|        |   | 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.**

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**LICENSE AGREEMENT**

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**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**                               | ** ** |

** **

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**THIS AGREEMENT**is dated 9 February, 2007.

**PARTIES:**

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

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

**BACKGROUND:**

(A)                              Elanpossesses certain proprietary technology and confidential information used oruseful in the manufacture and use of pharmaceutical products displaying asustained or modified release profile, as described more fully below.

(B)                                NitroMedis developing pharmaceutical formulations containing the Compound, as definedbelow.

(C)                                NitroMedwishes to enter into this Agreement to obtain the right to utilize the ElanIntellectual Property (as defined below) to import, use, offer for sale andsell the Product in the Field in the Territory, on the terms and conditions setout below.

(D)                               Simultaneouslywith this Agreement, Elan’s Affiliate EDDI (as defined below) and NitroMed haveentered 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 orentity controlling, controlled or under common control with Elan or NitroMed,as the case may be.  For the purposes ofthis Agreement, “control” means the direct or indirect ownership of more than50% of the issued voting shares or other voting rights of the subject entity toelect directors, or if not meeting the preceding criteria, any entity owned orcontrolled by or owning or controlling at the maximum control or ownership rightpermitted 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 immediaterelease product containing the Compound that is currently marketed in theUnited States by NitroMed.

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“**Business Days**” means Monday to Fridayinclusive, excluding any days on which the clearing banks are generally closedin 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 asdefined in 21 C.F.R. Section 314.50 (1) relating to the Product, as may beamended from time to time, and/or its equivalent in other RegulatoryApplications.

“**Competitive Product**” means anypharmaceutical product (other than the Product itself) that has received finalregulatory approval (including marketing, pricing, reimbursement and any otherapplicable approval) from the applicable Governmental Authority in a country inthe Territory for use solely for the treatment of heart failure as an adjunctto current standard therapy in self-identified black patients to improvesurvival.

“**Compound**” means the combination of theactive drug substances isosorbide dinitrate and hydralazine HCl and/or othersalts, bases and isomeric forms of each.

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

“**DMF**” means the Drug Master File, asdefined in the 21 C.F.R., Section 314.420****and/or itsequivalent in the other countries of the Territory, which Elan (or anAffiliate) may file in respect of the Elan Technology and the application ofthe Elan Technology as regards the Product.

“**EDDI**” means Elan Drug Delivery  Inc., a Delaware corporation, having itsprincipal place of business at 3000 HorizonDrive, King of Prussia, PA 19406

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

“**EHI**” means Elan Holdings, Inc aDelaware corporation having its principal place of business at 1300 GouldDrive, Gainesville, GA 30504, USA.

“**Effective Date**” means the date of thisAgreement as first set forth above.

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

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

“**Elan Know-How**” means any and all rightsowned, licensed or controlled by Elan as of the Effective Date to anyscientific, 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 Technologywhich is not generally known to the public.

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“**Elan Patents**” means any and all PatentRights now existing, currently pending or hereafter filed by Elan relating tothe Elan Technology.

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

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

“**EXW**” (ex works) has the same meaning asin the ICC Incoterms 2000, International Rules for the Interpretation of TradeTerms, ICC Publication No. 560.

“**FDA**” means the United States Food andDrug Administration or any other successor agency whose approval is necessaryto market the Product in the United States of America.

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

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

“**Governmental Authority**” means allgovernmental and regulatory bodies, agencies, departments or entities, whetheror not located in the Territory, which regulate, direct or control commercialand other related activities in or with the Territory.

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

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

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

“**Net Sales**” shall, subject to theprovisions of Clause 7.4, mean in the case of Product sold by NitroMed, or by apermitted sub-licensee, the aggregate gross In Market sales proceeds billed forthe Product by NitroMed, or by a permitted sub-licensee, as the case may be, inaccordance 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 orrebates imposed by Governmental Authorities;

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(iv)                              debtsarising from failure to collect on customer accounts (such debts not to exceed1% of gross In Market sales);

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

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

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

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

“**NitroMed Improvements**” means any andall improvements to the NitroMed Patents, the NitroMed Know-How and/or theCompound that have been conceived, created, developed and/or otherwise inventedby NitroMed and/or Elan under the R&D Program, or otherwise pursuant tothis Agreement.

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

“**NitroMed Know-How**” means any and allrights owned, licensed or controlled by NitroMed (otherwise than pursuant tothe 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 relatingto the Compound which is not generally known to the public.

“**NitroMed Patents**” means any and allPatent Rights now existing, currently pending or hereafter filed, or acquiredor licensed by NitroMed relating to the Compound.

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

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

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

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“**Product Patents**” means Patent Rightsspecifically exemplifying or claiming the Product.  For the avoidance of doubt, Product Patentsdo not include the NitroMed Patents or the Elan Patents.

“**Prosecute**” means in relation to a classof intellectual property:

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

(b)                                 tofile and prosecute patent applications on patentable inventions and discoveriesrelating to that class;

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

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

and “**Prosecution**” has a correspondingmeaning.

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

“**Regulatory Application**” means anyregulatory application or any other application for marketing approval for theProduct, which NitroMed may file in the Territory, including any supplements oramendments thereto which NitroMed may file.

“**Regulatory Approval**” means the finalapproval to market the Product in any country of the Territory, including allapprovals which are required to launch the Product in the normal course ofbusiness.

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

“**Technical Failure**” means the inabilityto achieve a pharmacokinetic profile for Product (assessing Cmax (maximumconcentration) and AUC (area under the curve) criteria within 80-125% of meandata) consistent with that of BiDil administered three times daily (at 6 hourintervals).

“**Technological Competitor**” means aperson or entity listed in Schedule 1, and divisions, subsidiaries andsuccessors thereof, and such other corporate entities that, other than as a deminimis activity, develop oral drug delivery technology displaying a sustainedrelease or modified release profile and/or manufacture products displaying asustained or modified release profile that Elan may request to add to Schedule1 from time to time, subject to the consent of NitroMed, which consent may notbe unreasonably withheld or delayed.

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

“**Territory**” means all of the countriesof the world.

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

1.2.                              FurtherDefinitions.  In addition, thefollowing definitions have the meanings in the Clauses corresponding thereto,as set forth below:

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| ** ** | 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 theplural 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 includeall natural or legal persons including unincorporated associations;

1.3.3                        unless the context otherwiserequires, reference to a recital, article, paragraph, provision, clause orschedule is to a recital, article, paragraph, provision, clause or schedule ofor to this Agreement;

1.3.4                        the headings in this Agreementare 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 withoutlimitation.

**2.****                                      THE LICENSE**

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

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

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

(a) the potential sub-licensee does not generate a majority of itsrevenues in connection with activities in relation to oral controlled releasetechnologies;

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

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

(d) if such access to information cannot be avoided then Elan andNitroMed shall discuss in good faith the establishment of mechanisms to allowfor the maximum reasonable protection of Elan’s confidential information whilstpermitting the commercialisation of the Product in such countries, which willensure that the potential sub-licensee provides, directly to Elan, appropriateundertakings, with appropriate rights of enforcement of those undertakings.

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

2.2.3                        Any sub-license granted shallbe 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 aproduction license;

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

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

2.2.6                        NitroMedshall undertake to protect the confidentiality of Elan’s chemistry,manufacturing and control processes for the Product in its dealings withpermitted sub-

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

2.3.                              Section365(n) of the Bankruptcy Code.  Thelicenses granted under this Agreement shall be treated as licenses of rights to“intellectual property” (as defined in Section 101(56) of Title 11 of theUnited States Code, as amended (the “**Bankruptcy Code**”))for purposes of Section 365(n) of the Bankruptcy Code.  The parties agree that each party may electto retain and may fully exercise all of its rights and elections under theBankruptcy Code; providedthat the electing party complies withthe terms of this Agreement.

**3.****                                      INTELLECTUAL PROPERTY**

3.1.                              Ownershipof Intellectual Property.

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

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

3.2.                              PatentProsecution and Maintenance.

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

3.2.2                        NitroMed, at its solediscretion and expense, may Prosecute the NitroMed Intellectual Property in theTerritory.

3.2.3                        Elan shall promptly notifyNitroMed of any developments that fall within the NitroMed IntellectualProperty.  NitroMed shall promptly notifyElan of any developments that fall within the Elan Intellectual Property.

3.2.4                        Each party shall provide theother with reasonable support in the Prosecution of the Elan IntellectualProperty and the NitroMed Intellectual Property in respect of any inventionsthat were developed under this Agreement and shall provide all informationand/or data in its possession that is necessary to support any relevant patentapplication in the Territory.

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

3.2.6                        In the event that Elan does notwish to Prosecute the Elan Intellectual Property, or some part thereof, in aparticular country, Elan shall notify NitroMed prior to ceasing Prosecution,and NitroMed shall then have the right to assume such further action at its ownexpense.

3.3.                              Enforcement.

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

3.3.1                        Elan and NitroMed shall promptlyinform each other in writing of any actual or alleged unauthorized use of theElan Intellectual Property or the NitroMed Intellectual Property by a thirdparty of which it becomes aware and provide the other party with any availableevidence of such unauthorized use.

3.3.2                        Subject to Clause 3.3.5, Elanshall have the right to enforce for Elan’s own benefit (including by agreementor by litigation) Elan’s intellectual property rights at its owninstigation.  To the extent such rightsrelate to Elan Improvements and/or Product Patents, NitroMed shall reasonablycooperate with Elan to enforce such rights, provided that NitroMed isindemnified for any out-of-pocket expenses incurred in providing suchcooperation.  NitroMed shall be keptadvised at all times of all such suits or proceedings under this Clause 3.3.2brought by Elan. Any recovery, lump-sum settlement, royalty payment or otherconsideration received by Elan for past infringement or misappropriation as aresult of litigation related to the Elan Improvements and/or Product Patentsshall be disbursed as follows:

3.3.2.1               first, Elan and NitroMed shall bereimbursed pro rata for the expenses of the suit actually incurred by them inconnection with the alleged infringement or misappropriation including, withoutlimitation, attorney’s fees and court costs;

3.3.2.2               second, any amount awarded in relationto 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 toenforce the Elan Improvements and/or Product Patents pursuant to Clause 3.3.2as a result of an actual unauthorised use of such Elan intellectual property bya third party and NitroMed has actual money damages from such unauthorised use,NitroMed may institute such infringement suit at its own expense. Elan shallreasonably cooperate with NitroMed to enforce such rights, provided that Elanis indemnified for any out-of-pocket expenses incurred in providing suchcooperation. Elan shall be kept advised at all times of all such suits orproceedings under this Clause 3.3.3 brought by NitroMed. NitroMed shall notsettle or compromise any such infringement suit without the prior writtenconsent of Elan which shall not be unreasonably withheld. Any recovery, lumpsum settlement, royalty payment or other consideration received by NitroMed forpast infringement or misappropriation as a result of litigation related to theElan Improvements and/or Product Patents shall be disbursed in the same manneras laid down in Clause 3.3.2.

3.3.4                        Subject toClause 3.3.5, NitroMed shall have the right to enforce for NitroMed’s ownbenefit (including by agreement or through litigation) NitroMed’s intellectualproperty rights at its own instigation. To the extent such rights relate to NitroMed Improvements, Elan shallfully cooperate with NitroMed to enforce such rights, provided that Elan isindemnified for out-of-pocket expenses incurred in providing such 

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

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

3.4.                              Defenseof and Liability for Infringement Claims.

3.4.1                        Each of the parties shallpromptly notify the other party in writing of any Claim made or brought againsteither of them alleging infringement or other unauthorised use of theproprietary rights of a third party arising from the development, manufacture,importation, use, offer for sale, sale or other commercialization of theProduct in the Territory (“**Infringement Claim**”).

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

3.4.2.1               a breach by NitroMed of itsrepresentations 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 permittedsub-licensee in the country in question, or which is/was generated pursuant tosome agreement between NitroMed (or an Affiliate or permitted sub-licensee) onthe one hand and a third party on the other.

3.4.3                        Subject to Clauses 3.4.4, 3.4.5and 3.4.6 Elan shall indemnify and hold harmless NitroMed against allInfringement Claims resulting from a breach by Elan of its representations andwarranties 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 againstall claims (whether successful or otherwise), damages, losses, liabilities andexpenses (including reasonable attorney’s fees) which may arise in connectionwith any Infringement Claim where such Infringement Claim does not result from abreach by Elan of any of its representations or warranties set forth in Clauses11.1.3 and 11.1.4 or by NitroMed of its representations and warranties setforth in Clauses 11.2.3 and 11.2.4.

3.4.4                        Subject to Clauses 3.4.5 and3.4.6, Elan’s aggregate cumulative liability pursuant to Clause 3.4.3 (and/orunder any other provision of this Agreement) in respect of those InfringementClaims for which Elan is liable under Clause 3.4.3 (“**InfringementClaim Fees**”) shall not exceed certain limitations as follows:

** **

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** **

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

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

3.4.5                             NitroMed will be entitled to recover amounts due by Elan to NitroMedunder Clause 3.4.4 solely as a credit against the royalties payable by NitroMedto Elan under the provisions of Clause 7.3, provided, however, that the maximumcredit which may be claimed by NitroMed in any one such year will be [**]% ofthe royalty otherwise payable to Elan until such time as the aggregate amountof the credit due by Elan to NitroMed pursuant to this clause exceeds theamount that represents all royalties that have previously been paid by NitroMedto Elan under the provisions of Clause 7.3, after which such time the maximumcredit 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 toNitroMed under Clauses 3.4.3 and 3.4.4 following recovery by NitroMed withinthe limitations set forth in this Clause 3.4.5 shall be borne by NitroMed andElan shall have no liability to NitroMed in relation thereto.

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

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

3.4.6.1                   Withreference to the provisions of Clause 11.7.4, Elan and NitroMed shall consultas regards any actions Elan or NitroMed proposes to take in order to mitigateany loss or liability in respect of any Infringement Claim, such as NitroMedceasing to sell the Product, the parties agreeing to modify the Product, oreither or both of the parties entering into a licensing or settlementnegotiation with the third party.

3.4.6.2                   Inthe event that NitroMed and Elan fail to reach agreement on the course of suchactions, the party directing such actions shall indemnify and hold the otherparty harmless against all Infringement Claims to the extent that suchInfringement Claims (i) relate to the period after the date that  the parties were unable to reach finalagreement on such action and (ii) arose as a direct result of the failure ofNitroMed and Elan to reach final agreement on such action.  For the avoidance of doubt, the Elan’saggregate cumulative liability pursuant to Clause 3.4.4 and the NitroMedrecovery 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 reasonablybelieves that the importation, use, offer for sale or sale of the Product inthe Field in the Territory would infringe the

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intellectual property rights of a third partyand that such infringement arises from or relates to use of the Elan Technologyin 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’sposition.  If the Notifying Partybelieves a license from such third party is necessary or advisable to exerciseits rights and obligations under this Agreement, including without limitationto sell the Product and/or mitigate any potential liability arising therefrom(a “**Third Party License**”), the notice shallinclude 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 theNotifying Party and to agree or disagree with the Notifying Party’s belief bywritten counter-notice.  If the NotifiedParty disagrees with the Notifying Party’s belief, then the Notified Partyshall provide the Notifying Party with documents supporting the Notified Party’sposition.  The Notifying Party shall havefifteen (15) working days from the date of receipt to review the documents fromthe Notified Party.  Failure to respondto the other party’s notice shall be taken for the purposes of the decision asto whether to obtain a license under this Clause 3.5.2 (but for the avoidanceof doubt, not for any other purpose whatsoever) as accession to the position ofthe other party.  The parties agree thatthe time periods as set forth in this Clause 3.5.2 may be reasonably extendedby the mutual written agreement of the parties.

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

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

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

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

3.5.7                             Negotiation.  If the parties or the Firm determine that alicense should be obtained, Elan shall have the initial right to negotiate suchlicense.  Elan shall not agree to orsettle any license negotiations for an amount that exceeds its obligation topay 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 theagreement and/or settlement as a result thereof.  In the event that Elan is unsuccessful inobtaining such a license within [**] days of the determination to seek alicense from such third party, then NitroMed shall have the right to negotiatesuch license.  In the event that NitroMedobtains the right to negotiate a third party license pursuant to this Clause3.5.7, and chooses to exercise such right, NitroMed shall not, without Elan’sprior written approval, propose nor agree to the grant of any right whatsoeverunder the Elan Intellectual Property as a part of those negotiations or as apart of any settlement arising from such negotiations.

3.5.8                             Terms.  The party attempting to negotiate the licenseshall:

3.5.8.1                                           use all commercially reasonable efforts to achieve commerciallyreasonable 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 allcommercially reasonable efforts to ensure that the license is sub-licensable toNitroMed (in the case of Elan) or sub-licensable and freely transferable toElan (in the case of NitroMed).

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

3.5.9.1                                           Elan shall be responsible for [**] of all such costs, including licensefees, milestone payments and royalties up to a maximum aggregate responsibilityunder all Third Party Licenses (“**Third Party Royalties**”)in any given calendar quarter up to [**] of the royalties otherwise payable toElan under this Agreement in that quarter, subject to the provisions of Clause3.4;

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

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

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the Term until exhausted. Such carry forward shallremain subject to the limit of [**] of the royalties otherwise payable to Elanunder this Agreement in such calendar quarter, except as otherwise providedherein.

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

3.6.                                   Notwithstanding any provision to the contrary in this Agreement and forclarity, Elan’s maximum aggregate liability for Third Party Royalties andInfringement Claim Fees shall be limited to a maximum of [**] of the royaltiesotherwise payable to Elan under this Agreement, except as otherwise provided inClause 3.4, but NitroMed shall be entitled to recover any Third Party Royaltiesor Infringement Claim Fees for which (in each case) Elan is responsible inexcess 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 suchquarter, 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 NitroMedTrademark.

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 promotionof its activities and of the Elan Technology.

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

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

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

3.7.1.6                                           NitroMed shall, at its sole discretion and expense, file and prosecuteapplications to register and maintain registrations of the NitroMed Trademarkin the Territory.

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

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or counter-claim brought or threatened in respect ofthe use or registration of the NitroMed Trademark.  Any such proceedings shall be conducted atNitroMed’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 prominentlydisplay the Elan Trademark on the packaging of the Product and on allpromotional materials in relation to the Product to acknowledge that the ElanTechnology 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-exclusivelicense to the Elan Trademark, solely for the purpose of fulfilling NitroMed’sobligations under this Clause 3.7.2.

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

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

3.7.2.5                                           NitroMed shall not use in the Territory any trademarks or trade names soresembling 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 prosecuteapplications to register and maintain registrations of the Elan Trademark inthe Territory.

3.7.2.7                                           Elan will be entitled to conduct all enforcement proceedings relating tothe 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 ElanTrademark or passing-off or any other claim or counter-claim brought orthreatened in respect of the use or registration of the Elan Trademark.  Any such proceedings shall be conducted atElan’s expense and for its own benefit.

**4.**                                           NON-COMPETITION

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

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releaseformulation of BiDil in combination with any other compound in the Territoryand (d) any such formulation containing hydralazine as its sole activeingredient,  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 onthe date of First Commercial Sale of the Product in the EEA, or such othermaximum time period as EEA laws and regulations shall specifically so require).

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

**5.**                                           REGISTRATION, MARKETING AND THE PROMOTION OF THEPRODUCT

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

5.2.                                   Diligent Efforts.  NitroMed shall use commercially reasonableefforts, and at least the same level of effort as used by it with other similarproducts 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 maximummarket impact and concentration throughout the Territory.

5.3.                                   Reporting: NitroMed shall promptlynotify Elan in writing of (i) the submission date of all RegulatoryApplications; (ii) the date that such submissions are accepted for filing bythe relevant regulatory authority and (iii) the date of all RegulatoryApprovals.

5.4.                                   Promotional Campaigns  NitroMed shall:

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

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

5.4.3                             prior to the launch of the Product, communicate with Elan regarding itsobjectives for  the Product in theTerritory.

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

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

5.6.                                   Required Markings.  All trade packaging and marketing materialsshall:

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

5.6.2                             have marked representative patent number(s) including that of the formulationpatent in respect of the Elan Patents on all Product, or otherwise reasonablycommunicate to the trade the existence of any Elan Patents for the countrieswithin the Territory in such a manner as to ensure compliance with, andenforceability under, applicable laws.

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

5.7.1                             in each Major Market, within [**] days after the Regulatory Approval inthat 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 afterthe relevant Regulatory Approval in that country is obtained, subject to thetimely receipt of launch stocks.

**6.**                                           PRODUCTION LICENSE

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

6.1.1                             The facility shall be subject to the written approval of Elan, whichshall 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, toprotect the confidentiality of Elan’s manufacturing processes related toProduct and not use them for any other purpose.

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

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

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

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

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

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

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

6.5.                                   Technological Competitors.  Under no circumstances may the Manufacturerbe a Technological Competitor.  In theevent of a Manufacturer becoming a Technological Competitor or an Affiliate ofa Technological Competitor, all manufacturing rights of the Manufacturer shallcease.  In such event, Elan shall onrequest negotiate in good faith terms for qualifying and using a differentAlternate Source.

6.6.                                   Supply of Product from Alternate Source.  NitroMed may acquire from the AlternateSource only such quantities of Product as are permitted to be so sourced underthe 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 ElanLicense, NitroMed shall pay to Elan the following non-refundable amounts:

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

7.1.2                             a milestone payment of US$[**] dollars) upon the delivery by EDDI ofclinical supplies of the Product for the first pivotal study of the Product(Phase II or Phase III) or, if earlier, upon the License Milestone Paymentreferred 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 DMFsupportive of a Regulatory Application, provided that Elan is not notified bythe FDA or its equivalent in another country within thirty (30) days of filingof the rejection thereof, in which

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case such milestone payment shall be payableupon notice of acceptance of such DMF filing, or if earlier, RegulatoryApproval of the Product in that country;

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

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

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

7.2.                                   Not Subject to Future Performance Obligations.  The License Fee and the LicenseMilestone Payments shall not be subject to future performance obligations ofElan to NitroMed and shall not be applicable against future services providedby Elan to NitroMed.

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

7.3.                                   Royalty on Sales.  In further consideration of the grant of theElan License, NitroMed shall pay to Elan a non-refundable royalty calculated byreference to the table set out below, being the royalties within the bands ofaggregate Net Sales below for the applicable formulation as from the date ofits 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 forthe purposes of clarifying the intention of the parties, if: (a) prior tocommencement 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, theroyalty payable shall be:

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

PLUS

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

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PLUS

Twice-daily — firstband:  $[**] x [**]%

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

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

7.5.                                   Method of calculation of fees.  The parties acknowledge and agree that themethods for calculating the royalties and fees under this Agreement are for thepurposes 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 recordsof gross sales of the Product, the items deducted from the gross amount incalculating the Net Sales, the Net Sales and the royalties payable to Elanunder Clause 7.3.  NitroMed shall deliverto Elan a written estimated statement (the “**EstimatedStatement**”) thereof within 45 days following the end of eachcalendar quarter, (or any part thereof in the first or last calendar quarter ofthis Agreement) for such calendar quarter, with a written final statement (the “**Final Statement**”) to be delivered by NitroMed to Elan nolater than 75 days following the end of each calendar quarter.  The Estimated Statement shall outline on acountry-by-country basis, the calculation of the Net Sales from gross revenuesduring that calendar quarter, the aggregate Net Sales of each formulation fromits first commercial sale to the end of that calendar quarter, the applicablepercentage rate, and a computation of the sums due to Elan.  Following the delivery of the Final Statementfor each calendar quarter, the parties shall reconcile the Estimated Statementand the Final Statement.  If the FinalStatement reports a greater amount of royalties due than were initiallyreported in the Estimated Statement, NitroMed shall pay the difference toElan.  If the Final Statement reports alesser amount of royalties due that was initially reported in the EstimatedStatement, Elan shall refund the difference to NitroMed.  In either case, the additional amount due toElan or the refund due to NitroMed shall be paid by the other party, as thecase may be, within 30 days of delivery of the Final Statement.  The parties’ financial officers shall agreeupon the precise format of the Estimated Statement and the Final Statement.

8.2.                                   Foreign Currency.  Net Sales of the Product based on salesamounts in a currency other than US$ shall be converted to US$ on the basis ofthe median exchange rate in effect for the purchase of US$ with such foreigncurrency quoted in the Wall Street Journal (or comparable publication if notquoted in the Wall Street Journal) at the closing of the Business Days duringthe calendar quarter in question, prior to being included in the EstimatedStatement or the Final Statement.

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

** **

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8.4.                                   Taxes.  If NitroMed is required by law to pay orwithhold any income or other taxes on behalf of Elan with respect to any moniespayable 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 andborne solely by Elan;

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

8.5.                                   Double Tax Co-operation.  Elan and NitroMed agree to co-operate in allrespects necessary to take advantage of any double taxation agreements orsimilar agreements as may, from time to time, be available in order to enableNitroMed 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 ofthe achievement of the relevant event to which they relate; and

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

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

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

8.9.                                   Audit.  For the 180 day period following the close ofeach calendar year of the Agreement, NitroMed will, in the event that Elanreasonably requests such access, provide Elan’s independent certifiedaccountants (reasonably acceptable to the other party) with access, duringregular business hours and subject to the confidentiality provisions ascontained in this Agreement, to NitroMed’s books and records relating to theProduct, solely for the purpose of verifying the accuracy and reasonablecomposition of the calculations under this Agreement for the calendar year thenended.

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 toNitroMed, as the case may be, together with interest at the rate specified inClause 8.8.  If the discrepancy exceeds5% of the amount due or charged by a party for any period and provided that theamount of the

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discrepancyexceeds US$25,000, then additionally the cost of such accountants shall beborne by the audited party.

**9.              DURATION AND TERMINATION**

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

9.1.1                             In the US:  on (a) the 20thanniversary of the date of the first In Market sale of the Product; or (b) theexpiration of the last-to-expire patent for the Product listed in the Food andDrug 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 thefirst In Market sale of the Product in the country concerned; or (b)  the expiration of the life of the last toexpire 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 Agreementshall continue automatically for rolling 3 year periods thereafter, unless theAgreement has been terminated by either of the parties by serving 1 year’swritten notice on the other party immediately prior to the end of the InitialTerm or any such additional 3 year period.

9.3.                                   Breach / Insolvency.  In addition to the rights of terminationprovided for elsewhere in this Agreement, either party will be entitledforthwith 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 ofthis Agreement, and fails to cure the same within [**] days after receipt of awritten notice from another party hereto giving full particulars of the breachand requiring it to be remedied; provided, that if the breaching party hasproposed a course of action to cure the breach and is acting in good faith tocure same but has not cured the breach by the [**] day, such period shall beextended by such period as is reasonably necessary to permit the breach to becured, 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 applicablejurisdiction (except for the purposes of amalgamation or reconstruction and insuch manner that the company resulting therefrom effectively agrees to be boundby or assume the obligations imposed on that other party under this Agreement);

9.3.3                             a receiver, administrator, examiner, trustee or similar officer isappointed over all or substantially all of assets of that other party under thelaws of any applicable jurisdiction; or

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

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

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

9.4.2                             notifies Elan that it does not wish to commercialise the Product in aMajor Market or does not notify Elan within [**] months of the later of thecompletion of the R&D Program or the conclusion of the Phase III clinicaltrial program as regards a Major Market that it wishes to advance tocommercialisation 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 themutual recognition procedure, as the case may be, unless such failure is due tocircumstances beyond NitroMed’s control (including governmental action,inaction and / or delay).

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

9.5.                                   Cross-Termination.  This Agreement shall automatically terminateupon the termination of the Development Agreement or the termination of theSupply Agreement.  For the purposes ofClause 10, such a termination of this Agreement shall be treated:

9.5.1                             if termination of the Development Agreement or Supply Agreement is onthe 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 byNitroMed or Elan, as the case may be; and

9.5.2                             if termination of the Development Agreement or the Supply Agreement ison 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 ofNitroMed or Elan, as the case may be.

9.6.                                   Additional NitroMed Termination Rights.  In further addition to the rights andtermination provided for elsewhere in this Agreement, NitroMed shall beentitled 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 terminationspecified in Clause 9 or elsewhere in this Agreement, this Agreement shall,subject to Clause 10.2, automatically terminate forthwith and be of no furtherlegal force or effect.

10.2.                             Specific Consequences.  Upon termination of the Agreement by eitherparty, or upon termination by Elan of a license for a particular country underClause 9.4, the following shall be the consequences relating to the Territoryor the particular country, as applicable:

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10.2.1                       any sums that were due from NitroMed to Elan under the provisions ofthis Agreement prior to its termination or expiry shall be paid in full within14 days of termination of this Agreement and Elan shall not be liable to repayto NitroMed any amount of money paid or payable by NitroMed to Elan up to thedate of the termination of this Agreement;

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

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

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

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

10.2.6                       any other provision of this Agreement which, by its nature, is intendedto 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 asof the Effective Date, as follows:

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

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

11.1.3                       Elan has not been notified of, nor to the best of its knowledge with nospecial search are there any, infringement proceedings, actions, suits orcomplaints pending against nor any outstanding injunctions, judgments, orders,decrees, rulings or other charges against, Elan or any Affiliate of Elan inconnection with the Elan Patents, the Elan Technology or the Elan Know How inthe 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 theapplication of the Elan Patents, the Elan Technology or the Elan Know-How inthe Territory as it may concern the making, using, or selling of the Productinfringes the intellectual property rights of a third party, nor to the best ofits knowledge with no special search has any such allegation been made.

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11.2.                             NitroMed Warranties.  NitroMed represents and warrants to Elan asof 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 conflictwith this Agreement.

11.2.3                       NitroMed has not been notified of, nor to the best of its knowledge withno special search are there any, infringement proceedings, actions, suits orcomplaints pending against nor any outstanding injunctions, judgments, orders,decrees, rulings or other charges against, NitroMed or any Affiliate ofNitroMed in connection with the NitroMed Patents or the NitroMed Know How inthe 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 thatthe application of the NitroMed Patents or the NitroMed Know-How in theTerritory as it may concern the making, using, or selling of the Productinfringes the intellectual property rights of a third party, nor to the best ofits knowledge with no special search has any such allegation been made.

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

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

11.5.                             Indemnification (Medical Claims). NitroMedshall indemnify Elan against all Claims made or brought against Elan seekingdamages for personal injury (including death) and/or for the cost of medicaltreatment, caused by or attributed to the Product, but without prejudice to anyright of indemnification NitroMed may have against EDDI or EHI under theDevelopment Agreement or the Supply Agreement respectively.

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

11.7.                             Conduct of Claims.  Subject to Clause 11.8, the party seeking anindemnity 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 orproceedings, with counsel of the indemnifying party’s choice, provided that theindemnifying party shall reasonably and regularly consult with the indemnifiedparty 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 orproceedings; and

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

The indemnifying party may settle a Claim on termswhich provide only for monetary relief and do not include any admission ofliability.  Save as aforesaid, neitherthe indemnifying party nor the party to be indemnified shall acknowledge thevalidity of, compromise or otherwise settle any Claim without the prior writtenconsent of the other, which shall not be unreasonably withheld.

11.8.                             Pursuant to the procedure set out in Clause 3.5 and the monetary limitsset out therein, NitroMed may settle an Infringement Claim of the type referredto therein on terms which provide only for monetary relief and/or the grant bythe plaintiff in such Infringement Claim of a license solely relating to theProduct and not to any other product and do not include any admission ofliability, infringement, or invalidity or unenforceability of any of the ElanIntellectual Property.  Save as aforesaid, neither Elan nor NitroMed shallacknowledge the validity of, compromise or otherwise settle any suchInfringement Claim without the prior written consent of the other, which shallnot be unreasonably withheld.

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

11.10.                       Exclusion of Consequential Loss.  WITHOUT PREJUDICE TO THE OBLIGATION OF EITHERPARTY TO INDEMNIFY THE OTHER IN RESPECT OF CLAIMS BY A THIRD PARTY,NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND NITROMEDSHALL 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 TERMSOF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE LOSSOR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISEVALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVEPARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.

11.11.                       Extension of Indemnification.  Where this Agreement provides for theindemnification of a party to this Agreement or for the limitation of a party’sliability, such indemnification and/or limitation (as the case may be) shallalso 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 areinherent uncertainties involved in the development and registration ofpharmaceutical products and such uncertainties form part of the business riskinvolved in undertaking the form of commercial collaboration outlined in thisAgreement.  Accordingly, Elan andNitroMed shall have no liability to each other as a result of the failure ofthe Product to obtain Regulatory Approval, and Elan will

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haveno liability to NitroMed as a result of any failure or delay of the Product toachieve the Product Specifications (as defined in the Development Agreement) orone or more of the milestones set out in the R&D Program and/or to obtainRegulatory Approval in one or more countries of the Territory.  The foregoing shall not derogate from theresponsibilities and obligations of each of Elan and NitroMed pursuant to theterms of this Agreement.

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

Eachparty shall provide the other party with a certificate from the insurancecompany verifying the above and shall notify the other party in writing atleast 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 proprietaryinformation, including without limitation, inventions, trade secrets,specifications, designs, data, know-how and other proprietary informationrelating to the Product and the processes, services and business of thedisclosing party.

The foregoing shall be referred to collectivelyas “**Confidential Information**”.

12.2.                             Exclusion.  Confidential Information shall be deemed notto 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 withoutreference to the other party’s Confidential Information, as evidenced by suchparty’s written records; or

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

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

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

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12.5.                             Obligation to Inform.  Each party further agrees to inform all suchemployees, representatives and agents of the terms and provisions of thisAgreement relating to Confidential Information and to obtain their agreement toconfidentiality obligations no less onerous in any respect than those set forthherein as a condition of receiving Confidential Information.

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

12.7.                             Return of Information.  Upon termination or expiration of thisAgreement, each party shall promptly, upon request of the other party, returnall documents and any copies thereof containing Confidential Informationbelonging to, or disclosed by, such other party, save that it may retain onecopy of the same solely for the purposes of ensuring compliance with thisClause 12.

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

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

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

12.11.                       Announcements.  No announcement or public statementconcerning the existence, subject matter or any term of this Agreement, or itsperformance, shall be made by or on behalf of any party without the priorwritten approval of the other, such approval not to be unreasonably withheld ordelayed.  Notwithstanding any provisionin this Agreement to the contrary, following the initial disclosure relating tothe terms of this Agreement on a Form 8-K and an application for confidentialtreatment filed with the U.S. Securities and Exchange Commission (on both ofwhich the parties shall collaborate), the parties may make such announcementsor public statements concerning the existence, subject matter or any term ofthis Agreement to the extent required by applicable law or regulation(including, without limitation, any requirements of any stock exchange, Nasdaqor the U.S. Securities and Exchange Commission); provided, however, thatneither party shall, without the consent of the other party, disclose any termwhich remains confidential pursuant to the confidential treatment applicationfiled with the U.S. Securities and Exchange Commission.

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

12.12.1                 avalid order of a court or Governmental Authority; or

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

provided that if the Disclosing Party becomes legallyrequired to make such announcement, public statement or disclosure hereunder,the Disclosing Party shall give the other party prompt notice of such fact toenable the other party to seek a protective order or other appropriate remedyconcerning any such announcement, public statement or disclosure, includingconfidential treatment and/or appropriate redactions.

The Disclosing Party shall fully co-operate with theother party in connection with that other party’s efforts to obtain any suchorder or other remedy.  If any such orderor other remedy does not fully preclude announcement, public statement ordisclosure, the Disclosing Party shall make such announcement, public statementor 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 ordelay in the performance of any of its obligations under this Agreement if suchfailure or delay results from Force Majeure, but any such failure or delayshall 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 anAffiliate or in connection with the sale or transfer of all or substantiallyall of the Elan Intellectual Property provided that Elan fully compensatesNitroMed for any adverse tax consequence that may arise from the assignment.

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

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

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

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

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13.2.3                       Except as provided for in Clauses 13.2.1 and 13.2.2, this Agreement maynot 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 writingto NitroMed in the event a Technological Competitor obtains Control of NitroMedduring the Term of this Agreement unless the conditions set out in Clause2.2.1(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 havebeen obtained where a person or persons acting in concert acquire the direct orindirect ownership of more than 50% of the issued  voting shares or 50% of the other votingrights, if applicable, to elect directors.

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

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

13.5.                             Entire Agreement.  This Agreement constitutes the entireagreement and understanding between the parties with respect to its subjectmatter, and except as otherwise expressly provided, supersedes all priorrepresentations, writings, negotiations or understandings with respect to thatsubject matter.

Nothingin this Clause 13.5 shall exclude any liability which any party would otherwisehave to the other party or any right which either of them may have to rescindthis Agreement in respect of any statements made fraudulently by the otherprior to the execution of this Agreement or any rights which either of them mayhave in respect of fraudulent concealment by the other.

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

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

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

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

** **

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13.10.                     Variations.  No variation of this Agreementshall be effective unless it is made in writing and signed by each of theparties.

13.11.                     Notices.

13.11.1                A notice under or inconnection with this Agreement (a “**Notice**”)

(a) shall be inwriting; and

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

13.11.2                The address referredto 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                    |

 

Markedfor 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 beentitled but not obliged to set-off against any amount of money payable to itby the other party under this Agreement, any amount of money payable by it tothe other party under this Agreement.

13.13.                     GoverningLaw and Jurisdiction:  This Agreement shall be governed by andconstrued in accordance with the laws of the State of New York, without regardto its conflict of laws rules, and shall be subject to the exclusivejurisdiction of the State and Federal Courts located in New York, New York.

***

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** **
| **SCHEDULE 1** | **TECHNOLOGICAL COMPETITORS OF ELAN** |
|----------------|---------------------------------------|
| ** **     |

[**]

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**SCHEDULE2**

**KEY TERMSFOR SUPPLY AGREEMENT**

Capitalized termsused and not otherwise defined in this Schedule shall have the meaning ascribedto such term in the License Agreement.

1.               EHI shall supplyProduct to NitroMed in the Territory for commercial supplies, subject to Clause8 below.  EHI to use commerciallyreasonable efforts to meet NitroMed supply requirements.

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

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

4.               Detailedforecasting, ordering and delivery provisions to be negotiated in good faithbetween the parties and to be fully set out in the Supply Agreement, theforegoing to include (i) a provision that delivery periods for binding purchaseorders of Product shall be commensurate with the Product manufacturing leadtime and (ii) NitroMed shall be entitled to cancel any Purchase Order forProduct provided Elan is compensated by NitroMed for the non-recoverable costincurred in manufacturing the Product up to the date of notification of anysuch cancellation plus the full margin that would otherwise have been earned byElan if the Product Purchase Order had not been cancelled. The parties agreethat during the agreed “launch period” the forecasting and ordering provisionsmay differ to reflect the respective challenges for both parties during thisperiod.

5.               NitroMed shall in atimely fashion review and approve proposed changes in advance of theirimplementation specific to the Product manufacturing, testing, or controlsdocumentation which require prior Regulatory Authority approval.

6.               NitroMed to haveright to audit EHI and subcontractors relevant to the Product manufacturing andtesting in conformance with cGMPs no more than once per calendar year, or forjust cause provided in each case that reasonable advance notice is provided toEHI.

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

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

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9.               Release andrejection provisions reasonably acceptable to the parties, with EHI to have aspecified time to rectify the issue. NitroMed to be refunded where problemcannot be rectified within specified time save where it is established that thenon-conformity is due to the negligent acts or omissions of NitroMed.

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

11.         EHI responsible forcompliance to cGMP, applicable laws for supply and manufacture, and adherenceto specifications. NitroMed responsible for marketing and promotion and forrecalls and indemnification arising otherwise. Indemnification provisions willcorrespond to such responsibilities.

12. NitroMed shall pay toEHI a fixed sum per dosage unit for the Product, which such sum will bespecified in the Supply Agreement and shall be [**]%.  For purposes of this calculation, the cost ofmanufacturing shall be as described in Schedule 3 and in accordance with USGAAP. 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 dateas may be agreed between the parties) the parties shall enter into good faithnegotiations to settle [**] for commercial supplies of Product. From the timethe price for commercial supplies is agreed as aforesaid, thereafter the pricefor such commercial supplies of Product shall be as EHI notifies to NitroMedfrom time to time provided that during the term of the Supply Agreement priceincreases for commercial supplies of Product shall be limited to the [**], ascompared to the most recent price adjustment for Product.  In addition, if (i) the price EHI must payfor the active ingredients (or other raw materials) used to manufacture theProduct increases by a percentage in excess of [**], (ii) additional regulatoryobligations are imposed on EHI by law or a Governmental Authority; or (iii) anyother price increase is required or agreed resulting from changes to Productspecifications, EHI may increase the price of the Product by [**].  The parties agree that NitroMed will be [**] onthe date of the License Agreement.  Forthe avoidance of doubt, NitroMed [**] with the manufacture of the Product.

13.  NitroMed shall have audit rights in order toverify 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.       Theparties shall agree minimum volumes of product to be ordered by NitroMed underthe Supply Agreement, such minimum volumes to take effect [**] months after thefirst launch of the Product. EHI shall ensure that sufficient capacity isavailable during the term of the Supply Agreement to manufacture such minimumvolumes.  In the event that the actualquantities of Product ordered by NitroMed fall below such minimum volumes,NitroMed shall pay to EHI an annual capacity fee equal to [**]% of theapplicable price of shortfall of Product ordered for delivery in thatyear.   Shortfall shall mean the amount,if any, by

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whichin the calendar year in question the quantities of Product properly ordered isless than the minimum volumes.   Theparties further agree that the Supply Agreement shall include a mechanismwhereby EHI shall be entitled to terminate the Supply Agreement  where there is a failure to meet minimumvolume requirements and subject to conditions (to include tech transfer to athird party).  The parties further agreethat as part of the negotiations of the Supply Agreement there will be goodfaith discussions on additional EHI termination rights in circumstances otherthan failure to meet minimum volume requirements.

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

 

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*SCHEDULE 3*

*Product Manufacturing Costs*

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

1.                                      DirectMaterials

                                               Materialsused in the manufacturing process that are traced directly to the completedproduct and include:

-                                            Inertraw materials or excipients.

-                                            Activesubstances/ingredients.

-                                            Packagingcomponents such as bottles, caps, labels, etc.

2.                                      DirectLabor

                                               The costof employees engaged in production activities which are directly identifiablewith product costs.  Excludessupervision, which is included in indirect labor, and production supportactivities such as inspection, plant and equipment maintenance labor, andmaterial handling personnel.  DirectLabor cost includes:

-                                            Basepay, overtime, vacation and holidays, illness, personal with pay and shiftdifferential.

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

3.                                      IndirectManufacturing Costs

                                               Costswhich are ultimately allocated to product based on standard labor hours of theoperating departments.  These costsinclude:

-                                            IndirectProduction Labor: Salaries of employees engaged in production labor whichare not classified as direct labor, including supervision, clerical, etc.

-                                            Costsof Direct Labor:  Employees notutilized for the manufacturing of product such as training, downtime andgeneral duties.

-                                            IndirectMaterials:  Supplies and chemicalswhich are used in the manufacturing process and are not assigned to specificproducts but are included in manufacturing overhead costs.  Includes supplies which are either common toseveral products or for which direct assignment to products is not practical.

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

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-                                            Maintenanceand Repairs:  Amount of expenseincurred in-house or purchased to provide services for plant maintenance andrepairs of facilities and equipment.

-                                            OtherServices:  Purchased outside servicesand rentals such as the cost of security, ground maintenance, etc.

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

-                                            Insurance:  Cost of comprehensive and other insurancenecessary for the safeguard of manufacturing plant and equipment, and businessinterruption.

-                                            Taxes:  Expense incurred for taxes on real andpersonal property (manufacturing site, buildings, and the fixed assets ofequipment, 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.

-                                            Costof 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.

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

•                                                 Cafeteria

•                                                 Personal Operations

•                                                 Health and Safety Services

•                                                 Division Engineering and OperationsServices

•                                                 Plant Services (housekeeping)

•                                                 Manufacturing Information Systems

•                                                 Plant Power

•                                                 Office of VP Manufacturing

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                                               Variousbases are used for allocating these costs to manufacturing operatingdepartments including headcount, square feet, metered utilities use, estimatedservices rendered, EDP computer hours etc.

4.                                      QualityAssurance Costs

                                               Directlabor and indirect costs for Quality Assurance departments testing and approvingmaterials used in manufacturing and completed manufacturing batches andfinished products.  This includes allmanufacturing in-process testing and testing of finished materials.  Excluded from product costs are QA costsrelated to research and development testing and testing which is allocated backto appropriate manufacturing sites.

5.                                      InventoryCarrying Costs

                                               Inventorycarrying costs which relate to personnel and warehousing, but excluding anyapplication 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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