
later of NitroMed’s commercial launch of the Product, during the Term, and for
a period of one (1) year thereafter, each party shall maintain product
liability insurance coverage, with minimum limits of $10,000,000 per occurrence
and $10,000,000 annual aggregate of all claims.


Each
party shall provide the other party with a certificate from the insurance
company verifying the above and shall notify the other party in writing at
least 30 days prior to the expiration or termination of such coverage.


12.            CONFIDENTIALITY


12.1.                             Confidential Information:  The parties agree that it will be necessary,
from time to time, to disclose to each other confidential and proprietary
information, including without limitation, inventions, trade secrets,
specifications, designs, data, know-how and other proprietary information
relating to the Product and the processes, services and business of the
disclosing party.


The foregoing shall be referred to collectively
as “Confidential Information”.


12.2.                             Exclusion.  Confidential Information shall be deemed not
to include:


12.2.1                       information which is in the public domain prior to disclosure;


12.2.2                       information which is made public through no breach of this Agreement;


12.2.3                       information which is independently developed by a party without
reference to the other party’s Confidential Information, as evidenced by such
party’s written records; or


12.2.4                       information that becomes available to a receiving party on a
non-confidential basis, whether directly or indirectly, from a source other
than the other party hereto, which source did not acquire this information on a
confidential basis.


12.3.                             Use of Confidential Information.  Any Confidential Information disclosed by the
disclosing party shall be used by the receiving party exclusively for the
purposes of fulfilling the receiving party’s obligations, or exercising the
receiving party’s rights, under this Agreement and for no other purpose.


12.4.                             Non-Disclosure.  Except as otherwise specifically provided in
this Agreement, each party shall disclose Confidential Information of the other
party only to those employees, representatives and agents requiring knowledge
thereof in connection with fulfilling the party’s obligations under this
Agreement, and not to any other third party.



 28
 









12.5.                             Obligation to Inform.  Each party further agrees to inform all such
employees, representatives and agents of the terms and provisions of this
Agreement relating to Confidential Information and to obtain their agreement to
confidentiality obligations no less onerous in any respect than those set forth
herein as a condition of receiving Confidential Information.


12.6.                             Care.  Each party shall exercise the same standard
of care as it would itself exercise in relation to its own confidential
information (but in no event less than a reasonable standard of care) to
protect and preserve the proprietary and confidential nature of the
Confidential Information disclosed to it by the other party.


12.7.                             Return of Information.  Upon termination or expiration of this
Agreement, each party shall promptly, upon request of the other party, return
all documents and any copies thereof containing Confidential Information
belonging to, or disclosed by, such other party, save that it may retain one
copy of the same solely for the purposes of ensuring compliance with this
Clause 12.


12.8.                             Attribution.  Any breach of this Clause 12 by any person
informed by one of the parties is considered a breach by the party itself.


12.9.                             Acknowledgment.  The parties agree that the obligations of
this Clause 12 are necessary and reasonable in order to protect the parties’
respective businesses.  The parties
further agree that monetary damages may be inadequate to compensate a party for
any breach by the other party of its covenants and agreements with respect to
confidentiality, and that each party shall be entitled to seek injunctive or
other equitable relief against the threatened or continued breach of those
provisions, in addition to with any other remedy which may be available.


12.10.                       Compound Data.  For the purpose of demonstrating to third
parties the benefits of the Elan Technology, Elan shall be entitled, subject to
the prior written consent of NitroMed, to disclose to third parties the
Compound Data provided that Elan does not disclose NitroMed’s name or the name
of the Compound. Prior to any such disclosure, Elan and NitroMed shall agree on
a mutually acceptable scope of disclosure for the Compound Data. For the
avoidance of doubt, Elan shall be entitled, without the consent of NitroMed, to
disclose any portion of the Compound Data already in the public domain.


12.11.                       Announcements.  No announcement or public statement
concerning the existence, subject matter or any term of this Agreement, or its
performance, shall be made by or on behalf of any party without the prior
written approval of the other, such approval not to be unreasonably withheld or
delayed.  Notwithstanding any provision
in this Agreement to the contrary, following the initial disclosure relating to
the terms of this Agreement on a Form 8-K and an application for confidential
treatment filed with the U.S. Securities and Exchange Commission (on both of
which the parties shall collaborate), the parties may make such announcements
or public statements concerning the existence, subject matter or any term of
this Agreement to the extent required by applicable law or regulation
(including, without limitation, any requirements of any stock exchange, Nasdaq
or the U.S. Securities and Exchange Commission); provided, however, that
neither party shall, without the consent of the other party, disclose any term
which remains confidential pursuant to the confidential treatment application
filed with the U.S. Securities and Exchange Commission.



 29
 









12.12.                       Required Disclosures.  A party (the “Disclosing
Party”) will be entitled to make an announcement or public statement
concerning the existence, subject matter or any term of this Agreement, or to
disclose Confidential Information that the Disclosing Party is required to make
or disclose pursuant to:


12.12.1                 a
valid order of a court or Governmental Authority; or


12.12.2                 any
other requirement of law or any securities or stock exchange;


provided that if the Disclosing Party becomes legally
required to make such announcement, public statement or disclosure hereunder,
the Disclosing Party shall give the other party prompt notice of such fact to
enable the other party to seek a protective order or other appropriate remedy
concerning any such announcement, public statement or disclosure, including
confidential treatment and/or appropriate redactions.


The Disclosing Party shall fully co-operate with the
other party in connection with that other party’s efforts to obtain any such
order or other remedy.  If any such order
or other remedy does not fully preclude announcement, public statement or
disclosure, the Disclosing Party shall make such announcement, public statement
or disclosure only to the extent that the same is legally required.


13.            MISCELLANEOUS PROVISIONS


13.1.                             Force Majeure.  Neither party shall be liable for failure or
delay in the performance of any of its obligations under this Agreement if such
failure or delay results from Force Majeure, but any such failure or delay
shall be remedied by such party as soon as practicable.


13.2.                             Assignment and Change of Control.


13.2.1                       Elan shall be entitled, without prior consent, to assign or subcontract,
in whole or in part, its rights and obligations under this Agreement to an
Affiliate or in connection with the sale or transfer of all or substantially
all of the Elan Intellectual Property provided that Elan fully compensates
NitroMed for any adverse tax consequence that may arise from the assignment.


13.2.2                       NitroMed shall be entitled, without prior consent, to assign or
subcontract, in whole or in part, its rights and obligations under this
Agreement to an Affiliate or to a third party in connection with the sale and
transfer of all NitroMed’s business assets relating to this Agreement provided
that:


(i)                                     the assignment does not grant manufacturing rights to a Technological
Competitor;


(ii)                                  NitroMed fully compensates Elan for any adverse tax consequences that
may arise from the assignment; and


(iii)                               where the assignee is a Technological Competitor, Elan shall have the
right to refuse to grant its consent to the assignment unless the conditions of
Clause 2.2.1 (a) to (d), as applied to assignment to a Technological
Competitor, have been satisfied.



 30
 









13.2.3                       Except as provided for in Clauses 13.2.1 and 13.2.2, this Agreement may
not be assigned by a party without the prior written consent of the other,
which shall not be unreasonably withheld or delayed.


13.2.4                       Elan shall be entitled to terminate this Agreement by notice in writing
to NitroMed in the event a Technological Competitor obtains Control of NitroMed
during the Term of this Agreement unless the conditions set out in Clause
2.2.1(a) to (d), as applied to a Technological Competitor acquiring Control,
have been satisfied. For the purposes of this Clause 13.2.4 “Control” will have
been obtained where a person or persons acting in concert acquire the direct or
indirect ownership of more than 50% of the issued  voting shares or 50% of the other voting
rights, if applicable, to elect directors.


13.3.                             Parties Bound.  This Agreement shall be binding upon and run
for the benefit of the parties, their successors and permitted assigns.


13.4.                             Relationship of the Parties.  In this Agreement, nothing shall be deemed to
constitute a partnership between the parties or make either party an agent for
the other, for any purpose whatsoever.


13.5.                             Entire Agreement.  This Agreement constitutes the entire
agreement and understanding between the parties with respect to its subject
matter, and except as otherwise expressly provided, supersedes all prior
representations, writings, negotiations or understandings with respect to that
subject matter.


Nothing
in this Clause 13.5 shall exclude any liability which any party would otherwise
have to the other party or any right which either of them may have to rescind
this Agreement in respect of any statements made fraudulently by the other
prior to the execution of this Agreement or any rights which either of them may
have in respect of fraudulent concealment by the other.


13.6.                             Severability.  If any provision in this Agreement is deemed
to be, or becomes invalid, illegal, void or unenforceable under applicable
laws, such provision will be deemed amended to conform to applicable laws so as
to be valid and enforceable, or if it cannot be so amended without materially
altering the intention of the parties, it will be deleted, but the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be impaired or affected in any way.


13.7.                             Further Assurance.  Each party shall do and execute, or arrange
for the doing and executing of, each necessary act, document and thing
reasonably within its power to implement this Agreement.


13.8.                             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute this Agreement.


13.9.                             Waivers.  A failure to exercise or delay in exercising
a right or remedy provided by this Agreement or by law does not constitute a
waiver of the right or remedy or a waiver of other rights or remedies.  No single or partial exercise of a right or
remedy provided by this Agreement or by law prevents further exercise of the right
or remedy or the exercise of another right or remedy.


 



 31















13.10.                     Variations.  No variation of this Agreement
shall be effective unless it is made in writing and signed by each of the
parties.


13.11.                     Notices.


13.11.1                A notice under or in
connection with this Agreement (a “Notice”)


(a) shall be in
writing; and


(b) may be delivered
personally or sent by first class post (and air mail if overseas) by any
internationally recognized overnight courier or by fax to the party due to
receive the Notice at its address set out below.


13.11.2                The address referred
to in Clause 13.12.1 is:


(a)           in the case of Elan:


	
  Address:

  	
  Elan Pharma
  International Limited

  
	
   

  	
  Monksland Industrial Estate

  
	
   

  	
  Athlone

  
	
   

  	
  Co. Westmeath

  
	
   

  	
  Ireland

  
	
   

  	
   

  
	
  Fax:

  	
  +353 9064 95402

  



 


Marked
for the attention of:  Vice President
& Legal Counsel


(b)           in the case of NitroMed:


	
  Address:

  	
  125 Spring Street

  
	
   

  	
  Lexington

  
	
   

  	
  MA 02421-7801

  
	
   

  	
  United States of America

  
	
   

  	
   

  
	
  Fax:

  	
  +1 781-274 8080

  



 


Marked for the attention of:  Vice President Finance


13.12.                     Set-off.  Each of the parties will be
entitled but not obliged to set-off against any amount of money payable to it
by the other party under this Agreement, any amount of money payable by it to
the other party under this Agreement.


13.13.                     Governing
Law and Jurisdiction:  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflict of laws rules, and shall be subject to the exclusive
jurisdiction of the State and Federal Courts located in New York, New York.


***



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  SCHEDULE 1

  	
  TECHNOLOGICAL COMPETITORS OF ELAN

  
	
   

  



[**]



 33
 









SCHEDULE
2


KEY TERMS
FOR SUPPLY AGREEMENT


Capitalized terms
used and not otherwise defined in this Schedule shall have the meaning ascribed
to such term in the License Agreement.


1.               EHI shall supply
Product to NitroMed in the Territory for commercial supplies, subject to Clause
8 below.  EHI to use commercially
reasonable efforts to meet NitroMed supply requirements.


2.               EHI to own and be
responsible for (i) filing regulatory approvals in regard to Elan Technology,
(ii) DMFs that EHI or its Affiliates may file in respect of Elan Technology and
the application of Elan Technology as regards the Product and/or the
manufacture of Product, and (iii) all necessary manufacturing approvals for the
commercial manufacture of the Product. 
NitroMed to be responsible for filing for and maintaining all other
necessary Regulatory Approvals.


3.               EHI to supply
Product that conforms to agreed specifications and to all applicable laws and
regulations for supply and manufacturing, including cGMP, within the
Territory.  Product to be provided EXW in
defined packaging configuration (bulk or finished).  Product packaging to conform to
specifications agreed with and  approved
by the FDA or other relevant regulatory body in the Territory.


4.               Detailed
forecasting, ordering and delivery provisions to be negotiated in good faith
between the parties and to be fully set out in the Supply Agreement, the
foregoing to include (i) a provision that delivery periods for binding purchase
orders of Product shall be commensurate with the Product manufacturing lead
time and (ii) NitroMed shall be entitled to cancel any Purchase Order for
Product provided Elan is compensated by NitroMed for the non-recoverable cost
incurred in manufacturing the Product up to the date of notification of any
such cancellation plus the full margin that would otherwise have been earned by
Elan if the Product Purchase Order had not been cancelled. The parties agree
that during the agreed “launch period” the forecasting and ordering provisions
may differ to reflect the respective challenges for both parties during this
period.


5.               NitroMed shall in a
timely fashion review and approve proposed changes in advance of their
implementation specific to the Product manufacturing, testing, or controls
documentation which require prior Regulatory Authority approval.


6.               NitroMed to have
right to audit EHI and subcontractors relevant to the Product manufacturing and
testing in conformance with cGMPs no more than once per calendar year, or for
just cause provided in each case that reasonable advance notice is provided to
EHI.


7.               NitroMed to order
safety stock through agreed order and forecast procedures.  EHI shall not hold safety stock.


8.               NitroMed shall have
a Manufacturing License and the right to obtain Product from the Alternate
Source in the event of an EHI “serious failure to supply”, the meaning of such
term to be negotiated in good faith and defined in the Supply Agreement.  The cost of such technology transfer shall be
borne by NitroMed.   Otherwise NitroMed
may only source such quantities of Product from the Alternate Source as are necessary
to maintain its qualification.



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9.               Release and
rejection provisions reasonably acceptable to the parties, with EHI to have a
specified time to rectify the issue. NitroMed to be refunded where problem
cannot be rectified within specified time save where it is established that the
non-conformity is due to the negligent acts or omissions of NitroMed.


10.         NitroMed to be
responsible for coordinating any Product recall and ensuring that recalls are
conducted in a commercially reasonable manner. 
Costs of recall shall be borne by NitroMed unless the recall arises from
EHI’s failure to supply Product in accordance with agreed specifications or
cGMP or from the negligent acts or omissions of EHI in manufacturing the
Product.


11.         EHI responsible for
compliance to cGMP, applicable laws for supply and manufacture, and adherence
to specifications. NitroMed responsible for marketing and promotion and for
recalls and indemnification arising otherwise. Indemnification provisions will
correspond to such responsibilities.


12. NitroMed shall pay to
EHI a fixed sum per dosage unit for the Product, which such sum will be
specified in the Supply Agreement and shall be [**]%.  For purposes of this calculation, the cost of
manufacturing shall be as described in Schedule 3 and in accordance with US
GAAP. For the avoidance of doubt, EHI shall not include costs associated with [**].
On the second anniversary of the first Product launch date (or such other date
as may be agreed between the parties) the parties shall enter into good faith
negotiations to settle [**] for commercial supplies of Product. From the time
the price for commercial supplies is agreed as aforesaid, thereafter the price
for such commercial supplies of Product shall be as EHI notifies to NitroMed
from time to time provided that during the term of the Supply Agreement price
increases for commercial supplies of Product shall be limited to the [**], as
compared to the most recent price adjustment for Product.  In addition, if (i) the price EHI must pay
for the active ingredients (or other raw materials) used to manufacture the
Product increases by a percentage in excess of [**], (ii) additional regulatory
obligations are imposed on EHI by law or a Governmental Authority; or (iii) any
other price increase is required or agreed resulting from changes to Product
specifications, EHI may increase the price of the Product by [**].  The parties agree that NitroMed will be [**] on
the date of the License Agreement.  For
the avoidance of doubt, NitroMed [**] with the manufacture of the Product.


13.  NitroMed shall have audit rights in order to
verify EHI manufacturing costs, such audit to occur (i) in the first two years,
no more than twice per annum; and (ii) thereafter, no more than once per annum,
and upon reasonable advance notice to EHI.


14.       The
parties shall agree minimum volumes of product to be ordered by NitroMed under
the Supply Agreement, such minimum volumes to take effect [**] months after the
first launch of the Product. EHI shall ensure that sufficient capacity is
available during the term of the Supply Agreement to manufacture such minimum
volumes.  In the event that the actual
quantities of Product ordered by NitroMed fall below such minimum volumes,
NitroMed shall pay to EHI an annual capacity fee equal to [**]% of the
applicable price of shortfall of Product ordered for delivery in that
year.   Shortfall shall mean the amount,
if any, by



 35
 









which
in the calendar year in question the quantities of Product properly ordered is
less than the minimum volumes.   The
parties further agree that the Supply Agreement shall include a mechanism
whereby EHI shall be entitled to terminate the Supply Agreement  where there is a failure to meet minimum
volume requirements and subject to conditions (to include tech transfer to a
third party).  The parties further agree
that as part of the negotiations of the Supply Agreement there will be good
faith discussions on additional EHI termination rights in circumstances other
than failure to meet minimum volume requirements.


15.  Term of the
Supply Agreement will be the term of the License Agreement.


 



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SCHEDULE 3


Product Manufacturing Costs


The following costs are
Product Manufacturing Costs which are prepared by EHI.


1.                                      Direct
Materials


                                               Materials
used in the manufacturing process that are traced directly to the completed
product and include:


-                                            Inert
raw materials or excipients.


-                                            Active
substances/ingredients.


-                                            Packaging
components such as bottles, caps, labels, etc.


2.                                      Direct
Labor


                                               The cost
of employees engaged in production activities which are directly identifiable
with product costs.  Excludes
supervision, which is included in indirect labor, and production support
activities such as inspection, plant and equipment maintenance labor, and
material handling personnel.  Direct
Labor cost includes:


-                                            Base
pay, overtime, vacation and holidays, illness, personal with pay and shift
differential.


-                                            
Cost of employee fringe benefits such as health and life insurance, payroll
taxes, welfare, pension and profit sharing.


3.                                      Indirect
Manufacturing Costs


                                               Costs
which are ultimately allocated to product based on standard labor hours of the
operating departments.  These costs
include:


-                                            Indirect
Production Labor: Salaries of employees engaged in production labor which
are not classified as direct labor, including supervision, clerical, etc.


-                                            Costs
of Direct Labor:  Employees not
utilized for the manufacturing of product such as training, downtime and
general duties.


-                                            Indirect
Materials:  Supplies and chemicals
which are used in the manufacturing process and are not assigned to specific
products but are included in manufacturing overhead costs.  Includes supplies which are either common to
several products or for which direct assignment to products is not practical.


-                                            Utilities:  Expenses incurred for fuel, electricity and
water in providing power for production and other plant equipment.



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-                                            Maintenance
and Repairs:  Amount of expense
incurred in-house or purchased to provide services for plant maintenance and
repairs of facilities and equipment.


-                                            Other
Services:  Purchased outside services
and rentals such as the cost of security, ground maintenance, etc.


-                                            Depreciation:
Of plant (being manufacturing and laboratory premises and buildings and the
service, maintenance and renovation thereof) on the basis of a 40 year life and
equipment (being handling, storage, manufacturing, processing and testing
machinery and equipment) on the basis of a 10 year life utilizing the
straight-line method of calculation.


-                                            Insurance:  Cost of comprehensive and other insurance
necessary for the safeguard of manufacturing plant and equipment, and business
interruption.


-                                            Taxes:  Expense incurred for taxes on real and
personal property (manufacturing site, buildings, and the fixed assets of
equipment, furniture and fixtures, etc.). 
If manufacturing site includes other operations (marketing, research,
etc.), taxes are allocated on the basis of total real and personal property.


-                                            Cost
of Manufacturing Service Department such as:


•                                                 Packaging Engineering.


•                                                 Manufacturing Maintenance.


•                                                 Industrial Engineering.


•                                                 Receiving and Warehousing.


•                                                 Purchasing and Accounting.


•                                                 Inventory Management.


•                                                 Plant Materials Management.


•                                                 Central Weigh.


•                                                 Manufacturing Administration.


-                                            Allocation
Costs of Services Provided to Manufacturing including (where applicable):


•                                                 Cafeteria


•                                                 Personal Operations


•                                                 Health and Safety Services


•                                                 Division Engineering and Operations
Services


•                                                 Plant Services (housekeeping)


•                                                 Manufacturing Information Systems


•                                                 Plant Power


•                                                 Office of VP Manufacturing



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                                               Various
bases are used for allocating these costs to manufacturing operating
departments including headcount, square feet, metered utilities use, estimated
services rendered, EDP computer hours etc.


4.                                      Quality
Assurance Costs


                                               Direct
labor and indirect costs for Quality Assurance departments testing and approving
materials used in manufacturing and completed manufacturing batches and
finished products.  This includes all
manufacturing in-process testing and testing of finished materials.  Excluded from product costs are QA costs
related to research and development testing and testing which is allocated back
to appropriate manufacturing sites.


5.                                      Inventory
Carrying Costs


                                               Inventory
carrying costs which relate to personnel and warehousing, but excluding any
application of interest costs suffered as a result of carrying inventory.


 



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SIGNED


 


	
  /s/ Paul Breen

  	
   

  	
   

  
	
  Duly authorised for and on behalf of:

  	
   

  
	
  ELAN PHARMA INTERNATIONAL
  LIMITED

  	
   

  



 


 


SIGNED


 


	
  /s/ Kenneth M. Bate

  	
   

  	
   

  
	
  Duly authorised for and on behalf of:

  	
   

  
	
  NITROMED, INC.

  	
   

  



 


 


 


 



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