-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EJMFx620O39LNRdzFy04kfbVekccKsEMBnEZj/9yheuXRRl8aF5c9GgmDd7dWPqb ltWNRUZYT/EARfEQPHb8WQ== 0001047469-03-028392.txt : 20030820 0001047469-03-028392.hdr.sgml : 20030820 20030820160904 ACCESSION NUMBER: 0001047469-03-028392 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 26 FILED AS OF DATE: 20030820 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NITROMED INC CENTRAL INDEX KEY: 0000927829 IRS NUMBER: 223159793 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-108104 FILM NUMBER: 03858247 BUSINESS ADDRESS: STREET 1: 12 OAK PARK DR CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 7816859700 MAIL ADDRESS: STREET 1: 12 OAK PARK DR CITY: BEDFORD STATE: MA ZIP: 01730 S-1 1 a2116973zs-1.htm S-1
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As filed with the Securities and Exchange Commission on August 20, 2003.

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

NITROMED, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	2834 (Primary Standard Industrial Classification Code Number)	22-3159793 (I.R.S. Employer Identification Number)
12 Oak Park Drive Bedford, Massachusetts 01730 (781) 685-9700 (Address Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)
Michael D. Loberg Chief Executive Officer NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 (781) 685-9700 (Name, Address Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)

Copies to:
Steven D. Singer, Esq. Cynthia T. Mazareas, Esq. Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000		Geoffrey B. Davis, Esq. Ropes & Gray LLP One International Place Boston, Massachusetts 02110 (617) 951-7000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date hereof.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. / /

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. / /

If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box. / /

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities To Be Registered	Proposed Maximum Aggregate Offering Price (1)	Amount of Registration Fee (2)


Common Stock, $0.01 par value per share	$100,000,000	$8,090

(1): Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2): Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated August 20, 2003

NitroMed, Inc.

Shares

Common Stock

This is the initial public offering of NitroMed, Inc. We are offering shares of our common stock. We anticipate that the initial public offering price will be between $ and $ per share. We have applied to list our common stock on the NASDAQ National Market under the symbol "NTMD."

Investing in our common stock involves risks. See "Risk Factors" beginning on page 5.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

		Price to Public			Underwriting Discounts and Commissions			Proceeds to NitroMed
Per Share		$			$			$
Total		$			$			$

We have granted the underwriters the right to purchase up to additional shares of common stock to cover over-allotments.

Joint Bookrunning Managers

Deutsche Bank Securities

JPMorgan

Pacific Growth Equities, LLC

The date of this prospectus is , 2003.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before buying shares of our common stock. You should read the entire prospectus carefully before making an investment in our common stock.

Our Business

NitroMed is an emerging pharmaceutical company that discovers, develops and seeks to commercialize proprietary pharmaceuticals based on the therapeutic benefits of the naturally-occurring molecule nitric oxide. We utilize our nitric oxide expertise and technology in an effort both to develop novel pharmaceuticals and to improve the safety and efficacy of widely-prescribed drugs. Our research and development efforts focus on major diseases that are characterized by a deficiency in nitric oxide, such as cardiovascular and inflammatory diseases, and which present large market opportunities.

We are conducting a late-stage confirmatory trial of our lead nitric oxide-enhancing drug, BiDil, for the treatment of heart failure in African Americans. BiDil is the subject of a new drug application filed with the U.S. Food and Drug Administration, or FDA. We have received a letter from the FDA stating that, in addition to the data already submitted to the agency, a clearly positive clinical trial in African Americans with heart failure would, together with the satisfaction of other conditions, provide a basis for approval of BiDil. We are conducting our African American Heart Failure Trial, or A-HeFT, at approximately 160 sites in the U.S., with a goal of enrolling 1,100 patients. A-HeFT, which is jointly sponsored by the Association of Black Cardiologists, is over 60% enrolled. A-HeFT is designed to demonstrate that BiDil, when administered together with standard heart failure therapies, can provide a combination of reduced mortality and hospitalization and improved quality of life for African Americans with heart failure.

We are also collaborating with Merck, one of the world's leading pharmaceutical companies, to develop nitric oxide-enhancing COX-2 inhibitors. COX-2 inhibitors, a class of medicines that are effective in treating inflammation, generated approximately $6.0 billion in worldwide sales in 2002. Merck currently markets a leading COX-2 inhibitor, Vioxx. Under our agreement, we have exclusively licensed Merck worldwide rights under our technology to develop nitric oxide-enhancing COX-2 inhibitors and are currently working with Merck to select proprietary drug candidates for clinical testing. Merck provided us with a $10.0 million upfront license payment and has agreed to provide us with research funding for a three-year period. We are entitled to milestone payments upon our successful achievement of specified research and development objectives and royalties on any product sales. In mid-2003, we received $5.0 million from Merck upon achievement of the initial milestone.

We also have entered into an agreement with Boston Scientific, a leading cardiovascular medical device company, for the research, development and commercialization of cardiovascular stents coated with nitric oxide-enhancing medicines. Stents, or wire mesh devices, are typically inserted into narrowed coronary arteries to maintain blood flow.

We are also conducting preclinical research and development on other nitric oxide-enhancing drug candidates that would address large pharmaceutical markets, including pain, asthma and allergy, sexual dysfunction, dermatology and central nervous system disorders.

The BiDil Market Opportunity

African Americans as a group are at greater risk for, and are more likely to die from, heart disease when compared to non-African Americans. The Centers for Disease Control estimate that there are currently 750,000 African Americans who have been diagnosed with heart failure. This patient population accounted for a disproportionately high percentage, 15.3%, of all heart failure patients in the U.S. in 2002. Additionally, recent analyses of heart failure clinical trials show that the mortality rate for African Americans is higher than for non-African Americans even after adjustment for social and economic factors.

African Americans may also be more vulnerable to heart failure because some approved heart failure medicines appear to be less effective in these patients. The FDA has recognized this and appropriate disclosure has been included in package inserts for these drugs.

Based on recent clinical data, we believe that African Americans as a group may produce less nitric oxide in their arteries or destroy the nitric oxide that is produced too quickly, leaving them more vulnerable to heart failure. As BiDil is intended to treat these specific characteristics, we believe that BiDil, if approved, will be broadly prescribed for African-American heart failure patients.

Our Strategy

Our goal is to become a leading pharmaceutical company focused on the discovery, development and commercialization of nitric oxide-enhancing medicines. Key elements of our strategy include:

•: Successfully obtain FDA approval of and commercialize BiDil.
•: Collaborate with leading pharmaceutical companies to develop and commercialize selected nitric oxide-enhancing versions of existing medicines and to benefit from their clinical expertise, marketing reach and proprietary technology.
•: Focus our internal development efforts on nitric oxide-enhancing product candidates in drug and therapeutic classes where we have intellectual property and believe we can offer a clinical benefit compared to existing medicines.
•: Expand our pipeline of nitric oxide-enhancing drug candidates through appropriate in-licensing or other arrangements.
•: Continue to protect and enhance our nitric oxide expertise and related intellectual property.

We were incorporated in Delaware in 1992. Our principal executive office is located at 12 Oak Park Drive, Bedford, Massachusetts 01730, and our telephone number is (781) 685-9700. Our internet address is www.nitromed.com. The information on our website is not incorporated by reference into this prospectus and should not be considered to be a part of this prospectus. Our website address is included in this prospectus as an inactive technical reference only.

Unless otherwise stated, all references to "us," "our," "NitroMed," "we," "the company" and similar designations refer to NitroMed, Inc. NitroMed®, NitRx®, BiDil® and NitroMed's logo "N" are trademarks of NitroMed. Other trademarks or service marks appearing in this prospectus are the property of their respective holders.

The Offering

Common stock offered by NitroMed		shares
Common stock to be outstanding after this offering		shares
Over-allotment option		shares
Use of proceeds		We intend to use the net proceeds of this offering for BiDil commercialization activities, including establishment of sales and marketing capabilities, research and development, working capital and general corporate purposes. For more detailed information, see "Use of Proceeds" on page 20.
Proposed NASDAQ National Market symbol		NTMD

The common stock outstanding after the offering is based on the number of shares outstanding as of August 1, 2003, and excludes:

•: 2,567,201 shares of common stock issuable upon the exercise of outstanding stock options as of August 1, 2003 with a weighted-average exercise price of $1.32 per share;
•: 275,096 shares of common stock issuable upon the exercise of outstanding warrants as of August 1, 2003 with a weighted-average exercise price of $1.84 per share; and
•: an aggregate of 2,163,000 shares available, or to be available after the completion of the offering, for future issuance under our 2003 stock incentive plan and 2003 employee stock purchase plan.

Except as otherwise noted, we have presented the information in this prospectus based on the following assumptions:

•: the conversion of all outstanding shares of redeemable convertible preferred stock into 16,806,064 shares of common stock upon the closing of the offering, but excluding up to a maximum of shares of common stock issuable to holders of our series E redeemable convertible preferred stock at the closing of the offering in payment of accrued dividends on such stock, calculated based upon a per share common stock price of $ , which is the low end of the range of initial public offering prices set forth on the cover page of this prospectus;
•: no exercise by the underwriters of their option to purchase additional shares of common stock in the offering; and
•: the filing of our restated certificate of incorporation and the adoption of our amended and restated by-laws immediately prior to the closing of the offering.

Summary Financial Data
(in thousands, except per share data)

The following summary financial data should be read in conjunction with "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes, all included elsewhere in this prospectus.

		Year Ended December 31,															Six Months Ended June 30,
		1998			1999			2000			2001			2002			2002			2003
Statement of Operations Data:
Revenue		$	4,000		$	2,658		$	2,125		$	250		$	750		$	375		$	3,388
Operating expenses:
	Research and development		6,690			8,748			8,043			10,214			15,907			6,488			8,261
	General and administrative		2,155			2,461			2,048			2,362			2,133			939			1,227

Loss from operations			(4,845	)		(8,551	)		(7,966	)		(12,326	)		(17,290	)		(7,052	)		(6,100	)
Net loss			(4,355	)		(7,957	)		(7,431	)		(11,629	)		(16,718	)		(6,725	)		(5,896	)
Accretion of dividends and redemption value			(22	)		(101	)		(157	)		(1,662	)		(2,698	)		(1,349	)		(1,349	)

Net loss attributable to common stockholders		$	(4,377	)	$	(8,058	)	$	(7,588	)	$	(13,291	)	$	(19,416	)	$	(8,074	)	$	(7,245	)

Net loss per common share:
	Basic and diluted	$	(8.97	)	$	(15.86	)	$	(14.05	)	$	(17.91	)	$	(20.02	)	$	(8.38	)	$	(7.36	)
	Weighted average basic and diluted common shares outstanding		488			508			540			742			970			963			985
	Pro forma basic and diluted net loss per common share													$	(1.11	)				$	(0.39	)
	Shares used in computing pro forma basic and diluted net loss per common share														15,000						15,015

	As of June 30, 2003
	Actual			Pro Forma		Pro Forma As Adjusted
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	18,790		$	38,690	$
Working capital		11,112			25,832
Total assets		20,022			39,922
Redeemable convertible preferred stock		84,233			—
Total stockholders' equity (deficit)		(80,581	)		18,372

Pro forma basic and diluted net loss per common share have been calculated assuming the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock, excluding outstanding shares of our series E redeemable convertible preferred stock issued on August 1, 2003.

The pro forma and pro forma as adjusted balance sheet data as of June 30, 2003 give effect to the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock as of June 30, 2003, including outstanding shares of our series E redeemable convertible preferred stock issued on August 1, 2003. The pro forma as adjusted balance sheet data as of June 30, 2003 have also been adjusted to give effect to the sale of the shares of common stock offered by this prospectus at the assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses.

RISK FACTORS

If you purchase shares of our common stock, you will assume a high degree of risk. In deciding whether to invest, you should carefully consider the following risk factors, as well as the other information contained in this prospectus. Any of the following risks as well as other risks and uncertainties discussed in this prospectus could have a material adverse effect on our business, financial condition, results of operations or prospects and cause the value of our stock to decline, which could cause you to lose all or part of your investment. The risks and uncertainties described below are also not the only ones facing us. Additional risks and uncertainties that we are unaware of, or that are currently deemed immaterial, also may become important factors that affect us.

Risks Relating to Our Business

Because we have a history of losses and our future profitability is uncertain, our common stock is a highly speculative investment.

We have experienced significant operating losses since our inception in 1992. For the year ended December 31, 2002 and the six months ended June 30, 2003, we had net losses of $16.7 million and $5.9 million, respectively. As of June 30, 2003, we had an accumulated deficit of approximately $82.5 million. We expect that we will continue to incur substantial losses and that our cumulative losses will increase as our research, development and commercialization efforts expand. We expect that the losses that we incur will fluctuate from quarter to quarter and that these fluctuations may be substantial. To date, we have not recorded any revenue from the sale of products and we will not be able to do so unless and until one of our products completes clinical trials and receives regulatory approval. BiDil is our only product candidate that has advanced into clinical trials and we do not anticipate receiving revenues from BiDil until at least 2006, if ever.

A large portion of our expenses is fixed, including expenses related to facilities, equipment and personnel. In addition, we expect to spend significant amounts to fund research, development and commercialization of our product candidates and to enhance our core technologies. As a result, we expect that our operating expenses will continue to increase significantly in the near term and, consequently, we will need to generate significant revenue to achieve profitability. We do not expect to achieve profitability until at least 2008 and may not achieve profitability until after that date, if at all. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the market price of our common stock and could impair our ability to raise capital, expand our business, diversify our product offerings or continue our operations.

We are heavily dependent on obtaining regulatory approval for and successfully commercializing BiDil, our most advanced drug candidate.

Our research, development and management resources are primarily dedicated to our most advanced drug candidate, BiDil, which is not expected to be commercially available until at least 2006, if at all. If we experience significant delays in completing A-HeFT, obtain unfavorable or only marginally favorable results from A-HeFT, or fail to achieve regulatory approval or market acceptance of BiDil, our near term ability to generate product revenue, our reputation and our ability to raise additional capital will be impaired and the value of your investment will decline.

The successful completion of A-HeFT will depend on, among other things, the rate of patient enrollment. Patient enrollment is a function of many factors, including the size of the patient population, the nature of the clinical protocol, the availability of alternative treatments, the proximity of patients to clinical sites and the eligibility criteria for the study. We have experienced decreasing patient enrollment in A-HeFT over time and, as a result, we have revised the patient eligibility criteria and increased the number of clinical sites in an attempt to maintain enrollment levels. Despite these changes, we may be unable to enroll the number of patients we need to complete A-HeFT on a timely basis. Delays in planned patient enrollment for A-HeFT may cause us to incur increased costs and delay commercialization.

A-HeFT is the first clinical trial of BiDil in the specific drug combination and formulation that we intend to commercialize. We did not conduct the prior clinical trials involving the two generic drugs that comprise the BiDil composition, which were conducted in the 1980s and were not specifically designed to study the safety or efficacy of the therapeutic for African Americans. These prior trials, V-HeFT I and V-HeFT II, generated the data that served as the basis for the original new drug application for BiDil filed by Medco Research, our amendment to that new drug application and the FDA's resulting request for a confirmatory trial. In the A-HeFT trial, we are studying the use of BiDil as a supplement to current standard-of-care medicines, whereas in prior clinical trials the combination of drugs contained in BiDil was studied as a substitute for an approved therapeutic. As a result, we have limited clinical experience with BiDil in the drug combination and for the specific indication for which we intend to seek marketing approval.

The FDA deemed the original new drug application seeking approval for use of BiDil in the general heart failure population non-approvable because the data did not show a statistically significant benefit in that population. In 2001, the FDA issued us a letter stating that, in addition to the data in African-American heart failure patients already submitted to the agency, a clearly positive trial in African Americans with heart failure would, together with the satisfaction of other conditions, provide a basis for approval of BiDil. This letter from the FDA was not an "approvable" letter, which means that the FDA retains broad discretion in determining whether to ultimately approve BiDil. The FDA's reference to our need to show "clearly positive" results means that BiDil could be held to a higher standard than other late-stage drug candidates and could give the FDA additional discretion to deny approval.

Our ability to obtain FDA approval and to successfully market BiDil depends, in part, on the FDA and the U.S. pharmaceutical marketplace accepting ethnicity as a basis for therapeutic decisions, which is a novel issue that may attract controversy.

We are seeking regulatory approval of our lead drug candidate, BiDil, for the treatment of heart failure in African Americans, based upon a confirmatory clinical trial performed exclusively on subjects who are self-identified as African American. To our knowledge, the FDA has never approved a drug product for use particularly in an ethnic population. The FDA's receptiveness to drugs that are approved and marketed on the basis of different ethnicity-based therapeutic outcomes is untested and may be adversely affected by contrary scientific or public health evidence or political or legal factors. These factors may impede or prevent us from obtaining FDA approval of BiDil even if the data from A-HeFT is positive. In addition, we plan to market BiDil only in the U.S. Key participants in the U.S. pharmaceuticals marketplace, such as physicians, payors and consumers, may not accept a product intended to improve therapeutic results based on ethnicity.

Our patent protection for BiDil, which is a combination of two generic drugs, is limited and we may be subject to generic substitution or competition and resulting pricing pressure.

We have no composition of matter patent covering our lead product candidate, BiDil, which we intend to market for the treatment of heart failure in African Americans. BiDil is a combination of two generic drugs, isosorbide dinitrate and hydralazine, which are approved and separately marketed, in dosages similar to those we include in BiDil, for indications other than heart failure, at prices below the prices we expect to charge for BiDil. We have two issued method-of-use patents covering, respectively, the use of the combination of isosorbide dinitrate and hydralazine to reduce the incidence of mortality associated with chronic congestive heart failure, expiring in 2007, and to treat heart failure in African Americans, expiring in 2020. As a practical matter, we may not be able to enforce these method-of-use patents to prevent physicians from prescribing isosorbide dinitrate and hydralazine for the treatment of heart failure in African Americans, even though neither drug is approved for such use.

Other factors may also adversely affect our patent protection for BiDil. The combination therapy of isosorbide dinitrate and hydralazine for use in heart failure was developed through lengthy, publicly-sponsored clinical trials conducted during the 1980s, prior to the filing of the patent application that resulted in the 2007 patent. The U.S. patent office considered published reports on these clinical trials and concluded that they did not constitute prior art that would prevent the issuance of the 2007 patent. The U.S. patent office also considered the question of whether the 2007 patent constituted prior art with respect to the 2020 patent, but determined that the claims of the 2020 patent were non-obvious and patentable. A court considering the validity of the 2007 or 2020 patents with respect to questions of prior art might be presented with other alleged prior art or might reach conclusions different from those reached by the patent office. If the 2007 or 2020 patents were to be invalidated or if physicians were to prescribe isosorbide dinitrate and hydralazine rather than BiDil for heart failure in African Americans, our BiDil revenue could be significantly reduced, we could fail to recover the cost of developing BiDil and BiDil might not be a viable product.

If our clinical trials are not successful, we may not be able to successfully develop and commercialize our products.

In order to obtain regulatory approvals for the commercial sale of our product candidates, we and our collaborators will be required to complete extensive clinical trials in humans to demonstrate the safety and efficacy of our product candidates. We may not be able to obtain authority from the FDA or other regulatory agencies to commence or complete these clinical trials. If permitted, such clinical testing may not prove that our drug candidates are safe and effective to the extent necessary to permit us to obtain marketing approvals from regulatory authorities. Moreover, positive results demonstrated in preclinical studies and clinical trials that we complete may not be indicative of results obtained in future clinical trials. Furthermore, we, one of our collaborators, institutional review boards, or regulatory agencies may suspend clinical trials at any time if it is believed that the subjects or patients participating in such trials are being exposed to unacceptable health risks. Adverse or inconclusive clinical trial results concerning any of our drug candidates could require us to conduct additional clinical trials, result in increased costs and significantly delay the filing for marketing approval for such drug candidates with the FDA or result in a filing for a narrower indication.

We rely on academic institutions or clinical research organizations to supervise or monitor some or all aspects of A-HeFT and we expect to rely on academic institutions and clinical

research organizations for other product candidates we advance into clinical testing. Accordingly, we have less control over the timing and other aspects of these clinical trials than if we conducted them entirely on our own.

As a result of these factors, we or third parties on whom we rely may not successfully begin or complete our clinical trials in the time periods we have forecasted, if at all. Moreover, if we incur costs and delays in our programs or if we do not successfully develop and commercialize our products, our stock price could decline.

If we and our partners do not obtain the regulatory approvals required to market and sell our products under development, then our business will be unsuccessful and the market price of our stock will substantially decline.

We and our partners will not be able to market any of our products in the United States, Europe or in any other country without marketing approval from the FDA or equivalent foreign regulatory agency. The regulatory process to obtain market approval for a new drug or medical device takes many years and requires expenditures of substantial resources. We have had only limited experience in preparing applications and obtaining regulatory approvals.

If we do not receive required regulatory approval or clearance to market BiDil or any of our other products under development, we will not be able to develop and commercialize these products, which will affect our ability to achieve profitability, and will cause the value of our common stock to substantially decline.

Even if we receive regulatory approval to market our product candidates, the market may not be receptive to BiDil or our other product candidates upon their commercial introduction, which will prevent us from being profitable.

BiDil and the other product candidates that we are developing are based upon new technologies or therapeutic approaches. As a result, it may be more difficult for us to convince the medical community and third-party payors to accept and use our products.

Other factors that we believe will materially affect market acceptance of BiDil and our other product candidates under development include:

•: the timing of our receipt of any marketing approvals, the terms of any approval, and the countries in which approvals are obtained;
•: the safety, efficacy and ease of administration;
•: the success of our physician education programs; and
•: the availability of government and third-party payor reimbursement.

Most of our product candidates are in early stages of development.

We have not completed the development of any products. Only BiDil is currently undergoing clinical trials while our other product candidates are in research or preclinical development. All of our product candidates other than BiDil will require significant additional research and development and laboratory testing prior to submission of any regulatory application and will require significant clinical testing and regulatory approval prior to commercialization. Accordingly, these product candidates are not expected to be commercially available for many years, if at all.

Our product candidates, including BiDil, and future product development efforts are subject to the risks of failure inherent in the development of pharmaceutical products and medical devices. These risks include the possibilities that any or all of our product candidates will be found to be ineffective, unsafe, or toxic, or otherwise fail to either meet applicable regulatory standards or receive necessary regulatory approvals or clearances. Unacceptable toxicities or side effects could occur at any dose level at any time in the course of toxicological studies or human clinical trials of our product candidates. The appearance of any such unacceptable toxicities or side effects in toxicology studies or human clinical trials could cause us or regulatory authorities to interrupt, limit, delay or abort the development of any of our product candidates and could ultimately prevent their approval for any of the targeted indications. Even after receiving approval, products may later exhibit adverse effects that prevent their widespread use and necessitate their withdrawal from the market. Products under development by us may not be safe when administered to patients. Furthermore, there is a risk that our product candidates, even if safe and effective, will be difficult to develop into commercially-viable products. We may also experience difficulties in manufacturing on a large scale or may find it uneconomical to market and sell our product candidates. Moreover, the proprietary rights of third parties may preclude us from marketing our product candidates. If we are unable to successfully develop and commercialize any of our product candidates, we may not achieve profitability.

The application of our nitric oxide technology is unproven in humans and, as a result, we may not be able to successfully develop and commercialize any products.

A key component of our strategy is to seek to improve existing medicines with our proprietary nitric oxide technology. Our product candidates include nitric oxide enhancements of existing drugs. Thus, we are modifying compounds whose chemical and pharmacological profiles are well-documented and understood. However, each of our product candidates is a new molecule with a chemical and pharmacological profile that differs from that of the existing drug. None of our product candidates has been sufficiently studied or tested for its chemical and pharmacological properties to have been fully explored and documented. These compounds may not demonstrate in patients the chemical and pharmacological properties ascribed to them in laboratory studies, and they may interact with human biological systems in unforeseen, ineffective or harmful ways. In addition, it is possible that existing drugs or newly-discovered drugs may not benefit from the application of our nitric oxide technology. If we are not able to successfully develop and commercialize drugs based upon our technological approaches we will not become profitable and the value of your stock will decline.

We rely on Merck and Boston Scientific for a significant portion of our revenues and if either of these relationships is terminated or is otherwise unsuccessful our business and results of operations would be harmed.

Our revenues in 2002 and the first half of 2003 were derived from licensing, research and development or other fees paid to us by Merck and Boston Scientific. For the fiscal year ended December 31, 2002, Boston Scientific accounted for all of our revenues and for the six months ended June 30, 2003, Boston Scientific and Merck accounted for all of our revenues. Our agreements with Merck and Boston Scientific, which provide to us research and development funding for certain of our lead programs, generally are terminable upon short notice by the collaborator and additional payments due to us under the collaboration agreements are generally based on the achievement of specific development and commercialization milestones that may not be met. Our collaborations also entitle us to royalty payments that are based on the sales of products developed and marketed through

the collaboration. These future royalty payments may not materialize or be less than expected if the related products are not successfully developed or marketed, or if we or our collaborators are forced to license intellectual property from third parties. Accordingly, we cannot predict with certainty when, if ever, any of our collaborations will continue to generate revenues for us. The loss of either of these large collaborations would likely significantly decrease our near term revenues and future prospects. We are likely to have similar risks with regard to any future collaborations.

We depend on Merck and Boston Scientific, and expect to depend on additional collaborative partners in the future, to develop, conduct clinical trials with, obtain regulatory approvals for, and manufacture, market and sell some of our products under development, and these collaborations may not be successful.

We are relying on Merck to fund the development of and to commercialize products based upon our nitric oxide-enhancing COX-2 inhibitor technologies, and we are relying on Boston Scientific to fund the development of and to commercialize nitric oxide-enhancing stents for restenosis using our technology. We intend to enter into collaborative agreements with other parties in the future relating to other product candidates. Our collaborators may not devote the resources necessary or may otherwise be unable to complete development and commercialization of these potential products.

Our existing collaborations and any future collaborative arrangements that we seek to enter into with third parties may not be scientifically or commercially successful. Factors that may affect the success of our collaborations include the following:

•: our collaborators may be pursuing alternative technologies or developing alternative products, either on their own or in collaboration with others, that may be competitive with the product on which they are collaborating with us or which could affect our collaborative partners' commitment to the collaboration with us;
•: reductions in marketing or sales efforts or a discontinuation of marketing or sales of our products by our collaborators would reduce our revenues, which will be based on a percentage of net sales by the collaborator;
•: our collaborators may terminate their collaborations with us, which could make it difficult for us to attract new collaborators or adversely affect how we are perceived in the business and financial communities; and
•: our collaborators may pursue higher-priority programs or change the focus of their development programs, which could affect the collaborators' commitment to us.

If we are not able to obtain and enforce patent protection for our discoveries, our ability to develop and commercialize our product candidates will be harmed and we may not be able to operate our business profitably.

Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under the patent and other intellectual property laws of the United States and other countries, so that we can prevent others from using our inventions and proprietary information. Because certain United States patent applications are confidential until patents issue, such as applications filed prior to November 29, 2000, or applications filed after such date which will not be filed in foreign countries, third parties may have filed patent applications for technology covered by our pending patent applications without our being aware of those applications, and our patent applications may not have priority over any patent applications of others.

Our strategy depends on our ability to rapidly identify and seek patent protection for our discoveries. This process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. The mere issuance of a patent does not guarantee that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties.

The issued patents and patent applications for our drug development candidates and nitric oxide technology include claims with respect to both the composition of specific drugs or compounds and specific methods of using these drugs or compounds in therapeutic areas. In some cases, like BiDil, our only patent protection is with respect to the method of using a drug or compound and we do not have patent claims covering the underlying composition of the drug or compound. Method-of-use patents may provide less protection for our product candidates because it may be more difficult to prove direct infringement against a pharmaceutical manufacturer or distributor. In addition, if any other company markets a drug that we expect to market under the protection of a method-of-use patent, physicians will be able to prescribe that drug for use in the indication for which we have obtained approval, even though the drug is not approved for such indication. As a practical matter, we may not be able to enforce our method-of-use patents against physicians prescribing drugs for such off-label use. Off-label use and any resulting off-label sales could make it more difficult to obtain the price we would otherwise wish to achieve for, or to successfully commercialize, our product. In addition, where we have only method-of-use patent coverage for a product candidate, it may be more difficult to find a pharmaceutical company partner to license or support development of our product candidate.

Our pending patent applications may not result in issued patents. The patent position of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factual considerations. The standards which the U.S. Patent and Trademark Office and its foreign counterparts use to grant patents are not always applied predictably or uniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable in pharmaceutical or biotechnology patents. Accordingly, we do not know the degree of future protection for our proprietary rights or the breadth of claims allowed in any patents issued to us or to others.

If we become involved in patent litigation or other proceedings to enforce our patent rights, we could incur substantial costs and expenses, substantial liability for damages or be required to stop our product development and commercialization efforts.

A third party may sue us for infringing on its patent rights. Likewise, we may need to resort to litigation to enforce a patent issued to us or to determine the scope and validity of third party proprietary rights. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation would divert our management's efforts. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, our strategy of providing nitric oxide-enhancing versions of existing medicines could lead to more patent litigation as the markets for these existing medicines are very large and competitive. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations.

For example, we have filed an opposition in the European Patent Office, or EPO, to revoke NicOx S.A.'s European Patent No. 904 110, which we refer to as EP ‘110. This patent is

directed to the use of organic compounds containing a nitrate group or inorganic compounds containing a nitric oxide group to reduce the toxicity caused by certain drugs, including non-steroidal anti-inflammatory drugs, or NSAIDs. The basis for our opposition, in part, is that the claims in EP ‘110 are anticipated and therefore invalid if they are construed to cover a single compound chemically linked to a nitrate. While we believe that the claims in EP ‘110 will be invalidated, or be narrowed, we cannot predict with certainty the outcome of the opposition. If the EPO finds that there are valid claims in EP ‘110 that cover compounds chemically linked to nitrates, we may be adversely affected in our ability to market our product candidates for reducing gastrointestinal toxicity without first obtaining a license from NicOx, which may not be available on favorable terms, if at all. We do not know whether NicOx has filed claims of similar scope to the EP ‘110 patent in the U.S.

If any parties should successfully claim that our creation or use of proprietary technologies infringes upon their intellectual property rights, we might be forced to pay damages, potentially including treble damages, if we are found to have willfully infringed on such parties' patent rights. In addition to any damages we might have to pay, a court could require us to stop the infringing activity or obtain a license on unfavorable terms. Moreover, any legal action against us or our partners claiming damages and seeking to enjoin commercial activities relating to the affected products and processes could, in addition to subjecting us to potential liability for damages, require us or our partners to obtain a license in order to continue to manufacture or market the affected products and processes. Any license required under any patent may not be made available on commercially-acceptable terms, if at all. In addition, some licenses may be non-exclusive, and therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to effectively market some of our technology and products, which could limit our ability to generate revenues or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations. In addition, a number of our collaborations provide that royalties payable to us for licenses to our intellectual property may be offset by amounts paid by our collaboration partners to third parties who have competing or superior intellectual property positions in the relevant fields, which could result in significant reductions in our revenues from products developed through collaborations.

We in-license a significant portion of our principal proprietary technologies and if we fail to comply with our obligations under any of the related agreements, we could lose license rights that are necessary to developing BiDil and our other product candidates.

We are a party to a number of licenses that give us rights to third party intellectual property that is necessary for our business. In particular, we have obtained the exclusive right to develop and commercialize BiDil pursuant to a license agreement with Dr. Jay N. Cohn, and some of our intellectual property rights relating to nitric oxide compounds have been obtained pursuant to license agreements with the Brigham and Women's Hospital and Boston University. We expect to enter into additional licenses in the future. These licenses impose various development, commercialization, funding, royalty, diligence, and other obligations on us. If we breach these obligations, the licensor may have the right to terminate the license or render the license non-exclusive, which would result in us being unable to develop, manufacture and sell products that are covered by the licensed technology.

If we are unable to protect the confidentiality of our trade secrets and know-how, the value of our technology and products will be adversely affected.

We rely upon unpatented trade secrets, know-how and continuing technological innovation to develop and maintain our competitive position. Our failure to protect our trade secrets and techniques may inhibit or limit our ability to exclude certain competitors from the market.

We face significant competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The pharmaceutical and medical device industries are highly competitive and characterized by rapid and significant technological change. Our principal competitors in the markets we have targeted, such as cardiovascular disease and inflammation, are large, multinational pharmaceutical and medical device companies that have substantially greater financial and other resources than we do and are conducting extensive research and development activities on technologies and products similar to or competitive with ours. Moreover, there are a number of currently-available products to treat heart failure in the general population that will compete with BiDil, if it is approved. We also face competition from other pharmaceutical companies seeking to develop drugs using nitric oxide technology. For example, we are aware of at least four companies working in the area of nitric-oxide based therapeutics. Many of our competitors are more experienced than we are in drug development and commercialization, obtaining regulatory approvals and product marketing and manufacturing. As a result, our competitors may develop and commercialize pharmaceutical products before we do. In addition, our competitors may develop and commercialize products which render our products obsolete or non-competitive.

We have no sales and marketing experience and may depend significantly on third parties who may not successfully commercialize our products.

We have no sales, marketing and distribution experience. We intend to independently launch and market BiDil and certain other products not already subject to marketing agreements where we believe the target physician market can be effectively reached by the internal sales force we intend to establish. To develop an internal sales, distribution and marketing capability, we will have to invest significant amounts of money and management resources. We plan to minimize these expenditures prior to obtaining the results of A-HeFT, but this may provide us insufficient time to build our sales and marketing capabilities in advance of BiDil's launch. If we develop these capabilities and approval of BiDil is delayed substantially, or BiDil is not approved, we will have incurred significant unrecoverable expenses.

For products where we decide to perform sales, marketing and distribution functions ourselves, we could face a number of additional risks, including:

•: we may not be able to attract and build a significant marketing or sales force;
•: the cost of establishing a marketing or sales force may not be justifiable in light of the revenues generated by any particular product; and
•: our direct sales and marketing efforts may not be successful.

For product candidates with larger target physician markets, we plan to rely significantly on sales, marketing and distribution arrangements with third parties. For example, we plan to rely on our existing collaborative partners for the commercialization of nitric oxide-enhancing COX-2 inhibitors and stents coated with nitric oxide-releasing compounds. We may have to

enter into additional marketing arrangements in the future and we may not be able to enter into these arrangements on terms which are favorable to us, if at all. In addition, we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the success of the efforts of these third parties.

We have limited manufacturing experience and resources and we must incur significant costs to develop this expertise or rely on third parties to manufacture our products.

We have no manufacturing experience. In order to continue to develop products, apply for regulatory approvals, and commercialize our products, we will need to develop, contract for, or otherwise arrange for the necessary manufacturing capabilities. We currently rely on third parties for the production of certain of our products, including BiDil, for preclinical and clinical testing purposes and we expect to continue to do so in the future. Only a limited number of manufacturers can supply nitric oxide-based medicines, and we have not secured a long-term commercial supply arrangement for any of our product candidates, including BiDil. The manufacturing process for any of our products is an element of the FDA approval process and we will need to contract with manufacturers who can meet the FDA requirements on an ongoing basis. As part of obtaining regulatory approval for BiDil, we will need to engage a commercial manufacturer that will be required, among other things, to produce validation batches of the drug consistent with regulatory approval requirements. To the extent we enter into manufacturing arrangements with third parties, we will be dependent upon these third parties to perform their obligations in a timely manner and in accordance with applicable government regulations. In addition, if we receive the necessary regulatory approval for our products, we also expect to rely on third parties, including our collaborative partners, to produce materials required for commercial production. We may experience difficulty in obtaining adequate manufacturing capacity for our needs. If we are unable to obtain or maintain contract manufacturing of these products, or to do so on commercially reasonable terms, we may not be able to successfully develop and commercialize our products.

To the extent that we enter into manufacturing arrangements with third parties, we will be dependent upon these third parties to perform their obligations in a timely manner and consistent with regulatory requirements. If third-party manufacturers with whom we contract fail to perform their obligations, we may be adversely affected in a number of ways, including:

•: we may not be able to initiate or continue clinical trials of products that are under development;
•: we may be delayed in submitting applications for regulatory approvals for our products;
•: we may be required to cease distribution and/or recall some or all batches of our products; and
•: ultimately, we may not be able to meet commercial demands for our products.

We will require substantial additional funds and, if additional capital is not available, we may need to limit, scale back or cease our operations.

We have used and will continue to require substantial funds to conduct research and development, including preclinical testing and clinical trials of our potential products, and to manufacture and market any products that are approved for commercial sale. We believe that the net proceeds from this offering, existing cash and investment securities will be sufficient

to support our current operating plan for at least 24 months from the date of this prospectus. We have based this belief on assumptions that may prove to be wrong.

We will be required to seek additional funding in the future and may do so through collaborative arrangements and public or private financings. Additional financing may not be available to us on acceptable terms or at all. In addition, the terms of the financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, further dilution to our then-existing stockholders will result. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies, product candidates, or products which we would otherwise pursue on our own.

Even if we are able to raise additional funds in a timely manner, our future capital requirements may vary from what we expect and will depend on many factors, including the following:

•: the costs of launching BiDil, if and when it is approved by regulatory authorities;
•: the timing, receipt, and amount of milestone and other payments, if any, from collaborators;
•: the timing, receipt, and amount of sales and royalties, if any, from our potential products;
•: the resources required to successfully complete our clinical trials;
•: the time and costs involved in obtaining regulatory approvals;
•: continued progress in our research and development programs, as well as the magnitude of these programs;
•: the cost of manufacturing, marketing and sales activities;
•: the costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims;
•: the cost of obtaining and maintaining licenses to use patented technologies; and
•: our ability to establish and maintain additional collaborative arrangements.

If we or our third party manufacturers or service providers fail to comply with regulatory laws and regulations, we or they could be subject to enforcement actions, which could affect our ability to market and sell our products and may harm our reputation.

If we or our third party manufacturers or service providers fail to comply with applicable federal, state or foreign laws or regulations, we could be subject to enforcement actions, which could affect our ability to develop, market and sell our products successfully and could harm our reputation and lead to less acceptance of our products by the market. These enforcement actions include:

•: product seizures;
•: voluntary or mandatory recalls;
•: voluntary or mandatory patient or physician notification;
•: withdrawal of product approvals;

•: restrictions on, or prohibitions against, marketing our products;
•: fines;
•: restrictions on importation of our products;
•: injunctions;
•: civil and criminal penalties; and
•: suspension of review, refusal to approve pending applications, or withdrawal of approval.

We may be exposed to product liability claims and may not be able to obtain or maintain adequate product liability insurance.

Our business exposes us to the risk of product liability claims that is inherent in the manufacturing, testing, and marketing of human therapeutic products. Our clinical trial liability insurance is subject to deductibles and coverage limitations. We do not currently have any commercial product liability insurance. We may not be able to obtain or maintain insurance on acceptable terms or at all. Moreover, any insurance that we do obtain may not provide adequate protection against potential liabilities.

Risks Relating to This Offering

Purchasers in this offering will suffer immediate dilution.

If you purchase common stock in this offering, the value of your shares based upon our actual book value will immediately be less than the offering price you paid. This reduction in the value of your equity is known as "dilution." Based upon the pro forma net tangible book value of the common stock at June 30, 2003, your shares will be worth less per share than the price you paid in the offering. If the options and warrants we previously granted are exercised, additional dilution is likely to occur. As of August 1, 2003, options to purchase 2,567,201 shares of common stock at the weighted-average exercise price of $1.32 were outstanding, and warrants to purchase 275,096 shares of common stock, at the weighted- average exercise price of $1.84, were outstanding. In addition, if we raise additional funding by issuing more equity securities, the newly-issued shares will further dilute your percentage ownership of our shares and may also reduce the value of your equity.

Our stock price will fluctuate after this offering, which may cause your investment in our stock to suffer a decline in value.

After this offering, an active trading market in our stock might not develop or continue. If you purchase shares of our common stock in the offering, you will pay a price that was not established in a competitive market. Rather, you will pay a price that we negotiated with the representatives of the underwriters based upon an assessment of the valuation of our stock. The public market may not agree with or accept this valuation, in which case you may not be able to sell your shares at or above the initial offering price.

In addition, the market price of our common stock may fluctuate significantly in response to factors which are beyond our control. The stock market in general has recently experienced extreme price and volume fluctuations. The market prices of securities of pharmaceutical, biotechnology and other life sciences companies have been extremely volatile, and have experienced fluctuations that often have been unrelated or disproportionate to the operating performance of these companies. For example, our stock price could be adversely affected if

drugs developed by others that utilize nitric oxide technology are not successful in clinical testing, fail to achieve regulatory approval or are not accepted in the marketplace, even though these failures may not be related to our product candidates or technology. These broad market fluctuations could result in extreme fluctuations in the price of our common stock, which could cause a decline in the value of your shares.

We may incur significant costs from class action litigation due to our expected stock volatility.

Our stock price may fluctuate for many reasons, including as a result of public announcements regarding the progress of our development and marketing efforts, the addition or departure of key personnel, variations in our quarterly operating results and changes in market valuations of pharmaceutical, biotechnology or other life science companies. Recently, when the market price of a stock has been volatile as our stock price may be, holders of that stock have occasionally brought securities class action litigation against the company that issued the stock. If any of our stockholders were to bring a lawsuit of this type against us, even if the lawsuit is without merit, we could incur substantial costs defending the lawsuit. A stockholder lawsuit could also divert the time and attention of our management.

The sale of a substantial number of shares could cause the market price of our common stock to decline.

Our sale or resale by our stockholders of shares of our common stock after this offering could cause the market price of the common stock to decline. We intend to file registration statements following the offering to permit the sale of up to 4,730,201 shares of our common stock to cover shares issuable under our stock option and employee stock purchase plans.

As of August 1, 2003, options to purchase 2,567,201 shares of our common stock with a weighted-average exercise price per share of $1.32 were outstanding. In addition, as of August 1, 2003, warrants to purchase 275,096 shares of our common stock with a weighted-average exercise price per share of $1.84 were outstanding.

Future sales of common stock in the public market following this offering could also adversely affect the market price of our common stock. After this offering, we will have shares of common stock outstanding. Of these shares, the shares sold in this offering will be freely transferable without restriction.

Substantially all of our stockholders will have signed lock-up agreements before the commencement of this offering. Under these lock-up agreements, these stockholders will agree, subject to limited exceptions, not to sell or pledge any shares owned by them as of the effective date of this prospectus for a period of 180 days thereafter, unless they first obtain the written consent of the managing underwriter, which may be granted. At the end of 180 days, approximately shares of common stock, excluding shares issuable upon exercise of vested options, but including up to 275,096 shares of common stock issuable upon exercise of warrants, will be eligible for immediate resale. Immediately after the date of this prospectus, shares of common stock will be eligible for resale.

The remainder of the approximately shares of common stock outstanding will become eligible for sale at various times over a period of approximately two years.

Upon the completion of this offering, the holders of 17,893,327 shares of our common stock, including 275,096 shares issuable upon the exercise of warrants, have the right under

specified circumstances to require us to register their shares for resale to the public or participate in a registration of shares by us.

Insiders will continue to have substantial control over us after this offering and could delay or prevent a change in corporate control.

After this offering, our directors, executive officers and principal stockholders, together with their affiliates, will beneficially own, in the aggregate, approximately % of our outstanding common stock, or % if the underwriters exercise their over-allotment option. As a result, these stockholders, if acting together, may have the ability to determine the outcome of matters submitted to our stockholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these persons, acting together, may have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership may harm the market price of our common stock by:

•: delaying, deferring or preventing a change in control of our company;
•: impeding a merger, consolidation, takeover or other business combination involving our company; or
•: discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.

Provisions in our charter documents and under Delaware law could prevent or delay transactions that stockholders may favor.

We are incorporated in Delaware. Anti-takeover provisions of Delaware law and our charter documents as filed on the closing of this offering may make a change in control more difficult, even if the stockholders desire a change in control. For example, our anti-takeover provisions include provisions in our by-laws providing that stockholders' meetings may only be called by the chief executive officer or a majority of our board of directors and a provision in our restated certificate of incorporation providing that our stockholders may not take action by written consent.

Additionally, our board of directors has the authority to issue 5,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders. The rights of holders of our common stock are subject to the rights of the holders of any preferred stock that we issue. As a result, our issuance of preferred stock could cause the market value of our common stock to decline and could make it more difficult for a third party to acquire a majority of our outstanding voting stock.

Delaware law also prohibits a corporation from engaging in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. This provision may prevent changes in our management. Also, under applicable Delaware law, our board of directors may adopt additional anti-takeover measures in the future.

FORWARD-LOOKING INFORMATION

This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 that involve risks and uncertainties. We may, in some cases, use words such as "project," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "will," or "may," or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this prospectus may include statements about:

•: our research, development and commercialization activities and projected expenditures;
•: the advantages of our technology as compared to other technologies and our ability to compete with our competitors;
•: our ability to obtain and maintain partners for certain of our development programs and the terms of these arrangements;
•: the receipt of regulatory approvals by our partners or us, including regulatory approval for BiDil;
•: the completion and success of clinical trials for our products;
•: our ability to maintain and establish intellectual property rights in our products;
•: our use of proceeds from this offering;
•: our cash needs;
•: implementation of our corporate strategy, including the establishment of sales and marketing capabilities; and
•: our financial performance.

There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss in this prospectus under the caption "Risk Factors." You should read these factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of the shares of common stock will be approximately $ million, assuming an initial public offering price of $ per share and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option, we estimate that we will receive additional net proceeds of approximately $ million. We expect to use the net proceeds to fund:

•: establishment of sales and marketing capabilities, as well as manufacturing and distribution arrangements required to launch our lead drug candidate, BiDil, pending FDA approval;
•: preclinical and clinical development of existing product candidates;
•: discovery and development of additional product candidates; and
•: working capital, capital expenditures and other general corporate purposes.

The amounts and timing of our actual expenditures will depend upon numerous factors, including the timing of the completion of A-HeFT, the timing of BiDil regulatory submissions, any terms or conditions imposed as a condition of any approval of BiDil, the progress of our commercialization efforts for BiDil, the amount of competitive sales and marketing activities we may face within the heart failure market, the amount of proceeds actually raised in this offering and the amount of cash generated by our operations.

We may also use a portion of the proceeds for the acquisition of, or investment in, companies, technologies, products or assets that complement our business. However, we have no present understandings, commitments or agreements to enter into any potential acquisitions or investments. Further, we have not determined the amounts we plan to spend on any of the areas listed above or the timing of these expenditures. As a result, our management will have broad discretion to allocate the net proceeds from this offering. Pending utilization of the net proceeds as described above, we intend to invest the net proceeds of the offering in short-term investment grade and U.S. government securities.

DIVIDEND POLICY

We have never paid or declared any cash dividends on our common stock. We currently intend to retain earnings, if any, to finance the growth and development of our business and we do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors.

CAPITALIZATION

The following table sets forth our cash, cash equivalents, and marketable securities and capitalization as of June 30, 2003:

•: on an actual basis;
•: on a pro forma basis, giving effect to the sale of shares of our series E redeemable convertible preferred stock on August 1, 2003, as if such shares had been issued on June 30, 2003, and to the conversion of all of our outstanding shares of redeemable convertible preferred stock into an aggregate of 16,806,064 shares of common stock upon the closing of this offering; and
•: on a pro forma as adjusted basis to reflect the transactions described above and to also give effect to the issuance and sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

This table should be read with our financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

			As of June 30, 2003
			Actual			Pro Forma			Pro Forma As Adjusted
			(in thousands)

Cash, cash equivalents and marketable securities			$	18,790		$	38,690		$

Current portion of long-term debt			$	42		$	42		$
Long-term debt, net of current portion				2			2
Redeemable convertible preferred stock; $0.01 par value; 34,688 shares authorized and 30,770 shares issued and outstanding, actual; no shares issued and outstanding pro forma and pro forma as adjusted				84,233			—
Stockholders' equity (deficit):
Common stock, $0.01 par value; 20,853 shares authorized, actual; 65,000 shares authorized, pro forma and pro forma as adjusted; 985 shares issued and outstanding, actual; 17,791 shares issued and outstanding, pro forma; shares issued and outstanding, pro forma as adjusted				10			178
Additional paid-in capital				1,956			100,953
Accumulated deficit				(82,547	)		(82,759	)

	Total stockholders' equity (deficit)			(80,581	)		18,372

		Total capitalization	$	3,696		$	18,416		$

The above data exclude:

•: 2,567,201 shares of common stock issuable upon exercise of options outstanding as of August 1, 2003 with a weighted-average exercise price of $1.32 per share;
•: 275,096 shares of common stock issuable upon exercise of outstanding warrants as of August 1, 2003 with a weighted-average exercise price of $1.84 per share; and
•: 2,163,000 shares of common stock available, or to be available after the completion of the offering, for future issuance under our 2003 stock incentive plan and 2003 employee stock purchase plan.

DILUTION

The pro forma net tangible book value of our common stock as of June 30, 2003 was approximately $ , or $ per share, after giving effect to the conversion of all outstanding shares of redeemable convertible preferred stock into common stock, including shares of our series E redeemable convertible preferred stock issued on August 1, 2003, into an aggregate of shares of common stock upon the closing of this offering. Pro forma net tangible book value per share represents our total assets less total liabilities, divided by the number of pro forma shares of common stock outstanding. Net tangible book value dilution per share to new investors is the difference between the amount per share paid by purchasers of common stock in this offering and the pro forma net tangible book value per share immediately following the offering. After giving effect to the issuance and sale of the shares of common stock in this offering, at an assumed offering price of $ per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of June 30, 2003 would have been $ million or $ per share. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $ per share. The initial public offering price per share will significantly exceed the net tangible book value per share. Accordingly, new investors who purchase common stock in this offering will suffer an immediate dilution of their investment of $ per share. The following table illustrates this per share dilution:

Assumed initial public offering price per share			$

	Pro forma net tangible book value per share as of June 30, 2003	$
	Increase per share attributable to sale of common stock in this offering

Pro forma net tangible book value per share after this offering

Dilution of net tangible book value per share to new investors			$

If the underwriters exercise their over-allotment option in full, the pro forma net tangible book value per share after the offering would be $ per share, the increase in net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors would be $ per share.

The following table summarizes, on a pro forma basis as of June 30, 2003, giving effect to (a) the issuance of the series E redeemable convertible preferred stock on August 1, 2003 as if such shares had been issued on June 30, 2003, and (b) the conversion of all shares of redeemable convertible preferred stock outstanding into shares of common stock, the differences between the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by existing stockholders and by new investors. The calculation below is based on an assumed initial public offering price of $ per share, before deduction of estimated underwriting discounts and commissions and estimated offering expenses payable by us:

		Shares Issued		Total Consideration
		Shares Issued		Total Consideration			Average Price Per Share
		Number	Percent	Amount		Percent	Average Price Per Share
Existing stockholders		17,791,014	%	$	101,130,529	%	$	5.68
New investors							$

	Total		%	$		%

The tables above assume no exercise of stock options or warrants outstanding as of June 30, 2003. At August 1, 2003, there were 2,567,201 shares of common stock issuable upon exercise of outstanding stock options at a weighted-average exercise price of $1.32 per share. As of August 1, 2003, there were warrants outstanding that, upon completion of this offering, will be exercisable into 275,096 shares of common stock at a weighted-average exercise price of $1.84 per share. To the extent that outstanding options or warrants are exercised in the future, there will be further dilution to new investors. To the extent all of such outstanding options and warrants had been exercised as of August 1, 2003, net tangible book value per share after this offering would be $ and total dilution per shares to new investors would be $ .

If the underwriters exercise their over-allotment option in full, the number of shares held by new investors will increase to shares, or % of the total number of shares of common stock outstanding after this offering.

SELECTED FINANCIAL DATA
(in thousands, except per share data)

This section presents our historical financial data. You should read carefully the financial statements included in this prospectus, including the notes to the financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The selected financial data in this section are not intended to replace the financial statements.

We derived the statement of operations data for the years ended December 31, 2000, 2001 and 2002 and the balance sheet data as of December 31, 2001 and 2002 from NitroMed's financial statements, which have been audited by Ernst & Young LLP, independent auditors, and are included elsewhere in this prospectus. The statement of operations data for the six months ended June 30, 2002 and 2003, and the balance sheet data as of June 30, 2003, have been derived from our unaudited financial statements included elsewhere in this prospectus. We derived the statement of operations data for the years ended December 31, 1998 and 1999 and the balance sheet data as of December 31, 1998, 1999 and 2000 from our audited financial statements which are not included herein. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the audited financial statements and contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of our results of operations for these periods and financial position at that date. Historical results are not necessarily indicative of future results. See the notes to the financial statements for an explanation of the method used to determine the number of shares used in computing basic and diluted and pro forma basic and diluted net loss per common share. Pro forma basic and diluted net loss per common share have been calculated assuming the conversion of all outstanding shares of redeemable convertible preferred stock into shares of common stock, excluding outstanding shares of our series E redeemable convertible preferred stock issued on August 1, 2003.

		Year Ended December 31,															Six Months Ended June 30,
		1998			1999			2000			2001			2002			2002			2003
Statement of Operations Data:
Revenue		$	4,000		$	2,658		$	2,125		$	250		$	750		$	375		$	3,388
Operating expenses:
	Research and development		6,690			8,748			8,043			10,214			15,907			6,488			8,261
	General and administrative		2,155			2,461			2,048			2,362			2,133			939			1,227

Total costs and expenses			8,845			11,209			10,091			12,576			18,040			7,427			9,488

Loss from operations			(4,845	)		(8,551	)		(7,966	)		(12,326	)		(17,290	)		(7,052	)		(6,100	)
Other income, net			490			594			535			697			572			327			204

Net loss			(4,355	)		(7,957	)		(7,431	)		(11,629	)		(16,718	)		(6,725	)		(5,896	)
Accretion of dividends and redemption value			(22	)		(101	)		(157	)		(1,662	)		(2,698	)		(1,349	)		(1,349	)

Net loss attributable to common stockholders		$	(4,377	)	$	(8,058	)	$	(7,588	)	$	(13,291	)	$	(19,416	)	$	(8,074	)	$	(7,245	)

Net loss per common share:
	Basic and diluted	$	(8.97	)	$	(15.86	)	$	(14.05	)	$	(17.91	)	$	(20.02	)	$	(8.38	)	$	(7.36	)
	Weighted average basic and diluted common shares outstanding		488			508			540			742			970			963			985
	Pro forma basic and diluted net loss per common share													$	(1.11	)				$	(0.39	)
	Shares used in computing pro forma basic and diluted net loss per common share														15,000						15,015

	As of December 31,
	As of December 31,															As of June 30, 2003
	1998			1999			2000			2001			2002			As of June 30, 2003
Balance Sheet Data:
Cash, cash equivalents and marketable securities	$	8,715		$	11,878		$	4,559		$	28,331		$	11,843		$	18,790
Working capital		7,227			9,750			2,266			25,401			15,838			11,112
Total assets		10,027			13,232			5,507			29,809			22,492			20,022
Long-term debt		1,241			889			353			64			22			2
Redeemable convertible preferred stock		33,414			44,120			44,277			80,187			82,884			84,233
Accumulated deficit		(26,590	)		(35,008	)		(42,596	)		(55,887	)		(75,302	)		(82,547	)
Total stockholders' equity (deficit)		(26,184	)		(34,030	)		(41,493	)		(54,275	)		(73,353	)		(80,581	)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read together with "Selected Financial Data," and our financial statements and accompanying notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many important factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

Overview

We are an emerging pharmaceutical company that discovers, develops and seeks to commercialize proprietary pharmaceuticals. We have devoted substantially all of our efforts towards the research and development of our product candidates. Since our inception, we have had no revenue from product sales and have funded our operations through the private placement of equity securities, debt financings, license fees, research and development funding and milestone payments from our collaborative partners. We have never been profitable and have incurred a cumulative net loss of $76.5 million from inception through June 30, 2003, which excludes the accretion of dividends.

We expect to incur significant operating losses for the next several years. Research, development and commercialization expenses relating to our product candidates and to enhancing our core technologies will continue to increase in the near term. In particular, we expect to incur increased costs as we complete A-HeFT and seek regulatory approval for BiDil. General and administrative costs will increase as we prepare for the planned commercialization of BiDil and as we begin operating as a public company. We will need to generate significant revenues to achieve profitability. We do not expect to achieve profitability until at least 2008 and may not achieve profitability until after that date, if at all.

Financial Operations Overview

Revenue. We have not generated any revenue from product sales since our inception and do not expect to generate any revenue from the sale of products until at least 2006. All of our revenue to date has been derived from license fees, research and development payments and milestone payments we have received from our corporate collaborators. We will seek to generate revenue from a combination of product sales, up-front fees and milestone payments in connection with collaborative or strategic relationships, and royalties resulting from the license of our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of research and development, milestone and other payments received under our collaborative or strategic relationships and related continuing obligations, and the amount and timing of payments we receive upon the sale of our products, to the extent any are successfully commercialized.

Research and Development. Research and development expense consists of expenses incurred in identifying, developing and testing product candidates. These expenses consist primarily of salaries and related expenses for personnel, fees paid to professional service providers for independent monitoring and analysis of our clinical trials, costs of contract research and manufacturing, costs of facilities and the legal costs of pursuing patent protection of our intellectual property. We expense research and development costs, including patent-related costs, as incurred.

As new clinical sites are initiated and additional patients are enrolled in A-HeFT, we anticipate incurring increased costs from the use of professional service firms supporting the trial. We also anticipate incurring increased costs related to hiring of additional clinical personnel associated with preparations to launch BiDil. We also expect our research and development expense to increase as we pursue the identification and development of other product candidates.

General and Administrative. General and administrative expense consists primarily of salaries and other related costs for personnel in executive, finance, accounting, business development and human resource functions. Other costs include facility costs not otherwise included in research and development expense and professional fees for legal and accounting services.

After this offering, we anticipate increases in general and administrative expense for investor relations and other activities associated with operating as a publicly-traded company. These increases will also likely include the hiring of additional personnel. We intend to continue to incur increased internal and external business development costs to support our various product development efforts, which can vary from period to period. We do not anticipate incurring significant costs to support the expected commercial introduction of BiDil until the second half of 2004.

Merck Collaboration. In December 2002, we entered into an exclusive, worldwide research, collaboration and licensing agreement that granted Merck Frosst Canada & Co., a wholly-owned subsidiary of Merck & Co., marketing and sales rights for nitric oxide-enhancing COX-2 inhibitors. The research portion of the agreement is for three years and can be extended by mutual agreement. In 2003, we have received a $10.0 million license fee and a further $5.0 million for achieving the first milestone. The revenue from this license fee and milestone payment is being recognized over the remaining life of the research and development program. We expect to receive $3.0 million in research and development fees from Merck during 2003, of which $2.3 million has been received to date. We expect to receive additional research and development funding through 2005 and milestone payments upon the successful achievement of specified research objectives and royalties on any product sales.

Boston Scientific Collaboration. In November 2001, we entered into a development and license agreement with Boston Scientific Corporation to develop stents coated with nitric oxide-releasing compounds. Under the agreement, we are expected to deliver to Boston Scientific two nitric oxide-releasing compounds. If Boston Scientific accepts one or both of these compounds, it will have the right to incorporate them into medical devices or specialty catheters used in the treatment, reduction or inhibition of restenosis. We have granted Boston Scientific an exclusive worldwide license to develop and commercialize products for restenosis incorporating these two nitric oxide-releasing compounds. Boston Scientific made an upfront license payment of $1.5 million to us in 2001. In the event that specified research, development and commercialization milestones are achieved, Boston Scientific is obligated to make milestone payments to us. Boston Scientific is also obligated to pay royalties to us on the sale of any products resulting from the collaboration. Boston Scientific made a $3.5 million investment in our series F junior redeemable convertible preferred stock in 2001 and made an additional $500,000 investment in our series E redeemable convertible preferred stock in August 2003.

Other Income, Net. Other income includes interest earned on our cash, cash equivalents and marketable securities, as well as rental income from a sublease of a portion of our facilities. Other income is net of interest expense.

Results of Operations

Six Months Ended June 30, 2003 and 2002

Revenue. Total revenue for the six months ended June 30, 2003 was $3.4 million, compared to $375,000 for the six months ended June 30, 2002. The increase in revenue was attributable to $15.0 million of payments we received under our agreement with Merck that have been deferred and are being recognized as revenue ratably over the contractual research and development term ending in December 2005. In addition, in 2003 we recognized $1.5 million from Merck for research and development funding.

Research and Development. Research and development expense for the six months ended June 30, 2003 was $8.3 million, compared to $6.5 million for the six months ended June 30, 2002. The increase was primarily in the areas of clinical trial costs as a result of an increase in the number of clinical sites and number of patients enrolled in A-HeFT.

General and Administrative. General and administrative expense for the six months ended June 30, 2003 was $1.2 million, compared to $939,000 for the six months ended June 30, 2002. The higher general and administrative expense incurred in the six months ended June 30, 2003 primarily resulted from $313,000 of costs incurred in connection with evaluating and developing plans to commercialize BiDil.

Other Income, Net. Other income, net for the six months ended June 30, 2003 was $204,000, compared to $327,000 for the six months ended June 30, 2002. The decrease was primarily due to reduced yields on marketable securities resulting from lower average interest rates and lower average fund balances available for investing.

Years Ended December 31, 2002, 2001 and 2000

Revenue. Revenue for the year ended December 31, 2002 was $750,000, compared to $250,000 in 2001 and $2.1 million in 2000. In 2002 compared to 2001, our increased revenue was attributable to our research agreement with Boston Scientific. The decrease in our revenue in 2001 was attributable to the winding down of our prior research agreements.

Research and Development. Research and development expense for the year ended December 31, 2002 was $15.9 million, compared to $10.2 million in 2001 and $8.0 million in 2000. In 2002 compared with 2001, our increased research and development expense principally resulted from an increase of $4.7 million of expenses associated with A-HeFT, reflecting the addition of new sites and additional patients. Additionally, contract research and supplies associated with our other programs were $290,000 higher in 2002, and 2001 expenses reflected a reversal of a $533,000 accrual due to a change in our estimate of our liability. In 2001 compared to 2000, the higher level of research and development expense was primarily associated with the initiation of A-HeFT in the second quarter and expanded research and development efforts.

General and Administrative. General and administrative expense for the year ended December 31, 2002 was $2.1 million, compared to $2.4 million in 2001 and $2.0 million in 2000. In 2002 compared to 2001, general and administrative expense decreased due to a reduction in market research costs of $231,000. This was partially offset by increased personnel costs of $160,000. General and administrative expenses increased in 2001 compared to 2000, primarily due to higher legal costs mostly attributable to increased business development activities and stock compensation charges associated with a loan given to an officer for the purchase of our common stock.

Other Income, Net. Other income, net decreased to $572,000 in 2002 from $697,000 in 2001, after having increased from $535,000 in 2000. The decrease in interest income in 2002 compared to 2001 was primarily due to reduced yields on investments resulting from lower average interest rates and lower average fund balances available for investment. Interest expense declined in 2002 compared with 2001 and 2000 due to the reduction of outstanding debt.

Liquidity and Capital Resources

We have financed our operations since inception through the private placement of equity, debt and payments from collaborative partners for licenses, research and development and achievement of milestones. As of June 30, 2003, we have received net proceeds of $79.2 million from the issuance of equity securities, primarily redeemable convertible preferred stock. At June 30, 2003, we had $18.8 million in cash, cash equivalents and marketable securities. In August 2003, we sold an additional 2,776,347 shares of our series E redeemable convertible preferred stock for net proceeds of $19.9 million to existing preferred stockholders.

During the six months ended June 30, 2003, operating activities provided cash of $7.3 million driven by the receipt of $15.0 million from Merck, offset by a net loss of $5.9 million, a decrease in accounts payable and accrued expenses of $433,000 and an increase in prepaid and other current assets of $423,000. For the year ended December 31, 2002, net cash used in operating activities was $16.2 million which was due to a net loss of $16.7 million partially offset by $533,000 in non-cash charges for loan forgiveness, depreciation and amortization, and stock-based compensation expenses.

During the six months ended June 30, 2003, investing activities provided cash of $635,000 due to the sale of marketable securities of $919,000 offset by purchases of equipment of $284,000. For the year ended December 31, 2002, net cash provided by investing activities was $950,000 primarily from the sale of marketable securities totaling $976,000. We expect to have no material capital expenditures for the balance of 2003.

During the six months ended June 30, 2003, financing activities used cash of $20,000 for the scheduled repayment of debt. For the year ended December 31, 2002, net cash used in financing activities was $266,000, which consisted of repayment of debt of $289,000 offset by proceeds received from stock option exercises of $23,000.

The following table summarizes our contractual obligations at June 30, 2003 and the effects such obligations are expected to have on our liquidity and cash flows in future periods.

Payments Due by Period

Contractual Obligations	Total		July to December 2003		2004 through 2005		2006 through 2007		After 2007
Short and long-term debt	$	44,000	$	22,000	$	22,000	$	—	$	—
Operating lease obligations		532,000		290,000		242,000		—		—

Total contractual cash obligations	$	576,000	$	312,000	$	264,000	$	—	$	—

Based on our operating plans, we believe that the proceeds from this offering, together with our existing resources, will be sufficient to fund our planned operations, including increases in spending for our BiDil clinical program, for at least 24 months from the date of

this prospectus. However, we may require significant additional funds earlier than we currently expect to conduct the clinical trials and to obtain regulatory approvals necessary to launch BiDil, and to develop our other product candidates.

We may seek additional funding through collaborative arrangements and public or private financings. Additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities, further dilution to our existing stockholders will result. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies, product candidates, or products which we would otherwise pursue on our own.

Even if we are able to raise additional funds in a timely manner, our future capital requirements may vary from what we expect and will depend on many factors, including the following:

•: the costs of launching BiDil, if and when it is approved by regulatory authorities;
•: the timing, receipt, and amount of milestone and other payments, if any, from collaborators;
•: the timing, receipt, and amount of sales and royalties, if any, from our potential products;
•: the resources required to successfully complete our clinical trials;
•: the time and costs involved in obtaining regulatory approvals;
•: continued progress in our research and development programs, as well as the magnitude of these programs;
•: the cost of manufacturing, marketing and sales activities;
•: the costs involved in preparing, filing, prosecuting, maintaining, and enforcing patent claims;
•: the cost of obtaining and maintaining licenses to use patented technologies; and
•: our ability to establish and maintain additional collaborative arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an on-going basis, we evaluate our estimates and judgments, including those related to revenue, accrued expenses and the fair valuation assigned to our common stock. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue. We record revenue on an accrual basis as it is earned and when amounts are considered collectible. Revenues received in advance of performance obligations or in cases where we have a continuing obligation to perform services, are deferred and recognized over the performance period. Revenues from milestone payments that represent the culmination of a separate earnings process are recorded when the milestone is achieved. Contract revenues are recorded as the services are performed. When we are required to defer revenue, the period over which such revenue should be recognized is subject to estimates by management and may change over the course of the collaborative agreement.

Accrued Expenses. As part of the process of preparing financial statements, we are required to estimate accrued expenses. This process involves identifying services which have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for such service as of each balance sheet date in our financial statements. Examples of estimated expenses for which we accrue include contract service fees such as amounts paid to clinical monitors, data management organizations and investigators in conjunction with clinical trials, and fees paid to contract manufacturers in conjunction with the production of clinical materials and professional service fees, such as lawyers and accountants. In connection with such service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual levels of services incurred by such service providers. The majority of our service providers invoice us monthly in arrears for services performed. In the event that we do not identify certain costs, which have begun to be incurred, or we under- or over-estimate the level of services performed or the costs of such services, our reported expenses for such period would be too low or too high. The date on which certain services commence, the level of services performed on or before a given date and the cost of such services are often determined based on subjective judgments. We make these judgments based upon the facts and circumstances known to us in accordance with generally accepted accounting principles.

Stock-Based Compensation. We have elected to follow Accounting Principle Board, or APB, Opinion No. 25, "Accounting for Stock Issued to Employees," or APB 25, and related interpretations, in accounting for our stock-based compensation plans, rather than the alternative fair value method provided for under Financial Accounting Standard No. 123, or FAS 123, "Accounting for Stock-Based Compensation." Accordingly, we have not recorded compensation expense for stock options issued to employees in fixed amounts with exercise prices equal to the fair value of our common stock on the date of grant. In the notes to our financial statements, we provide pro forma disclosures in accordance with FAS 123. We account for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of such services received or of the equity instruments issued, whichever is more reliably measured, in accordance with FAS 123 and the Emerging Issues Task Force, or EITF, Issue 96-18, "Accounting for Equity Instruments that Are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

Accounting for equity instruments granted or sold by us under APB 25, FAS 123 and EITF 96-18 requires fair value estimates of the equity instrument granted or sold. If our estimates of the fair value of these equity instruments are too high or too low, our expenses may be over or under stated. Equity instruments granted or sold in exchange for the receipt of goods or services and the value of those goods or services can not be readily estimated, as is true in connection with most stock options and warrants granted to employees and

non-employees, we estimated the fair value of the equity instruments based upon consideration of factors which we deemed to be relevant at the time. Because shares of our common stock have not been publicly traded, market factors historically considered in valuing stock and stock option grants include comparative values of public companies discounted for the risk and limited liquidity provided for in the shares we are issuing, pricing of private sales of our redeemable convertible preferred stock, prior valuations of stock grants and the effect of events that have occurred between the time of such grants, economic trends, and the comparative rights and preferences of the security being granted compared to the rights and preferences of our other outstanding equity.

As disclosed more fully in Note 6 to our financial statements, in lieu of cash payments we granted options to purchase the following number of shares of common stock to non-employees during the years ended December 31, 2002, 2001 and 2000:

Year Ending December 31,	Exercise Price Per Share		Number of Shares
2002		—	—
2001	$	2.00	55,000
2000		1.30	50,000

We recorded these grants at fair value when granted and re-measure the unvested portion of these grants at each reporting period because these awards either vest over time or upon reaching certain performance objectives.

As disclosed more fully in Note 6 to our financial statements, we granted options to purchase the following number of shares of common stock to employees during the years ended December 31, 2002, 2001 and 2000:

Year Ending December 31,	Exercise Price Per Share		Number of Shares
2002	$	2.00	241,000
2001		2.00	386,150
2000		1.30	131,250

The fair value of our common stock is determined by our board of directors contemporaneously with the grant. In the absence of a public trading market for our common stock, our board of directors considers numerous objective and subjective factors in determining the fair value of our common stock. For example, during the six months ended June 30, 2003, we granted stock options to purchase 428,500 shares of common stock to employees at an exercise price of $2.00. At the time of these option grants and other stock issuances, our board of directors considered the liquidation preferences, dividend rights, voting control and anti-dilution protection attributable to our then-outstanding redeemable convertible preferred stock, the status of private and public financial markets, valuations of comparable private and public companies, the likelihood of achieving a liquidity event such as an initial public offering, our existing financial resources, our anticipated continuing operating losses and increased spending levels required to complete our clinical trials, dilution to common stockholders from anticipated future financings and a general assessment of future business risks.

Recently Issued Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 46, "Consolidation of Variable Interest Entities" or FIN 46, which is an interpretation of

Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46 requires that if an entity has a controlling interest in a variable interest entity, the assets, liabilities and results of activities of the variable interest entity should be included in the consolidated financial statements of the entity. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied in the first interim or annual period beginning after June 15, 2003. We have not yet determined what effect, if any, the adoption of FIN 46 will have on our financial position or results of operation.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement establishes how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity, including redeemable convertible preferred stock. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the interim period commencing July 1, 2003, except for mandatory redeemable financial instruments of nonpublic companies. We have not yet determined the impact of this statement on our financial statements.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk related to changes in interest rates. Our current investment policy is to maintain an investment portfolio consisting mainly of U.S. money market and high-grade corporate securities, directly or through managed funds, with maturities of one year or less. Our cash is deposited in and invested through highly rated financial institutions in North America. Our marketable securities are subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 10% from levels at June 30, 2003, we estimate that the fair value of our investment portfolio would decline by an immaterial amount. While our cash and investment balances will increase upon completion of the offering made by this prospectus, we will have the ability to hold our fixed income investments until maturity, and therefore we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our investments.

BUSINESS

Overview

NitroMed is an emerging pharmaceutical company with substantial expertise and intellectual property in nitric oxide-based drug development. We are applying our nitric oxide technology to develop new pharmaceuticals, as well as safer and more effective versions of existing pharmaceuticals, to target significant diseases and major commercial markets. Our lead nitric oxide-enhancing medicine, BiDil, which is being developed to reduce mortality and hospitalization and to improve the quality of life of African Americans diagnosed with heart failure, is the subject of a late-stage confirmatory trial.

Our commercial strategy involves the development of proprietary nitric oxide drugs, the co-development and commercialization of nitric oxide-enhancing drugs with partners and the out-licensing of our nitric oxide-enhancing technology in exchange for potential milestone payments and royalties on sales. We plan to directly market BiDil, if approved, to those physicians who treat African Americans with heart failure. We have also entered into collaboration agreements with Merck to jointly develop nitric oxide-enhancing COX-2 inhibitors and with Boston Scientific to jointly develop nitric oxide stents.

Our Nitric Oxide-Enhancing Medicines

Nitric oxide is a naturally-occurring compound that is synthesized in cells to regulate a broad range of cellular reactions. Many disease states are associated with a deficiency in nitric oxide and might benefit from nitric oxide-enhancing medicines. For example, depleted levels of nitric oxide have been implicated in diseases such as heart failure, pulmonary hypertension and sexual dysfunction. Additionally, nitric oxide-enhancing medicines have been shown to minimize side effects associated with a variety of medications, including a broad range of anti-inflammatory medications.

We generally choose drugs for nitric oxide enhancement from among those marketed medicines whose safety and efficacy we believe can be improved by increased nitric oxide levels in the body. We estimate that candidate medicines for our nitric oxide technology have current annual worldwide sales in excess of $30 billion. We seek to produce our nitric oxide-enhancing drug candidates by combining an existing, marketed medicine with a nitric oxide donor, which is a molecule capable of increasing nitric oxide levels in the body. The nitric oxide donor and the existing medicine can be combined together through either a chemical linkage to potentially create a proprietary new chemical entity or through the direct mixing of the medicine and the nitric oxide donor to potentially create a patentable new use and dosage form.

We believe that the probability of clinical success for our drug candidates is increased because regulatory approvals have already been achieved for the existing medicines that we are seeking to improve. We also believe that the commercial risk associated with these drug candidates is mitigated because many of these existing medicines have already generated significant sales in their markets.

We have generated significant intellectual property rights for our nitric oxide technology and compounds to protect our interests and support our discovery and development of additional product candidates.

BiDil—Treatment for Heart Failure in African Americans

Our lead product, BiDil, is an orally-administered nitric oxide-enhancing medicine that is being investigated for its potential to reduce mortality and hospitalization and improve the quality of life of African Americans diagnosed with heart failure. BiDil is a combination of two drugs, isosorbide dinitrate and hydralazine. Isosorbide dinitrate is a nitric oxide donor. Hydralazine is an antioxidant and vasodilator agent, which means it dilates blood vessels and protects the nitric oxide formed by isosorbide dinitrate from deactivating. Through these properties, BiDil is intended to provide a number of beneficial effects for African-American heart failure patients, including increasing levels of nitric oxide in the body. Because heart failure is a chronic disease, we expect that, if approved, BiDil, like other medicines taken for chronic heart disease, will be taken for the duration of the patient's life.

Heart failure—or end-stage cardiovascular disease—affects approximately five million Americans. There is no cure for this disease and more than 50% of patients die within five years of diagnosis. African Americans suffer a disproportionate incidence of cardiovascular disease. With respect to heart failure, they are affected at a rate almost twice the rate of the corresponding white population and are twice as likely to die from it. This dramatic ethnic difference in health outcomes has been attributed to a variety of factors, including access to medical care, management of heart failure and socioeconomic factors. Recent analyses of heart failure clinical trials, however, show that the mortality rate and the hospitalization rate for African Americans is significantly higher than for non-African Americans, even after adjustment for such factors. The Centers for Disease Control estimates today that 750,000 African Americans have been diagnosed with heart failure, and we expect this number to grow to over 900,000 persons by 2010.

African Americans may also be more vulnerable to heart failure because some medicines approved for use in heart failure appear in certain clinical studies to be less effective in African-American patients. These ethnic differences are documented in FDA-required product package inserts, including:

•: the package insert for enalapril, known commercially as Vasotec, an angiotensin converting enzyme inhibitor, or ACE inhibitor, which states "it should be noted that in controlled clinical trials ACE inhibitors have an effect on blood pressure that is less in black patients than in non-blacks. In addition, it should be noted that black patients receiving ACE inhibitors have been reported to have a higher incidence of angioedema compared to non-blacks."
•: the package insert for losartan, known commercially as Cozaar, an angiotensin receptor blocker, which states "...the LIFE study provides no evidence that the benefits of Cozaar on reducing the risk of cardiovascular events in hypertensive patients with left ventricular hypertrophy apply to Black patients" and also notes "this finding could not be explained on the basis of the populations other than race."

Several factors lead us to believe BiDil has the potential to be clinically and commercially successful in African-American heart failure patients. Specifically:

•: African-American heart failure patients are disproportionately overrepresented in the North American heart failure population;
•: existing therapies for heart failure may not work as effectively in African Americans;
•: BiDil's mechanism of action is intended to address the nitric oxide deficiency we believe to be associated with heart failure in African Americans; and

•: a retrospective analysis of a completed heart failure study in the general population using the components of BiDil suggests that BiDil's components may have efficacy in African-American patients.

We amended BiDil's previously submitted new drug application which had been filed by a prior sponsor of the drug who was investigating BiDil for use in the general heart failure population. In early 2001, we received a letter from the FDA stating that, in addition to the data already submitted to the agency, a clearly positive confirmatory trial in African Americans with heart failure would, together with the satisfaction of other conditions, provide a basis for approval of BiDil. In May 2001, we commenced A-HeFT, enrolling patients with moderate to severe heart failure who have identified themselves as being African American. As is generally true with most late-stage trials, the protocol was developed and finalized with significant input from the FDA. It is a double-blind, placebo-controlled trial, meaning that neither the patients nor the investigators in the study are informed during the trial which patients are receiving BiDil and which are receiving a placebo, which is a pill that looks the same as the drug but has no active ingredients. This trial is being conducted at approximately 160 clinical sites in the U.S. and is over 60% enrolled. Based on the interim analysis, the independent third party calculated that the trial will need to enroll at least 900 patients to achieve statistical significance for the targeted primary clinical endpoints. The interim analysis also indicated that a 1,100 patient sample size would enhance the likelihood of generating statistically significant results. We expect to enroll up to 1,100 patients and to complete this study in early 2005. If such results are achieved, we believe that the A-HeFT trial will satisfy the FDA's requirements.

Nitric Oxide-Enhancing COX-2 Inhibitors for the Treatment of Pain and Inflammation

COX-2 inhibitors, including Merck's Vioxx and Pfizer's Celebrex, are a class of medicines that are effective in treating inflammation. Inflammation is caused by the body's local response to injury and is part of the healing mechanism. However, the body sometimes overcompensates to cause acute and chronic problems of pain, swelling, and loss of function. COX-2 inhibitors are widely prescribed for conditions such as arthritis, mild to moderate pain, migraine and fever. We estimate that in 2002, COX-2 inhibitors generated approximately $6.0 billion in worldwide sales.

We have created several series of proprietary nitric oxide-enhancing COX-2 inhibitors that we believe could improve the safety and efficacy of this drug class. COX-2 inhibitors have gained rapid commercial success due to their decreased gastrointestinal side effects, compared to aspirin and other commonly prescribed non-steroidal, anti-inflammatory drugs. In our laboratories, nitric oxide has been shown in animal studies to further decrease the gastrointestinal side effects of COX-2 inhibitors.

In December 2002, we entered into an exclusive, worldwide licensing research, collaboration and licensing agreement that granted Merck marketing and sales rights to our technology for nitric oxide-enhancing COX-2 inhibitors. The research portion of the agreement is for three years and can be extended by mutual agreement. In 2003, we have received $10.0 million in license fees from Merck and $5.0 million for achieving the first milestone. In addition, we expect to receive $3.0 million in research and development funding in 2003. We are currently working with Merck to screen proprietary nitric oxide-enhancing COX-2 inhibitors in advance of clinical testing as analgesic and anti-inflammatory agents and in other specified disease areas. These agents are intended to be second-generation COX-2 inhibitors. We are entitled to milestone payments upon our successful achievement of specified research objectives and royalties on product sales.

Nitric Oxide Stents for the Treatment of Restenosis

Balloon angioplasty is a procedure to widen blocked arteries that have resulted from certain conditions such as high cholesterol. It is increasingly common during angioplasty to place a stent, or mesh medical device, into the diseased artery to help maintain the artery width and prevent its re-collapse, or restenosis. Several cardiovascular device companies are developing and commercializing stents coated with chemotherapeutic agents or other toxic agents designed to help reduce the risk of restenosis. We have demonstrated that a stent coated with a nitric oxide donor can significantly reduce restenosis in a variety of animal studies.

We have entered into a development and license agreement with Boston Scientific pursuant to which we have granted Boston Scientific an exclusive worldwide license to develop and commercialize products for restenosis which incorporate these nitric oxide-releasing compounds.

Boston Scientific made an up-front license payment to us of $1.5 million in 2001 and has made equity investments in our redeemable convertible preferred stock in 2001 and 2003 totaling $4.0 million. Boston Scientific will be obligated to make milestone payments to us if specified research, development and commercialization milestones are achieved and has also agreed to pay us royalties on the sale of any products resulting from the collaboration.

Nitric Oxide-Enhancing NSAIDs for Inflammation and Other Development Programs

We are utilizing our nitric oxide expertise and proprietary position to develop products for a variety of additional medical conditions. We are in various stages of discussions with potential partners in the areas of nitric oxide-enhancing non-steroidal anti-inflammatory drugs, or NSAIDs, for the treatment of pain and inflammation and the targeted delivery of nitric oxide-enhancing medicines to the kidney for acute renal failure.

NSAIDs are among the most widely-prescribed drugs for the treatment of inflammatory conditions, including arthritis, mild to moderate pain, migraine and fever. We estimate that the worldwide market for NSAIDs is approximately $13.3 billion, almost half of which is for arthritis alone. Among the most serious side effects associated with NSAIDs are ulceration and bleeding in the gastrointestinal tract. Nitric oxide has been shown in preclinical studies to decrease the gastrointestinal side effects of NSAIDs. We have developed a proprietary approach to reducing the gastrointestinal side effects of traditional NSAIDs, including aspirin, by delivering a source of nitric oxide along with the NSAID.

Acute renal failure is characterized by a sudden deterioration in kidney function and affects approximately 5% of all hospitalized patients. It is a serious and life-threatening condition from which more than half of the affected patients die. Nitric oxide is known to be essential to kidney function, and we believe that acute renal failure can be moderated by the targeted delivery of nitric oxide to the kidneys.

The following table highlights those classes of nitric oxide-enhancing medicines where we have or are seeking to create intellectual property rights and where we believe we can offer a clinical benefit compared to existing FDA-approved medicines. Our efforts in these areas, except with respect to the COX-2 inhibitors for pain and inflammation, where specific

preclinical compounds are being studied for advancement into clinical trials, consist of discovery-stage research primarily directed to establishing our intellectual property position:

Product Candidate and Therapeutic Area		Anticipated Clinical Benefit
Nitric Oxide-Enhancing NSAIDs and COX-2 Inhibitors
• Pain, inflammation, cancer and central nervous system diseases		• Improved gastrointestinal tolerance; accelerated ulcer healing; reduced kidney damage and hypertension
Nitric Oxide-Enhancing PDE Inhibitors
• Asthma		• Increased airway circulation; reduced lung inflammation and decreased sensitivity to airborne allergens
• Male erectile dysfunction		• Increased response rate; rapid onset of action
• Pulmonary hypertension		• Increased efficacy; longer duration of action
• Chronic obstructive airway disease		• Increased airway circulation
Nitric Oxide-Enhancing Steroids
• Allergy and asthma		• Faster onset of action; increased airway circulation
• Dermatology		• Faster onset of action; increased efficacy
Nitric Oxide-Enhancing Gastrointestinal Protectants
• Peptic ulcer		• Improved efficacy; faster onset of action
Nitric Oxide-Enhancing Arginines
• Kidney failure		• Improved sodium and water balance

Our Strategy

Our goal is to become a leading, multi-product pharmaceutical company, focused on the discovery, development and commercialization of nitric oxide-based medicines. Key elements of our strategy include:

Successfully commercialize BiDil. We plan to develop an internal marketing and sales force to promote BiDil for the treatment of heart failure in African Americans. Based on the number of physicians serving the African-American heart failure market, we believe we can successfully promote BiDil with approximately 150 to 200 sales representatives. Because BiDil, if approved, will be the only heart failure treatment specifically indicated to treat African Americans with heart failure, we believe that we will be able to capture significant market share in this population.

Develop and commercialize selected nitric oxide-enhancing versions of existing medicines with leading companies. We intend to continue entering into collaborations with leading pharmaceutical companies where our product candidates will benefit from the marketing reach, clinical expertise and technology of the partner. Our current strategic research and development collaborations with Merck for COX-2 inhibitors and with Boston Scientific for

drug-coated stents are examples of our ability to enter into collaborations with leading companies.

Focus our internal development efforts on improved versions of existing medicines. We believe that many pharmaceutical companies have currently marketed drugs and products that can benefit from the therapeutic attributes and the potential patent protection of our nitric oxide-enhancement. We are currently conducting research and development on five drug classes and have consolidated an intellectual property position from which we believe we can generate significant value.

Expand our pipeline of nitric oxide-enhancing drug candidates through corporate development activities. Our nitric oxide expertise coupled with our corporate development capabilities affords us opportunities within the nitric oxide field that others may not recognize. For example, we were well suited to appreciate the value that BiDil, a nitric oxide-enhancing medicine, could bring to African-American heart failure patients. We will continue to position ourselves to attract additional opportunities through in-licensing or other arrangements and anticipate using our planned BiDil sales force to market additional products in the future.

Continue to protect and enhance our nitric oxide intellectual property rights and capabilities. Because of its critical role in our on-going product development efforts, we intend to rigorously pursue the protection of our intellectual property. In order to protect and expand our current intellectual property position, we intend to invest significantly in nitric oxide-related research and development efforts, including attracting and retaining highly talented and experienced personnel.

BiDil Clinical Trials

In the 1980s, the U.S. Veterans Administration evaluated the components of BiDil, isosorbide dinitrate and hydralazine, in two landmark studies. The first Vasodilators in Heart Failure Trial, or V-HeFT I, which began in 1980, compared the effects of a placebo, the BiDil components, and another vasodilator called prazosin in the general population. The primary endpoint of this trial was mortality over two years and the trial enrolled 642 patients who were followed for up to five years. A second study, V-HeFT II, began in 1986. This study compared the effects of enalapril, an ACE inhibitor, and the BiDil composition in the general population. The primary endpoint of this trial was mortality over two years and the trial enrolled 804 patients who were followed for up to five years. These data formed the basis of a new drug application filed by Medco Research, now King Pharmaceuticals, seeking approval of BiDil for treatment of heart failure in the general population. Medco received a non-approvable letter with respect to the application in 1997 from the FDA following a split vote at the FDA's CardioRenal Advisory Committee. The FDA review concluded that BiDil failed to satisfy typical statistical significance requirements after statistical adjustments were applied to account for multiple unplanned interim analyses that had been performed by the investigators.

Our extensive work in the field of nitric oxide-enhancing medicines led us to believe that BiDil might be particularly well-suited to enhance in-vivo nitric oxide levels and to protect the nitric oxide after it is formed. As such, we postulated that BiDil might provide preferential survival advantages to African-American heart failure patients suffering from a deficiency of nitric oxide. In 1999, we re-analyzed V-HeFT I and II by ethnicity. Following this re-analysis and extensive discussions with the FDA, in 1999 we acquired the new drug application and a license to the BiDil intellectual property from Dr. Jay Cohn, Professor in the Department of Medicine at the University of Minnesota, who had acquired the new drug application and intellectual property from Medco Research. Our retrospective analysis of V-HeFT I, which

contained 180 African-American patients, showed that BiDil reduced mortality versus placebo by 66% in African Americans with mild to moderate heart failure. These data have a p <0.004, which indicates a four in one thousand probability that this result is due to chance. In addition, re-analysis of V-HeFT II, which contained data from 215 African-American patients, showed that African-American patients treated with BiDil experienced an improvement in quality of life and statistically equivalent mortality rates as African-American patients treated with enalapril, an ACE inhibitor approved for the treatment of heart failure.

We amended the previously-submitted new drug application for BiDil in the third quarter of 2000 with the results from these ethnicity-based re-analyses. In March 2001, the FDA advised us that results from a clearly positive clinical trial in African Americans with heart failure would, together with the satisfaction of other conditions, provide a basis for approval of BiDil. We are conducting A-HeFT at approximately 160 sites in the U.S., with a goal of enrolling 1,100 patients. A-HeFT, which is jointly sponsored by the Association of Black Cardiologists, is over 60% enrolled. A-HeFT is designed to demonstrate that BiDil, when administered together with standard heart failure therapies, can provide a combination of reduced mortality and hospitalization and improved quality of life for African Americans with heart failure.

An independent third party designated by us performed an interim analysis of the A-HeFT clinical database in March 2003 in accordance with the protocol after 313 patients had completed the minimum of six months of patient follow-up. This interim analysis was incorporated into the study design, with the FDA's concurrence, to ascertain the appropriate number of patients to enroll and to perform an interim safety assessment. No significant treatment-related adverse drug reactions were observed. Based on the interim analysis, the independent third party calculated that the trial will need to enroll at least 900 patients to achieve statistical significance for the targeted primary clinical end points. The interim analysis also indicated that a 1,100 patient sample size would enhance the likelihood of generating statistically significant results. We expect to enroll up to 1,100 patients and to complete this study in early 2005.

Nitric Oxide's Role in Cellular Function and Disease

In the 1980s, nitric oxide was identified as a significant molecule that regulates a wide range of important cellular functions. Robert R. Furchgott, a member of our scientific advisory board, and two others were awarded the 1998 Nobel Prize in Physiology and Medicine for this discovery.

Recent research has also shown that nitric oxide also plays important biochemical and physiological roles in many diseases or medical conditions, including the following:

Cardiovascular Disease. The formation of nitric oxide in the cells that line the inner walls of blood vessels, referred to as the endothelium, has been found to play a crucial role in maintaining the dilation of the blood vessels, a process essential for the regulation of blood pressure. Nitric oxide produced by the endothelium also inhibits the clumping of platelets, which are cells in the blood that promote clotting, and the adhesion of platelets and white blood cells to the blood vessels' inner walls, thereby significantly reducing the obstruction of blood vessels that is associated with blood clots and stroke. Numerous other cardiovascular actions of nitric oxide have been reported, including maintaining sufficient blood flow to the heart muscle and regulation of the contraction of the heart muscle. Cardiovascular diseases associated with nitric oxide imbalance include atherosclerosis, high cholesterol levels, high blood pressure, pulmonary hypertension and heart failure.

Gastrointestinal and Inflammatory Disease. Nitric oxide is capable of influencing many of the biochemical and physiological reactions that are key to preventing or repairing injury to the gastrointestinal tract, such as stimulating mucus secretion from the mucus membrane lining the stomach and intestines and regulating the blood flow feeding the wall of the gastrointestinal tract and the mucus membrane. Nitric oxide can control inflammatory cell activation and is active on other chemical mediators in the inflammatory process. Gastrointestinal diseases in which nitric oxide may have been shown to have beneficial actions include NSAID-induced gastric injury, inflammatory bowel disease, and peptic ulcer.

Central Nervous System Disorders. Nitric oxide is also synthesized in nerve cells, or neurons, of the central nervous system, where it performs many physiological functions, including the formation of memory and the modulation of pain. Nitric oxide-based therapies for diseases such as epilepsy, stroke, neuroinflammatory disorders and trauma may be able to provide protection to neurons.

Sexual Dysfunction. In the peripheral nervous system, nitric oxide is now known to play a role in regulating some forms of vasodilation and certain gastrointestinal, respiratory and genito-urinary functions. For example, male penile erection is dependent upon nitric oxide-relaxation of genital smooth muscles, and drugs like Viagra enhance the nitric oxide-signaling pathway.

Respiratory Disease. Nitric oxide inhalation reduces pulmonary hypertension and improves oxygenation, the absorption of oxygen by the lungs. In inflammatory pulmonary diseases, such as asthma and chronic obstructive pulmonary disease, nitric oxide has been shown to promote airway dilation and reduce inflammation, thus reducing airway sensitivity to airborne irritants and allergens.

Corporate Collaborations

As part of our strategy to accelerate our product development efforts, we have established collaborations with Merck Frosst Canada & Co., a Merck & Co., Inc. subsidiary, in the area of nitric oxide-enhancing COX-2 inhibitors for use in the treatment of various diseases, and Boston Scientific in the area of nitric oxide drug-coated stents to reduce restenosis. These collaborations are designed to provide us with capital and research, development and marketing capabilities. We intend to pursue other collaborations as appropriate. Since inception, all of our revenue has been derived from our collaborations with third parties. For the fiscal year ended December 31, 2002, our collaboration with Boston Scientific accounted for all of our revenue and for the six months ended June 30, 2003, Boston Scientific and Merck accounted for all of our revenue.

Merck Agreement

In December 2002, we entered into a research, collaboration and license agreement with Merck to jointly develop pharmaceutical products containing nitric oxide-enhancing COX-2 inhibitors. We are currently working with Merck to screen proprietary nitric oxide-enhancing COX-2 inhibitors in advance of clinical testing as analgesic and anti-inflammatory agents and in other specified disease areas. Under the terms of the agreement, we have granted Merck an exclusive worldwide, royalty-bearing license to develop, make and sell nitric oxide-enhancing COX-2 inhibitors for use in the treatment or prevention of various diseases, conditions or disorders.

Merck has paid an up-front license fee of $10.0 million under the agreement and has agreed to make research and development payments over the three-year term of the research

program, of which $3.0 million is expected to be paid in 2003. In the event that specified research, development and commercialization milestones are achieved, Merck will be obligated to make additional payments to us. In 2003, Merck made a $5.0 million payment upon the achievement of a preclinical milestone. Merck has agreed to pay royalties to us on the sale by Merck, its affiliates or any sublicensees of any products resulting from the collaboration.

The research program may be extended beyond its initial three-year term by the parties for additional one-year periods by written agreement. Merck has the right to terminate the agreement after the initial three year research term upon 90 days' advance written notice. Each party has the right to terminate the agreement in the event of an uncured, material breach by the other party, provided that in the event of a termination by Merck for a material breach by us, Merck must continue to pay any royalty amounts due under the agreement.

Boston Scientific Agreement

In November 2001, we entered into a development and license agreement with Boston Scientific Corporation in the field of restenosis. Under the agreement, we are expected to deliver to Boston Scientific two nitric oxide-releasing compounds. If Boston Scientific accepts one or both of these compounds, it will have the right to incorporate them into medical devices or specialty catheters used in the treatment, reduction or inhibition of restenosis. We have granted Boston Scientific an exclusive worldwide license to develop and commercialize products for restenosis incorporating these two nitric oxide-releasing compounds. We have also granted to Boston Scientific a right of first refusal to obtain an exclusive license under our nitric oxide technologies to commercialize products for restenosis, which right of first refusal is for a period of three years after the end of the research term.

Boston Scientific made an up-front license payment of $1.5 million to us in 2001. In the event that specified research, development and commercialization milestones are achieved, Boston Scientific is obligated to make milestone payments to us. Boston Scientific also is obligated to pay royalties to us on the sale of any products resulting from the collaboration. Boston Scientific made a $3.5 million investment in our series F junior redeemable convertible preferred stock in 2001. In August 2003, in connection with a private placement, Boston Scientific made an additional $500,000 investment in our series E redeemable convertible preferred stock.

Boston Scientific has the right to terminate our research program at any time upon 30 days' written notice. Boston Scientific may also terminate the agreement at any time upon 60 days' written notice in the event of an uncured material breach by us, in which event Boston Scientific may elect whether the licenses we have granted shall continue in effect. Unless earlier terminated, the agreement will remain in effect until the expiration of the obligation of Boston Scientific to pay royalties under the agreement. Boston Scientific also has a right of first refusal with respect to other nitric oxide-releasing compounds we may develop for delivery through the use of implantable medical devices or via specialty catheters.

Research and Development

Our research and development group consists of 35 employees, consisting of 15 biologists, 10 medicinal chemists, six persons engaged in clinical development and four persons engaged in patent and other research and development-related functions. Our research and development group is focusing on continuous improvement of our core technology; new materials and platforms; complementary products; and new initiatives aimed at leveraging our core technology in new market areas.

During the fiscal years ended December 31, 2002, 2001 and 2000, and the six months ended June 30, 2003, we estimate that our total company-sponsored research and development expenses were $14.7 million, $9.9 million, $5.9 million and $6.1 million, respectively, and that our collaborator-sponsored research and development expenses were $1.2 million, $313,000, $2.1 million and $2.2 million, respectively.

Proprietary Rights and Licensing

Our policy is to prosecute and enforce our patents and proprietary technology. We intend to continue to file United States and foreign patent applications to protect technology, inventions and improvements that are considered important to the development of our business. We will be able to protect our proprietary technologies from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

We have 71 issued U.S. patents and 36 pending U.S. patent applications. We also have 19 issued patents and 135 pending patent applications in certain major industrial countries, including Canada, the major European market countries, Australia and Japan. Our issued U.S. and foreign patents expire on various dates between 2007 and 2023.

BiDil. We have two U.S. patents, expiring in 2007 and 2020, respectively, and one Canadian patent expiring in 2008, which relate to co-administration of the components of BiDil. The first U.S. patent and the Canadian patent cover methods for reducing mortality associated with chronic congestive heart failure. The second U.S. patent covers methods for reducing mortality associated with chronic congestive heart failure, for improving the quality of life, for improving oxygen consumption or improving exercise tolerance in black patients. In addition, we have filed three additional U.S. method-of-use patent applications and corresponding foreign patent applications that could provide additional patent protection for BiDil.

Nitric Oxide-Enhancing COX-2 Inhibitors and Nitric Oxide-Enhancing NSAIDs for Inflammation. We have three pending U.S. patent applications, which, if issued, will have expiration dates between 2020 and 2023 which disclose and claim novel nitric oxide-enhancing COX-2 inhibitors. These applications also disclose kits and methods of use for the treatment of pain, inflammation and fever, gastrointestinal disorders, disorders resulting from elevated levels of COX-2 inhibitors, for reducing renal and respiratory toxicity, for facilitating wound healing and for improving the cardiovascular profile of COX-2 inhibitors. We have also filed additional foreign patent applications relating to this technology. We have three U.S. patents, expiring in 2015, two U.S. patents, expiring in 2018, and one patent application which, if issued, will expire in 2018, which cover different compositions of matter and methods of use for the treatment of pain, inflammation, fever and gastrointestinal disorders with novel nitric oxide-enhancing NSAIDs. One pending patent application, which, if issued, will expire in 2023, discloses specific composition of matter and methods of use for the treatment of pain, inflammation and gastrointestinal disorders of novel nitric oxide-enhancing NSAIDs. We have filed additional patent applications worldwide and have been issued two Australian patents, both of which expire in 2016, and one allowed Canadian patent, which also expires in 2016.

Nitric Oxide Stents. We have five U.S. patents expiring on dates between 2013 and 2018 which cover the coating of medical devices with nitric oxide compounds, prevention of adverse effects associated with the use of a medical device, treatment of a damaged vessel or treatment of a damaged vascular surface in a patient by administration of a nitric oxide compounds. We have five pending U.S. patent applications which, if issued, will have

expiration dates between 2021 and 2023 and which cover the composition of matter of specific nitric oxide donors or nitric oxide-linked compounds and their methods of use for the treatment of restenosis. We have filed additional patent applications worldwide, have been issued one Australian patent that expires in 2014 and have one allowed European patent which expires in 2014.

Other Development Programs. We also have a U.S. patent and a pending U.S. patent application, both of which expire in 2019, which disclose the methods of use of N-hydroxyguanidine compounds in the treatment of renal failure. We have also filed additional foreign patents applications covering this technology.

License and Royalty Agreements

Dr. Jay N. Cohn. In January 1999, as amended in January 2001, we entered into a collaboration and license agreement with Dr. Jay N. Cohn. Under the agreement, Dr. Cohn licensed to us exclusive worldwide royalty-bearing rights to technology and inventions owned or controlled by Dr. Cohn and that relate to BiDil for the treatment of cardiovascular disease. We have agreed to make milestone payments to Dr. Cohn upon FDA approval and upon first commercial sale of products, if any, arising out of the agreement. The agreement imposes upon us an obligation to use reasonable best efforts to develop and, upon receipt of regulatory approval, manufacture, market and commercialize products based upon the licensed rights. If we fail to meet this obligation, Dr. Cohn has the right to terminate the agreement and the license granted to us under the agreement. Dr. Cohn also has the right to terminate the agreement if we materially breach the agreement and fail to remedy the breach within 30 days. We have the right to terminate the agreement at any time upon 30 days' prior written notice. Unless earlier terminated, the agreement continues in perpetuity. Pursuant to the agreement, Dr. Cohn was appointed to our scientific advisory board, entered into a consulting agreement with us and was granted an option to purchase 10,000 shares of our common stock.

The Brigham and Women's Hospital. In August 1992 and as amended in November 1996, we entered into a research and license agreement with The Brigham and Women's Hospital, Inc., or BWH. Under the agreement, we sponsored a research program at BWH for a period of approximately two years relating to the diagnostic, therapeutic and prophylactic use of nitric oxide and related compounds. Under the agreement, in exchange for our sponsored research funding, BWH granted us exclusive worldwide royalty-bearing rights to technology and inventions owned at the effective time of, or developed in the course of, the sponsored research program. We are applying the patents, patent applications and other intellectual property rights licensed to us by the BWH in our nitric oxide stent program. The agreement imposes on us due diligence obligations with respect to the research, development and commercialization of products based upon the licensed rights. If we fail to meet these obligations, then upon written notice the license will become non-exclusive. BWH has the right to terminate the agreement if we materially breach the agreement and fail to remedy the breach within 60 days.

Boston University. In June 1993, as amended in January 1999, we entered into a research and license agreement with the Trustees of Boston University, or BU. Under the agreement, we have agreed to sponsor a multi-year research program at BU in the area of nitric oxide-enhancing medicines for erectile dysfunction and ureteral relaxation. Under the agreement, in exchange for our sponsored research funding, BU has granted us exclusive worldwide royalty-bearing rights to technology and inventions owned by BU and/or for the principal investigator named in the research proposal at the effective time of, or developed in the course of, the

sponsored research program. We have agreed to pay royalties to BU on all products sold or distributed by us or our affiliates which incorporate or utilize inventions, material or information specified in the agreement. The agreement imposes on us due diligence obligations with respect to the development and commercialization of products based upon the licensed rights. If we fail to meet these obligations, then upon notice by BU, the parties are required to enter into good faith negotiations, and if the parties cannot reach resolution, the license will become non-exclusive without the right to sublicense. BU has the right to terminate the agreement if we materially breach the agreement and fail to remedy the breach within 60 days. We may terminate funding of any sponsored research program on three months' prior written notice.

FoxKiser. In April 2001, we entered into an agreement with the law firm of FoxKiser LLC under which FoxKiser agreed to provide strategic counsel, including assistance in seeking FDA approval of BiDil. We and FoxKiser agreed that the fees owed by us to FoxKiser, including consulting services, would be deferred by us and would be paid in full within 45 days after the date on which we received written FDA approval, if any, for the first BiDil product. In further consideration for FoxKiser's services, we also agreed to pay FoxKiser a royalty on the sale of BiDil by us or a third party licensee. Our obligation to make royalty payments to FoxKiser on BiDil ends six months after the date of market introduction of an FDA-approved generic version of BiDil. The agreement continues in effect in perpetuity, unless either we or FoxKiser terminates the agreement in the event of a material breach by the other party that remains uncured for 60 days and unless renegotiation of the agreement is triggered by its terms in the event that we enter into a license or other business arrangement with a third party on terms that impose certain limitations on the royalties payable to us on sales of BiDil.

Dr. John D. Folts. In March 1995 and as amended in November 1996 and December 1998, we entered into an agreement with Dr. John D. Folts, a member of our scientific advisory board, pursuant to which Dr. Folts assigned to us his rights to any pending patent applications and issued patents relating to the use of nitric oxide adducts in exchange for a royalty on any products, methods or services sold or distributed by us or our licensees that are covered by the assigned patents. These patents cover technologies being used in our nitric oxide-coated stent development programs with Boston Scientific.

Trademarks, Trade Secrets and Other Proprietary Information

We also currently own the following U.S. trademarks:

•: BiDil®;
•: NitroMed®;
•: NitRx®; and
•: NitroMed "N" logo.

In addition, we depend upon trade secrets, know-how and continuing technological advances to develop and maintain our competitive position. To maintain the confidentiality of trade secrets and proprietary information, we require our employees, scientific advisors, consultants and collaborators, upon commencement of a relationship with us, to execute confidentiality agreements and, in the case of parties other than our research and development collaborators, to agree to assign their inventions to us. These agreements are designed to protect our proprietary information and to grant us ownership of technologies that are developed in connection with their relationship with us. These agreements may not,

however, provide protection for our trade secrets in the event of unauthorized disclosure of such information.

Manufacturing

We have no manufacturing capabilities. We rely on third parties to manufacture bulk compounds and finished investigational medicines for research, development, preclinical and clinical trials. We currently engage Schwarz Pharma Manufacturing, Inc. for manufacture of small-scale batches of BiDil for clinical trials. Commercial quantities of BiDil and other drugs we seek to develop will have to be manufactured in facilities and by processes that comply with the FDA and other regulations. We plan to rely on third parties to manufacture commercial quantities of any products we successfully develop, including BiDil. We believe that there are several manufacturing sources available to us on commercially reasonable terms to meet our clinical and any commercial production requirements.

Marketing and Sales

We currently have no marketing, sales or distribution capabilities. Where the geographic market is limited or where the prescriptions are written principally by a relatively small number of physicians, such as oncologists or cardiologists, we may elect to establish our own marketing organization and sales force to market and sell those products for which we obtain regulatory approval. For example, we plan to directly market BiDil, if approved, to those physicians who treat African Americans with heart failure. To this end, in the near term we intend to initiate development of those marketing and sales capabilities necessary to launch and commercialize BiDil, including beginning to build out a marketing department and planning for the hiring of a U.S. sales force, medical science liasons, and other professional services functions.

We plan to seek third party support for those products that would benefit from the worldwide promotional support of, branding by, and the reach of, a large sales and marketing force. These products are typically those prescribed by the primary care physician. In these cases we will promote our products in collaboration with marketing partners or rely on relationships with one or more companies with established sales forces and distribution systems spread around the world. Our partnerships with Merck in nitric oxide-enhancing COX-2 inhibitors and Boston Scientific in coated stents are examples of areas in which we have sought partners.

Competition

We and our corporate collaborators face intense competition from a wide range of pharmaceutical and life science companies, as well as academic and research institutions and government agencies. These competitors include organizations that are pursuing the same or similar technologies to those which constitute our technology platform and from organizations that are developing and commercializing pharmaceutical products that are competitive with our potential products.

We believe that competition for our BiDil product and other nitric oxide-enhancing cardiovascular medicines that we and our corporate collaborators may develop will initially come from companies currently marketing and selling therapeutics to treat heart failure in the general population. These competitors include GlaxoSmithKline, plc, Merck & Co., Inc. and Pfizer Inc. We expect that COX-2 inhibitors currently marketed by Pfizer Inc. and Novartis Pharma, AG will compete with our and our corporate collaborators' nitric oxide-enhancing COX-2 inhibitor products under development. In the field of stents, we believe that

competition will come from Cordis Corporation, a Johnson & Johnson Company, Guidant Corporation and Medtronic, Inc.

We also face competition from other companies that are active in or entering into the area of nitric oxide-based therapeutics. We are aware of four companies working in the area of nitric-oxide therapeutics:

•: GB Therapeutics, of Ontario, Canada, which is in early stage preclinical development of nitrate medicines for Alzheimer's disease, Parkinson's disease and dementia;
•: NicOx S.A., a French company, which is engaged in the research and development of nitric-oxide releasing derivatives of existing drug classes;
•: OxoN Medica, of California, which is in preclinical development of drug targets for diseases resulting from dysfunction of the endothelial cells that line the inside of blood vessel walls; and
•: Vasopharm BIOTECH GmbH, of Germany, which is focused on disease mechanisms involving nitric oxide signaling pathways within the vascular wall.

We intend to compete with these companies on the basis of our intellectual property portfolio, the expertise of our scientific personnel and our nitric oxide technologies. Principal competitive factors in our industry include:

•: improved patient outcomes;
•: cost-effectiveness;
•: acceptance by physicians and other health care providers;
•: the quality and breadth of an organization's technology;
•: the skill of an organization's employees and its ability to recruit and retain skilled employees;
•: an organization's intellectual property protection;
•: development, sales and marketing capabilities; and
•: the availability of substantial capital resources to fund development and commercialization activities.

Many of the companies competing against us have financial and other resources substantially greater than our own. In addition, many of our competitors have significantly greater experience in testing pharmaceutical and other therapeutic products, obtaining FDA and other regulatory approvals of products for use in health care, and marketing and selling those products. Accordingly, our competitors may succeed more rapidly than we will in obtaining FDA approval for products and achieving widespread market acceptance. If we obtain necessary regulatory approval and commence significant commercial sales of our products, we will also be competing with respect to manufacturing efficiency and marketing capabilities, areas in which we have limited or no experience.

Regulatory Matters

FDA Requirements for New Drug Compounds

The research, testing, manufacture and marketing of drug products are extensively regulated by numerous governmental authorities in the United States and other countries. In the United States, drugs are subject to rigorous regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, labeling, promotion and marketing and distribution of pharmaceutical products. Failure to comply with applicable regulatory requirements may subject a company to a variety of administrative or judicially-imposed sanctions and/or the inability to obtain or maintain required approvals or to market approved drug products.

The steps ordinarily required before a new pharmaceutical product may be marketed in the United States include preclinical laboratory tests, animal tests and formulation studies, the submission to the FDA of a notice of claimed investigational exemption or an investigational new drug application, which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes several years and the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease. Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures upon a manufacturer's activities. Success in early stage clinical trials does not assure success in later stage clinical trials. Data obtained from clinical activities is not always conclusive and may be susceptible to varying interpretations that could delay, limit or prevent regulatory approval. Even if a product receives regulatory approval, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market.

Preclinical tests include laboratory evaluation of product chemistry and formulation, as well as animal trials to assess the potential safety and efficacy of the product. The conduct of the preclinical tests and formulation of compounds for testing must comply with federal regulations and requirements. The results of preclinical testing are submitted to the FDA as part of an investigational new drug application.

A 30-day waiting period after the filing of each investigational new drug application is required prior to the commencement of clinical testing in humans. If the FDA has not commented on or questioned the investigational new drug application within this 30-day period, clinical trials may begin. If the FDA has comments or questions, the questions must be answered to the satisfaction of the FDA before initial clinical testing can begin. In addition, the FDA may, at any time, impose a clinical hold on ongoing clinical trials. If the FDA imposes a clinical hold, clinical trials cannot commence or recommence without FDA authorization and then only under terms authorized by the FDA. In some instances, the investigational new drug application process can result in substantial delay and expense.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted in compliance with federal regulations and requirements, under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. subjects must be submitted to the FDA as part of the investigational new drug application. The study protocol

and informed consent information for patients in clinical trials must also be approved by the institutional review board at each institution where the trials will be conducted.

Clinical trials to support new drug applications for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase I, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics and pharmacological actions and safety, including side effects associated with increasing doses. Phase II usually involves trials in a limited patient population, to determine dosage tolerance and optimum dosage, identify possible adverse effects and safety risks, and provide preliminary support for the efficacy of the drug in the indication being studied.

If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase II evaluations, Phase III trials are undertaken to further evaluate clinical efficacy and to further test for safety within an expanded patient population, typically at geographically dispersed clinical trial sites. Phase I, Phase II or Phase III testing of any product candidates may not be completed successfully within any specified time period, if at all.

After successful completion of the required clinical testing, generally a new drug application is prepared and submitted to the FDA. FDA approval of the new drug application is required before marketing of the product may begin in the United States. The new drug application must include the results of extensive clinical and other testing and a compilation of data relating to the product's pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting a new drug application is substantial. Under Federal law, the submission of new drug applications are additionally subject to substantial application user fees, currently exceeding $500,000, and the manufacturer and/or sponsor under an approved new drug application are also subject to annual product and establishment user fees, currently exceeding $30,000 per product and $200,000 per establishment. These fees are typically increased annually.

The FDA has 60 days from its receipt of a new drug application to determine whether the application will be accepted for filing based on the agency's threshold determination that the new drug application is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review of the new drug application. Under federal law, the FDA has agreed to certain performance goals in the review of new drug applications. Most such applications for non-priority drug products are reviewed within ten months. The review process is often significantly extended by FDA requests for additional information or clarification regarding information already provided in the submission. The FDA may also refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee.

If FDA evaluations of the new drug application and the manufacturing facilities are favorable, the FDA may issue an approval letter, or, in some cases, an approvable letter followed by an approval letter. An approvable letter generally contains a statement of specific conditions that must be met in order to secure final approval of the new drug application. If and when those conditions have been met to the FDA's satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of new drug application approval, the FDA may require post approval testing and surveillance to monitor the drug's safety or efficacy and may impose other conditions, including labeling restrictions which can

materially impact the potential market and profitability of the drug. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Once the new drug application is approved, a product will be subject to certain post-approval requirements, including requirements for adverse event reporting and submission of periodic reports. Additionally, the FDA also strictly regulates the promotional claims that may be made about prescription drug products. In particular, the FDA requires substantiation of any claims of superiority of one product over another including, in many cases, requirements that such claims be proven by adequate and well controlled head-to-head clinical trials. To the extent that market acceptance of our products may depend on their superiority over existing therapies, any restriction on our ability to advertise or otherwise promote claims of superiority, or requirements to conduct additional expensive clinical trials to provide proof of such claims, could negatively effect the sales of our products and/or our costs.

If the FDA's evaluation of the new drug application submission or manufacturing facilities is not favorable, the FDA may refuse to approve the new drug application or issue a not approvable letter. The not approvable letter outlines the deficiencies in the submission and often requires additional testing or information in order for the FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. With limited exceptions, FDA may withhold approval of a new drug application regardless of prior advice it may have provided or commitments it may have made to the sponsor.

Once a new drug application is approved, the product covered thereby becomes a "listed drug" which can, in turn, be cited by potential competitors in support of approval of an abbreviated new drug application. An abbreviated new drug application provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug. There is no requirement, other than the requirement for bioequivalence testing, for an abbreviated new drug application applicant to conduct or submit results of pre-clinical or clinical tests to prove the safety or effectiveness of its drug product. Drugs approved in this way are commonly referred to as "generic equivalents" to the listed drug, are listed as such by the FDA, and can often be substituted by pharmacists under prescriptions written for the original listed drug. Federal law provides for a period of three years of exclusivity following approval of a listed drug that contains previously approved active ingredients but is approved in a new dosage, dosage form, route of administration or combination, or for a new use, the approval of which was required to be supported by new clinical trials conducted by or for the sponsor, during which such three year period FDA cannot grant effective approval of an abbreviated new drug application based on that listed drug. Federal law also provides a period of five years following approval of a drug containing no previously approved active ingredients, during which abbreviated new drug applications for generic versions of those drugs cannot be submitted unless the submission accompanies a challenge to a listed patent, in which case the submission may be made four years following the original product approval. Additionally, in the event that the sponsor of the listed drug has properly informed FDA of patents covering its listed drug, applicants submitting an abbreviated new drug application referencing that drug are required to certify whether they intend to market their generic products prior to expiration of those patents. If an abbreviated new drug application applicant certifies that it believes one or more listed patents are invalid or not infringed, it is required to provide notice of its filing to the new drug application sponsor and the patent holder. If the patent holder then initiates a suit for patent

infringement against the abbreviated new drug application sponsor within 45 days of receipt of the notice, FDA cannot grant effective approval of the abbreviated new drug application until either 30 months has passed or there has been a court decision holding that the patents in question are invalid or not infringed. If the abbreviated new drug application applicant certifies that it does not intend to market its generic product before some or all listed patents on the listed drug expire, then FDA cannot grant effective approval of the abbreviated new drug application until those patents expire. The first abbreviated new drug applicant(s) submitting substantially complete applications certifying that listed patents for a particular product are invalid or not infringed may qualify for a period of 180 days after a court decision of invalidity or non-infringement or after its begins marketing its product, whichever occurs first, during which subsequently submitted abbreviated new drug applications cannot be granted effective approval.

From time to time, including presently, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of drug products. In addition, FDA regulations and guidance are often revised or reinterpreted by the agency in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDA regulations, guidance or interpretations changed, or what the impact of such changes, if any, may be.

FDA Requirements for Medical Devices

Drugs that are incorporated into medical devices, such as drug-coated stents, are potentially subject to regulatory requirements applicable to medical devices as well as those applicable to drugs. For review purposes, applications for approval of drug-coated stents have been assigned by FDA primarily to the FDA Center for Devices and Radiological Health, which consults with the FDA Center for Drug Evaluation and Research on issues relating to the drug component of the product. The FDA has recently established an Office of Combination Products within the office of the FDA Commissioner and has published revised regulations implementing statutory requirements directed at ensuring prompt and consistent regulation of drug/device combination products. However, because of the limited experience with combination product review, the manner in which it may be modified and applied in the future to similar or different types of products is unpredictable. This uncertainty, and the complexity inherent in the testing and review of combination drug/device products, may lead to significant delays and additional costs in the process of developing and seeking approval to market such products.

Medical devices are regulated by the FDA according to their classification. The FDA classifies a medical device into one of three categories based on the device's risk and what is known about the device. The three categories are as follows:

Class I devices are generally lower risk products for which sufficient information exists establishing that general regulatory controls provide reasonable assurance of safety and effectiveness. Most class I devices are exempt from the requirement for premarket notification under section 510(k) of the Federal Food, Drug, and Cosmetic Act. FDA clearance of a premarket notification is necessary prior to marketing a non-exempt class I device in the United States.

Class II devices are devices for which general regulatory controls are insufficient to provide reasonable assurance of safety and effectiveness and for which there is sufficient information to establish special controls, such as guidance documents or performance

standards, to provide a reasonable assurance of safety and effectiveness. Clearance of 510(k) notification is necessary prior to marketing a non-exempt class II device in the United States.

Class III devices are devices for which there is insufficient information demonstrating that general and special controls will provide a reasonable assurance of safety and effectiveness. Typical Class III devices are life-sustaining, life-supporting or implantable devices, or devices posing substantial risk. Unless a device is a preamendments device that is not subject to a regulation requiring a premarket approval application, the FDA generally must approve a premarket approval application prior to the marketing of a class III device in the United States. Under current law and regulations, we expect that drug-coated stents will be treated as Class III devices, to the extent that they are regulated as devices, and that approval of a device premarket approval application will be required to obtain authorization to market such products.

The premarket approval application process is expensive and uncertain and includes the imposition at the time of submission of significant device user fees. A premarket approval application must be supported by valid scientific evidence, which typically includes extensive data, including preclinical data and clinical data from well-controlled or partially controlled clinical trials, to demonstrate the safety and effectiveness of the device. Product and manufacturing and controls specifications and information must also be provided. The FDA may refuse to accept a premarket approval application for filing and often will require additional clinical trial data or other information before approval. Obtaining approval can take several years and approval may be conditioned on, among other things, the conduct of postmarket clinical studies or surveillance. Reduced device user fees also apply to most premarket approval supplements. Any subsequent change to an approved device that affects the safety or effectiveness of the device will require approval of a supplemental premarket approval application. We cannot be sure that approval of a premarket approval application or premarket approval application supplement will be granted on a timely basis, if at all, or that the FDA's approval process will not involve costs and delays that will adversely affect our ability to commercialize our products. In the case of a combination drug/device product such as a drug-coated stent, the need for consultation with drug reviewers and the potential application of drug standards as well as device standards to different aspects of the product, its manufacturing process, and the associated FDA review processes may significantly increase the complexity, costs and potential delays involved in obtaining marketing approval.

Whether or not a product is required to be approved before marketing, we must comply with strict FDA requirements applicable to devices, including quality system requirements pertaining to all aspects of our product design and manufacturing process, such as requirements for packaging, labeling, record keeping, including complaint files, and corrective and preventive action related to product or process deficiencies. The FDA enforces its quality system requirements through periodic inspections of medical device manufacturing facilities. In addition, Medical Device Reports must be submitted to the FDA to report device-related deaths or serious injuries, and malfunctions the recurrence of which would likely cause serious injury or death. Medical device reports can result in agency action such as inspection, recalls, and patient/physician notifications, and are often the basis for agency enforcement actions. Because the reports are publicly available, they can also become the basis for private tort suits, including class actions and unfavorable publicity.

As with drugs, the promotion of medical devices is regulated by the FDA and violations of FDA policies and regulations with respect to promotional activities may result in significant administrative and court sanctions.

Foreign Regulation of New Drug Compounds and Medical Devices

Approval of a product by comparable regulatory authorities may be necessary in foreign countries prior to the commencement of marketing of the product in those countries, whether or not FDA approval has been obtained. The approval procedure varies among countries and can involve requirements for additional testing. The time required may differ from that required for FDA approval. Although there are some procedures for unified filings for some European countries with the sponsorship of the country which first granted marketing approval, in general each country has its own procedures and requirements, many of which are time consuming and expensive. Thus, there can be substantial delays in obtaining required approvals from foreign regulatory authorities after the relevant applications are filed.

In Europe, marketing authorizations may be submitted at a centralized, a decentralized or a national level. The centralized procedure is mandatory for the approval of biotechnology products and provides for the grant of a single marketing authorization which is valid in all European Union member states. As of January 1995, a mutual recognition procedure is available at the request of the applicant for all medicinal products which are not subject to the centralized procedure. We will choose the appropriate route of European regulatory filing to accomplish the most rapid regulatory approvals. However, our chosen regulatory strategy may not secure regulatory approvals on a timely basis or at all.

Hazardous Materials

Our research and development processes involve the controlled use of hazardous materials, chemicals and radioactive materials and produce waste products. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste products. We do not expect the cost of complying with these laws and regulations to be material.

Scientific Advisors

We seek advice from a number of leading scientists and physicians on scientific and medical matters. Our scientific advisory board is chaired by our founder, Joseph Loscalzo, M.D., Ph.D., and meets regularly to assess:

•: our research and development programs;
•: the design and implementation of our clinical programs;
•: our patent and publication strategies;
•: market opportunities from a clinical perspective;
•: new technologies relevant to our research and development programs; and
•: specific scientific and technical issues relevant to our business.

The current members of our scientific advisory board are:

Name		Position/ Institutional Affiliation
Joseph Loscalzo, M.D., Ph.D.		Chairman, Department of Medicine, Boston University School of Medicine; Physician in Chief, Boston Medical Center
Jay N. Cohn, M.D.		Professor of Medicine, Cardiovascular Division, University of Minnesota Medical School
Martin Feelisch, Ph.D.		Professor of Medicine, Boston University School of Medicine
John D. Folts, Ph.D.		Director, Coronary Thrombosis Research and Prevention Laboratory, Department of Medicine, University of Wisconsin-Madison and Professor of Medicine and Nutritional Science, University of Wisconsin School of Medicine
Robert F. Furchgott, Ph.D.		Professor of Pharmacology, Medical University of South Carolina and Nobel Laureate for his work on nitric oxide
Michael A. Marletta, Ph.D.		Professor of Biochemistry and Molecular Biology, University of California, Berkeley
Kevin McIntyre, M.D., J.D.		Associate Clinical Professor of Medicine, Harvard Medical School
Ínigo Saenz de Tejada, M.D.		President, Fundación para la Investigación y el Desarrollo en Andrología, Madrid Spain

Employees

As of July 31, 2003, we had 40 full-time employees, 35 of whom were engaged in research and development and five of whom were engaged in management, administration and finance. Of our employees, 20 hold M.D. or Ph.D. degrees. None of our employees are represented by a labor union or covered by a collective bargaining agreement, nor have we experienced work stoppages. We believe that relations with our employees are good.

Properties

We lease a facility that contains approximately 40,000 square feet of laboratory and office space in Bedford, Massachusetts. The lease has a term ending in May 2004. We are currently engaged in discussions with a third party regarding a lease of new facilities. We expect to enter into a new lease for approximately 50,000 square feet of laboratory and office space in the Boston area prior to the termination of our existing lease. We believe that such space will be available to us on commercially reasonable terms.

Legal Proceedings

We are currently not a party to any material legal proceedings.

MANAGEMENT

Directors and Executive Officers

Our directors and executive officers and their ages and positions as of August 1, 2003, are set forth below:

Name	Age	Title
Argeris Karabelas, Ph.D.	51	Chairman of the Board of Directors
Michael D. Loberg, Ph.D.	56	Chief Executive Officer and Director
Manuel Worcel, M.D.	64	President and Chief Medical Officer
L. Gordon Letts, Ph.D.	55	Senior Vice President, Research and Development and Chief Scientific Officer
Joseph Grimm	52	Senior Vice President, Business Development and Chief Financial Officer, Treasurer and Secretary
Robert S. Cohen	60	Director
Zola Horovitz, Ph.D.	68	Director
Mark Leschly	34	Director
John W. Littlechild	51	Director

Mr. Cohen and Drs. Karabelas and Horovitz are the members of our audit committee. Dr. Karabelas and Messrs. Cohen and Leschly are the members of our compensation committee. Dr. Horovitz and Messrs. Leschly and Littlechild are the members of our nominating and corporate governance committee.

Argeris Karabelas, Ph.D. has served as a member of our board of directors since January 2002 and as our Chairman since August 2003. Since November 2001, he has been a partner in Care Capital LLC, a life sciences investment firm. From June 2000 to November 2001, Dr. Karabelas served as Chairman of Novartis BioVentures Ltd., a private equity firm affiliated with Novartis A.G., a pharmaceutical company. Dr. Karabelas has also served as Chief Executive Officer of Worldwide Pharmaceuticals for Novartis AG from January 1998 to July 2000. He is a member of the Scientific Advisory Council of Massachusetts General Hospital and the Visiting Committee for Health Sciences and Technology at Massachusetts Institute of Technology. In addition, Dr. Karabelas serves as a director of Halsey Drug Co., Inc., Human Genome Sciences, Inc. and SkyePharma plc. Dr. Karabelas holds a Ph.D. in pharmacokinetics from the Massachusetts College of Pharmacy.

Michael D. Loberg, Ph.D. has served as a member of our board of directors and as our Chief Executive Officer since September 1997. From 1996 to January 1997, Dr. Loberg served as President of Bristol-Myers Squibb Company's Oncology and Immunology division, a pharmaceuticals company. From 1994 to 1996, Dr. Loberg served as President of Bristol-Myers Squibb Company's U.S. Primary Care division. Dr. Loberg also serves as a director of Advanced Magnetics, Inc. Dr. Loberg holds a B.S. in chemistry from Trinity College and a Ph.D. in chemistry from Washington University.

Manuel Worcel, M.D. has served as our President since September 1993 and became our Chief Medical Officer in 1997. From 1993 to 1997, Dr. Worcel also served as our Chief Executive Officer and as a director. From 1989 to 1993, Dr. Worcel served as Head of Cardiovascular Research and Development of Ciba Geigy Corp., a pharmaceutical company. Dr. Worcel has served as a professor at the Institut de la Sante et de la Recheherche Medicale in France and is currently a Fellow of the Hypertension Council of the American Heart Association. Dr. Worcel holds a M.D. from the University of Buenos Aires.

L. Gordon Letts, Ph.D. has served as our Senior Vice President, Research and Development and as our Chief Scientific Officer since May 1997. From December 1993 to May 1997, Dr. Letts served as our Vice President, Research. From 1987 to 1993, he served as Director of Pharmacology for Boehringer Ingelheim Pharmaceuticals, a United States subsidiary of a German pharmaceuticals company. Dr. Letts currently serves as a Vice President of the International Association of Inflammation Societies and serves on the scientific advisory board of IPS Pharma, Inc., a privately-held biopharmaceutical company. Dr. Letts holds a Ph.D. in pharmacology from Sydney University.

Joseph Grimm has served as our Senior Vice President, Business Development, and as our Chief Financial Officer since April 1999. From October 1997 to January 1999, he served as Chief Financial Officer of Alpha-Beta Technology, Inc., a biopharmaceutical company, and from May 1986 to April 1997, he served as Vice President Finance and Treasurer of Genetics Institute, Inc., a biopharmaceutical company. Mr. Grimm holds a B.A. from the University of Wisconsin and a M.B.A. from the University of Minnesota.

Robert S. Cohen has served as a member of our board of directors since July 1997. Mr. Cohen has seved as a consultant to pharmaceutical and biotechnology companies for the past two years. From October 1999 to May 2001, Mr. Cohen served as Chief Executive Officer of Memory Pharmaceuticals Corp., a pharmaceutical company. From March 1997 to June 1999, Mr. Cohen served as President and Chief Executive Officer of Shire Laboratories Inc., a drug delivery company. Mr. Cohen also served first as Chief Operating Officer and then Chief Executive Officer of Pharmavene Inc. which subsequently merged with Shire Pharmaceutical Group, plc. Mr. Cohen holds a B.S. and an M.S. degree from Brooklyn College of Pharmacy of Long Island University and attended the Harvard Business School Advanced Management Program.

Zola P. Horovitz, Ph.D. has served as a member of our board of directors since September 1997. Dr. Horovitz has served as a consultant to the pharmaceutical and biotechnology industries since 1994. Prior to his retirement in 1994, Dr. Horovitz served as Vice President, Business Development and Planning for Bristol-Myers Squibb Company. He also serves as a Director of Avigen, Inc., BioCryst Pharmaceuticals, Inc., Diacrin, Inc., DOV Pharmaceutical, Inc., Genaera Corporation, Paligent Inc. and Palatin Technologies, Inc. Dr. Horovitz holds a Ph.D. in pharmacology from the University of Pittsburgh.

Mark Leschly has served as a member of our board of directors since September 1996. Since July 1999, Mr. Leschly has been a Managing Partner with Rho Capital Partners, an investment and venture capital management company. Starting in July 1994 to July 1999, Mr. Leschly was an associate and then a General Partner of HealthCare Ventures, L.L.C., a venture capital management company. From September 1991 to June 1993, Mr. Leschly served as a consultant for McKinsey & Co., a management consulting company. In addition to being a director of Diversa Corporation, a biotechnology company, Mr. Leschly is a director of a number of private companies. Mr. Leschly holds a B.A. degree from Harvard University and an M.B.A. from the Stanford Graduate School of Business.

John W. Littlechild has served as a member of our board of directors since June 1999. Mr. Littlechild previously served as our President from inception to May 1993 and as a director from May 1992 to December 1997. Since January 1991, he has served as General Partner of HealthCare Ventures, L.L.C., a venture capital management company. He currently serves on the Executive Committee of the Board of Fellows for Harvard Medical School as well as on the Science and Technology Committee and as Chairman of the Microbiology Department Advisory Board. Mr. Littlechild also serves as a director of Diacrin, Inc., Dyax Corp. and

Orthofix International NV. Mr. Littlechild holds a B.Sc. from the University of Manchester in England and an M.B.A. from Manchester Business School.

Board of Directors

The board of directors is fixed at seven members and we currently have one vacancy on the board. The terms of service of each director will expire upon the election and qualification of successor directors at our annual meeting of stockholders. Our amended and restated by-laws provide that the authorized number of directors may be changed only by resolution of the board of directors or by the stockholders.

Each executive officer is elected by, and serves at the discretion of, the board of directors. Each of our executive officers and directors, other than non-employee directors, devotes his or her full time to the affairs of the company. Each of our directors currently serves on the board of directors pursuant to a stockholders' agreement. The provisions of the stockholders' agreement relating to the nomination of directors will terminate upon the closing of this offering. There are no family relationships among any of our directors or officers.

Board Committees

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The members of each committee are appointed by the board of directors and serve one-year terms.

Audit Committee

We have an audit committee consisting of Mr. Cohen and Drs. Karabelas and Horovitz. The audit committee assists our board of directors in its oversight of:

•: the integrity of our financial statements;
•: the independent auditor's qualifications and independence; and
•: the performance of our independent auditors.

The audit committee has direct responsibility for the appointment, compensation, retention and oversight of the work of our independent auditors, Ernst & Young LLP. In addition, the audit committee must approve any related-party transaction entered into by us. We believe that each member of the audit committee satisfies the requirements for membership established by the NASDAQ National Market and the SEC.

Compensation Committee

We have a compensation committee consisting of Dr. Karabelas and Messrs. Cohen and Leschly. The compensation committee reviews, and makes recommendations to the board of directors regarding, the compensation and benefits of our executive officers and key managers. The compensation committee also administers the issuance of stock options and other awards under our stock plans and establishes and reviews policies relating to the compensation and benefits of our employees and consultants.

Nominating and Corporate Governance Committee

We have a nominating and corporate governance committee consisting of Dr. Horovitz and Messrs. Leschly and Littlechild. The purpose of the nominating and corporate governance committee is to:

•: identify and nominate members of the board of directors;
•: develop and recommend to the board of directors a set of corporate governance principles applicable to the Company; and
•: oversee the evaluation of the board of directors and management.

Procedures for the consideration of director nominees recommended by stockholders are set forth in our amended and restated by-laws which will be effective upon completion of this offering.

Compensation of Directors

Effective August 2003, we compensate our directors for service on the board of directors in the amount of $4,000 per quarter. In addition, members of the audit committee will receive $2,000 per committee meeting and members of the compensation committee and nominating and corporate governance committee will receive $1,000 per committee meeting. The chair of the audit committee will receive an additional $2,000 per year and the chair of the compensation committee and nominating and governance committee will each receive an additional $1,000 per year. Directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its committees.

Directors are also eligible to participate in our amended and restated 2003 stock incentive plan. In August 2003, the board of directors adopted a program under which each non-employee director is eligible to receive an option to purchase 20,000 shares of our common stock upon his appointment to the board and also is eligible to receive an annual grant of an option to purchase 10,000 shares of our common stock at each year's annual meeting at which he serves as a director. All options granted under our director option program vest in four equal annual installments beginning on the first anniversary of the grant date. Each option terminates on the earlier of ten years from the date of grant or 90 days after the optionee ceases to serve as a director, except in the case of death or disability, in which event the option terminates three months from the date of the director's death or disability. Mr. Loberg's options terminate one year from his death or disability. The exercise price of these options equals the fair market value of our common stock on the date of grant.

In accordance with our director stock option program in effect prior to August 2003, in 2002 we granted the following stock options to our non-employee directors:

Name of Director		Number of Shares
Robert S. Cohen		5,000
Argeris Karabelas		17,500
Zola Horovitz		5,000
Mark Leschly		5,000
John W. Littlechild		5,000

Compensation Committee Interlocks and Insider Participation

None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, or of any other

entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee. None of the current members of our compensation committee has ever been our employee.

Executive Compensation

The table below sets forth the total compensation paid or accrued for the fiscal year ended December 31, 2002 for our chief executive officer and each of our four most highly compensated other executive officers who were serving as executive officers on December 31, 2002 and whose total annual compensation exceeded $100,000 for the year ended December 31, 2002. We refer to these officers as our named executive officers.

Summary Compensation Table

	Annual Compensation							Long-Term Compensation Awards
Name and Principal Position	Salary		Bonus		Other Annual Compensation			Securities Underlying Options (#)	All Other Compensation
Michael D. Loberg, Ph.D. Chief Executive Officer	$	304,560	$	90,577	$	293,208(1	)	—	$	1,032	(2)
Manuel Worcel, M.D. President and Chief Medical Officer		246,774		52,439		—		—		1,558	(2)
L. Gordon Letts, Ph.D. Senior Vice President, Research and Development and Chief Scientific Officer		227,689		46,750		35,843(3	)	65,000		490	(2)
Joseph Grimm Senior Vice President, Business Development, Chief Financial Officer, Treasurer, and Secretary		205,947		38,512		—		—		430	(2)

(1): Amount represents loan forgiveness, in September 2002, of principal and accrued interest, including a gross up on taxable amounts resulting from the forgiveness of interest.
(2): Amount represents the payment of premiums on group term life insurance.
(3): Amount represents loan forgiveness, ending in January 2002, of principal and accrued interest, including a gross up on taxable amounts resulting from the forgiveness of both principal and interest.

Option Grants in Last Fiscal Year

The following table sets forth each grant of stock options during the fiscal year ended December 31, 2002 to each of the named executive officers. The potential realizable value set forth in the last column of the table is calculated based on the term of the option at the time of grant, which is ten years. This value is based on assumed rates of stock price appreciation of 5% and 10% compounded annually from the date of grant until their expiration date, assuming a fair market value equal to an assumed initial public offering price of $ , minus the applicable exercise price. These numbers are calculated based on the requirements of the SEC and do not reflect our estimate of future stock price growth. Actual gains, if any, on stock

option exercises will depend on the future performance of the common stock and the date on which the options are exercised.

Option Grants in Last Fiscal Year

							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
		Percent of Total Options Granted to Employees in Fiscal Year
	Number of Securities Underlying Options Granted
Name				Exercise Price		Expiration Date
Name				Exercise Price		Expiration Date	5%	10%
Michael D. Loberg, Ph.D.	—	—			—	—	—	—
Manuel Worcel, M.D.	—	—			—	—	—	—
L. Gordon Letts, Ph.D. (1)	65,000	26	%	$	2.00	3/12/2012	—	—
Joseph Grimm	—	—			—	—	—	—

(1): This option vests and becomes exercisable in four equal annual installments beginning on December 12, 2003. The exercise price per share was determined to be equal to the fair market value per share of our common stock as valued by our board of directors on the date of grant.

Option Exercises and Fiscal Year-End Option Values

The following table sets forth information for each of the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options, as well as the value of unexercisable in-the-money options, as of December 31, 2002. There was no public trading market for our common stock as of December 31, 2002. Accordingly, the value of the unexercised in-the-money options at fiscal year end has been calculated by determining the difference between the exercise price per share and the fair market value of our common stock at fiscal year end, $2.00, as determined by our board of directors.

Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year-End Option Values

			Securities Underlying Unexercised Options at December 31, 2002		Value of Unexercised In-The-Money Options at December 31, 2002
Name	Shares Acquired on Exercise	Value Realized
Name	Shares Acquired on Exercise	Value Realized	Exercisable	Unexercisable	Exercisable		Unexercisable
Michael D. Loberg, Ph.D.	—	—	190,235	64,765	$	216,335	$	13,836
Manuel Worcel, M.D.	—	—	335,886	33,858		395,207		7,951
L. Gordon Letts, Ph.D.	—	—	264,791	98,859		301,006		7,951
Joseph Grimm	—	—	83,297	48,003		97,433		34,977

Employment Letters

We have entered into employment letters with each of our executive officers: Dr. Loberg; Dr. Worcel; Dr. Letts and Mr. Grimm. Each of these agreements provide for severance payments in the event of a termination by us without cause up to an amount equal to six months of such executive officer's base salary. In addition, these agreements include the following terms:

•: Dr. Worcel's agreement provides that in the event of a sale of our company prior to July 1 of any calendar year, Dr. Worcel will receive 50% of his scheduled bonus for such year, and if such sale occurs anytime after July 1 of any calendar year, he will be entitled to 100% of his scheduled bonus for such year.
•: Mr. Grimm's agreement provides that if he is terminated without cause within one year following a change in control of NitroMed, all options held by Mr. Grimm will vest and become immediately exercisable, shares of restricted stock held by him, if any, will become free of restrictions of repurchase, and he will be entitled to a severance payment equal to one year's base salary. For this purpose, termination without cause will include a constructive termination defined to include a reduction in his responsibilities, compensation and/or benefits or a relocation of greater than a 50 mile radius from our executive office at the time of termination.

Each executive officer has signed our standard form of invention and non-disclosure agreement, providing for protection of our confidential information and ownership of intellectual property developed by such executive officer and our standard form of non-competition and non-solicitation agreement, providing for a one year non-compete and one year non-solicitation agreement.

Employee Benefit Plans

Restated 1993 Equity Incentive Plan and Amended and Restated 2003 Stock Incentive Plan

Our restated 1993 equity incentive plan, or 1993 plan, was initially adopted by our board of directors and stockholders effective on December 2, 1993. As of August 1, 2003, 2,288,200 shares of common stock were authorized for issuance under the 1993 plan, of which 2,155,201 shares were subject to outstanding options at a weighted average exercise price of $1.20 per share, and 6,175 shares were available for future grant.

Our amended and restated 2003 stock incentive plan, or 2003 plan, was initially adopted by our board of directors on March 25, 2003 and approved by our stockholders effective as of May 12, 2003. As of August 1, 2003, 800,000 shares of common stock were authorized for issuance under the 2003 plan, of which 412,000 shares were subject to outstanding options at a weighted average exercise price of $2.00 per share, no shares were outstanding as restricted stock and 388,000 shares were available for future grant. On August 18, 2003, our board of directors approved, subject to stockholder approval, an increase in the number of shares of common stock reserved for issuance under our 2003 plan to 2,500,000 shares.

Both plans provide for the grant of options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code, non-statutory stock options, restricted stock awards, and in the case of the 2003 plan, other stock based awards as our board of directors may determine.

Our employees, officers, directors, consultants and advisors are eligible to receive awards under the plans. Under present law, however, incentive stock options may only be granted to

employees. Under the 2003 plan, no participant may receive any award for more than 500,000 shares in any calendar year.

Optionees receive the right to purchase a specified number of shares of common stock at a specified option price and subject to any other terms and conditions specified in connection with the option grant. We may grant options at an exercise price equal to or greater than the fair market value of our common stock on the date of grant. Under present law, incentive stock options and options intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code may not be granted to optionees holding more than 10% of the voting power of all shares of our capital stock at an exercise price less than 110% of the fair market value of our common stock on the date of grant. The plan permits our board of directors to determine how optionees may pay the exercise price of their options, including through payment by cash, check, surrender to us of shares of common stock owned for at least six months, by delivery to us of a promissory note, or by any combination of the permitted forms of payment. In addition, under the 2003 plan, options may be exercised by delivery to us of an irrevocable undertaking of a creditworthy broker to promptly deliver the exercise price to us.

The compensation committee of our board of directors administers the plans. The compensation committee has the authority to grant awards, including awards to executive officers, and to adopt, amend and repeal the administrative rules, guidelines and practices relating to the plans and to interpret the provisions of the plans. In addition, our board of directors may delegate authority under the 2003 plan to one or more of our executive officers. Subject to any applicable limitations contained in the plans, our compensation committee, or if applicable, one or more executive officers to whom authority has been granted under the 2003 plan, selects the recipients of awards and determines:

•: the number of shares of common stock covered by options and the dates upon which such options become exercisable;
•: the exercise price of options;
•: the duration of options;
•: the conditions and limitations applicable to the exercise of each option; and
•: the number of shares of common stock subject to any restricted stock award or, in the case of the 2003 plan, other stock-based awards, and the terms and conditions of such awards.

Under the terms of the 2003 plan, the compensation committee may amend outstanding options granted under the plan to provide an option exercise price per share which may be lower or higher than the original option exercise price, and/or cancel any such options and grant in substitution therefor new options covering the same or different numbers of shares of common stock having an option exercise price per share which may be lower or higher than the exercise price of the canceled options.

No incentive stock options may be granted under the 1993 plan after December 2, 2003, but the vesting and effectiveness of incentive stock options previously granted may extend beyond that date. The 1993 plan will terminate with respect to non-statutory stock options and restricted stock awards on the date on which all shares available for issuance under the plans have been issued pursuant to the exercise or cancellation of options or the final vesting of restricted stock awards granted under the plan. No awards may be granted under the 2003 plan after March 25, 2013, but the vesting and effectiveness of options, restricted stock and other stock-based awards previously granted may extend beyond that date.

Our compensation committee may at any time modify or amend the plans, except that:

•: under the 1993 plan, if the approval of our stockholders is required for any such modification or amendment under Section 422 of the Internal Revenue Code with respect to incentive stock options or under Rule 16b-3 under the Securities Exchange Act of 1934, such modification or amendment will not become effective until the modification or amendment is approved by our stockholders; and
•: under the 2003 plan, no award granted under the 2003 plan intended to comply with Section 162(m) shall, after the date of such amendment, become exercisable, realizable or vested, as applicable to such award, unless such amendment is approved by our stockholders as required by Section 162(m).

Both the 2003 plan and 1993 plan provide that in the event of a merger or other acquisition event, the compensation committee is authorized, in its discretion, to take one or more of the following actions:

•: provide for outstanding options to be assumed or substituted for by the acquiring or succeeding entity;
•: provide that all unexercised options will terminate immediately prior to the consummation of such transaction unless previously exercised;
•: in the event of a transaction where the holders of common stock receive a cash payment for their shares, provide for per share cash payment to the optionees equal the cash per share received by the holders of common stock less the exercise price per share of such option; or
•: provide that, immediately prior to such transaction, all unexercised options will become exercisable in full.

Under the 1993 plan, the compensation committee may further provide that any restrictions on outstanding options and/or restricted stock shall terminate, including any right of repurchase in favor of us upon the occurrence of such a transaction. Our rights under the terms of outstanding restricted stock granted under the 2003 plan will inure to the benefit of the surviving or succeeding entity and will continue to apply to any cash or other property into which shares were convertible as a result of such transaction.

2003 Employee Stock Purchase Plan

Our 2003 employee stock purchase plan, or 2003 ESPP, was adopted by our board of directors on August 18, 2003 and approved by our stockholders effective as of . The 2003 ESPP will become effective upon completion of this offering and authorizes the issuance of up to a total of 75,000 shares of our common stock to participating employees.

All of our employees, including our directors who are employees, who meet the following criteria are eligible to participate in the purchase plan if:

•: such person is employed for more than 20 hours per week and for more than five months in a calendar year;
•: such person is employed for at least six months prior to enrolling in the 2003 ESPP; and
•: such person is employed on the first day of the applicable offering period under the 2003 ESPP.

Employees who would immediately after the grant own 5% or more of the total combined voting power or value of our stock are not eligible to participate in the purchase plan.

We will make one or more offerings to our employees to purchase stock under the 2003 ESPP. Offerings will begin on dates established by our board of directors, provided that our first offering commencement date will follow shortly after the date on which trading of our common stock commences on the NASDAQ National Market in connection with this offering. Each offering commencement date will begin a six-month period during which payroll deductions will be made and held for the purchase of our common stock at the end of the purchase plan period.

On the first day of a designated payroll deduction period, or offering period, we will grant to each eligible employee who has elected to participate in the purchase plan an option to purchase shares of our common stock. The employee may authorize up to a maximum of 10% of his or her base pay to be deducted by us during the offering period. On the last day of the offering period, the employee is deemed to have exercised the option, at the option exercise price, to the extent of accumulated payroll deductions. Under the terms of the purchase plan, the option exercise price is an amount equal to 85% of the closing price, as defined in the purchase plan, per share of our common stock on either the first day or the last day of the offering period, whichever is lower. In no event may an employee purchase in any one offering period a number of shares which exceeds the number of shares determined by dividing (a) the product of $2,083 and the number of full months in the offering period by (b) the closing price of a share of our common stock on the commencement date of the offering period. Our board of directors may, in its discretion, choose an offering period of 12 months or less for each offering and may choose a different offering period for each offering.

An employee who is not a participant on the last day of the offering period is not entitled to exercise any option, and the employee's accumulated payroll deductions will be refunded. An employee's rights under the purchase plan terminate upon voluntary withdrawal from the purchase plan at any time, or when the employee ceases employment for any reason, except that upon termination of employment because of death, the employee's beneficiary has certain rights to elect to exercise the option to purchase the shares that the accumulated payroll deductions in the employee's account would purchase at the date of death.

Because the participation in the purchase plan is voluntary, we cannot now determine the number of shares of our common stock to be purchased by any particular current executive officer, by all current executive officers as a group or by non-executive employees as a group.

401(k) Plan

Our employee savings and retirement plan is qualified under Section 401 of the Internal Revenue Code. Our employees may elect to reduce their current compensation by up to the statutorily prescribed annual limit and have the amount of such reduction contributed to the 401(k) plan. We may make matching or additional contributions to the 401(k) plan in amounts to be determined annually by our board of directors.

RELATED PARTY TRANSACTIONS

Since January 1, 2000, we have engaged in the following transactions with our directors, officers and holders of more than five percent of our voting securities and their affiliates.

Issuance of Series E Redeemable Convertible Preferred Stock

In May 2001, June 2001 and August 2003, we sold an aggregate of 7,067,890 shares of our series E redeemable convertible preferred stock at a price per share of $7.2037 for an aggregate purchase price of approximately $51.0 million. All shares of our series E redeemable convertible preferred stock will be automatically converted into 7,067,890 shares of our common stock upon completion of this offering. Of these shares, an aggregate of 6,803,886 shares were sold to the following directors, officers and five percent stockholders and their affiliates:

Name		Series E Convertible Preferred Stock	Purchase Price
Funds managed by Rho Capital Partners, Inc. (1)		3,053,981	$	21,999,963
Funds managed by HealthCare Ventures, L.L.C. (2)		1,943,444		13,999,988
Funds managed by Care Capital LLC (3)		1,667,644		12,013,207
Johnson & Johnson Development Corporation		138,817		999,996

	Total:	6,803,886	$	49,013,154

(1): Consists of 1,438,844 shares held by Rho Management Trust II; 278,102 shares held by Rho Ventures IV, L.P.; 654,721 shares held by Rho Ventures IV (QP), L.P.; and 682,314 shares held by Rho Ventures IV GmbH & Co. Beteiligungs KG. Mark Leschly, a director of NitroMed, is a Managing Member of the general partner of Rho ventures IV, L.P. and Rho Ventures IV (QP), L.P., a Managing Director of the general partner of Rho Ventures IV GmbH & Co. Beteiligungs KG and a Managing Partner of the investment advisor to Rho Management Trust II.
(2): Consists of 347,043 shares held by HealthCare Ventures V, L.P. and 1,596,401 shares held by HealthCare Ventures VI, LP. John W. Littlechild, a director of NitroMed, is a general partner of HealthCare Ventures, L.L.C., the general partner of each of the funds managed by HealthCare Partners V, L.P., the general partner of HealthCare Ventures V, L.P., and HealthCare Partners VI, L.P., the general partner of HealthCare Ventures VI, L.P.
(3): Consists of 575,929 shares held by CC/M NitroMed Holdings, L.P.; 224,557 shares held by CC NitroMed Holdings, L.P.; 494,837 shares held by CC/Q Partners, L.P.; and 372,321 shares held by Care Capital Investments II, L.P. Argeris Karabelas, a director of NitroMed, is a partner of Care Capital LLC, the general partner of each of the funds managed by Care Capital LLC.

Loans to Executive Officers

Since January 1, 2000, NitroMed has had outstanding two loans to its executive officers, as described below, neither of which remains outstanding.

In 1994, we loaned $150,000 to Dr. Letts to finance his relocation to Massachusetts at an interest rate equal to the interest rate on Dr. Letts' primary residence purchased as a result of such relocation. The loan was secured by a second mortgage on Dr. Letts' principal residence. The outstanding principal and interest on this loan was forgiven over a five year period beginning on January 1, 1997 and ending on January 1, 2002. In December 1997, we loaned $252,000 to Dr. Loberg, which was used by Dr. Loberg to purchase 350,000 shares of our restricted common stock, at an interest rate of 6.02% per year. This loan was secured by the restricted common stock. This loan was forgiven in September 2002 and Dr. Loberg's restricted common stock is fully vested and no longer subject to repurchase by us.

Registration Rights

The holders of 17,893,327 shares of our common stock, including warrants to purchase 275,096 shares of common stock, are entitled to require us to register their shares or participate in a registration of shares by us under the Securities Act. These rights are provided under the terms of stockholders' agreements between us and these holders. These holders include the following directors, officers and holders of more than five percent of our voting securities and their affiliates:

Name of Holder		Number of Registrable Shares
Funds managed by HealthCare Ventures, L.L.C. (1)		5,880,703
Funds managed by Rho Capital Partners, Inc. (2)		4,527,791
Funds managed by Care Capital LLC (3)		1,667,644
Johnson & Johnson Development Corporation		1,305,612
Atlas Venture Fund II, LP		1,032,242
Michael D. Loberg		286,608
Joseph Grimm		34,383
Manuel Worcel		23,289

	Total:	14,758,272

(1): John W. Littlechild, a director of NitroMed, is a general partner of HealthCare Partners III, L.P., the general partner of HealthCare Ventures III, L.P., HealthCare Partners IV, L.P., the general partner of HealthCare Ventures IV, L.P., HealthCare Partners V, L.P., the general partner of HealthCare Ventures V, L.P., and HealthCare Partners VI, L.P., the general partner of HealthCare Ventures VI, L.P.
(2): Mark Leschly, a director of NitroMed, is a Managing Member of the general partner of Rho Ventures IV, L.P. and Rho Ventures IV (QP), L.P., a Managing Director of the general partner of Rho Ventures IV GmbH & Co. Beteiligungs KG and a Managing Partner of the investment advisor to Rho Management Trust II.
(3): Argeris Karabelas, a director of NitroMed, is a partner of Care Capital LLC, the general partner of each of the funds managed by Care Capital LLC.

For a more detailed description of these registration rights, see "Description of Capital Stock—Registration Rights" on page 72 of this prospectus.

Other Agreements with Five Percent Stockholders

In April 1997, we entered into a research and license agreement with Ortho Pharmaceutical Corporation and the R.W. Johnson Pharmaceutical Research Institute, each of which is an affiliate of Johnson & Johnson. Pursuant to the agreement, we exclusively licensed to Ortho and the Research Institute, our nitric oxide technology for research and development of products in the area of nitric oxide-enhancing COX-2 inhibitors, including but not limited to NSAIDs, to treat pain and inflammation. Ortho and the Research Institute agreed to fund our research and development activities in these areas for a period of two years, subjected to extension on an annual basis for three additional years. Under the terms of this agreement, the Johnson & Johnson Development Corporation made an equity investment of $1.5 million to purchase 1.5 million shares of our series B redeemable convertible preferred stock. In addition, Ortho and the Research Institute paid us an aggregate of $9.8 million in up-front license fees, milestone payments and research funding during the term of the agreement. The agreement was terminated in April 2000.

In April 1997, we entered into a collaboration and license agreement with Cordis Corporation, an affiliate of Johnson & Johnson. Pursuant to the agreement, we exclusively licensed to Cordis our nitric oxide technology for research and development of products in the

area of stents coated with nitric oxide-releasing compounds in acute and chronic cardiovascular interventional therapy. Cordis agreed to fund our research and development activities relating to the development of a nitric oxide-coated stent for restenosis and also agreed to fund our research and development expenses in other projects accepted by them in the areas covered by the agreement. Under the terms of the agreement, the Johnson & Johnson Development Corporation made an equity investment of $1.5 million to purchase 1.5 million shares of our series B redeemable convertible preferred stock. In addition, Cordis paid us an aggregate of $6.1 million in up front license fees, milestone payments, research funding and other research-related cost during the term of the agreement. The agreement was terminated in September 2001.

Employment Letters

We have entered into employment letters with Drs. Loberg, Worcel and Letts and Mr. Grimm. For a detailed description of these employment letters, see "Management—Employment Letters" on page 61 of this prospectus.

Other Considerations

We have adopted a policy providing that all material transactions between us and our officers, directors and other affiliates must be:

•: approved by a majority of the members of our board of directors and by a majority of the disinterested members of our board of directors; and
•: on terms no less favorable to us than those which we believe could be obtained from unaffiliated third parties.

We believe that the arrangements described above are on terms which are no less favorable to us than terms that could have been obtained from unaffiliated third parties.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding beneficial ownership of our common stock as of August 1, 2003 by:

•: each person, or group of affiliated persons known to us to be the beneficial owner of more than 5% of the outstanding shares of our common stock;
•: each of our directors and the named executive officers; and
•: all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and includes voting or investment power with respect to shares. Shares of common stock issuable under stock options that are exercisable within 60 days after August 1, 2003 or issuable pursuant to outstanding warrants that may be exercised upon completion of this offering are deemed outstanding for computing the percentage ownership of the person holding the options or warrants but are not deemed outstanding for computing the percentage ownership of any other person.

Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws. As of August 1, 2003, there were 17,791,014 shares of common stock issued and outstanding, which reflects the conversion, upon the closing of this offering, of all outstanding shares of our redeemable convertible preferred stock. The number of shares of common stock deemed outstanding after

this offering includes the shares of common stock being offered for sale in this offering but assumes no exercise of the underwriters' over-allotment option.

		Number of Shares of Common Stock Beneficially Owned Prior to Offering
					Percentage Owned
			Common Stock Underlying Options	Common Stock Underlying Warrants	Percentage Owned
Name and Address of Beneficial Owner (1)		Common Stock	Common Stock Underlying Options	Common Stock Underlying Warrants	Before the Offering		After the Offering
5% Stockholders
Funds managed by HealthCare Ventures, L.L.C. (2) 44 Nassau Street, Second Floor Princeton, NJ 08837		5,880,703	—	—	33.1	%
Funds managed by Rho Capital Partners, Inc. (3) 152 West 57^th Street, 23^rd Floor New York, NY 10019		4,503,631	—	24,160	25.4	%
Funds Managed by Care Capital LLC (4) Princeton Overlook One 100 Overlook Center Princeton, NJ 08540		1,667,644	—	—	9.4	%
Johnson & Johnson Development Corporation One Johnson & Johnson Plaza New Brunswick, NJ 08933		1,305,612	—	—	7.3	%
Atlas Venture Fund II, LP 890 Winter Street, Suite 320 Waltham, MA 02451		922,869	—	109,373	5.8	%
Directors and Named Executive Officers
Michael D. Loberg, Ph.D. (5)		359,384	212,940	—	3.2	%
Manuel Worcel, M.D.		23,289	347,814	—	2.0	%
L. Gordon Letts, Ph.D.		—	363,650	—	2.0	%
Joseph Grimm		34,383	115,965	—	*
Robert S. Cohen		—	21,250	—	*
Argeris Karabelas, Ph.D. (6)		1,667,644	3,125	—	9.4	%
Zola Horovitz, Ph.D.		—	21,250	—	*
Mark Leschly (7)		4,503,631	16,250	24,160	25.5	%
John W. Littlechild (8)		5,880,703	7,500	—	33.1	%
All current executive officers and
	directors as a group (9 persons)	12,469,034	1,109,744	24,160	71.9	%

*: Represents beneficial ownership of less than one percent of common stock.
(1): Unless otherwise indicated, the address of each shareholder is NitroMed, Inc., 12 Oak Park Drive, Bedford, MA 01730.
(2): Consists of 2,407,472 shares held by HealthCare Ventures III, L.P.; 707,033 shares held by HealthCare Ventures IV, L.P.; 1,169,797 shares held by HealthCare Ventures V, L.P.; and 1,596,401 shares held by HealthCare Ventures VI, L.P. Mr. Littlechild, a director of NitroMed, is a general partner of HealthCare Partners III, L.P., the general partner of HealthCare Ventures, III, L.P., HealthCare Partners IV, L.P., the general parnter of HealthCare Ventures IV, L.P., HealthCare Partners V, L.P., the general partner of HealthCare Ventures V, L.P. and HealthCare Partners VI, L.P., the

general partner of HealthCare Ventures VI, L.P. Mr. Littlechild disclaims beneficial ownership of the shares held by each of the funds managed by HealthCare Ventures, L.L.C., except to the extent of his pecuniary interest therein.

(3): Consists of 2,912,654 shares and warrants held by Rho Management Trust II; 278,102 shares held by Rho Ventures IV L.P., 654,721 shares held by Rho Ventures IV (QP) L.P. and 682,314 shares held by Rho Ventures IV GmbH & Co., Beteiligungs KG. Mark Leschly, a director of NitroMed, is a Managing Member of the general partner of Rho Ventures IV, L.P. and Rho Ventures IV (QP), L.P., a Managing Director of the general partner of Rho Ventures IV GmbH & Co. Beteiligungs KG and a Managing Partner of the investment advisor to Rho Management Trust II. Mr. Leschly disclaims beneficial ownership of the shares held by each of the funds managed by Rho Capital Partners, Inc. except to the extent of his pecuniary interest therein.
(4): Consists of 494,837 shares held by CC/Q Partners, L.P.; 575,929 shares held by CC/M NitroMed Holdings, L.P.; 224,557 shares held by CC NitroMed Holdings, L.P.; and 372,321 shares held by Care Capital Investments II, L.P. Argeris Karabelas, a director of NitroMed, is a partner of Care Capital LLC, the general partner of each of the funds managed by Care Capital LLC.
(5): Includes 72,776 shares held in trust for the benefit of Dr. Loberg's children of which Dr. Loberg disclaims beneficial interest.
(6): Includes 1,667,644 shares held by Funds Managed by Care Capital LLC. (See Note 4 above).
(7): Includes 4,503,631 shares held by funds managed by Rho Capital Partners, Inc. and 24,160 warrants held by Rho Management Trust II. Mark Leschly, a director of NitroMed, is a Managing Member of the general partner of Rho Ventures IV, L.P. and Rho Ventures IV (QP), L.P., a Managing Director of the general partner of Rho Ventures IV GmbH & Co. Beteiligungs KG and a Managing Partner of the investment advisor to Rho Management Trust II. Mr. Leschly disclaims beneficial ownership of the shares held by each of the funds managed by Rho Capital Partners, Inc. except to the extent of his pecuniary interest therein.
(8): Includes 5,880,703 shares held by funds managed by HealthCare Ventures, L.L.C. Mr. Littlechild, a director of NitroMed, is a general partner of HealthCare Partners III, L.P., the general partner of HealthCare Ventures III, L.P., HealthCare Partners IV, L.P., the general partner of HealthCare Ventures IV, L.P., HealthCare Partners V, L.P., the general partner of HealthCare Ventures V, L.P. and HealthCare Partners VI, L.P., the general partner of HealthCare Ventures VI, L.P. Mr. Littlechild disclaims beneficial ownership of the shares held by each of the funds managed by HealthCare Ventures, L.L.C., except to the extent of his pecuniary interest therein.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock and provisions of our restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference to the restated certificate of incorporation and the amended and restated bylaws that will become effective upon closing of this offering. Copies of these documents will be filed with the SEC as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering.

Upon the completion of this offering, our authorized capital stock will consist of 65,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share, all of which shares of preferred stock will be undesignated. The rights and preferences of the preferred stock may be established from time to time by our board of directors. As of August 1, 2003, after giving effect to the conversion of all outstanding shares of preferred stock into shares of common stock, there were 17,791,014 shares of common stock issued and outstanding. As of August 1, 2003, there were 63 stockholders of record of our capital stock.

Common Stock

Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our board of directors, subject to any preferential dividend rights of outstanding preferred stock. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive proportionately our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. Our outstanding shares of common stock are, and the shares offered by us in this offering will be, when issued and paid for, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.

Preferred Stock

Under the terms of our restated certificate of incorporation, our board of directors is authorized to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock.

The purpose of authorizing our board of directors to issue preferred stock and determine its right and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible future acquisitions and other corporate purposes, will affect, and may adversely affect, the rights of holders of any preferred stock that may be issued in the future. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until the board of directors determines the specific rights

attached to that preferred stock. The effects of issuing preferred stock could include one or more of the following:

•: restricting dividends on the common stock;
•: diluting the voting power of the common stock;
•: impairing the liquidation rights of the common stock; or
•: delaying or preventing changes in control or management of NitroMed.

We have no present plans to issue any shares of preferred stock.

Warrants

As of August 1, 2003, there were warrants outstanding to purchase an aggregate of 151,347 shares of our common stock at a per share exercise price of $0.08 and warrants to purchase an aggregate of 123,749 shares of our common stock at a per share exercise price of $4.00. These warrants expire on various dates between 2004 and 2007. Holders of these warrants have registration rights which are outlined below under the heading "Registration Rights."

Registration Rights

Upon the completion of this offering, the holders of 17,170,391 shares of common stock, and holders of warrants to purchase 275,096 shares of common stock, are entitled to cause NitroMed to register under the Securities Act the shares of common stock issuable upon the conversion of the redeemable convertible preferred stock or the exercise of the warrants. In addition, holders of an additional 447,840 shares of common stock will have "piggy-back" registration rights in connection with future registrations of our common stock under the Securities Act. The holders of registration rights in connection with this offering have waived their right to participate in this offering.

At anytime after the earlier of the closing of this offering and December 31, 2003, holders of at least 40% of the shares of our common stock having registration rights may demand that we register all or a portion of their common stock for sale under the Securities Act. However, holders of registration rights have agreed not to exercise these rights until at least 180 days after the date of this prospectus. If such a demand is made a second time, holders having registration rights may demand registration of their shares of common stock so long as the aggregate value of that common stock so requested to be registered is equal to or greater than $1,000,000. We are required to effect only two of these registrations. However, if at any time we become eligible to file a registration statement on Form S-2 or Form S-3 (or any successor form), holders of registration rights may make unlimited requests of us to effect a registration on such forms of their common stock having an aggregate offering price of at least $500,000.

In addition, if at any time after this offering we register any shares of common stock, either for our own account or for the account of other security holders, the holders of registration rights are entitled to notice of the registration and to include all or a portion of their common stock in the registration.

A holder's right to demand or include shares in a registration is subject to the right of the underwriters to limit the number of shares included in the offering. All fees, costs and expenses of any demand registrations and registrations on Form S-2 or Form S-3 will be paid by us, and all selling expenses will be paid by the holders of the securities being registered.

Anti-Takeover Provisions of Delaware Law, our Restated Certificate of Incorporation and our Amended and Restated By-Laws

We are subject to the provisions of Section 203 of the General Corporation Law of Delaware. Subject to certain exceptions, Section 203 prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the person became an interested stockholder, unless the interested stockholder attained such status with the approval of our board of directors or the business combination is approved in a prescribed manner. A "business combination" includes, among other things, a merger or consolidation involving us and the "interested stockholder" and the sale of more than 10% of our assets. In general, an "interested stockholder" is any entity or person beneficially owning 15% or more of our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.

Our restated certificate of incorporation provides that directors may be removed only for cause by the affirmative vote of the holders of 75% of our shares of capital stock entitled to vote. Under our restated certificate of incorporation, any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may only be filled by vote of a majority of our directors then in office. The limitations on the removal of directors and filling of vacancies could make it more difficult for a third party to acquire, or discourage a third party from acquiring, control of NitroMed.

Our restated certificate of incorporation and our amended and restated by-laws also provide that any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before the meeting and may not be taken by written action in lieu of a meeting. Our restated certificate of incorporation and our amended and restated by-laws further provide that, except as otherwise required by law, special meetings of the stockholders may only be called by the chairman of the board, chief executive officer or our board of directors. In addition, our amended and restated bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder's intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholders' meeting stockholder actions which are favored by the holders of a majority of our outstanding voting securities. These provisions may also discourage a third party from making a tender offer for our common stock, because even if it acquired a majority of our outstanding voting securities, the third party would be able to take action as a stockholder (such as electing new directors or approving a merger) only at a duly called stockholders' meeting, and not by written consent.

The General Corporation Law of Delaware provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or by-laws, unless a corporation's certificate of incorporation or by-laws, as the case may be, requires a greater percentage. Our restated certificate of incorporation and amended and restated by-laws require the affirmative vote of the holders of at least 75% of the shares of our capital stock issued and outstanding and entitled to vote to amend or repeal any of the provisions described in the prior two paragraphs.

Limitation of Liability and Indemnification

Our restated certificate of incorporation contains provisions permitted under the General Corporation Law of Delaware relating to the liability of directors. The provisions eliminate a director's liability for monetary damages for a breach of fiduciary duty, except in circumstances involving wrongful acts, such as the breach of a director's duty of loyalty or acts or omissions that involve intentional misconduct or a knowing violation of law. Further, our restated certificate of incorporation contains provisions to indemnify our directors and officers to the fullest extent permitted by the General Corporation Law of Delaware. We believe that these provisions will assist us in attracting and retaining qualified individuals to serve as directors.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company.

NASDAQ National Market

We have applied for the quotation of our common stock on the NASDAQ National Market under the symbol "NTMD."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices of our common stock. Furthermore, since some shares of common stock will not be available for sale shortly after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Prior to this offering, there has been no public market for our common stock. Upon completion of this offering, we will have outstanding an aggregate of shares of our common stock assuming no exercise of outstanding options or warrants. Of these shares, the shares sold in this offering will be freely tradable without restrictions or further registration under the Securities Act, unless those shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 under the Securities Act or are subject to the contractual restrictions described below. Of these remaining securities:

•: shares which are not subject to the 180-day lock-up period described below may be sold immediately after completion of this offering;
•: additional shares which are not subject to the 180-day lock-up period described below may be sold beginning 90 days after the effective date of this offering; and
•: additional shares may be sold upon expiration of the 180-day lock-up period described below.

Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act, which rules are summarized below.

Rule 144

In general, under Rule 144, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

•: 1% of the number of shares of common stock then outstanding, which will equal approximately shares immediately after this offering; or
•: the average weekly trading volume of the common stock on the NASDAQ National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 144(k)

Common stock eligible for sale under Rule 144(k) may be sold immediately upon the completion of this offering. In general, under Rule 144(k), a person may sell shares of

common stock acquired from us immediately upon completion of this offering, without regard to manner of sale, the availability of public information or volume, if:

•: the person is not an affiliate of NitroMed and has not been an affiliate of NitroMed at any time during the three months preceding such a sale; and
•: the person has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate.

Rule 701

In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors who purchase shares from us in connection with a qualified compensatory stock plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with various restrictions, including the holding period, contained in Rule 144.

Lock-Up Agreements

Our officers and directors and stockholders beneficially owning an aggregate of shares of common stock have signed lock-up agreements under which they agreed not to offer, sell, pledge, contract to sell, short sell, grant any option in or otherwise dispose of, or enter into any hedging transaction with respect to, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock beneficially owned by them, for a period ending 180 days after the date of this prospectus. The foregoing does not prohibit open market purchases and sales of our common stock by such holders after the completion of this offering and transfers or dispositions by our officers, directors and stockholders can be made sooner:

•: with the written consent of Deutsche Bank Securities Inc.;
•: as a gift or by will or intestacy;
•: to immediate family members;
•: to any trust for the direct or indirect benefit of the holder or his or her immediately family; and
•: as a distribution to partners, members or shareholders of the holder, in each case, so long as the transferee of such shares agrees to be bound by the lock-up agreement and such transfer does not cause any filing under Section 16(a) of the Exchange Act.

Registration Rights

Upon completion of this offering, the holders of 17,590,371 shares of our common stock, or their transferees, have rights to require or participate in the registration of those shares under the Securities Act. The holders of warrants to purchase 275,096 shares of our common stock will also be entitled to these registration rights with respect to shares of common stock issuable upon exercise of such warrants. For a detailed description of these registration rights see "Description of Capital Stock—Registration Rights" on page 72.

Stock Options

Immediately after the 180-day lock-up period expires, we intend to file a registration statement under the Securities Act covering 4,730,201 shares of common stock reserved for issuance under our 1993 plan, 2003 plan and 2003 ESPP. That registration statement is

expected to become effective upon filing with the SEC. Accordingly, common stock registered under that registration statement will, subject to vesting provisions and limitations as to the volume of shares that may be sold by our affiliates under Rule 144 described above, be available for sale in the open market immediately after the 180-day lock-up period expires.

As of August 1, 2003, options to purchase 2,567,201 shares of common stock were issued and outstanding at a weighted-average exercise price of $1.32. Upon the expiration of the lock-up period described above, at least 1,818,792 shares of common stock will be subject to vested options, based on options outstanding as of August 1, 2003.

Warrants

Upon completion of this offering, there will be warrants outstanding to purchase 275,096 shares of common stock at a weighted-average exercise price of $1.84 per share. Any shares purchased pursuant to the "cashless exercise" feature of outstanding warrants may be sold approximately 90 days after completion of this offering, subject to the requirements of Rule 144 and subject to the terms of the lock-up agreements to which the holder may be a party.

Effect of Sales of Shares

Prior to this offering, there has been no public market for our common stock, and no prediction can be made as to the effect, if any, that market sales of shares of common stock or the availability of shares for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of significant numbers of shares of our common stock in the public market after the completion of this offering could adversely affect the market price of our common stock and could impair our future ability to raise capital through an offering of our equity securities.

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF OUR COMMON STOCK

The following is a general discussion of the material U.S. federal income and estate tax considerations applicable to non-U.S. holders with respect to their ownership and disposition of shares of our common stock. This discussion is for general information only and is not tax advice. Accordingly, all prospective non-U.S. holders of our common stock should consult their own tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the acquisition, ownership and disposition of our common stock. In general, a "non-U.S. holder" means a beneficial owner of our common stock who is not for U.S. federal income tax purposes:

•: a citizen or resident of the United States,
•: a corporation or any other organization taxable as a corporation created or organized in the United States or under the laws of the United States or of any state thereof, or
•: an estate or trust, the income of which is included in gross income for U.S. federal income tax purposes regardless of its source.

This discussion is based on current provisions of the United States Internal Revenue Code of 1986, as amended, existing and proposed United States Treasury Regulations promulgated thereunder, current administrative rulings and judicial decisions, all of which are in effect as of the date of this prospectus and all of which are subject to change or to differing interpretation. Any change, which may or may not be retroactive, could alter the tax consequences to non-U.S. holders described in this prospectus. We assume in this discussion that a non-U.S. holder holds shares of our common stock as a capital asset (generally property held for investment).

This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder's individual circumstances nor does it address any aspects of U.S. state, local or non-U.S. taxes. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. holder and does not address the special tax rules applicable to particular non-U.S. holders, such as:

•: insurance companies;
•: tax-exempt organizations;
•: financial institutions;
•: brokers or dealers in securities;
•: partnerships;
•: regulated investment companies;
•: pension plans;
•: owners of more than 5% of our common stock;
•: owners that hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment; and
•: certain U.S. expatriates.

There can be no assurance that the Internal Revenue Service, the IRS, will not challenge one of the tax consequences described herein, and we have not obtained, nor do we intend to

obtain, an opinion of counsel with respect to the United States federal income or estate tax consequences to a non-U.S. holder of the purchase, ownership, or disposition of our common stock. We urge prospective investors to consult with their own tax advisors regarding the U.S. federal, state, local and non-U.S. income and other tax considerations of acquiring, holding and disposing of shares of our common stock.

Distributions on Our Common Stock

We have not declared or paid distributions on our common stock since our inception and do not intend to pay any distributions on our common stock in the foreseeable future. In the event we do pay distributions on our common stock, however, these distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder's investment, up to such holder's tax basis in the common stock. Any remaining excess will be treated as capital gain, subject to the tax treatment described below in "Gain on Sale or Other Disposition of Common Stock."

Dividends paid to a non-U.S. holder generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be provided by an applicable income tax treaty between the United States and such holder's country of residence. If we determine, at a time reasonably close to the date of payment of a distribution on our common stock, that the distribution will not qualify as a dividend because we do not anticipate having current or accumulated earnings and profits, we intend not to withhold any United States federal income tax on the distribution as permitted by United States Treasury Regulations. If we or another withholding agent withholds tax on such a distribution, a non-U.S. holder may be entitled to a refund of the tax withheld which the non-U.S. holder may claim by filing a United States tax return with the IRS.

Dividends that are treated as "effectively connected" with a trade or business conducted by a non-U.S. holder within the United States (and if an applicable income tax treaty so provides, are also attributable to a permanent establishment of such non-U.S. holder), known as "United States trade or business income," are generally exempt from the 30% withholding tax if the non U.S. holder satisfies applicable certification and disclosure requirements. However, such United States trade or business income, net of specified deductions and credits, is taxed at the same graduated United States federal income tax rates applicable to United States persons. Any United States trade or business income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as specified by an applicable income tax treaty between the United States and such holder's country of residence.

A non-U.S. holder of our common stock who claims the benefit of an applicable income tax treaty between the United States and such holder's country of residence generally will be required to satisfy applicable certification and other requirements. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

A non-U.S. holder that is eligible for a reduced rate of United States withholding tax or other exclusion from withholding under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim with the IRS.

Gain On Sale or Other Disposition of Our Common Stock

In general, a non-U.S. holder will not be subject to any U.S. federal income tax or withholding tax on any gain realized upon such holder's sale or other disposition of shares of our common stock unless:

•: the gain is United States trade or business income, in which case the graduated United States federal income tax rates applicable to United States persons and the branch profits tax described above in "Distributions on Our Common Stock" may apply;
•: the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and meets certain other requirements; or
•: certain rules (described below) relating to "United States real property holding corporation" status apply to such sale or other disposition.

Gain recognized on a sale or other disposition may be subject to United States federal income tax (and, in certain circumstances, to withholding tax) if we are, or have been, a United States real property holding corporation during the shorter of the five-year period ending on the date of such sale or other disposition or the period that the non-U.S. holder held our common stock. Generally, a corporation is a United States real property holding corporation if the fair market value of its "United States real property interests" equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance, we do not believe that we are, or have been, a United States real property holding corporation, or that we are likely to become one in the future.

United States Federal Estate Tax

Shares of our common stock that are owned or treated as owned by an individual non-U.S. holder at the time of death will be included in the individual's gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise, and therefore may be subject to U.S. federal estate tax.

Backup Withholding, Information Reporting And Other Reporting Requirements

We must report annually to the IRS and to each non-U.S. holder the gross amount of the distributions on our common stock paid to such holder and the tax withheld, if any, with respect to such distributions. Dividends paid to non-U.S. holders subject to the United States withholding tax, as described above in "Distributions on Our Common Stock," generally will be exempt from United States backup withholding.

Information reporting and backup withholding (currently at a rate of 28%) will generally apply to the proceeds of a disposition of our common stock by a non-U.S. holder effected by or through the United States office of a broker unless the holder certifies its status as a non-U.S. holder and satisfies certain other qualifications, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds where the transaction is effected outside the United States through a non-United States office of a non-United States broker. However, for information reporting purposes, certain brokers with substantial United States ownership or operations generally will be treated in a manner similar to United States brokers. Non-U.S. holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

Copies of information returns may be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is incorporated.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder can be refunded or credited against the non-U.S. holder's U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement, the underwriters named below, through their representatives Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Pacific Growth Equities, LLC, have severally agreed to purchase from us the following respective number of shares of common stock at a public offering price, less underwriting discounts and commissions set forth on the cover page of this prospectus:

Underwriters			Number of Shares
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
Pacific Growth Equities, LLC

	Total

The underwriting agreement provides that the obligations of the several underwriters to purchase the shares of common stock offered hereby are subject to certain conditions precedent and that the underwriters will purchase all of the shares of common stock offered by this prospectus, other than those covered by the over-allotment option described below, if any of these shares are purchased.

We have been advised by the representatives of the underwriters that the underwriters propose to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus and to dealers at a price that represents a concession not in excess of $ per share under the public offering price. The underwriters may allow, and these dealers may re-allow, a concession of not more than $ per share to other dealers. After the initial public offering, representatives of the underwriters may change the offering price and other selling terms.

We have granted to the underwriters an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to additional shares of common stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus. The underwriters may exercise this option only to cover over-allotments made in connection with the sale of the common stock offered by this prospectus. To the extent that the underwriters exercise this option, each of the underwriters will become obligated, subject to conditions, to purchase approximately the same percentage of these additional shares of common stock as the number of shares of common stock to be purchased by it in the above table bears to the total number of shares of common stock offered by this prospectus. We will be obligated, pursuant to the option, to sell these additional shares of common stock to the underwriters to the extent the option is exercised. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

The underwriting discounts and commissions per share are equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting discounts and commissions are % of the initial public offering price. We have agreed to pay the underwriters the following discounts and

commissions, assuming either no exercise or full exercise by the underwriters of the underwriters' over-allotment option:

				Total Discounts and Commissions
	Discounts and Commissions Per Share			Without Exercise of Over-Allotment Option			With Full Exercise of Over-Allotment Option
Discounts and commissions paid by us	$			$			$

In addition, we estimate that our share of the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $ .

We have agreed to indemnify the underwriters against specified types of liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of any of these liabilities.

Each of our officers and directors, and substantially all of our stockholders and holders of options and warrants to purchase our stock, have agreed not to offer, sell, contract to sell, short sell, grant any option in or otherwise dispose of, or enter into any hedging transaction that is designed to, or could be expected to, result in the disposition of any shares of our common stock or other securities convertible into or exchangeable or exercisable for shares of our common stock or derivatives of our common stock owned by these persons prior to this offering or common stock issuable upon exercise of options or warrants held by these persons for a period of 180 days after the effective date of the registration statement of which this prospectus is a part without the prior written consent of Deutsche Bank Securities Inc. This consent may be given at any time without public notice. We have entered into a similar agreement with the representatives of the underwriters, except that without such consent we may grant options and sell shares pursuant to our 1993 plan, 2003 plan or 2003 ESPP, provided that the recipient of such shares agrees in writing to be bound by the 180-day restrictions on transfer described above. Transfers or dispositions can be made during the lock-up period in the case of gifts or for estate planning purposes or as a distribution to partners, members or shareholders of the holder if the transfer does not require a filing under the Exchange Act (other than a filing on Form 5 after the lock-up period) and where the transferee signs a lock-up agreement. There are no agreements between the representatives and any of the stockholders or affiliates releasing them from these lock-up agreements prior to the expiration of the 180-day period.

The representatives of the underwriters have advised us that the underwriters do not intend to confirm sales to any account over which they exercise discretionary authority.

In connection with the offering, the underwriters may purchase and sell shares of our common stock in the open market. These transactions may include short sales, purchases to cover positions created by short sales and stabilizing transactions.

Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. Covered short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares of common stock from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

Naked short sales are any sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if underwriters are concerned that there may be downward pressure on the price of the shares in the open market prior to the completion of the offering.

Stabilizing transactions consist of various bids for or purchases of our common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may impose a penalty bid. This occurs when a particular underwriter repays to the other underwriters a portion of the underwriting discount received by it because the representatives of the underwriters have repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions may have the effect of preventing or slowing a decline in the market price of our common stock. Additionally, these purchases, along with the imposition of a penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise.

At our request, the underwriters have reserved for sale at the initial public offering price up to shares of our common stock being sold in this offering for our directors, officers, employees, their family members, business associates and other third parties. The number of shares of our common stock available for the sale to the general public will be reduced to the extent these reserved shares are purchased. Any reserved shares not purchased by these persons will be offered by the underwriters to the general public on the same basis as the other shares in this offering.

A prospectus in electronic format is being made available on Internet web sites maintained by one or more of the lead underwriters of this offering and may be made available on web sites maintained by other underwriters. Other than the prospectus in electronic format, the information on any underwriter's web site and any information contained in any other web site maintained by an underwriter is not part of the prospectus or the registration statement of which the prospectus forms a part.

Pricing of this Offering

Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price of our common stock will be determined by negotiation among us and the representatives of the underwriters. Among the primary factors that will be considered in determining the public offering price are:

•: prevailing market conditions;
•: our results of operations in recent periods;
•: the present stage of our development;
•: the market capitalizations and stages of development of other companies that we and the representatives of the underwriters believe to be comparable to our business; and
•: estimates of our business potential.

LEGAL MATTERS

The validity of the shares of common stock we are offering will be passed upon for us by Hale and Dorr LLP, Boston, Massachusetts. Legal matters in connection with this offering will be passed upon for the underwriters by Ropes & Gray LLP, Boston, Massachusetts.

EXPERTS

The financial statements of NitroMed, Inc. at December 31, 2001 and 2002, and for each of the three years in the period ended December 31, 2002, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the common stock we are offering by this prospectus. This prospectus does not include all of the information contained in the registration statement. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the SEC. We anticipate making these documents publicly available free of charge on our website at www.nitromed.com as soon as practicable after filing such documents with the SEC.

You can also read our SEC filings, including the registration statement, over the Internet at the SEC's Web site at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 450 Fifth Street, N.W., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

NITROMED, INC.

INDEX TO FINANCIAL STATEMENTS

Report of Ernst & Young LLP, Independent Auditors		F-2
Balance Sheets at December 31, 2001 and 2002 and June 30, 2003 (unaudited)		F-3
Statements of Operations for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)		F-4
Statements of Redeemable Convertible Preferred Stock and Stockholders' Deficit for the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2003 (unaudited)		F-5
Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003 (unaudited)		F-6
Notes to Financial Statements		F-7

F-1

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
NitroMed, Inc.

We have audited the accompanying balance sheets of NitroMed, Inc. as of December 31, 2002 and 2001, and the related statements of operations, redeemable convertible preferred stock and stockholders' deficit, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NitroMed, Inc. at December 31, 2002 and 2001, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

Boston, Massachusetts
March 6, 2003

F-2

NITROMED, INC.

BALANCE SHEETS

(in thousands, except par value amounts)

								June 30, 2003
		December 31,						June 30, 2003
		December 31,									Pro Forma (Note 2)
		2001			2002			Actual			Pro Forma (Note 2)
								(Unaudited)
Assets
Current assets:
	Cash and cash equivalents	$	20,672		$	5,160		$	13,026		$	32,926
	Marketable securities		7,659			6,683			5,764			5,764
	Accounts receivable		—			10,000			—			—
	Prepaid expenses and other current assets		903			267			690			690

Total current assets			29,234			22,110			19,480			39,380
Property and equipment, net			475			282			442			442
Deposit			100			100			100			100

Total assets		$	29,809		$	22,492		$	20,022		$	39,922

Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
	Notes payable	$	289		$	42		$	42		$	42
	Accounts payable		1,057			695			790			790
	Accrued expenses		1,112			1,577			1,049			1,049
	Accrued Series E dividends		—			—			—			5,180
	Deferred revenue		1,375			3,958			6,487			6,487

Total current liabilities			3,833			6,272			8,368			13,548
Deferred revenue, long-term			—			6,667			8,000			8,000
Notes payable, less current portion			64			22			2			2
Commitments and contingencies
Redeemable convertible preferred stock, $.01 par value; 31,912 shares authorized at December 31, 2001 and 2002 and 34,688 shares authorized at June 30, 2003; 30,770 shares issued and outstanding at December 31, 2001 and 2002 and June 30, 2003 and no shares pro forma (Liquidation value of $83,109 at December 31, 2002 and $84,345 at June 30, 2003)			80,187			82,884			84,233			—
Stockholders' Equity (Deficit):
	Common stock, $.01 par value; 18,077 shares authorized at December 31, 2001 and 2002 and 20,853 shares authorized at June 30, 2003; 963, 985 and 985 shares issued and outstanding at December 31, 2001 and 2002 and June 30, 2003, respectively, and 17,791 shares pro forma		10			10			10			178
	Additional paid-in capital		1,854			1,939			1,956			100,953
	Note receivable from stock purchase agreement		(252	)		—			—			—
	Accumulated deficit		(55,887	)		(75,302	)		(82,547	)		(82,759	)

Total stockholders' equity (deficit)			(54,275	)		(73,353	)		(80,581	)		18,372

Total liabilities and stockholders' equity (deficit)		$	29,809		$	22,492		$	20,022		$	39,922

See accompanying notes.

F-3

NITROMED, INC.

STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

		For the Years Ended December 31,									For the Six Months Ended June 30,
		2000			2001			2002			2002			2003
											(Unaudited)
Revenues:
	Research and development	$	2,125		$	250		$	750		$	375		$	3,388
Operating expenses:
	Research and development		8,043			10,214			15,907			6,488			8,261
	General and administrative		2,048			2,362			2,133			939			1,227

Total operating expenses			10,091			12,576			18,040			7,427			9,488

Loss from operations			(7,966	)		(12,326	)		(17,290	)		(7,052	)		(6,100	)
Non operating income (expense):
	Interest expense		(108	)		(48	)		(10	)		(7	)		(2	)
	Interest income		488			557			387			236			124
	Rental income		155			188			195			98			82

			535			697			572			327			204

Net loss			(7,431	)		(11,629	)		(16,718	)		(6,725	)		(5,896	)
Dividends and accretion to redemption value of redeemable convertible preferred stock			(157	)		(1,662	)		(2,698	)		(1,349	)		(1,349	)

Net loss attributable to common stockholders		$	(7,588	)	$	(13,291	)	$	(19,416	)	$	(8,074	)	$	(7,245	)

Basic and diluted net loss attributable to common stockholders per common share		$	(14.05	)	$	(17.91	)	$	(20.02	)	$	(8.38	)	$	(7.36	)
Shares used in computing basic and diluted net loss attributable to common stockholders per common share			540			742			970			963			985
Unaudited pro forma basic and diluted net loss attributable to common stockholders per common share								$	(1.11	)	$	(0.45	)	$	(0.39	)
Shares used in computing unaudited pro forma basic and diluted net loss attributable to common stockholders per common share									15,000			14,993			15,015

See accompanying notes.

F-4

NITROMED, INC.

STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

(in thousands, except per share amounts)

									Note Receivable from Stock Purchase Agreement
	Redeemable Convertible Preferred Stock
				Common Stock
				Common Stock			Additional Paid-in Capital					Accumulated Deficit			Total Stockholders' Deficit
	Shares	Amount		Shares	Par Value		Additional Paid-in Capital					Accumulated Deficit			Total Stockholders' Deficit
Balance at December 31,1999	26,228	$	44,120	516	$	5	$	1,225	$	(252	)	$	(35,008	)	$	(34,030	)
Exercise of stock options				73		1		81								82
Compensation expense associated with note receivable from stock purchase agreement								19								19
Compensation expense associated with non-employee stock options								24								24
Accretion of preferred stock to redemption value			157										(157	)		(157	)
Net loss													(7,431	)		(7,431	)

Balance at December 31, 2000	26,228		44,277	589		6		1,349		(252	)		(42,596	)		(41,493	)
Exercise of stock options				9		—		6								6
Exercise of warrants				365		4		26								30
Compensation expense associated with note receivable from stock purchase agreement								253								253
Compensation expense associated with options issued to non-employees and performance options issued to employees								220								220
Issuance of Series E preferred stock in June 2001 at $7.20 per share for cash (net of issuance costs of $143)	4,292		30,773
Issuance of Series F preferred stock in November 2001 at $14.00 per share for cash (net of issuance costs of $25)	250		3,475
Accretion of Series E dividends			1,471										(1,471	)		(1,471	)
Accretion of preferred stock to redemption value			191										(191	)		(191	)
Net loss													(11,629	)		(11,629	)

Balance at December 31, 2001	30,770		80,187	963		10		1,854		(252	)		(55,887	)		(54,275	)
Exercise of stock options				22		—		23								23
Forgiveness of note receivable from stock purchase agreement										252						252
Compensation expense associated with options issued to non-employees and performance options issued to employees								62								62
Accretion of Series E dividends			2,473										(2,473	)		(2,473	)
Accretion of preferred stock to redemption value			224										(224	)		(224	)
Net loss													(16,718	)		(16,718	)

Balance at December 31, 2002	30,770		82,884	985		10		1,939		—			(75,302	)		(73,353	)
Compensation expense associated with options issued to non-employees and performance options issued to employees (unaudited)								17								17
Accretion of Series E dividends (unaudited)			1,236										(1,236	)		(1,236	)
Accretion of preferred stock to redemption value (unaudited)			113										(113	)		(113	)
Net loss (unaudited)													(5,896	)		(5,896	)

Balance at June 30, 2003 (unaudited)	30,770	$	84,233	985	$	10	$	1,956		—		$	(82,547	)	$	(80,581	)

See accompanying notes.

F-5

NITROMED, INC.

STATEMENTS OF CASH FLOWS

(in thousands)

			For the Years Ended December 31,									For the Six Months Ended June 30,
			2000			2001			2002			2002			2003
												(Unaudited)
Operating activities
Net loss			$	(7,431	)	$	(11,629	)	$	(16,718	)	$	(6,725	)	$	(5,896	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation and amortization			330			319			219			119			124
	Employee loan receivable forgiven			30			30			—			—			—
	Forgiveness of note receivable from stock purchase agreement			—			—			252			—			—
	Stock compensation expense			43			474			62			23			17
	Changes in operating assets and liabilities:
		Accounts receivable		—			—			—			—			10,000
		Prepaid expenses and other current assets		47			(825	)		636			(354	)		(423	)
		Deferred revenue		(75	)		1,375			(750	)		(375	)		3,862
		Accounts payable and accrued expenses		189			335			103			(900	)		(433	)

Net cash provided by (used in) operating activities				(6,867	)		(9,921	)		(16,196	)		(8,212	)		7,251
Investing activities
Purchases of property and equipment				(1	)		(54	)		(26	)		(3	)		(284	)
Net sales (purchases) of marketable securities				—			(7,659	)		976			(3,874	)		919

Net cash provided by (used in) investing activities				(1	)		(7,713	)		950			(3,877	)		635
Financing activities
Principal payments on notes payable				(533	)		(537	)		(289	)		(269	)		(20	)
Proceeds from exercise of stock options				82			6			23			—			—
Proceeds from exercise of stock purchase warrants				—			30			—			—			—
Net proceeds from sale of redeemable convertible preferred stock				—			34,248			—			—			—

Net cash provided by (used in) financing activities				(451	)		33,747			(266	)		(269	)		(20	)

Net (decrease) increase in cash and cash equivalents				(7,319	)		16,113			(15,512	)		(12,358	)		7,866
Cash and cash equivalents at beginning of period				11,878			4,559			20,672			20,672			5,160

Cash and cash equivalents at end of period			$	4,559		$	20,672		$	5,160		$	8,314		$	13,026

Supplemental cash flow information
Cash paid during the year for interest			$	108		$	48		$	10		$	7		$	2

See accompanying notes.

F-6

NITROMED, INC.

NOTES TO FINANCIAL STATEMENTS

Years ended December 31, 2000, 2001 and 2002 and the
Six-Month Periods Ended June 30, 2002 and 2003 (Unaudited)

(all tabular amounts in thousands except per share amounts)

1. The Company

NitroMed, Inc. (the Company) is an emerging pharmaceutical company that discovers, develops and seeks to commercialize pharmaceuticals based on the therapeutic benefits of the naturally-occurring molecule nitric oxide. The Company utilizes its nitric oxide expertise and proprietary technology in an effort both to develop novel pharmaceuticals and to improve the safety and efficacy of widely-prescribed drugs. The Company's research and development efforts focus on major diseases that are characterized by a deficiency in nitric oxide, such as cardiovascular and inflammatory diseases.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

The financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash, cash equivalents and marketable securities. The majority of the Company's cash and cash equivalents and marketable securities are maintained with well-known, established financial institutions.

Cash Equivalents and Marketable Securities

Cash equivalents are short-term, highly liquid investments with maturities of three months or less at the time of acquisition. Investments with maturities in excess of three months at the time of acquisition are classified as marketable securities and designated as available-for-sale. Cash equivalents consist of institutional money market funds, and marketable securities consist of corporate bonds with contractual maturities of less than one year. Available-for-sale securities are carried at fair market value, which approximates amortized cost, as reported by the custodian, and unrealized gains and losses, if any, are reported as a separate component of other comprehensive income within stockholders' equity (deficit). Realized gains and losses and unrealized gains and losses were not material for the years ended December 31, 2000, 2001 and 2002.

Fair Value of Financial Instruments

Financial instruments mainly consist of cash and cash equivalents, marketable securities, accounts receivable and long-term obligations. The carrying amounts of these instruments approximate their fair values.

F-7

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives, which range between three to five years. Leasehold improvements are amortized based upon the lesser of the term of the lease or the useful life of the asset. The Company reviews its property and equipment whenever events or changes in circumstances indicate that the carrying value of certain assets may not be recoverable and recognizes an impairment loss when it is probable that the estimated cash flows are less than the carrying value of the asset.

Research and Development Expenses

Research and development costs primarily consist of salaries and related expenses for personnel, fees paid to consultants and outside service providers and materials used in clinical trials and research and development. The Company charges research and development expenses, including costs associated with acquiring patents, to operations as incurred.

Revenue Recognition

Revenue is deemed earned when all of the following have occurred: all obligations of the Company relating to the revenue have been met and the earnings process is complete; the monies received or receivable are not refundable irrespective of research results; and there are neither future obligations or milestones to be met by the Company with respect to such revenue. The Company recognizes revenue from nonrefundable, up-front licenses and related payments, not specifically tied to a separate earnings process, ratably over the period that the Company is obligated to participate on a continuing and substantial basis in the research and development activities outlined in each contract. When payments are specifically tied to a separate earnings process, revenue is recognized when the specific performance obligation associated with the payment is complete. Performance obligations typically consist of contract services performed under collaborative research agreements and significant milestones in the development lifecycle of the related technology, including filing for and obtaining approvals with regulatory agencies.

Stock-Based Compensation

The Company has elected to account for its stock-based compensation plans following Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related Interpretations, rather than the alternative fair value accounting provided under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (FAS 123). In accordance with EITF 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Connection with Selling Goods or Services (EITF 96-18), the Company records compensation expense equal to the fair value of

F-8

the option granted to non-employees over the vesting period, which is generally the period of service.

Pro forma information regarding net loss is required by FAS 123 as if the Company had accounted for its stock-based awards to employees under the fair value method of FAS 123. The fair value of the Company's stock options used to compute pro forma net loss is the estimated value at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	December 31,
	2000		2001		2002
Risk-free interest rate	6.3	%	4.5	%	3.5	%
Expected volatility	80	%	80	%	80	%
Expected lives	4 years		4 years		4 years
Expected dividend	—		—		—

The per-share, weighted-average grant date fair value of options granted during the years ended December 31, 2000, 2001 and 2002 were $0.82, $1.29 and $1.21, respectively.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized over the options vesting period. Had compensation expense for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of FAS 123, the Company's net loss would have been as follows:

		Years Ended December 31,									Six Months Ended June 30,
		2000			2001			2002			2002			2003
											(Unaudited)
Net loss attributable to common stockholders as reported		$	(7,588	)	$	(13,291	)	$	(19,416	)	$	(8,074	)	$	(7,245	)
Add: Stock-based employee compensation expense included in reported net loss			19			310			23			12			11
Deduct: Stock-based employee compensation expense determined under fair value based method			(107	)		(213	)		(179	)		(54	)		(93	)

	FAS 123 Pro forma net loss	$	(7,676	)	$	(13,194	)	$	(19,572	)	$	(8,116	)	$	(7,327	)

Basic and diluted net loss per share
	As reported	$	(14.05	)	$	(17.91	)	$	(20.02	)	$	(8.38	)	$	(7.36	)
	FAS 123 Pro forma	$	(14.21	)	$	(17.78	)	$	(20.18	)	$	(8.43	)	$	(7.44	)

F-9

Comprehensive Income (Loss)

Components of comprehensive income (loss) include net income (loss) and certain transactions that have generally been reported in the statement of stockholders' equity. Other comprehensive loss comprises the net loss for all periods presented.

Income Taxes

Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock and the dilutive potential common stock equivalents then outstanding. Potential common stock equivalents consist of stock options, warrants and redeemable convertible preferred stock. Since the Company has a net loss for all periods presented, the effect of all potentially dilutive securities is antidilutive. Accordingly, basic and diluted net loss per share is the same.

Unaudited Pro Forma Net Loss Per Share

Unaudited pro forma net loss per share is computed using the weighted average number of common shares outstanding, including the pro forma effects of the automatic conversion of all outstanding redeemable convertible preferred stock, into shares of the Company's common stock effective upon the assumed closing of the Company's proposed initial public offering, as if such conversion had occurred at the date of the original issuance.

Unaudited Pro Forma Balance Sheet Presentation

The unaudited pro forma balance sheet as of June 30, 2003 reflects the following:

•: The sale of 2,776,347 share of Series E Redeemable Convertible Preferred Stock on August 1, 2003 for net proceeds of $19.9 million.
•: The assumed automatic conversion of all outstanding shares of redeemable convertible preferred stock, including the August 2003 sale of Series E noted above, into 16,806,064 shares of common stock.

F-10

•: The accrual of $5,180,000 of Series E dividends that were previously included in the carrying value of the Series E Redeemable Convertible Preferred Stock.
•: Accretion of the remaining $212,000 of redemption value of all outstanding shares of redeemable convertible preferred stock.

Unaudited Interim Financial Statements

The financial statements as of June 30, 2003 and for the six months ended June 30, 2002 and 2003 have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the full year. All financial statement amounts and disclosures related to the six month periods ended June 30, 2002 and 2003 are unaudited.

New Accounting Standards

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46, which is an interpretation of Accounting Research Bulletin No. 51, "Consolidated Financial Statements." FIN 46 requires that if an entity has a controlling interest in a variable interest entity, the assets, liabilities and results of activities of the variable interest entity should be included in the consolidated financial statements of the entity. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN46 must be applied in the first interim or annual period beginning after June 15, 2003. The Company has not yet determined what effect, if any, the adoption of FIN 46 will have on its financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement establishes how a company classifies and measures certain financial instruments with characteristics of both liabilities and equity, including redeemable preferred stock. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the interim period commencing July 1, 2003, except for mandatory redeemable financial instruments of nonpublic companies, which is effective for fiscal periods beginning after December 31, 2003. The Company has not yet determined the impact of this statement on its financial statements.

F-11

3. Note Receivable from Stock Purchase Agreement

On December 31, 1997, the Company executed a loan of $252,000 to an officer that was used to purchase 350,000 shares of restricted common stock of the Company at a purchase price of $0.72 per share. These shares were granted under the Company's 1993 Equity Incentive Plan. The loan was due and payable in full in September 2002, bore interest at a rate of 6.02% per annum (which interest was forgiven) and was secured, pursuant to the terms of a Pledge Agreement, by the restricted shares. Twenty percent of the shares vested at the date of issuance and an additional 20% of the shares vested annually each September. Based on the terms of the arrangement, the award was required to be accounted for as variable compensation. Accordingly, the Company recorded noncash stock compensation charges for the years ended December 31, 2000 and 2001 of $19,000 and $253,000, respectively. In September 2002, the Company forgave the loan and recorded a noncash compensation charge of $252,000 for the year ended December 31, 2002.

4. Property and Equipment

Property and equipment consist of the following:

	December 31,
	2001			2002
Laboratory furniture, fixtures and equipment	$	620		$	634
Office furniture, fixtures and equipment		221			233
Leasehold improvements		877			877

		1,718			1,744
Less accumulated depreciation and amortization		(1,243	)		(1,462	)

	$	475		$	282

5. Accrued Expenses

Accrued expenses consist of the following:

	December 31,
	2001		2002
Clinical trial costs	$	143	$	1,017
Reimbursed revenue		375		—
Compensation and related benefits		344		411
Other		250		149

	$	1,112	$	1,577

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6. Redeemable Convertible Preferred Stock and Stockholders' Deficit

Redeemable Convertible Preferred Stock

The Company has issued Series A, Series B, Series C, Series D and Series E redeemable convertible preferred stock, and Series F junior redeemable convertible preferred stock (collectively, Series Preferred Stock) as follows:

		December 31,				June 30,
		2001		2002		2003
						(Unaudited)
Series A: 5,000 shares authorized, issued and outstanding (liquidation preference of $5,000)		$	4,993	$	4,996	$	4,998
Series B: 17,005 shares authorized; 16,510 shares issued and outstanding (liquidation preference of $16,510)			16,503		16,507		16,508
Series C: 3,158 shares authorized issued and outstanding (liquidation preference of $12,000)			11,971		11,985		11,993
Series D: 2,138 shares authorized; 1,560 shares issued and outstanding (liquidation preference of $11,239)			10,968		11,104		11,172
Series E: 4,361 shares authorized at December 31, 2001 and 2002 and 7,137 authorized at June 30, 2003; 4,292 shares issued and outstanding (liquidation preference of $36,096)			32,276		34,804		36,068
Series F: 250 shares authorized, issued and outstanding (liquidation preference of $3,500)			3,476		3,488		3,494

	Total	$	80,187	$	82,884	$	84,233

All liquidation preferences are as of June 30, 2003.

A summary of the rights, preferences and privileges of Series Preferred Stock is as follows:

Voting

The holders of Series Preferred Stock vote together with the common shareholders as one class on all matters as to which the common shareholders are entitled to vote, with each share of preferred stock entitling the holder to the number of votes per share that equals the

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number of shares of common stock into which such share of preferred stock is then convertible.

Dividends

The Series E stockholders are entitled to receive cumulative dividends at an annual rate of 8% from the date of issuance, whether or not declared by the Board of Directors. The Company shall not declare or pay any dividend on shares of Series A, B, C, D and F preferred stock or common stock until the holders of Series E have first received a dividend at the rate specified above. In the event that the Board of Directors declares and pays a dividend on common stock or any Series Preferred Stock, excluding Series E, a dividend shall be payable ratably to the other series preferred stock into which those shares are convertible into common stock. Through December 31, 2002, the Company has accrued dividends within accumulated deficit for Series E stockholders in the amount of $3,944,000. Upon conversion of the Series Preferred Stock, all stockholders are entitled to convert all accrued or declared but unpaid dividends into common stock at the fair market value of the common stock on the conversion date.

Liquidation

Upon any liquidation, dissolution or winding-up of the Company, the holders of Series E are entitled to receive out of the assets of the Company legally available for distribution to its stockholders before any payment to the holders of Series A, B, C, D, F and common stock, an amount per share equal to the original purchase price plus any declared or accrued but unpaid dividends. After distribution to the holders of Series E, the holders of Series A, B, C and D are entitled to receive, equally, an amount per share equal to the original purchase price plus any declared but unpaid dividends. After distribution to the holders of Series A, B, C and D, the holders of Series F are entitled to receive an amount per share equal to the original purchase price plus any declared but unpaid dividends. After distribution to the holders of Series Preferred Stock, the holders of Series Preferred Stock shall share ratably with the holders of common stock in all remaining assets available for distribution based upon the number of shares of common stock into which the Series Preferred Stock is then convertible. The original per share purchase price of Series A, B, C, D, E and F are $1.00, $1.00, $3.80, $7.20, $7.20 and $14.00, respectively.

F-14

Conversion

The Series Preferred Stock are convertible, at the option of the holder, subject to future adjustments for stock splits, stock dividends, recapitalizations and the like, as well as future dilutive issuances of common stock, if any, as follows:

Series of Preferred Stock		Number of Shares of Preferred Stock	Conversion Ratio	Equivalent Shares of Common Stock
Series A		5,000	0.125	625
Series B		16,510	0.250	4,127
Series C		3,158	1.000	3,158
Series D		1,560	1.000	1,560
Series E		4,292	1.000	4,292
Series F		250	1.000	250

	Total	30,770		14,012

The Series F conversion ratio will be adjusted to provide for additional shares of common stock if the Company should subsequently issue equity securities, as defined, for consideration of less than $14 per share, the purchase price of Series F. As a result of the sale of additional Series E shares in August 2003 for $7.20 per share (see Note 14), the Series F conversion ratio was increased to 1.06995 and will result in the issuance of 267,488 shares of common stock upon the conversion of Series F.

All outstanding shares of Series Preferred Stock automatically convert into shares of common stock upon either (1) the consummation of a firm commitment underwritten public offering of common stock pursuant to which the Company receives net proceeds of at least $15 million and the price per share paid by the public is at least $14.41 per share or (2) the written election by at least 66²/3% of the outstanding Series Preferred Stockholders. In the event that the price paid by the public in a public offering is less than $14.41 per share, then each share of Series E outstanding immediately prior to the public offering shall be automatically converted into that number of shares of common stock equal to $14.41 divided by the public offering price.

Redemption

At the request of at least 65% of the shares of Series Preferred Stock (the Requesting Holders) made at any time after December 31, 2003, the Company is required to redeem, at a redemption price equal to the original purchase price, plus accrued but unpaid dividends, up to 33¹/3% of the shares of each such series owned by the Requesting Holders and up to 33¹/3% of the shares of each such series owned by the Requesting Holders in each year thereafter. The Company is accreting dividends for the Series Preferred Stock to their respective redemption values assuming redemption occurs at the earliest date permitted. At

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December 31, 2002, an aggregate of $710,000 of such dividends has been accreted in addition to the dividends of $3,944,000 accreted for Series E.

Stock Purchase Warrants

At December 31, 2001 and 2002, there were stock purchase warrants outstanding to purchase 151,347 shares of the Company's common stock at an exercise price of $.08 per share, which expire beginning in 2004 through 2007. In addition, stock purchase warrants to purchase 495,000 shares of Series B at an exercise price of $1.00 per share, which expire in 2006, were outstanding at December 31, 2001 and 2002. The total value assigned to these stock purchase warrants, all of which were issued as part of the debt arrangement, was accounted for as debt discount and amortized through 1997, the period that the loans were outstanding. Upon an underwritten public offering, the Series B stock purchase warrants convert to stock purchase warrants for common stock into that number of shares of common stock using the applicable conversion ratio.

Common Stock

Common stockholders are entitled to one vote per share and dividends when and if declared by the Board of Directors, subject to the preferential rights of the Series Preferred Stockholders. As of December 31, 2002, a total of 15,945,175 shares of common stock are reserved for issuance upon conversion of convertible preferred stock, exercise of stock purchase warrants and issuance of stock awards under the Company's 1993 Equity Incentive Plan.

1993 Equity Incentive Plan

The Company's 1993 Equity Incentive Plan (the Plan) provides for the grant of incentive stock options, nonstatutory stock options and restricted stock awards to purchase up to 2,288,200 shares of common stock. Officers, employees, directors, consultants and advisors of the Company are eligible to be granted options under this plan at a price not less than 100% (110% in the case of incentive stock options granted to 10% or greater stockholders) of the fair market value of such stock, as determined by the Board of Directors, at the time the option is granted.

While the Company may grant options to employees, which become exercisable at different times or within different periods, the Company generally has granted options to employees that are exercisable in annual installments of 25% each on the first four anniversary dates of the grant.

F-16

Information with respect to activity under the Plan is as follows:

Stock Option Activity		Number of Options		Weighted-Average Exercise Price Per Share
Balance at December 31, 1999		1,637		$	0.91
	Options granted	181			1.30
	Options canceled	(27	)		0.81
	Options exercised	(73	)		1.11

Balance at December 31, 2000		1,718			0.94
	Options granted	441			2.00
	Options canceled	(2	)		1.82
	Options exercised	(9	)		0.74

Balance at December 31, 2001		2,148			1.16
	Options granted	241			2.00
	Options canceled	(226	)		1.74
	Options exercised	(22	)		1.04

Balance at December 31, 2002		2,141		$	1.19

The following table summarizes information about options outstanding at December 31, 2002:

	Options Outstanding
				Weighted- Average Remaining Contractual Life (In years)	Options Exercisable
Range of Exercise Prices	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (In years)	Number of Shares	Weighted- Average Exercise Price
$0.08 - $0.72	1,049	$	0.69	4.7	1,011	$	0.68
$1.20 - $1.44	554		1.37	4.8	445		1.39
$2.00	538		2.00	8.8	75		2.00

	2,141	$	1.19	5.8	1,531	$	0.96

There were 994,157 and 1,276,796 options exercisable at December 31, 2000 and 2001, respectively. At December 31, 2002, the Company has 19,975 options available for future grant.

During 1999 and 2000, the Company granted 75,100 and 100,000 performance-based options, respectively, with an exercise price of $1.30 to certain employees, which allow for acceleration of the vesting period upon the occurrence of certain defined events. Of the 100,000 granted, in 2002, 5,000 options were forfeited. Based on the terms of the arrangements, the awards are required to be accounted for as variable, and compensation

F-17

expense is measured as the difference between the fair market value of the Company's common stock at the reporting period date and the exercise price of the award. The compensation expense is recognized over the vesting period and totaled $0, $57,000 and $23,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

During 1999 and 2001, the Company granted a total of 146,000 stock options to nonemployees at a weighted-average exercise price of $1.48 per share, all of which remain outstanding at December 31, 2002. The Company has applied the recognition provisions of FAS 123 and EITF 96-18 related to these stock options and utilized the Black-Scholes option pricing model to determine the fair value of these stock options at each reporting date. In connection with these awards, the Company recognized compensation expense of $24,000, $163,000 and $39,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

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Note 7. Net Loss and Unaudited Pro forma Net Loss per Share

The following table sets forth the computation of basic and diluted, and unaudited pro forma basic and diluted, net loss per share for the respective periods. The unaudited pro forma basic and diluted net loss per share gives effect to the conversion of the redeemable convertible preferred stock and the accrued dividends as if converted at the date of original issuance.

	Year Ended December 31,
	2000			2001			2002
Basic and Diluted:
Net loss	$	(7,431	)	$	(11,629	)	$	(16,718	)
Dividends and accretion to redemption value of redeemable convertible preferred stock		(157	)		(1,662	)		(2,698	)

Net loss attributable to common stockholders	$	(7,588	)	$	(13,291	)	$	(19,416	)

Weighted average common shares used to compute net loss per share		540			742			970

Basic and diluted net loss per share	$	(14.05	)	$	(17.91	)	$	(20.02	)

Unaudited pro forma basic and diluted:
Net loss							$	(16,718	)

Weighted average common shares used to compute net loss per share								970
Weighted average number of common shares assuming the conversion of all redeemable convertible preferred stock at the original date of issuance								14,030

Weighted average common shares used to compute unaudited pro forma net loss per share								15,000

Unaudited pro forma basic and diluted net loss per share							$	(1.11	)

F-19

	Six Months Ended June 30,
	2002			2003
Basic and Diluted:
Net loss	$	(6,725	)	$	(5,896	)
Dividends and accretion to redemption value of redeemable convertible preferred stock		(1,349	)		(1,349	)

Net loss attributable to common stockholders	$	(8,074	)	$	(7,245	)

Weighted average common shares used to compute net loss per share		963			985

Basic and diluted net loss per share	$	(8.38	)	$	(7.36	)

	Six Months Ended June 30,
	2002			2003
Unaudited pro forma basic and diluted:
Net loss		(6,725	)	$	(5,896	)

Weighted average common shares used to compute net loss per share		963			985
Weighted average number of common shares assuming the conversion of all redeemable convertible preferred stock at the original date of issuance		14,030			14,030

Weighted average common shares used to compute pro forma net loss per share		14,993			15,015

Unaudited pro forma basic and diluted net loss per share	$	(0.45	)	$	(0.39	)

Options to purchase 1,717,665, 2,148,235 and 2,141,401 shares of common stock for the years ended December 31, 2000, 2001 and 2002, respectively, and 2,044,198 and 2,567,201 shares of common stock for the six months ended June 30, 2002 and 2003, respectively, have been excluded from the computation of net loss per share as their effects would have been antidilutive. Warrants to purchase 640,114 shares of common stock for the year ended December 31, 2000 and 275,096 shares of common stock for the years ended December 31, 2001 and 2002 and the six month periods ended June 30, 2002 and 2003 have been excluded from the computation of net loss per share as their effects would have been antidilutive. The number of shares of common stock from the exercise of warrants assumes the conversion of the Series B warrants to common stock.

F-20

8. Notes Payable

Notes payable consisted of the following:

	December 31,
	2001			2002
Note payable in monthly payments of $4 through June 30, 2004, including interest at 8% per annum	$	103		$	64
Bank term loan payable in monthly payments of $42 through June 28, 2002, including interest on the balance at the then-current prime rate (4.75% at December 31, 2001)		250			—

		353			64
Less current portion		(289	)		(42	)

Long-term portion	$	64		$	22

The bank term loan was paid off in 2002. At December 31, 2002, the aggregate maturities of long-term debt are $42,000 for 2003 and $22,000 for 2004.

9. Operating Lease

The Company leases its research facilities under an operating lease that expires May 31, 2004 with an option to extend for two additional successive periods of five years each. The lease requires payment of real estate taxes and other common area maintenance expenses. Under the lease, a security deposit of $100,000 is required to be held in escrow for the life of the lease. Annual rent expense was $580,000 for 2000, 2001 and 2002. Future annual minimum rental payments for noncancelable operating leases as of December 31, 2002 are $580,000 for the year ended December 31, 2003 and $242,000 for the year ended December 31, 2004. The Company sub-leases a portion of its premises and recognized rental income of $155,000, $188,000 and $195,000 in 2000, 2001 and 2002, respectively. Future minimum rental income to be received under the sublease agreement as of December 31, 2002 is $82,000 for 2003.

10. Research, License and Consulting Agreements

The Company has entered into various research, license and consulting agreements to support its research and development activities.

Johnson & Johnson Agreements

Prior to 2001, the Company had two principal research and development collaboration agreements, both dated April 1997, in which the Company had licensed its technology to Johnson & Johnson and affiliates in return for initial license fees, reimbursement of qualified research expenditures and the purchase of $3.0 million of Series B. The agreements contained provisions for future payments to the Company upon the achievement of certain research and

F-21

development milestones and future royalties to the Company on sales of products developed under the agreements. One of the agreements with affiliates of Johnson & Johnson was terminated in April 2000 and the other agreement was terminated in September 2001.

With respect to one of the Johnson & Johnson agreements noted above, during 2001, the Company reacquired the previously licensed technology in consideration of future payments totaling $4.5 million. The Company is required to make payments to Johnson & Johnson contingent upon the occurrence of the following events: a portion of up-front and milestone payments received in consideration for granting the rights to the technology; a percent of net sales revenue generated by the Company from product manufactured using the technology; and a percentage of royalty payments received based upon the sale of products derived from the technology. Payments are only required upon the occurrence of such events. As of December 31, 2002, the Company has paid $375,000 to Johnson & Johnson as a result of receiving payments for licensing the reacquired technology.

Boston Scientific Corporation Agreement

In November 2001, the Company entered into a development and license agreement with Boston Scientific Corporation ("BSC") that granted a nonexclusive, nonroyalty bearing right and license in certain technology, which had been reacquired as noted above. In consideration of the license, the Company received a nonrefundable license payment of $1.5 million. At the same time the Company sold to BSC 250,000 shares of Series F for $3.5 million. Under the agreement, the Company planned to deliver two drug compounds, as defined in the agreement, to BSC during the two year research term. Accordingly, the Company was recognizing the $1.5 million license fee as revenue ratably over the term of its contractual performance obligation. For the years ended December 31, 2001 and 2002, the Company recognized revenue of $125,000 and $750,000, respectively. The Company has no future contractual obligation to participate in development programs after delivering the two compounds. In 2003, the Company informally agreed to an extension of the research term to May 2004. As a result, the Company is recognizing the revenue deferred as of December 31, 2002 over the period January 1, 2003 through May 31, 2004.

In connection with the agreement, the Company may receive up to $8.3 million in milestone payments if certain development events are achieved by BSC. The Company may receive additional milestone payments for commercial success of any products derived from the licensed technology by BSC. For any individual product that exceeds certain sales levels in any consecutive 12-month period, the Company will receive milestone payments. In addition, the Company may receive royalty payments on net sales of products derived from the licensed technology. The royalty term, which is on a country by country basis, related to each product derived by the licensed technology will generally be 12 years.

F-22

BiDil License Agreement

In connection with its development program for BiDil, the Company's lead product candidate, the Company entered into an agreement to license certain technology from an individual who is on the Company's Scientific Advisory Board. The Company also receives services from this individual in consideration of nominal payments and the grant of stock options. Upon achieving certain development events, the Company is required to make milestone payments of up to $1 million in the aggregate. In addition, upon commercial sale of products developed from the technology, the Company is required to make royalty payments on net sales, which will vary depending on sales volume. The royalty term expires upon the later of the expiration of the patent rights or ten years from the first commercial sale. The agreement may be terminated by the Company at any time.

Merck Agreement

In December of 2002, the Company executed a research collaboration and license agreement with Merck Frosst Canada & Co., a wholly-owned subsidiary of Merck & Co., in which the Company has granted an exclusive, worldwide, royalty-bearing license to certain existing technology and any technology, pertaining to the licensed technology, developed by the Company during a three-year period commencing January 1, 2003. In consideration of this license, the Company received $10 million in January of 2003. During the three-year period, the Company is obligated to perform certain research and development activities in consideration of quarterly fees totaling $7.2 million. Accordingly, the Company is recognizing the license fee as revenue ratably over the term of its contractual performance obligation of three years.

In connection with this agreement, the Company may receive milestone payments associated with certain development and approval events and sales and marketing events. In addition, the Company may receive royalty payments based on net sales of licensed products derived from the licensed technology. The royalty term, which is on a country by country basis, related to each product derived by the licensed technology is the later of a) the expiration of the patent as defined in the agreement or b) ten years after the first commercial sale of the product as defined by the agreement.

F-23

11. Income Taxes

A reconciliation of federal statutory income tax provision to the Company's actual provision is as follows:

	Year Ended December 31,
	2000			2001			2002
Benefit at federal statutory tax rate	$	(2,527	)	$	(3,954	)	$	(5,684	)
Unbenefited operating losses		2,989			4,576			6,641
State taxes, net of federal benefit		(466	)		(729	)		(1,048	)
Non-deductible expenses		4			5			3
Other		—			102			88

Income tax provision	$	—		$	—		$	—

The significant components of the Company's deferred tax assets are as follows:

		December 31,
		2001			2002
Deferred tax assets:
	Net operating loss carryforwards	$	10,557		$	14,223
	Capitalized research costs, net of amortization		9,722			12,969
	Tax credit carryforwards		2,927			3,504
	Deferred revenue		553			252
	Depreciation		305			286
	Accrued expenses		159			181
	Other		—			26

			24,223			31,441
Valuation allowance			(24,223	)		(31,441	)

Net deferred tax assets		$	—		$	—

The Company has increased its valuation allowance by $7,218,000 in 2002 to provide a full valuation allowance for deferred tax assets since the realization of these benefits is not considered more likely than not. At December 31, 2002, the Company has unused net operating loss carryforwards of approximately $35,507,000 available to reduce federal taxable income expiring in 2010 through 2022 and $34,300,000 available to reduce state taxable income expiring in 2003 through 2007. The Company also has federal and state research tax credits of approximately $3,504,000 available to offset federal and state income taxes, both of which expire beginning in 2010. The net operating losses and tax credit carryforwards may be subject to the annual limitation provisions of Internal Revenue Code (IRC) Sections 382 and 383. No income tax payments were made in 2000, 2001 or 2002.

F-24

12. Commitments and Contingencies

In connection with its pursuit of obtaining FDA approval of BiDil, the Company contracted with a consulting firm for services related to the development approval process of BiDil. The agreement provides for payment of legal consulting fees if and when the Company receives written FDA approval of BiDil. At December 31, 2002, the Company estimates the potential payment to be approximately $677,000 for services incurred to date, which will be accrued when FDA approval becomes probable. In addition, the agreement requires the Company to pay royalties on sales of BiDil product. The royalty term ends six months from the date of market introduction of an FDA approved generic version of the BiDil product.

At December 31, 2002, the Company has been in negotiations with an academic institution relative to their claim that certain of the Company's intellectual property portfolio has not been validly licensed to the Company. It is the opinion of the Company's management and legal counsel that the disputed intellectual property has been validly licensed to the Company. Accordingly, the accompanying financial statements do not include any provision related to this claim.

13. Retirement Plan

The Company sponsors a 401(k) plan covering substantially all employees. The plan provides for salary deferral contributions by participants of up to 15% of eligible wages not to exceed Federal requirements. Those employees over 50 years old are permitted to contribute an additional $1,000 per year. The Company does not match employee contributions.

14. Subsequent Events (Unaudited)

On May 12, 2003, the Company's stockholders approved the 2003 Stock Incentive Plan, under which 800,000 shares of common stock were authorized for issuance. On August 18, 2003, the Board of Directors approved an increase of shares authorized for issuance under the plan to 2,500,000, which becomes effective upon consummation of the intial public offering as contemplated in this Prospectus.

On August 1, 2003, the Company completed the sale of 2,776,347 shares of Series E for net proceeds of $19.9 million. These shares carry the same terms and conditions as disclosed in Note 6, and automatically convert to common stock upon the closing of an underwritten public offering of common stock. In contemplation of this offering, the Board of Directors approved an increase in authorized shares of common stock to 20,852,891 and preferred stock to 34,688,320 in June 2003.

On August 18 2003, the Board of Directors approved an Amended Certificate of Incorporation, which is effective prior to the consummation of the initial public offering as contemplated in this Prospectus, and increased the Company's authorized shares of common stock to 35,000,000. On August 18, 2003, the Board of Directors also approved a Restated Certificate of Incorporation, which will become effective upon the consummation of the initial

F-25

public offering as contemplated by this Prospectus and increased the Company's authorized shares of common stock to 65,000,000.

On August 18, 2003, the Board of Directors adopted, subject to the consummation of the initial public offering as contemplated in this Prospectus, the 2003 Employee Stock Purchase Plan, which provides for the sale of 75,000 shares of common stock to participating employees.

15. Quarterly Results of Operations (Unaudited)

The following table presents unaudited quarterly financial data of the Company.

	Year Ended December 31, 2001
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net revenues	$	500		$	—		$	—		$	(250	)
Net loss		(2,487	)		(3,045	)		(3,239	)		(2,858	)
Net loss available to common stockholders		(2,526	)		(3,294	)		(3,925	)		(3,546	)
Basic and diluted net loss available to common stockholders per share	$	(4.28	)	$	(5.53	)	$	(4.81	)	$	(3.68	)
Weighted average common shares used to compute net loss per share		590			596			816			963

	Year Ended December 31, 2002
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Net revenues	$	187		$	188		$	187		$	188
Net loss		(3,226	)		(3,499	)		(5,571	)		(4,422	)
Net loss available to common stockholders		(3,900	)		(4,173	)		(6,246	)		(5,097	)
Basic and diluted net loss available to common stockholders per share	$	(4.05	)	$	(4.33	)	$	(6.43	)	$	(5.17	)
Weighted average common shares used to compute net loss per share		963			963			971			985

F-26

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

TABLE OF CONTENTS

		Page
Prospectus Summary		1
Risk Factors		5
Forward-Looking Information		19
Use of Proceeds		20
Dividend Policy		20
Capitalization		21
Dilution		22
Selected Financial Data		24
Management's Discussion and Analysis of Financial Condition and Results of Operations		26
Business		34
Management		55
Related Party Transactions		65
Principal Stockholders		68
Description of Capital Stock		71
Shares Eligible for Future Sale		75
Material U.S. Federal Tax Considerations For Non-U.S. Holders of Our Common Stock		78
Underwriting		82
Legal Matters		85
Experts		85
Where You Can Find More Information		85
Index to Financial Statements		F-1

Dealer Prospectus Delivery Obligation:

Until , 2003 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.


		NitroMed, Inc.
		Shares Common Stock

		Deutsche Bank Securities
		JPMorgan
		Pacific Growth Equities, LLC
		Prospectus
		, 2003

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table indicates the expenses to be incurred in connection with the offering described in this Registration Statement, other than underwriting discounts and commissions, all of which will be paid by NitroMed. All amounts are estimates, other than the registration fee and the NASD fee.

SEC registration fee		$	8,090
NASD Filing fee			10,500
Nasdaq National Market listing fee			100,000
Printing and engraving expenses			*
Legal fees and expenses			*
Accounting fees and expenses			*
Blue Sky fees and expenses			*
Transfer agent and registrar fees and expenses			*
Miscellaneous			*

	Total	$	*

*: To be filed by amendment.

Item 14. Indemnification of Directors and Officers.

Section 102 of the Delaware General Corporation Law allows a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. NitroMed has included such a provision in its Certificate of Incorporation.

Section 145 of the General Corporation Law of Delaware provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against amounts paid and expenses incurred in connection with an action or proceeding to which he is or is threatened to be made a party by reason of such position, if such person shall have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal proceeding, if such person had no reasonable cause to believe his conduct was unlawful; provided that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the adjudicating court determines that such indemnification is proper under the circumstances.

Our Amended and Restated Certificate of Incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, except for liability:

•: for any breach of the director's duty of loyalty to NitroMed or its stockholders;

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•: for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
•: under section 174 of the Delaware General Corporation Law regarding unlawful dividends and stock purchases; or
•: for any transaction from which the director derived an improper personal benefit.

These provisions are permitted under Delaware law. Our Amended and Restated Bylaws provide that:

•: we must indemnify our directors and officers to the fullest extent permitted by Delaware law;
•: we may indemnify our other employees and agents to the same extent that we indemnified our officers and directors, unless otherwise determined by our Board of Directors; and
•: we must advance expenses, as incurred, to our directors and executive officers in connection with a legal proceeding to the fullest extent permitted by Delaware law.

The indemnification provisions contained in our Restated Certificate of Incorporation and Amended and Restated Bylaws are not exclusive of any other rights to which a person may be entitled by law, agreement, vote of stockholders or disinterested directors or otherwise.

In addition, we maintain insurance on behalf of its directors and executive officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of such status.

Item 15. Recent Sales of Unregistered Securities.

Set forth below is information regarding shares of common stock and preferred stock issued, and options and warrants granted, by us within the past three years. Also included is the consideration, if any, received by us for such shares, options and warrants and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission under which exemption from registration was claimed.

(a) Issuances of Capital Stock.

1.: In May 2001, June 2001 and August 2003 the Registrant issued and sold an aggregate of 7,067,890 shares of its Series E Convertible Preferred Stock to a group of 21 investors at a price per share of $7.2037. These investors consisted of HealthCare Ventures V, L.P., HealthCare Ventures VI, L.P., Rho Ventures IV, L.P., Rho Ventures IV GmbH & Co. Beteiligungs KG, Rho Ventures IV (QP), L.P., Rho Management Trust II, CC/Q Partners, L.P., CC/M NitroMed Holdings, L.P., CC NitroMed Holdings, L.P., Care Capital Investments II, L.P., Boston Scientific Corporation, Bank Julius Baer, B.U.N.P., Delaware Charter and Trust John P. Curran IRA, Curran Partners, L.P., Lawrence Abrams, Hudson Trust, Robert Granovsky, DC NFA Trust, James M. Casty and Johnson & Johnson Development Corporation.
2.: In November 2001, the Registrant issued and sold 250,000 shares of its Series F Convertible Preferred Stock to Boston Scientific Corporation at a price per share of $14.00.

No underwriters were involved in the foregoing sales of securities. The securities described in this paragraph (a) of Item 15 were issued to a combination of foreign and U.S.

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investors in reliance upon exemptions from the registration provisions of the Securities Act set forth in Section 4(2) thereof relative to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required. All purchasers of shares of our convertible preferred stock described above represented to us in connection with their purchase that they were accredited investors and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The purchasers received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration.

(b) Stock Option Grants.

1.: The Registrant's 1993 equity incentive plan was adopted by the board of directors and approved by the stockholders of the Registrant effective on December 2, 1993. As of August 1, 2003, options to purchase 126,824 shares of Common Stock had been exercised for an aggregate consideration of $111,000 and options to purchase 2,155,201 shares of Common Stock, at a weighted average exercise price of $1.20 per share were outstanding under the plan.
2.: The Registrant's amended and restated 2003 stock incentive plan was adopted by the board of directors on May 25, 2003 and approved by the stockholders of the Registrant effective as of May 12, 3003. As of August 1, 2003 no options under this plan have been exercised, however, options to purchase 412,000 shares of Common Stock at an exercise price of $2.00 per share were outstanding under the plan.
3.: The Registrant's 2003 employee stock purchase plan was adopted by the board of directors and approved by the stockholders of the Registrant in August 2003. No options or shares have been granted or issued on this plan.

The issuance of stock options and the common stock issuable upon the exercise of such options as described in this paragraph (b) of Item 15 were issued pursuant to written compensatory plans or arrangements with our employees, directors and consultants, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.

All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of common stock described in this Item 15 included appropriate legends setting forth that the securities had not been registered and the applicable restrictions on transfer.

Item 16. Exhibits and Financial Statement Schedules.

(a): Exhibits

Exhibit No.		Description
1.1*		Underwriting Agreement
3.1		Sixth Restated Certificate of Incorporation of the Registrant, as amended
3.2		Form of Certificate of Amendment to Sixth Restated Certificate of Incorporation of the Registrant to be effective immediately prior to the effectiveness of this Registration Statement

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3.3		Form of Restated Certificate of Incorporation of the Registrant to be effective upon closing of the offering
3.4		Restated Bylaws of the Registrant
3.5		Form of Amended and Restated Bylaws of the Registrant to be effective upon closing of the offering
4.1*		Specimen Certificate evidencing shares of common stock
5.1*		Opinion of Hale and Dorr LLP
10.1		Restated 1993 Equity Incentive Plan
10.2		Amended and Restated 2003 Stock Incentive Plan
10.3		2003 Employee Stock Purchase Plan
10.4†		Development and License Agreement dated November 20, 2001 by and between Boston Scientific Corporation and the Registrant
10.5†		Research Collaboration and License Agreement dated December 12, 2002 by and between Merck Frosst Canada & Co. and the Registrant
10.6†		Research and License Agreement between the Registrant and Brigham and Women's Hospital, Inc. dated August 1, 1992, as amended November 22, 1996
10.7†		Collaboration and License Agreement between the Registrant and Professor Jay N. Cohn dated January 22, 1999, as amended January 29, 2001 and March 15, 2002
10.8†		Research and License Agreement between the Registrant and Trustees of Boston University dated June 1, 1993, as amended January 1, 1999
10.9†		Agreement, between the Registrant and FoxKiser dated April 26, 2001
10.10	†	Agreement, dated March 13, 1995, by and between the Registrant and John D. Folts, as amended, November 22, 1996 and December 2, 1998
10.11	*	Professional Service Agreement between Registrant and MIMC, Inc., dated May 1, 2001, as amended
10.12		Letter Agreement between the Registrant and Michael D. Loberg dated July 14, 1997
10.13		Letter Agreement between the Registrant and Manuel Worcel dated July 29, 1993
10.14		Letter Agreement between the Registrant and L. Gordon Letts dated November 4, 1993
10.15		Letter Agreement between the Registrant and Joseph M. Grimm dated April 22, 1999
10.16		Fourth Amended and Restated Stockholders' Agreement among the Registrant and the stockholders named therein dated May 22, 2001, as amended November 20, 2001, May 12, 2003 and July 31, 2003
10.17		Form of Warrant to purchase shares of the Registrant's Common Stock, together with a schedule of warrantholders
10.18		Lease between the Registrant and William J. Callahan dated May 29, 1997
21.1		Subsidiaries of the Registrant

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23.1		Consent of Ernst & Young LLP, Independent Auditors
23.2*		Consent of Hale and Dorr LLP (included in Exhibit 5.1)
24.1		Power of Attorney (see page II-6)

*: To be filed by amendment.
†: Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
(b): Financial Statement Schedules.

All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.

Item 17. Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by the registrant against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Bedford, Commonwealth of Massachusetts on this 20th day of August, 2003.

		NITROMED, INC.
		By:	/s/ MICHAEL D. LOBERG Michael D. Loberg Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Michael D. Loberg and Joseph Grimm, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all (1) amendments (including post-effective amendments) and additions to this Registration Statement on Form S-1 and (2) Registration Statements, and any and all amendments thereto (including post-effective amendments), relating to the offering contemplated pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ MICHAEL D. LOBERG Michael D. Loberg, Ph.D.	Chief Executive Officer and Director (Principal Executive Officer)	August 20, 2003
/s/ JOSEPH GRIMM Joseph Grimm	Chief Financial Officer (Principal Financial and Accounting Officer)	August 20, 2003
/s/ ROBERT S. COHEN Robert S. Cohen	Director	August 20, 2003
/s/ ZOLA HOROVITZ Zola Horovitz, Ph.D.	Director	August 20, 2003
/s/ ARGERIS KARABELAS Argeris Karabelas, Ph.D.	Director	August 20, 2003

II-6

/s/ MARK LESCHLY Mark Leschly		Director		August 20, 2003
/s/ JOHN W. LITTLECHILD John W. Littlechild		Director		August 20, 2003

II-7

EXHIBIT INDEX

(a): Exhibits

Exhibit No.		Description
1.1*		Underwriting Agreement
3.1		Sixth Restated Certificate of Incorporation of the Registrant, as amended
3.2		Form of Certificate of Amendment to Sixth Restated Certificate of Incorporation of the Registrant to be effective immediately prior to the effectiveness of this Registration Statement
3.3		Form of Restated Certificate of Incorporation of the Registrant to be effective upon closing of the offering
3.4		Restated Bylaws of the Registrant
3.5		Form of Amended and Restated Bylaws of the Registrant to be effective upon closing of the offering
4.1*		Specimen Certificate evidencing shares of common stock
5.1*		Opinion of Hale and Dorr LLP
10.1		Restated 1993 Equity Incentive Plan
10.2		Amended and Restated 2003 Stock Incentive Plan
10.3		2003 Employee Stock Purchase Plan
10.4†		Development and License Agreement dated November 20, 2001 by and between Boston Scientific Corporation and the Registrant
10.5†		Research Collaboration and License Agreement dated December 12, 2002 by and between Merck Frosst Canada & Co. and the Registrant
10.6†		Research and License Agreement between the Registrant and Brigham and Women's Hospital, Inc. dated August 1, 1992, as amended November 22, 1996
10.7†		Collaboration and License Agreement between the Registrant and Professor Jay N. Cohn dated January 22, 1999, as amended January 29, 2001 and March 15, 2002
10.8†		Research and License Agreement between the Registrant and Trustees of Boston University dated June 1, 1993, as amended January 1, 1999
10.9†		Agreement, between the Registrant and FoxKiser dated April 26, 2001
10.10	†	Agreement, dated March 13, 1995, by and between the Registrant and John D. Folts, as amended, November 22, 1996 and December 2, 1998
10.11	*	Professional Service Agreement between Registrant and MIMC, Inc., dated May 1, 2001, as amended
10.12		Letter Agreement between the Registrant and Michael D. Loberg dated July 14, 1997
10.13		Letter Agreement between the Registrant and Manuel Worcel dated July 29, 1993
10.14		Letter Agreement between the Registrant and L. Gordon Letts dated November 4, 1993
10.15		Letter Agreement between the Registrant and Joseph M. Grimm dated April 22, 1999

10.16		Fourth Amended and Restated Stockholders' Agreement among the Registrant and the stockholders named therein dated May 22, 2001, as amended November 20, 2001, May 12, 2003 and July 31, 2003
10.17		Form of Warrant to purchase shares of the Registrant's Common Stock, together with a schedule of warrantholders
10.18		Lease between the Registrant and William J. Callahan dated May 29, 1997
21.1		Subsidiaries of the Registrant
23.1		Consent of Ernst & Young LLP, Independent Auditors
23.2*		Consent of Hale and Dorr LLP (included in Exhibit 5.1)
24.1		Power of Attorney (see page II-6)

*: To be filed by amendment.
†: Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
(b): Financial Statement Schedules.

QuickLinks

PROSPECTUS SUMMARY
Our Business
The BiDil Market Opportunity
Our Strategy
RISK FACTORS
Risks Relating to Our Business
Risks Relating to This Offering
FORWARD-LOOKING INFORMATION
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED FINANCIAL DATA (in thousands, except per share data)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
RELATED PARTY TRANSACTIONS
PRINCIPAL STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR COMMON STOCK
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
Report of Ernst & Young LLP, Independent Auditors
NITROMED, INC. STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (in thousands, except per share amounts)
TABLE OF CONTENTS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES AND POWER OF ATTORNEY
EXHIBIT INDEX
EX-3.1 3 a2116973zex-3_1.txt EXHIBIT 3.1 Exhibit 3.1 SIXTH RESTATED CERTIFICATE OF INCORPORATION OF NITROMED, INC. NITROMED, INC. ("Corporation"), a Corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "General Corporation Law"), hereby certifies as follows: FIRST: The name of the Corporation is NitroMed, Inc. A Certificate of Incorporation of the Corporation originally was filed by the Corporation with the Secretary of State of the State of Delaware on March 9, 1992. A Restated Certificate of Incorporation of the Corporation was filed on December 2, 1993 and was amended on July 27, 1994 and December 20, 1994. A Second Restated Certificate of Incorporation was filed on June 19, 1995, and was amended on January 10, 1996, April 11, 1996, September 30, 1996, December 17, 1996, February 10, 1997, April 4, 1997, April 7, 1997 and July 31, 1997. A Third Restated Certificate of Incorporation was filed on December 31, 1997. A Fourth Restated Certificate of Incorporation was filed on May 17, 1999, and was amended on May 1, 2000. A Fifth Restated Certificate of Incorporation was filed on May 22, 2001, and was amended on June 15, 2001. SECOND: This Sixth Restated Certificate of Incorporation restates and integrates and further amends the Fifth Restated Certificate of Incorporation of the Corporation, was duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Sections 242 and 245 of the Delaware General Corporation Law, and was approved by written consent of the stockholders of the Corporation given in accordance with the provisions of Section 228 of the Delaware General Corporation Law (prompt notice of such action having been given to those stockholders who did not consent in writing). THIRD: The text of the Fifth Restated Certificate of Incorporation of the Corporation is hereby restated and amended to read in its entirety as follows: ARTICLE I NAME The name of the Corporation is NitroMed, Inc. ARTICLE II PURPOSE The Corporation is organized to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware. ARTICLE III CAPITAL STOCK (a) AUTHORIZATION. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 49,988,509, consisting of: (i) 31,911,969 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of which: (A) 5,000,000 shares shall be designated "Series A Convertible Preferred Stock" (the "Series A Stock"), (B) 17,005,330 shares shall be designated "Series B Convertible Preferred Stock" (the "Series B Stock"), (C) 3,157,895 shares shall have been designated "Series C Convertible Preferred Stock" (the "Series C Stock"), (D) 2,137,791 shares shall have been designated "Series D Convertible Preferred Stock" (the "Series D Stock"), (E) 4,360,953 shares shall have been designated "Series E Convertible Preferred Stock" (the "Series E Stock"); (F) 250,000 shares shall have been designated "Series F Junior Convertible Preferred Stock" (the "Series F Junior Stock"); and (ii) 18,076,540 shares of Common Stock, par value $.01 per share (the "Common Stock"). (b) The Preferred Stock may be issued in any number of series, including without limitation the Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock, Series F Junior Stock and any other series designated by the Board of Directors of the Corporation (the "Board of Directors") pursuant to Section B.1, subject to Section A.6(c) hereof. PART A. SERIES PREFERRED STOCK A.1 DESIGNATION. The Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Junior Stock are sometimes collectively referred to herein as the "Series Preferred Stock." The Series A Stock, Series B Stock, Series C Stock and Series D Stock are sometimes collectively referred to herein as the "Series A, B, C and D Preferred Stock." The number of shares, powers, terms, conditions, designations, preferences and privileges, relative, participating, optional and other special rights, and qualifications, limitations and restrictions, if any, of the Series Preferred Stock shall be as set forth herein. A.2 RANKING. The Corporation's Series Preferred Stock shall rank, as to dividends and upon Liquidation (as defined in Section A.4(b) hereof), in the manner set forth in this Sixth - 2 - Restated Certificate of Incorporation except as otherwise approved by the affirmative vote or consent of the holders of shares of Series Preferred Stock pursuant to Section A.6(c) hereof. A.3 DIVIDEND PROVISIONS. A.3(a) The holders of shares of Series E Stock shall be entitled to receive, out of funds legally available therefor, dividends of $0.5763 per share per annum (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares), payable when and as declared by the Board of Directors of the Corporation. Such dividends shall accrue and shall be cumulative from the date of issuance of each share of Series E Stock, whether or not declared. The Corporation shall not declare or pay any dividend on shares of Series A, B, C and D Preferred Stock, Series F Junior Stock or Common Stock until the holders of Series E Stock then outstanding shall have first received a dividend at the rate specified in this Section A.3(a). A.3(b) The holders of shares of Series Preferred Stock shall be entitled to receive, when and as declared or paid by the Board of Directors on any shares of Series Preferred Stock, out of funds legally available for that purpose, dividends and distributions (whether in cash, property or securities of the Corporation, including subscription or other rights to acquire securities of the Corporation). Whenever any dividend may be declared or paid on any shares of Series Preferred Stock (other than dividends on Series E Stock declared or paid pursuant to Section A.3(a)), the Board of Directors shall also declare and pay a dividend on the same terms, at the same rate and in like kind upon each other share of the Series Preferred Stock then outstanding, so that all outstanding shares of Series Preferred Stock will participate equally with each other ratably per share (calculated as provided in Section A.3(c) hereof). Whenever any dividend, whether in cash or property or in securities of the Corporation (or subscription or other rights to purchase or acquire securities of the Corporation), may be declared or paid on: (i) any shares of the Common Stock, the Board of Directors shall also declare and pay a dividend on the same terms, at the same rate and in like kind upon each share of the Series Preferred Stock then outstanding so that all outstanding shares of Series Preferred Stock will participate in such dividend ratably with such shares of Common Stock (calculated as provided in Section A.3(c) hereof); or (ii) any shares of Preferred Stock (other than the Series Preferred Stock), the Board of Directors shall also declare and pay a dividend on the same terms, at the same or equivalent rate (based on the number of shares of Common Stock into which such Preferred Stock is then convertible, if applicable, or, otherwise, the relative liquidation preference per share, as compared with the Series Preferred Stock then outstanding) and in like kind upon each share of Series Preferred Stock then outstanding, so that all Series Preferred Stock will participate in such dividend ratably with such other shares of Preferred Stock. A.3(c) In connection with any dividend declared or paid hereunder, each share of Series Preferred Stock shall be deemed to be that number of shares (including fractional shares) of Common Stock into which it is then convertible, rounded up to the nearest one-tenth of a share. No fractional shares of capital stock shall be issued as a dividend hereunder. The Corporation shall pay a cash adjustment for any such fractional interest in an amount equal to the fair market value thereof on the last Business Day (as defined in Section A.8 hereof) immediately preceding the date for payment of dividends, as determined by the Board of Directors in good faith. - 3 - A.4 LIQUIDATION RIGHTS. A.4(a) With respect to rights on Liquidation (as defined in Section A.4(b) hereof), the Series Preferred Stock shall rank in the manner set forth in this Sixth Restated Certificate of Incorporation, except as otherwise approved by the affirmative vote or consent of the holders of Series Preferred Stock pursuant to Section A.6(c) hereof. A.4(b) In the event of any liquidation, dissolution or winding-up of the affairs of the Corporation (each, a "Liquidation"), the holders of shares of Series E Stock then outstanding (the "Series E Preferred Stockholders") shall be entitled to receive out of the assets of the Corporation legally available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made to the holders of Series A, B, C and D Preferred Stock, Series F Junior Stock, Common Stock or any other class or series of stock ranking on Liquidation junior to such Series E Stock, an amount per share equal to the Original Purchase Price (as defined in Section A.8 hereof), plus, in each case, an amount equal to any accrued or declared but unpaid dividends thereon pursuant to Section A.3(a) and A.3(b) hereof. A.4(c) If, upon any Liquidation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series E Preferred Stockholders the full amount as to which each of them shall be entitled, then the Series E Preferred Stockholders shall share ratably in any distribution of assets according to the respective amounts which would be payable to them in respect of the shares held upon such distribution if all amounts payable on or with respect to such shares were paid in full. For purposes of calculating the amount of any payment to be paid upon any such Liquidation, each share of Series E Stock shall be deemed to be that number of shares (including fractional shares) of Common Stock into which it is then convertible, rounded to the nearest one-tenth of a share. A.4(d) In the event of any Liquidation, after payment shall have been made to the Series E Preferred Stockholders of the full amount to which they shall be entitled pursuant to Section A.4(b), the holders of shares of Series A, B, C and D Preferred Stock then outstanding (the "Series A, B, C and D Preferred Stockholders") shall be entitled to receive out of the assets of the Corporation legally available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made to the holders of Series F Junior Stock, Common Stock or any other class or series of stock ranking on Liquidation junior to such Series A, B, C and D Preferred Stock, an amount per share equal to the Original Purchase Price (as defined in Section A.8 hereof), plus, in each case, an amount equal to any declared but unpaid dividends thereon pursuant to Section A.3(b) hereof. A.4(e) If, upon any Liquidation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series A, B, C and D Preferred Stockholders the full amount as to which each of them shall be entitled, then the Series A, B, C and D Preferred Stockholders shall share ratably in any distribution of assets according to the respective amounts which would be payable to them in respect of the shares held upon such distribution if all amounts payable on or with respect to such shares were paid in full. For purposes of calculating the amount of any payment to be paid upon any such Liquidation, each share of Series A, B, C and D Preferred Stock shall be deemed to be that number of shares - 4 - (including fractional shares) of Common Stock into which it is then convertible, rounded to the nearest one-tenth of a share. A.4(f) In the event of any Liquidation, after payment shall have been made to each of the Series E Preferred Stockholders and the Series A, B, C and D Stockholders of the full amount to which they shall be entitled pursuant to Sections A.4(b) and A.4(d), the holders of shares of Series F Junior Stock then outstanding (the "Series F Junior Preferred Stockholders" and, together with the Series E Preferred Stockholders and the Series A, B, C and D Preferred Stockholders, the "Series Preferred Stockholders") shall be entitled to receive out of the assets of the Corporation legally available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made to the holders of Common Stock or any other class or series of stock ranking on Liquidation junior to such Series F Junior Stock, an amount per share equal to the Original Purchase Price (as defined in Section A.8 hereof), plus, in each case, an amount equal to any declared but unpaid dividends thereon pursuant to Section A.3(b) hereof. A.4(g) If, upon any Liquidation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series F Junior Preferred Stockholders the full amount as to which each of them shall be entitled, then the Series F Junior Preferred Stockholders shall share ratably in any distribution of assets according to the respective amounts which would be payable to them in respect of the shares held upon such distribution if all amounts payable on or with respect to such shares were paid in full. For purposes of calculating the amount of any payment to be paid upon any such Liquidation, each share of Series F Junior Stock shall be deemed to be that number of shares (including fractional shares) of Common Stock into which it is then convertible, rounded to the nearest one-tenth of a share. A.4(h) In the event of any Liquidation, after payment shall have been made to the Series Preferred Stockholders of the full amount to which they shall be entitled pursuant to Sections A.4(b), A.4(d) and A.4(f), with respect to each other class or series of capital stock (other than Common Stock) ranking on Liquidation junior to such Series Preferred Stock (in descending order of seniority), the Series Preferred Stockholders, as a class, shall be entitled to receive an amount equal (and in like kind) to the aggregate preferential amount fixed for each such junior class or series of capital stock, which amount shall be distributed among the Series Preferred Stockholders in an equal amount per share of the Series Preferred Stock then outstanding. If, upon any Liquidation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the Series Preferred Stockholders and a class or series of capital stock (other than the Common Stock) junior to the Series Preferred Stock the full amounts to which they shall be entitled pursuant to the next preceding sentence, the holders of the Series Preferred Stock and such other class or series of capital stock shall share ratably in any distribution of assets according to the respective preferential amounts fixed for the Series Preferred Stock (pursuant to Section A.4(b), A.4(d) and A.4(f)) and such junior class or series of capital stock which would be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. A.4(i) In the event of any Liquidation, after payments shall have been made to the Series Preferred Stockholders of the full amount to which they shall be entitled as aforesaid, and after all preferential payments shall have been made to each junior class or series of capital - 5 - stock as aforesaid, the Series Preferred Stockholders as a class shall be entitled to share ratably (calculated with respect to such Series Preferred Stock as provided in the next sentence) with the holders of Common Stock (the "Common Stockholders") in all remaining assets of the Corporation available for distribution to its stockholders. For purposes of calculating the amount of any payment to be paid upon any such Liquidation, each share of such Series Preferred Stock shall be deemed to be that number of shares (including fractional shares) of Common Stock into which it is then convertible, rounded to the nearest one-tenth of a share. A.4(j)(i) In the event of and simultaneously with the closing of an Event of Sale (as hereinafter defined), the Corporation shall (unless waived pursuant to Section A.4(j)(v) or otherwise prevented by law) redeem all of the shares of Series Preferred Stock then outstanding for a cash amount per share determined as set forth herein (the "Special Liquidation Price," said redemption being referred to herein as a "Special Liquidation"). For all purposes of this Section A.4(j), the Special Liquidation Price shall be equal to that amount per share which would be received by each Series Preferred Stockholder if, in connection with an Event of Sale, all the consideration paid in exchange for the assets or the shares of capital stock (as the case may be) of the Corporation were actually paid to and received by the Corporation and the Corporation were immediately thereafter liquidated and its assets distributed pursuant to Sections A.4(a) through (i) hereof. To the extent that one or more redemptions (as described in Section A.5 hereof) and/or Special Liquidations are occurring concurrently, the Special Liquidation under this Section A.4(j) shall be deemed to occur first. The date upon which the Special Liquidation shall occur is sometimes referred to herein as the "Special Liquidation Date." A.4(j)(ii) At any time on or after the Special Liquidation Date, a Series Preferred Stockholder shall be entitled to receive the Special Liquidation Price for each such share of Series Preferred Stock owned by such holder. Subject to the provisions of Section A.4(j)(iii) hereof, payment of the Special Liquidation Price will be made upon actual delivery to the Corporation or its transfer agent of the certificate representing such shares of Series Preferred Stock. A.4(j)(iii) If on the Special Liquidation Date less than all the shares of Series Preferred Stock then outstanding may be legally redeemed by the Corporation, the Special Liquidation shall be pro rata with respect to such Series Preferred Stock based upon the number of outstanding shares of Series Preferred Stock then owned by each holder thereof. A.4(j)(iv) On and after any Special Liquidation Date, all rights in respect of the shares of Series Preferred Stock to be redeemed shall cease and terminate except the right to receive the applicable Special Liquidation Price as provided herein, and such shares of Series Preferred Stock shall no longer be deemed to be outstanding, whether or not the certificates representing such shares of Series Preferred Stock have been received by the Corporation; PROVIDED, HOWEVER, that, if the Corporation defaults in the payment of the Special Liquidation Price with respect to any Series Preferred Stock, the rights of the holder(s) thereof with respect to such shares of Series Preferred Stock shall continue until the Corporation cures such default. A.4(j)(v) Anything contained herein to the contrary notwithstanding, the provisions of this Section A.4(j) may be waived by the holders of at least sixty-five percent - 6 - (65%) in voting power of the shares of Series Preferred Stock then outstanding, by delivery of written notice of waiver to the Corporation prior to the closing of any Event of Sale, in which event the Corporation shall not redeem any shares of Series Preferred Stock pursuant to this Section A.4(j). A.4(j)(vi) Any notice required to be given to the holders of shares of Series Preferred Stock pursuant to Section A.7(f) hereof in connection with an Event of Sale shall include a statement by the Corporation of (A) the Special Liquidation Price which each Series Preferred Stockholder shall be entitled to receive upon the occurrence of a Special Liquidation under this Section A.4(j) and (B) the extent to which the Corporation will, if at all, be legally prohibited from paying each holder of Series Preferred Stock the Special Liquidation Price. A.4(j)(vii) For purposes of this Section A.4(j), an "Event of Sale" shall mean (A) the merger or consolidation of the Corporation into or with another corporation, partnership, joint venture, trust or other entity, or the merger or consolidation of any corporation into or with the Corporation (in which consolidation or merger the stockholders of the Corporation receive distributions of cash or securities as a result of such consolidation or merger in complete exchange for their shares of capital stock of the Corporation), or (B) the sale or other disposition of all or substantially all the assets of the Corporation unless, upon consummation of such merger, consolidation or sale of assets, the holders of voting securities of the Corporation immediately prior to such transaction continue to own directly or indirectly not less than a majority of the voting power of the surviving corporation. A.5 REDEMPTION. A.5(a) At the request of the holder or holders of at least sixty five percent (65%) of the shares of Series Preferred Stock then outstanding (individually, a "Requesting Holder" and, collectively, the "Requesting Holders") made at any time after December 31, 2003, the Corporation shall redeem on the Redemption Date (as such term is defined in Section A.5(c) hereof) (unless otherwise prevented by law), at a redemption price per share equal to the Original Purchase Price (as defined in Section A.8), plus an amount equal to any declared but unpaid dividends thereon, up to thirty three and one-third percent (33 1/3rd %) of the shares of each such series of the Series Preferred Stock owned of record by such Requesting Holder at the time that such request is made, and in each subsequent year thereafter (upon the anniversary of the Redemption Date) up to thirty three and one-third percent (33 1/3rd %) of the shares of each such series of the Series Preferred Stock that was owned of record by such Requesting Holder on the Redemption Date plus that number of shares of each such series of Series Preferred Stock that such Requesting Holder could have required the Corporation to have redeemed in the year or years following the Redemption Date pursuant to this Section A.5(a), but elected not to have redeemed. Each Requesting Holder who desires to have any of the Series Preferred Stock owned of record by such Requesting Holder redeemed shall specify in a written notice to the Corporation the number of shares which the Requesting Holder elects to redeem (a "Redemption Notice"), in accordance with Section A.5(c) hereof. The total sum payable per share of Series Preferred Stock on the Redemption Date or on the subsequent anniversaries of the Redemption Date, as the case may be, is hereinafter referred to as the "Redemption Price," and the payment to be made on the Redemption Date is hereinafter referred to as the "Redemption Payment." - 7 - Notwithstanding any limitations specified in this Section A.5, in the event that the Corporation at any time breaches any of its representations, warranties, covenants and/or agreements set forth in: (i) that certain Fourth Amended and Restated Stockholders' Agreement dated May 22, 2001, as amended, among the Corporation and the persons or entities listed on Schedule 1 thereto (the "Stockholders' Agreement"); or (ii) in the case of the holders of Series A Stock that certain Series A Convertible Preferred Stock Purchase Agreement dated December 3, 1993 (the "Series A Stock Purchase Agreement"); or (iii) in the case of the holders of Series B Stock, either (A) that certain Series B Convertible Preferred Stock Purchase Agreement dated June 20, 1995 or (B) that certain Series B Convertible Preferred Stock Purchase Agreement dated April 4, 1997, as the case may be; or (iv) in the case of holders of Series C Stock, that certain Series C Convertible Preferred Stock Purchase Agreement dated December 31, 1997 (the "Series C Stock Purchase Agreement"); or (v) in the case of holders of Series D Stock, that certain Series D Convertible Preferred Stock Purchase Agreement dated May 17, 1999 (the "Series D Stock Purchase Agreement"); or (vi) in the case of holders of Series E Stock, that certain Series E Convertible Preferred Stock Purchase Agreement dated May 22, 2001 (the "Series E Stock Purchase Agreement"); or (vii) in the case of holders of Series F Junior Stock, that certain Series F Convertible Preferred Stock Purchase Agreement dated November 20, 2001 (the "Series F Stock Purchase Agreement"), then the holders of at least sixty-five percent (65%) of the shares of Series A Stock, and/or Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or Series E Stock, and/or Series F Junior Stock, as the case may be, then outstanding shall have the right to elect, at their sole discretion, if any such breach is not cured by the 60th day after receipt by the Corporation of notice of such breach from a holder of Series A Stock, and/or Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or Series E Stock, and/or Series F Junior Stock, as the case may be, to accelerate the maturity of their rights under this Section A.5 and immediately redeem all, but not less than all, of the issued and outstanding shares of Series A Stock, and/or Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or Series E Stock, and/or Series F Junior Stock, as the case may be. With respect to a breach of which the Corporation is aware or reasonably should be aware, such 60-day period within which the Corporation shall have the right to cure such breach shall be deemed to have commenced on the tenth day after the occurrence of such breach, irrespective of notice of such breach from a holder of Series A Stock, and/or Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or Series E Stock, and/or Series F Junior Stock, as the case may be, if the Corporation shall not have notified the - 8 - holders of Series A Stock, and/or Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or Series E Stock, and/or Series F Junior Stock, as the case may be, of such breach by such date. A.5(b) On and after the Redemption Date, all rights of any Requesting Holder with respect to those shares of Series Preferred Stock being redeemed by the Corporation pursuant to Section A.5(a), except the right to receive the Redemption Price per share of Series Preferred Stock as hereinafter provided, shall cease and terminate, and such shares of Series Preferred Stock shall no longer be deemed to be outstanding, whether or not the certificates representing such shares have been received by the Corporation; PROVIDED, HOWEVER, that, notwithstanding anything to the contrary set forth herein, (A) if the Corporation defaults in the payment of the Redemption Payment, the rights of the Requesting Holder with respect to such shares of Series Preferred Stock shall continue until the Corporation cures such default, and (B) without limiting any other rights a Requesting Holder, upon the occurrence of a subsequent Liquidation or Event of Sale, with respect to the shares of Series Preferred Stock in respect of which no Redemption Payment has been received by a Requesting Holder, such Requesting Holder shall be accorded the rights and benefits set forth in Section A.4 hereof in respect of such remaining shares, as if no prior redemption request had been made. A.5(c) Each Requesting Holder shall send its Redemption Notice pursuant to this Section A.5 by first class, certified mail, return receipt requested, postage prepaid, to the Corporation at its principal place of business or to any transfer agent of the Corporation. Within five (5) business days of receipt of a Redemption Notice, the Corporation shall notify in writing all other Series Preferred Stockholders of the request by a Requesting Holder for the redemption of Series Preferred Stock (the "Corporation Notice"). If any other Series Preferred Stockholder desires to have redeemed all or any portion of the Series Preferred Stock owned of record by such Series Preferred Stockholder, each such Series Preferred Stockholder shall send a Redemption Notice to the Corporation postmarked within five (5) business days after the receipt of the Corporation Notice, and such Series Preferred Stockholder shall be deemed to be a Requesting Holder. On the twentieth (20th) business day following the date upon which the Corporation received the first Redemption Notice from a Requesting Holder, the Corporation shall pay each Requesting Holder the applicable Redemption Price pursuant to the terms of Section A.5(a), provided that the Corporation or its transfer agent has received the certificate(s) representing the shares of Series Preferred Stock to be redeemed. Such payment date shall be referred to herein as the "Redemption Date." If, on the Redemption Date, less than all the shares of Series Preferred Stock requested to be redeemed may be legally redeemed by the Corporation, the redemption of such Series Preferred Stock shall be PRO RATA based upon the number of shares of Series Preferred Stock requested to be redeemed by each Requesting Holder thereof, subject to the thirty three and one-third percent (33 1/3rd %) limitation set forth in Section A.5(a) hereof, if applicable, and any shares of Series Preferred Stock not redeemed shall be redeemed, at the holder's election, on any date following such Redemption Date on which the Corporation may lawfully redeem such shares, again subject to such thirty three and one-third percent (33 1/3rd %) limitation, if applicable. The Corporation shall redeem (unless otherwise prevented by law) the shares of Series Preferred Stock being redeemed by each Requesting Holder on the Redemption Date and the Corporation shall promptly advise each Requesting Holder of such Redemption Date or of the relevant facts applicable thereto preventing such redemption. Upon redemption of only a portion of the number of shares covered by a Series Preferred Stock certificate, the - 9 - Corporation shall issue and deliver to or upon the written order of the holder of such Series Preferred Stock certificate, at the expense of the Corporation, a new certificate covering the number of shares of the Series Preferred Stock representing the unredeemed portion of the Series Preferred Stock certificate, which new certificate shall entitle the holder thereof to all the rights, powers and privileges of a holder of such shares. A.5(d) Shares of the Series Preferred Stock are not subject to or entitled to the benefit of any sinking fund. A.6 VOTING. A.6(a) In addition to any other rights provided for herein or by law, the Series Preferred Stockholders shall be entitled to vote, together with the Common Stockholders as one class, on all matters as to which Common Stockholders shall be entitled to vote, in the same manner and with the same effect as such Common Stockholders. In any such vote, each share of Series Preferred Stock shall entitle the holder thereof to the number of votes per share that equals the number of shares of Common Stock (including fractional shares) into which each such share of Series Preferred Stock is then convertible, rounded up to the nearest one-tenth of a share. A.6(b)(i) In addition to the rights specified in Section A.6(a), the holders of a majority in voting power of the Series Preferred Stock, voting as a separate class, shall have the exclusive right to elect five (5) members to the Board of Directors (the "Preferred Directors"). In any election of Preferred Directors pursuant to this Section A.6(b), each Series Preferred Stockholder shall be entitled to one vote for each share of the Series Preferred Stock held, and no Series Preferred Stockholder shall be entitled to cumulate its votes by giving one candidate more than one vote per share. The exclusive voting right of the Series Preferred Stockholders contained in this Section A.6(b)(i) may be exercised at a special meeting of the Series Preferred Stockholders called as provided in accordance with the By-laws of the Corporation, at any annual or special meeting of the stockholders of the Corporation, or by written consent of such Series Preferred Stockholders in lieu of a meeting. The Preferred Directors elected pursuant to this Section A.6(b) shall serve from the date of their election and qualification until their successors have been duly elected and qualified. A.6(b)(ii) A vacancy in the directorships to be elected by the Series Preferred Stockholders pursuant to Section A.6(b)(i), may be filled only by a vote at a meeting called in accordance with the By-laws of the Corporation or written consent in lieu of such meeting of (A) in the case of a vote of such Series Preferred Stockholders at a stockholders' meeting, the holders of at least a majority in voting power of such Series Preferred Stock or (B) in the case of written consent in lieu of a meeting, the holders of at least a majority of the voting power of such Series Preferred Stock. A.6(c) The Corporation shall not, without the affirmative approval of the holders of shares representing at least sixty five percent (65%) of the voting power of the Series Preferred Stock then outstanding (determined as set forth in the second sentence of Section A.6(a) hereof), acting separately from the holders of Common Stock or any other securities of the Corporation, given by written consent in lieu of a meeting or by vote at a meeting called for such purpose, for which meeting or approval by written consent timely and specific notice (a - 10 - "Notice") shall have been given to each holder of such Preferred Stock, in the manner provided in the By-laws of the Corporation: A.6(c)(i) sell, abandon, transfer, lease, license on an exclusive basis, or otherwise dispose of all or substantially all of its properties or assets or make any other sale, transfer, lease or disposition of its assets other than in the ordinary course of its business; A.6(c)(ii) purchase, lease or otherwise acquire all or substantially all of the assets of another entity; A.6(c)(iii) except as otherwise required by this Sixth Restated Certificate of Incorporation, declare or pay any dividend or make any distribution with respect to shares of its capital stock (whether in cash, shares, capital stock or other securities or property); A.6(c)(iv) except as otherwise required by this Sixth Restated Certificate of Incorporation or in any agreement approved by the Board of Directors with a director, officer, employee, consultant or independent contractor of or to the Corporation providing for the repurchase of any of its capital stock owned by such director, officer, employee, consultant or independent contractor at the option of the Corporation, provided that such agreements are either: (A) set forth on Schedule 5.2 to the Series F Stock Purchase Agreement, or (B) entered into pursuant to the 1993 Equity Incentive Plan of the Corporation, as amended with requisite Board and Stockholder approvals from time to time, (the "1993 Equity Incentive Plan") or any stock option plan which has been adopted by the Corporation and approved by the Board of Directors and by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (including any outstanding shares of Common Stock issued upon conversion thereof), and the form of option agreement under the Equity Incentive Plan is satisfactory in form and in substance, except for immaterial changes thereto may from time to time by officers of the Corporation, to the Board of Directors and to the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (including any outstanding shares of Common Stock issued upon conversion thereof), make any payment on account of the purchase, redemption or other retirement of any share of capital stock of the Corporation, or distribute to Common Stockholders shares of the Corporation's capital stock (other than Common Stock) or other securities of other entities, evidences of indebtedness issued by the Corporation or other entities, or other assets or options or rights (excluding options to purchase and rights to subscribe for shares of Common Stock or the securities of the Corporation convertible into or exchangeable for shares of Common Stock); A.6(c)(v) merge or consolidate with or into, or permit any subsidiary to merge or consolidate with or into, any other corporation, corporations or other entity or entities; - 11 - A.6(c)(vi) voluntarily dissolve, liquidate or wind-up or carry out any partial liquidation or distribution or transaction in the nature of a partial liquidation or distribution; A.6(c)(vii) in any manner alter or change the designations, powers, preferences, rights, qualifications, limitations or restrictions of the Series Preferred Stock; A.6(c)(viii) take any action to cause any amendment, alteration or repeal of any of the provisions of this Sixth Restated Certificate of Incorporation or the By-laws of the Corporation; A.6(c)(ix) except for the issuance of capital stock or other securities constituting shares of Excluded Stock (as defined in Section A.7(d)(iii) below), authorize, designate, create, issue or agree to issue any equity or debt security of the Corporation or any security right, option or warrant convertible into, or exercisable or exchangeable for, shares of the capital stock of the Corporation or any capitalized lease with an equity feature with respect to the capital stock of the Corporation; A.6(c)(x) amend, modify or terminate the 1993 Equity Incentive Plan of the Corporation or amend or modify any stock option agreement or restricted stock purchase agreement entered into between the Corporation and its employees, directors or consultants, except for immaterial changes made thereto from time to time by officer of the Corporation; or A.6(c)(xi) accelerate the vesting schedule or exercise date or dates of any such options or in any stock option agreement entered into between the Corporation and its directors, officers, employees, consultants or independent contractors, or waive or modify the Corporation's repurchase rights with respect to any shares of the Corporation's stock issuable pursuant to any restricted stock purchase agreement entered into between the Corporation and its directors, officers, employees, consultants or independent contractors. A.6(d) The Corporation shall not, without the affirmative approval of the holders of shares representing at least two-thirds (66 2/3rd %) of the voting power of the outstanding shares of Series C Stock, voting separately as a single class: A.6(d)(i) amend or repeal any provision of, or add any provision to, this Sixth Restated Certificate of Incorporation if such action would materially and adversely alter or change the preferences, rights, privileges, or powers of, or the restrictions provided for the benefit of, the Series C Stock; A.6(d)(ii) increase or decrease the number of authorized shares of Series C Stock; A.6(d)(iii) authorize, create, or issue shares of any class or series of Preferred Stock or stock either (A) on a parity with, or (B) having any preference or priority as to, the Series C Stock with respect to dividends or redemption rights, liquidation preferences, conversion rights, or voting rights. - 12 - A.6(e) The Corporation shall not, without the affirmative approval of the holders of shares representing at least two-thirds (66 2/3rd %) of the voting power of the outstanding shares of Series D Stock, voting separately as a single class: A.6(e)(i) amend or repeal any provision of, or add any provision to, this Sixth Restated Certificate of Incorporation if such action would materially and adversely alter or change the preferences, rights, privileges, or powers of, or the restrictions provided for the benefit of, the Series D Stock; A.6(e)(ii) authorize, create, or issue shares of any class or series of Preferred Stock or stock having any preference or priority as to the Series D Stock with respect to dividends or redemption rights, liquidation preferences, conversion rights, or voting rights. A.6(f) The Corporation shall not, without the affirmative approval of the holders of shares representing at least sixty five percent (65%) of the voting power of the outstanding shares of Series E Stock, voting separately as a single class: A.6(f)(i) amend or repeal any provision of, or add any provision to, this Sixth Restated Certificate of Incorporation if such action would materially and adversely alter or change the preferences, rights, privileges, or powers of, or the restrictions provided for the benefit of, the Series E Stock; A.6(f)(ii) increase or decrease the number of authorized shares of Series E Stock; A.6(f)(iii) authorize, create, or issue shares of any class or series of Preferred Stock or stock having any preference or priority as to the Series E Stock with respect to dividends or redemption rights, liquidation preferences, conversion rights, or voting rights. A.7 CONVERSION. A.7(a)(i) Any Series Preferred Stockholder shall have the right, at any time or from time to time, to convert any or all of its Series Preferred Stock into that number of fully paid and nonassessable shares of Common Stock for each share of Series Preferred Stock so converted equal to the quotient of the Original Purchase Price for such share divided by the Conversion Price for such share (as defined in Section A.7(d) hereof), as last adjusted and then in effect, rounded up to the nearest one-tenth of a share; PROVIDED, HOWEVER, that cash shall be paid in lieu of the issuance of fractional shares of Common Stock, as provided in Section A.7(c)(ii) hereof. A.7(a)(ii) Any Series Preferred Stockholder who exercises the right to convert shares of Series Preferred Stock into shares of Common Stock, pursuant to this Section A.7, shall be entitled to conversion into Common Stock, in accordance with the provisions of this Section A.7 of all accrued or declared but unpaid dividends payable with respect to such Series Preferred Stock pursuant to Section A.3(a) and/or A.3(b) herein, as the case may be, up to and including the Conversion Date (as defined in Section A.7(b)(ii) hereof); PROVIDED THAT, the Conversion Price for such purposes shall be the then fair market value of the Common Stock as determined by the Board of Directors of the Corporation. - 13 - A.7(b)(i) Any Series Preferred Stockholder may exercise the right to convert such shares into Common Stock pursuant to this Section A.7 by delivering to the Corporation during regular business hours, at the office of the Corporation or any transfer agent of the Corporation or at such other place as may be designated by the Corporation, the certificate or certificates for the shares to be converted (solely for purposes of this Section A.7, the "Series Preferred Certificate"), duly endorsed or assigned in blank to the Corporation (if required by it). A.7(b)(ii) Each Series Preferred Certificate shall be accompanied by written notice stating that such holder elects to convert such shares and stating the name or names (with address) in which the certificate or certificates for the shares of Common Stock (the "Common Certificate") are to be issued. Such conversion shall be deemed to have been effected on the date when such delivery is made, and such date is referred to herein as the "Conversion Date." A.7(b)(iii) As promptly as practicable thereafter, the Corporation shall issue and deliver to or upon the written order of such holder, at the place designated by such holder, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled and a check or cash in respect of any fractional interest in any shares of Common Stock, as provided in Section A.7(c)(ii) hereof, payable with respect to the shares so converted up to and including the Conversion Date. A.7(b)(iv) The person in whose name the certificate or certificates for Common Stock are to be issued shall be deemed to have become a holder of record of Common Stock on the applicable Conversion Date, unless the transfer books of the Corporation are closed on such Conversion Date, in which event the holder shall be deemed to have become the stockholder of record on the next succeeding date on which the transfer books are open, provided that the Conversion Price shall be that Conversion Price in effect on the Conversion Date. A.7(b)(v) Upon conversion of only a portion of the number of shares covered by a Series Preferred Certificate, the Corporation shall issue and deliver to or upon the written order of the holder of such Series Preferred Certificate, at the expense of the Corporation, a new certificate covering the number of shares of the Series Preferred Stock representing the unconverted portion of the Series Preferred Certificate, which new certificate shall entitle the holder thereof to all the rights, powers and privileges of a holder of such shares. A.7(c)(i) If a Series Preferred Stockholder shall surrender more than one share of Series Preferred Stock for conversion at any one time, then the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series Preferred Stock so surrendered. A.7(c)(ii) No fractional shares of Common Stock shall be issued upon conversion of Series Preferred Stock. The Corporation shall pay a cash adjustment for any such fractional interest in an amount equal to the Current Market Price thereof on the Conversion Date, as determined in accordance with Section A.7(d)(ix) hereof. A.7(d) The conversion price at which shares of Common Stock shall be issued upon conversion of the Series A Stock without the payment of additional consideration by the - 14 - holder thereof shall initially be equal to $8.00 per share, after giving effect to the Corporation's one-for-eight (1:8) reverse stock split of the Common Stock which was effected on April 4, 1997 (the "Reverse Stock Split") (the "Series A Conversion Price"). The conversion price at which shares of Common Stock shall be issued upon conversion of Series B Stock without the payment of additional consideration by the holder thereof shall initially be equal to $4.00 per share, after giving effect to the Reverse Stock Split (the "Series B Conversion Price"). The conversion price at which shares of Common Stock shall be issued upon conversion of Series C Stock without the payment of additional consideration by the holder thereof shall initially be equal to $3.80 per share (the "Series C Conversion Price"). The conversion price at which shares of Common Stock shall be issued upon conversion of Series D Stock without the payment of additional consideration by the holder thereof shall initially be equal to $7.2037 per share (the "Series D Conversion Price"). The conversion price at which shares of Common Stock shall be issued upon conversion of Series E Stock without the payment of additional consideration by the holder thereof shall initially be equal to $7.2037 per share (the "Series E Conversion Price"). The conversion price at which shares of Common Stock shall be issued upon conversion of Series F Junior Stock without the payment of additional consideration by the holder thereof shall initially be equal to $14.00 per share (the "Series F Conversion Price"). The Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price, the Series D Conversion Price, the Series E Conversion Price and the Series F Conversion Price are referred to collectively herein as the "Conversion Price." Such Conversion Price, and the rate at which shares of Series Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment from time to time as follows: A.7(d)(i)(A) Subject to Section A.7(d)(iii) below, if the Corporation shall, at any time or from time to time after the Original Issuance Date of the Series E Stock issue any shares of Common Stock (which term, for purposes of this Section A.7(d)(i)(A) and Section A.7(d)(iii), including all subsections thereof, shall be deemed to include all other securities convertible into, or exchangeable or exercisable for, shares of Common Stock (including, but not limited to, Series Preferred Stock)) or options to purchase or other rights to subscribe for such convertible or exchangeable securities, in each case other than Excluded Stock (as defined in Section A.7(d)(iv) below), for a consideration per share less than the Series E Conversion Price in effect immediately prior to the issuance of such Common Stock or other securities (a "Series E Dilutive Issuance"), the Series E Conversion Price for the Series E Stock in effect immediately prior to each such Series E Dilutive Issuance shall automatically be lowered to an amount per share (the "Series E Price Per Share") equal to the consideration per share received by the Corporation for the issue of the shares of Common Stock; PROVIDED, HOWEVER, that with respect to any Series E Stock held by a person or entity that is an Investor, as such term is defined in Section A.7(d)(iii)(A) below, the Series E Conversion Price in effect immediately prior to each such Series E Dilutive Issuance shall be subject to adjustment as provided in Section A.7(d)(iii) below, subject to Section A.7(d)(iii)(G). A.7(d)(i)(B) Subject to Section A.7(d)(iii) below, if the Corporation shall, at any time or from time to time after the Original Issuance Date of the Series B Stock, the Series C Stock, the Series D Stock or the Series F Junior Stock, as the case may be, issue any shares of Common Stock (which term, for purposes of this Section A.7(d)(i)(B) and Section A.7(d)(iii), including all subsections thereof, shall be deemed to include all other securities convertible into, or exchangeable or exercisable for, shares of Common Stock - 15 - (including, but not limited to, Series Preferred Stock)) or options to purchase or other rights to subscribe for such convertible or exchangeable securities, in each case other than Excluded Stock, for a consideration per share less than the applicable Conversion Price in effect immediately prior to the issuance of such Common Stock or other securities (a "Junior Series Preferred Dilutive Issuance" and, together with any Series E Dilutive Issuance, a "Dilutive Issuance"), the Series B Conversion Price, and/or the Series C Conversion Price, and/or the Series D Conversion Price, and/or Series F Conversion Price, as applicable, for the Series B Stock, and/or Series C Stock, and/or Series D Stock, and/or the Series F Junior Stock in effect immediately prior to each such Junior Series Preferred Dilutive Issuance shall automatically be lowered to an amount per share (the "Junior Series Preferred Price Per Share") determined by multiplying the previously applicable Conversion Price by a fraction, (A) the numerator of which shall be (1) the number of shares of Common Stock outstanding immediately prior to such issue plus (2) the number of shares of Common Stock which the aggregate consideration received or to be received by the Corporation for the total number of additional shares of Common Stock so issued would purchase at such Conversion Price; and (B) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such additional shares of Common Stock so issued; PROVIDED THAT, (i) for the purpose of this Subsection A.7(d)(i)(B), all shares of Common Stock issuable upon exercise or conversion of options or convertible securities outstanding immediately prior to such issue shall be deemed to be outstanding, and (ii) the number of shares of Common Stock deemed issuable upon exercise or conversion of such outstanding options and convertible securities shall not give effect to any adjustments to the conversion price or conversion rate of such options or convertible securities resulting from the issuance of additional shares of Common Stock that is the subject of this calculation; PROVIDED, HOWEVER, that with respect to any Series A, B, C and D Preferred Stock held by a person or entity that is an Investor, as such term is defined in Section A.7(d)(iii)(A) below, the Conversion Price in effect immediately prior to each such Junior Dilutive Issuance shall be subject to adjustment as provided in Section A.7(d)(iii) below, subject to Section A.7(d)(iii)(G). A.7(d)(ii) For the purposes of any adjustment of the Conversion Price pursuant to Section A.7(d)(i) and Section A.7(d)(iii) the following provisions shall be applicable: A.7(d)(ii)(A) In the case of the issuance of Common Stock in whole or in part for cash, the consideration shall be deemed to be the amount of cash paid therefor after deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof, plus the value of any property other than cash received by the Corporation, determined as provided in Section A.7(d)(ii)(B) hereof, plus the value of any other consideration received by the Corporation determined as set forth in Section A.7(d)(ii)(C) hereof. A.7(d)(ii)(B) In the case of the issuance of Common Stock for a consideration in whole or in part in property other than cash, the value of such property other than cash shall be deemed to be the fair market value of such property as determined in good faith by the Board of Directors, irrespective of any accounting treatment; PROVIDED, HOWEVER, that such fair market value of such property as determined by the Board of Directors shall not exceed the aggregate Current Market Price (as defined in Section A.7(d)(ix) hereof) of the shares of Common Stock being issued, less any cash consideration paid for such shares, determined as - 16 - provided in Section A.7(d)(ii)(A) hereof and less any other consideration received by the Corporation for such shares, determined as set forth in Section A.7(d)(ii)(C) hereof. A.7(d)(ii)(C) In the case of the issuance of Common Stock for consideration in whole or in part other than cash or property, the value of such other consideration shall be deemed to be the aggregate par value of such Common Stock (or the aggregate stated value if such Common Stock has no par value). A.7(d)(ii)(D) In the case of the issuance of options or other rights to purchase or subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or other rights to subscribe for such convertible or exchangeable securities: A.7(d)(ii)(D)(1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in Sections A.7(d)(ii)(A), (B) and (C) hereof), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby (the consideration in each case to be determined in the manner provided in Sections A.7(d)(ii)(A), (B) and (C) hereof); A.7(d)(ii)(D)(2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in Sections A.7(d)(ii)(A), (B) and (C) hereof); A.7(d)(ii)(D)(3) if there is any change in the exercise price of, or number of shares deliverable upon exercise of, any such options or rights or upon the conversion or exchange of any such convertible or exchangeable securities (other than a change resulting from the antidilution provisions thereof), then the Conversion Price shall automatically be readjusted in proportion to such change; and A.7(d)(ii)(D)(4) upon the expiration of any such options or rights or the termination of any such rights to convert or exchange such convertible or exchangeable securities, the Conversion Price shall be automatically readjusted to the Conversion Price that would have obtained had such options, rights or convertible or exchangeable securities not been issued. - 17 - A.7(d)(iii) With respect to any Dilutive Issuance (other than with respect to the Series F Junior Stock, it being understood that the provisions of this Section A.7(d)(iii) shall not be applicable to the holders of Series F Junior Stock): A.7(d)(iii)(A) If: (1) a holder of Series Preferred Stock that is a signatory to the Stockholders' Agreement (such holder, an "Investor") has purchased, in every Dilutive Issuance subsequent to the date that such Investor first became an "Investor" under the Stockholders' Agreement (the "Investor Date") other than in Exempt Transactions (as defined in subsection A.7(d)(iii)(E) below), no less than such Investor's then-current percentage ownership of all outstanding Common Stock determined on a fully diluted basis immediately prior to each Dilutive Issuance (I.E., assuming the conversion of all convertible securities, the exercise of all warrants, options or other rights and the exchange of all exchangeable securities) (as to each Investor, the "Ownership Percentage") pursuant to the exercise of such Investor's right of first refusal (the "Right of First Refusal") set forth in the Stockholders' Agreement (each such Investor, a "Fully Participating Investor"), or (2) an Investor has received its shares of Series Preferred Stock as a result of an original issuance from the Corporation and such Investor has never had the opportunity to exercise its Right of First Refusal, in whole or in part (a "New Investor"), or (3) a particular Dilutive Issuance is an Exempt Transaction; then, provided that such Fully Participating Investor or New Investor purchases at least its Ownership Percentage of Common Stock in the then-current Dilutive Issuance (unless such Dilutive Issuance is an Exempt Transaction), the Conversion Price in effect immediately prior to such Dilutive Issuance or Exempt Transaction, as the case may be, for the Series Preferred Stock held by such Fully Participating Investor or such New Investor, including any Series Preferred Stock issued in the Dilutive Issuance or the Exempt Transaction, automatically shall be adjusted in accordance with Section A.7(d)(i)(A) with respect to the Series E Stock, or Section A.7(d)(i)(B) with respect to the Series A Stock, the Series B Stock, the Series C Stock or the Series D Stock. A.7(d)(iii)(B) Except in the case of an Exempt Transaction, in the event that an Investor does not purchase any shares of Common Stock pursuant to its Right of First Refusal, there shall be no adjustment to the Conversion Price of the shares of Series Preferred Stock held by such Investor as a result of such Dilutive Issuance. A.7(d)(iii)(C) In any instance when an Investor purchases a number of shares of Common Stock that is less than such Investor's Ownership Percentage of the Common Stock offered in such Dilutive Issuance, then the Conversion Price in effect immediately prior to such Dilutive Issuance (the "Investor Conversion Price") for the Series Preferred Stock held by such Investor, and the Conversion Price for the Series Preferred Stock issued in the then-current Dilutive Issuance, shall automatically be lowered by an amount equal to the product of the difference between the Investor Conversion Price and (1) the Series E Price Per Share, in the case of an Investor who is a Series E Stockholder, and (2) the Junior Series Preferred Price Per Share, in the case of an Investor who is a Series A, B, C & D Preferred Stockholder, multiplied in each case by the Adjustment Factor (as such term is hereinafter defined). A.7(d)(iii)(C)(1) The "Adjustment Factor" shall be a number equal to the product of the Right of First Refusal Factor (as such term is hereinafter - 18 - defined) multiplied by the Dilutive Issuance Purchase Factor (as such term is hereinafter defined). A.7(d)(iii)(C)(2) The "Right of First Refusal Factor" shall equal the quotient of: (a) the aggregate number of shares of Common Stock (determined on a fully diluted basis) that such Investor purchased pursuant to its Right of First Refusal in each Dilutive Issuance that has occurred since the Investor Date and prior to the then current Dilutive Issuance, divided by (b) the aggregate number of shares of Common Stock (determined on a fully diluted basis) that such Investor was entitled to purchase in each such Dilutive Issuance (other than the then-current Dilutive Issuance) pursuant to its Right of First Refusal since the Investor Date had such Investor purchased its full Ownership Percentage of such Common Stock offered in all Dilutive Issuances other than Exempt Transactions (notwithstanding the foregoing, in no event shall the Right of First Refusal Factor exceed 1.00). A.7(d)(iii)(C)(3) The "Dilutive Issuance Purchase Factor" shall equal the total number of shares of Common Stock purchased by the Investor in the then current Dilutive Issuance divided by the product of such Investor's Ownership Percentage multiplied by the number of shares of Common Stock issued by the Corporation in such Dilutive Issuance. A.7(d)(iii)(D) In the case of: (1) an Investor which is not a Fully Participating Investor which exercises its Right of First Refusal to purchase at least its Ownership Percentage of the Offered Securities in a Dilutive Issuance, or (2) an Exempt Transaction (and solely with respect to any Investor which is not a Fully Participating Investor or a New Investor), then the Conversion Price then in effect for the shares of Series Preferred Stock held by such Investor, including any shares of Series Preferred Stock issued to an Investor under the circumstances described in the foregoing subsections (1) or (2), shall be reduced automatically as a result of such Dilutive Issuance or Exempt Transaction, as the case may be, by an amount equal to the product of the difference between the Investor Conversion Price and (x) the Series E Price Per Share, in the case of an Investor who is a Series E Stockholder, and (y) the Junior Series Preferred Price Per Share, in the case of an Investor who is a Series A, B, C & D Preferred Stockholder, multiplied in each case by the Right of First Refusal Factor. A.7(d)(iii)(E) As used in this Section A.7(d)(iii), an "Exempt Transaction" is any Dilutive Issuance with respect to which either (1) all Investors waive their Rights of First Refusal and elect not to purchase any of the Common Stock offered with respect to such Dilutive Issuance, or (2) notwithstanding anything to the contrary set forth in this Section A.7(d)(iii), Investors holding a majority of the shares of Common Stock held by all Investors (determined on a fully diluted basis) make a written election to treat such Dilutive Issuance as an Exempt Transaction. A.7(d)(iii)(F) In the event that an Investor transfers any shares of Series Preferred Stock (the "Transferred Stock") to any third party, no adjustment to the Conversion Price of such Transferred Stock shall be made as a result of such transfer. A.7(d)(iii)(G) Upon the written election of 75% of the combined voting power of the Series A, B, C & D Preferred Stock then outstanding, calculated in - 19 - accordance with Section A.6(a) above, the provisions of this Section A.7(d)(iii) shall not be applicable to any particular Series A, B, C & D Preferred Dilutive Issuance. Upon the written election of 75% of the voting power of the Series E Preferred Stock then outstanding, calculated in accordance with Section A.6(a) above, the provisions of this Section A.7(d)(iii) shall not be applicable to any particular Series E Dilutive Issuance. A.7(d)(iv) "Excluded Stock" shall mean: A.7(d)(iv)(A) Shares of Common Stock issued upon conversion of any shares of Series Preferred Stock; A.7(d)(iv)(B) Common Stock issued or issuable to officers, directors or employees of or consultants or independent contractors to the Corporation, pursuant to any written agreement, plan or arrangement, including pursuant to any option granted under the 1993 Equity Incentive Plan, as amended, to purchase, or rights to subscribe for, such Common Stock, that is set forth on Schedule 5.2 to the Series F Stock Purchase Agreement or that has been approved in form and substance by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (determined in accordance with Section A.6(a) hereof and including in such calculation any shares of Series Preferred Stock which have been converted by the holder thereof into shares of the Corporation's Common Stock), and which, as a condition precedent to the issuance of such shares, provides for the vesting of such shares and subjects such shares to restrictions on transfers and rights of first offer or refusal in favor of the Corporation on terms that have been approved by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (determined in accordance with Section A.6(a) hereof and including in such calculation any shares of Series Preferred Stock which have been converted by the holder thereof into Shares of the Corporation's Common Stock) (collectively, the "Required Terms"), unless any of such Required Terms are waived by holders of shares representing at least a majority of the voting power of the Series Preferred Stock then outstanding (determined as set forth in Section A.6(a) hereof); A.7(d)(iv)(C) Common Stock issued as a stock dividend payable in shares of Common Stock, or capital stock of any class issuable upon any subdivision, recombination, split-up or reverse stock split of all the outstanding shares of such class of capital stock; A.7(d)(iv)(D) A maximum of 516,364 shares of Common Stock (subject to adjustment) issued or issuable upon exercise of Common Stock Purchase Warrants issued: (1) pursuant to the terms of any one of the following Credit Agreements by and between the Corporation and the Lenders defined therein; (a) Credit Agreement dated July 27, 1994; (b) Credit Agreement dated December 20, 1994; (c) Credit Agreement dated June 20, 1995; - 20 - (d) One or more Credit Agreements dated on or after January 10, 1996 and on or before June 30, 1996; and (e) One or more Credit Agreements dated on or after September 30, 1996 and on or before February 28, 1997; or (2) on or after July 2, 1994 to certain investors of the Corporation in connection with the issuance by such investors to the Corporation's auditors of letters in which such investors commit to provide capital support to the Corporation through December 31, 1994; A.7(d)(iv)(E) 12,500 shares of Common Stock (subject to adjustment) issued to Dominion Fund III pursuant to that certain Common Stock Purchase Agreement by and among the Corporation and Dominion Fund III dated July 27, 1994; A.7(d)(iv)(F) the Series B Stock Purchase Warrants to purchase an aggregate of 495,000 shares of Series B Preferred Stock issued on April 11, 1996, September 30, 1996 and April 7, 1997 to Trustees of Boston University (the "BU Warrants"), a maximum of 495,000 shares of Series B Stock issued or issuable upon the exercise of the BU Warrants and the shares of Common Stock issued or issuable upon conversion of the Series B Stock issued upon exercise of the BU Warrants; A.7(d)(iv)(G) Shares of Series B Preferred Stock issued by the Corporation on or after June 30, 1995 pursuant to (i) the Series B Convertible Preferred Stock Purchase Agreement dated June 20, 1995 by and among the Corporation and the persons named on Schedule I thereto; and (ii) the Series B Convertible Preferred Stock Purchase Agreement dated April 4, 1997 by and among the Corporation and the persons named on Schedule thereto; A.7(d)(iv)(H) Common Stock or other securities issued in connection with equipment leasing or equipment financing arrangements, up to a maximum number of shares of Common Stock or other securities equal to 5% of the outstanding capital stock (counting all convertible Preferred Stock on an as-converted basis) of the Corporation; A.7(d)(iv)(I) Common Stock or other securities issued in connection with the acquisition or licensing-in of technology, which issuances are not undertaken primarily for the purpose of raising capital, up to a maximum number of shares of Common Stock or other securities equal to 5% of the outstanding capital stock (counting all convertible Preferred Stock on an as-converted basis) of the Corporation; A.7(d)(iv)(J) Common Stock or other securities issued in connection with a research, development and/or commercialization agreement or arrangement between the Corporation and a pharmaceutical, biopharmaceutical, biotechnology or similar entity in which equity securities of the Corporation are sold to such entity or an affiliate of such entity for cash consideration, up to a maximum number of shares of Common Stock or other securities equal to 5% of the outstanding capital stock (counting all convertible Preferred Stock on an as-converted basis) of the Corporation. A.7(d)(v) If the number of shares of Common Stock outstanding at any time after the Original Issuance Date (as hereinafter defined) is increased by a stock dividend payable - 21 - in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date fixed for the determination of holders of Common Stock entitled to receive such stock dividend, subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of Series Preferred Stock shall be increased in proportion to such increase in outstanding shares. A.7(d)(vi) If, at any time after the date of filing of this Sixth Restated Certificate of Incorporation, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock, then, following the record date for such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Series Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. A.7(d)(vii) In the event, at any time after the Original Issuance Date, of any capital reorganization, or any reclassification of the capital stock of the Corporation (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Corporation with or into another person (other than consolidation or merger in which the Corporation is the continuing corporation and which does not result in any change in the powers, designations, preferences and rights, or the qualifications, limitations or restrictions, if any, of the capital stock of the Corporation) or of the sale or other disposition of all or substantially all the properties and assets of the Corporation as an entirety to any other person (any such transaction, an "Extraordinary Transaction"), then the Corporation shall provide appropriate adjustment to the Conversion Price with respect to each share of Series Preferred Stock outstanding after the effectiveness of such Extraordinary Transaction (and excluding any Series Preferred Stock redeemed pursuant to Section A.4(j) hereof in connection therewith) such that each share of Series Preferred Stock outstanding immediately prior to the effectiveness of the Extraordinary Transaction (other than the shares redeemed pursuant to Section A.4(j) hereof) shall be convertible into the kind and number of shares of stock or other securities or property of the Corporation, or of the corporation resulting from or surviving such Extraordinary Transaction, that a holder of the number of shares of Common Stock deliverable (immediately prior to the effectiveness of the Extraordinary Transaction) upon conversion of such share of Series Preferred Stock would have been entitled to receive upon such Extraordinary Transaction. The provisions of this Section A.7(d)(vii) shall similarly apply to successive Extraordinary Transactions. A.7(d)(viii) All calculations under this Section A.7(d) shall be made to the nearest one-tenth of a cent ($.001) or to the nearest one-tenth of a share, as the case may be. A.7(d)(ix) For the purpose of any computation pursuant to Section A.7(c) hereof or this Section A.7(d), the Current Market Price at any date of one share of Common Stock shall be deemed to be the average of the daily closing prices for the 30 consecutive business days ending on the fifth (5th) business day before the day in question (as adjusted for any stock dividend, split-up, combination or reclassification that took effect during such 30-business day period) as follows: - 22 - A.7(d)(ix)(A) If the Common Stock is listed or admitted for trading on a national securities exchange, then the closing price for each day shall be the last reported sales price regular way or, in case no such reported sales took place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is listed or admitted to trading. A.7(d)(ix)(B) If the Common Stock is not at the time listed or admitted for trading on any such exchange, then such price as shall be equal to the last reported sale price, or if there is no such sale price, the average of the last reported bid and asked prices, as reported by the Nasdaq Stock Market ("Nasdaq") on such day. A.7(d)(ix)(C) If the Common Stock is not at the time quoted on the Nasdaq, then such price shall be equal to the last reported bid and asked prices on such day as reported by the National Quotation Bureau, Inc., or any similar reputable quotation and reporting service, if such quotation is not reported by the National Quotation Bureau, Inc. A.7(d)(ix)(D) If the Common Stock is not traded in such manner that the quotations referred to in this Section A.7(d)(ix) are available for the period required hereunder, then the Current Market Price shall be the fair market value of such share, as determined in good faith by a majority of the entire Board of Directors. A.7(d)(x) In any case in which the provisions of this Section A.7(d) shall require that an adjustment shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Series Preferred Stock converted after such record date and before the occurrence of such event the additional shares of capital stock issuable upon such conversion by reason of the adjustment required by such event over and above the shares of capital stock issuable upon such conversion before giving effect to such adjustment, and (B) paying to such holder any cash amounts in lieu of fractional shares pursuant to Section A.7(c)(ii) hereof; PROVIDED, HOWEVER, that the Corporation shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment. A.7(d)(xi) If a state of facts shall occur that, without being specifically controlled by the provisions of this Section A.7, would not fairly protect the conversion rights of the holders of the Series Preferred Stock in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such conversion rights. A.7(e) Whenever the Conversion Price shall be adjusted as provided in Section A.7(d) hereof, the Corporation shall forthwith file and keep on record at the office of the Secretary of the Corporation and at the office of the transfer agent for the Series Preferred Stock or at such other place as may be designated by the Corporation, a statement, signed by its President or Chief Executive Officer and by its Treasurer or Chief Financial Officer, showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment. The Corporation shall also cause a copy of such statement to be sent by - 23 - first-class, certified mail, return receipt requested, postage prepaid, to each Series Preferred Stockholder at such holder's address appearing on the Corporation's records. Where appropriate, such copy shall be given in advance of any such adjustment and shall be included as part of a notice required to be mailed under the provisions of Section A.7(f) hereof. A.7(f) In the event the Corporation shall propose to take any action of the types described in Section A.7(d)(i), (iii), (v), (vi) or (vii) hereof, or any other Event of Sale, the Corporation shall give notice to each Series Preferred Stockholder in the manner set forth in Section A.7(e) hereof, which notice shall specify the record date, if any, with respect to any such action and the date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price with respect to the Series Preferred Stock, and the number, kind or class of shares or other securities or property which shall be deliverable or purchasable upon each conversion of Series Preferred Stock. In the case of any action that would require the fixing of a record date, such notice shall be given at least 20 days prior to the record date so fixed, and in the case of any other action, such notice shall be given at least 30 days prior to the taking of such proposed action. A.7(g) The Corporation shall pay all documentary, stamp or other transactional taxes attributable to the issuance or delivery of shares of capital stock of the Corporation upon conversion of any shares of Series Preferred Stock; PROVIDED, HOWEVER, that the Corporation shall not be required to pay any taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificate for such shares in a name other than that of the Series Preferred Stockholder in respect of which such shares of Series Preferred Stock are being issued. A.7(h) The Corporation shall reserve out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the Series Preferred Stock sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series Preferred Stock. A.7(i) All shares of Common Stock which may be issued in connection with the conversion provisions set forth herein will, upon issuance by the Corporation, be validly issued, fully paid and nonassessable, not subject to any preemptive or similar rights and free from all taxes, liens or charges with respect thereto created or imposed by the Corporation. A.7(j) Upon either (1) the consummation of a firm commitment underwritten public offering of Common Stock of the Corporation registered under the Securities Act of 1933, pursuant to which (A) Common Stock is offered to the public at a price of at least $14.4074 per share (subject to adjustment to reflect stock splits, stock dividends, stock combinations, recapitalizations and like occurrences), and (B) the net proceeds to the Corporation are at least $15,000,000, or (2) the written election of the holders of at least sixty six and two-thirds percent (66 2/3rd %) of the Series Preferred Stock then outstanding, voting together as one class, each share of Series Preferred Stock then outstanding shall, by virtue of and immediately prior to the closing of such firm commitment public offering or at the time specified by such written election and without any action on the part of the holder thereof, be deemed automatically converted into that number of shares of Common Stock in which the Series Preferred Stock would be convertible if such conversion were to occur at the time of the public offering of Common Stock - 24 - or at the time specified by such written election. The holder of any shares of Series Preferred Stock converted into Common Stock pursuant to this Section A.7(j) shall be entitled to payment of all declared but unpaid dividends, if any, payable on or with respect to such shares up to and including the date of the closing of such public offering which shall be deemed the Conversion Date for purposes of this Section A.7(j). In the event that the price per share at which Common Stock is offered to the public in a public offering as described above (the "Public Offering Price Per Share") does not equal at least $14.4074 per share (subject to adjustment to reflect stock splits, stock dividends, stock combinations, recapitalizations or like occurrences), then each share of Series E Stock outstanding immediately prior to such public offering shall automatically be converted into a number of shares of Common Stock equal to the quotient of $14.4074 (subject to adjustment to reflect stock splits, stock dividends, stock combinations, recapitalizations or like occurrences) divided by the Public Offering Price Per Share, rounded up to the nearest one-tenth of a share. For example, if the Public Offering Price Per Share is $10.00, then each share of Series E Stock shall, immediately prior to the closing of such public offering, be deemed automatically converted into 1.4407 shares of Common Stock ($14.4074 DIVIDED BY $10.00 = 1.4407). A.8 DEFINITIONS. As used in Section A of this Sixth Restated Certificate of Incorporation, the following terms shall have the corresponding meanings: "Business Day" shall mean any day other than a Saturday, Sunday or public holiday in the state where the principal executive office of the Corporation is located. "Original Issuance Date" shall mean, (i) with respect to the Series A Stock, December 3, 1993, (ii) with respect to the Series B Stock, June 20, 1995, (iii) with respect to the Series C Stock, December 31, 1997, (iv) with respect to the Series D Stock, May 17, 1999, (v) with respect to the Series E Stock, May 22, 2001, and (vi) with respect to the Series F Junior Stock, November 20, 2001. "Original Purchase Price" shall mean, (i) with respect to the Series A Stock, $1.00 per share, (ii) with respect to the Series B Stock, $1.00 per share, (iii) with respect to the Series C Stock, $3.80 per share, (iv) with respect to the Series D Stock, $7.2037 per share, (v) with respect to the Series E Stock, $7.2037 per share and (vi) with respect to the Series F Junior Stock, $14.00 per share, in each case subject, for all purposes other than Section A.7 hereof (which provisions shall be applied in accordance with their own terms), to Proportional Adjustment. "Proportional Adjustment" shall mean an adjustment made to the price of the Series Preferred Stock upon the occurrence of a stock split, reverse stock split, stock dividend, stock combination, reclassification or other similar change with respect to such security, so that the price of one share of the Series Preferred Stock before the occurrence of any such change shall equal the aggregate price of the share (or shares or fractional share) of such security (or any other security) received by the holder of the Series Preferred Stock with respect thereto upon the effectiveness of such change. PART B. ADDITIONAL SERIES OF PREFERRED STOCK - 25 - B.1 DESIGNATION OF ADDITIONAL SERIES OF PREFERRED STOCK. Subject to Section A.6 hereof, the Board of Directors is hereby expressly authorized to provide for, designate and issue, out of the authorized but unissued shares of Preferred Stock, one or more other series of Preferred Stock in addition to the Series Preferred Stock, subject to the terms and conditions set forth herein. Before any shares of any such series are issued, the Board of Directors shall fix, and hereby is expressly empowered to fix, by resolution or resolutions, the following provisions of the shares of any such series: (a) the designation of such series, the number of shares to constitute such series and the stated value thereof, if different from the par value thereof; (b) whether the shares of such series shall have voting rights or powers, in addition to any voting rights required by law, and, if so, the terms of such voting rights or powers, which may be full or limited; (c) the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any shares of stock of any other class or series; (d) whether the shares of such class or series shall be subject to redemption by the Corporation, and, if so, the times, prices and other conditions of such redemption; (e) the amount or amounts payable with respect to shares of such class or series upon, and the rights of the holders of such class or series in, the voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Corporation; (f) whether the shares of such class or series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the shares of such class or series for retirement or other corporate purposes and the terms and provisions relative to the operation thereof; (g) whether the shares of such class or series shall be convertible into, or exchangeable for, shares of stock of any other class or series of any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange; (h) the limitations and restrictions, if any, to be effective while any shares of such class or series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Corporation of, the Common Stock or shares of stock of any other class or series; (i) the conditions or restrictions, if any, to be effective while any shares of such class or series are outstanding upon the creation of indebtedness of the - 26 - Corporation or upon the issue of any additional stock, including additional shares of such class or series or of any other class or series; and (j) any other powers, designations, preferences and relative, participating, optional or other special rights, and any qualifications, limitations or restrictions thereof. The powers, designations, preferences and relative, participating, optional or other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. The Board of Directors is hereby expressly authorized from time to time to increase (but not above the total number of authorized shares of Preferred Stock) or decrease (but not below the number of shares thereof then outstanding) the number of shares of stock of any series of Preferred Stock (other than the Series Preferred Stock) which has been designated to one or more series of Preferred Stock pursuant to this Section B.1. PART C. COMMON STOCK C.1 DESIGNATION. The designation of this class of capital stock shall be "Common Stock," par value $.01 per share ("Common Stock"). The number of shares, powers, terms, conditions, designations, preferences and privileges, relative, participating, optional and other special rights, and qualifications, limitations and restrictions, shall be as set forth in this Part C. The number of authorized shares of Common Stock may be increased or decreased (but not below the combined number of shares thereof then outstanding and those reserved for issuance upon conversion of the Series Preferred Stock) by the affirmative vote of the holders of the majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporation Law. C.2 VOTING. Each Common Stockholder shall be entitled to one vote for each share of Common Stock held of record on all matters as to which Common Stockholders shall be entitled to vote, which voting rights shall not be cumulative. C.3 OTHER RIGHTS. Each share of Common Stock issued and outstanding shall be identical in all respects with each other such share, and no dividends shall be paid on any shares of Common Stock unless the same dividend is paid on all shares of Common Stock outstanding at the time of such payment. Except for and subject to those rights expressly granted to the holders of Preferred Stock and except as may be provided by the laws of the State of Delaware, the Common Stockholders shall have all other rights of stockholders, including, without limitation, (a) the right to receive dividends, when and as declared by the Board of Directors, out of assets lawfully available therefor, and (b) in the event of any distribution of assets upon a liquidation, dissolution or winding-up of the affairs of the Corporation (each, a "Liquidation") or otherwise, the right to receive ratably and equally, together with the holders of the Preferred Stock and the holders of outstanding shares of any other class or series of stock, all the assets and funds of the Corporation remaining after the payment to the holders of the Preferred Stock of the specific amounts which they are entitled to receive upon such Liquidation, as provided herein. - 27 - ARTICLE IV REGISTERED AGENT The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of the registered agent of the Corporation at such address is The Corporation Trust Company. ARTICLE V BOARD OF DIRECTORS Subject to the provisions of Section A.6(c) of Article III hereof, the number of directors of the Board of Directors shall be not in excess of seven (7) persons, five (5) of whom shall be Preferred Directors, as defined in Section A.6(b)(i) of Article III hereof. Unless and except to the extent that the By-laws of the Corporation otherwise require, the election of directors of the Corporation need not be by written ballot. ARTICLE VI BY-LAWS In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal the By-laws of the Corporation, subject to the provisions of Section A.6 of Article III hereof. ARTICLE VII PERPETUAL EXISTENCE The Corporation is to have perpetual existence. ARTICLE VIII AMENDMENTS AND REPEAL Except as otherwise specifically provided in this Sixth Restated Certificate of Incorporation, the Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Sixth Restated Certificate of Incorporation, and to add or insert other provisions authorized at such time by the laws of the State of Delaware, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Sixth Restated Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this Article VIII. - 28 - ARTICLE IX COMPROMISES AND ARRANGEMENTS Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under Section 291 of the Delaware General Corporation Law or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under Section 279 of the Delaware General Corporation Law, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as such court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, then such compromise or arrangement and such reorganization shall, if sanctioned by the court to which such application has been made, be binding on all the creditors or class of creditors, and/or on all of the stockholders or class of stockholders of the Corporation, as the case may be, and also on the Corporation. ARTICLE X LIMITATION OF LIABILITY No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as director; PROVIDED, HOWEVER, that nothing contained in this Article X shall eliminate or limit the liability of a director: (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (c) under Section 174 of the General Corporation Law of the State of Delaware; or (d) for any transaction from which the director derived improper personal benefit. No amendment to or repeal of this Article X shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. - 29 - ARTICLE XI INDEMNIFICATION 1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation), by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Notwithstanding anything to the contrary in this Article, except as set forth in Section 7 below, the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Article, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement. 2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person - 30 - shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware shall deem proper. 3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, he shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by him or on his behalf in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of guilty or NOLO CONTENDERE by the Indemnitee, (iv) an adjudication that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. 4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Corporation to the Indemnitee of its election so to assume such defense, the Corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 4. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. 5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in the event that the Corporation does not assume the defense pursuant to Section 4 of this Article of any action, suit, proceeding or investigation of which the Corporation receives notice under this - 31 - Article, any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; PROVIDED, HOWEVER, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article. Such undertaking shall be accepted without reference to the financial ability of the Indemnitee to make such repayment. 6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the Indemnitee shall submit to the Corporation a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the Corporation determines within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation), or (d) a court of competent jurisdiction. 7. REMEDIES. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 6. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Corporation. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee's expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. 8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this Article or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of - 32 - or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. 9. OTHER RIGHTS. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. 10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled. 11. INSURANCE. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. 12. CONSOLIDATION. If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation. 13. SAVINGS CLAUSE. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. - 33 - 14. DEFINITIONS. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i). 15. SUBSEQUENT LEGISLATION. If the General Corporation Law of Delaware is amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Corporation shall indemnify such persons to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. - 34 - IN WITNESS WHEREOF, the undersigned has caused this Sixth Restated Certificate Of Incorporation to be duly executed on its behalf as of November 20, 2001. NITROMED, INC. By: /s/ Michael D. Loberg ----------------------------- Michael D. Loberg Chief Executive Officer - 35 - CERTIFICATE OF AMENDMENT OF SIXTH RESTATED CERTIFICATE OF INCORPORATION OF NITROMED, INC. PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE NitroMed, Inc. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows: At a meeting of the Board of Directors of the Corporation a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth an amendment to the Certificate of Incorporation of the Corporation and declaring said amendment to be advisable. The stockholders of the Corporation duly approved said proposed amendment by written consent in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. The resolutions setting forth the amendment are as follows: RESOLVED: That Section A.6(c)(iv)(B) of Article III of the Sixth Restated Certificate of Incorporation of the Corporation be and hereby is deleted in its entirety and the following is inserted in lieu thereof: "(B) entered into pursuant to the 1993 Equity Incentive Plan of the Corporation, as amended with requisite Board and Stockholder approvals from time to time, (the "1993 Equity Incentive Plan"), the 2003 Stock Incentive Plan of the Corporation, as amended with requisite Board and Stockholder approvals from time to time, (the "2003 Stock Incentive Plan"), or any stock option plan which has been adopted by the Corporation and approved by the Board of Directors and by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (including any outstanding shares of Common Stock issued upon conversion thereof), and the forms of option agreements under the 1993 Equity Incentive Plan and 2003 Stock Incentive Plan are satisfactory in form and in substance, except for immaterial changes thereto may from time to time by officers of the Corporation, to the Board of Directors and to the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (including any outstanding shares of Common Stock issued upon conversion thereof)," RESOLVED: That Section A.6(c)(x) of Article III of the Sixth Restated Certificate of Incorporation of the Corporation be and hereby is deleted in its entirety and the following is inserted in lieu thereof: "amend, modify or terminate the 1993 Equity Incentive Plan, amend, modify or terminate the 2003 Stock Incentive Plan, or amend or modify any stock option agreement or restricted stock purchase agreement entered into between the Corporation and its employees, directors or consultants, except for immaterial changes made thereto from time to time by officers of the Corporation; or" RESOLVED: That Section A.7(d)(iv)(B) of Article III of the Sixth Restated Certificate of Incorporation of the Corporation be and hereby is deleted in its entirety and the following is inserted in lieu thereof: "A.7(d)(iv)(B) Common Stock issued or issuable to officers, directors or employees of or consultants or independent contractors to the Corporation, pursuant to any written agreement, plan or arrangement, including pursuant to any option granted under the 1993 Equity Incentive Plan, as amended, or the 2003 Stock Incentive Plan to purchase, or rights to subscribe for, such Common Stock, that is set forth on Schedule 5.2 to the Series F Stock Purchase Agreement or that has been approved in form and substance by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (determined in accordance with Section A.6(a) hereof and including in such calculation any shares of Series Preferred Stock which have been converted by the holder thereof into shares of the Corporation's Common Stock), and which, as a condition precedent to the issuance of such shares, provides for the vesting of such shares and subjects such shares to restrictions on transfers and rights of first offer or refusal in favor of the Corporation on terms that have been approved by the holders of at least a majority of the combined voting power of the Series Preferred Stock then outstanding (determined in accordance with Section A.6(a) hereof and including in such calculation any shares of Series Preferred Stock which have been converted by the holder thereof into Shares of the Corporation's Common Stock) (collectively, the "Required Terms"), unless any of such Required Terms are waived by holders of shares representing at least a majority of the voting power of the Series Preferred Stock then outstanding (determined as set forth in Section A.6(a) hereof);" IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer this 12th day of May, 2003. NITROMED, INC. By:/s/ Michael D. Loberg ------------------------- Michael D. Loberg Chief Executive Officer CERTIFICATE OF AMENDMENT OF SIXTH RESTATED CERTIFICATE OF INCORPORATION OF NITROMED, INC. The Directors of the Corporation duly approved an amendment to the Sixth Restated Certificate of Incorporation at a regular meeting of the Board of Directors of the Corporation in accordance with Sections 141 and 242 of the General Corporation Law of the State of Delaware. The stockholders of the Corporation duly adopted the amendment to the Sixth Restated Certificate of Incorporation of the Corporation in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware, and written notice of such consent will be given to all stockholders who have not consented in writing to said amendment. The resolution setting forth this amendment is as follows: RESOLVED: That the Sixth Restated Certificate of Incorporation of the Corporation be amended by deleting the first paragraph of Article III in its entirety and inserting the following in lieu thereof: (a) AUTHORIZATION. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 56,362,798, consisting of: (i) 34,688,320 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of which: (A) 5,000,000 shares shall be designated "Series A Convertible Preferred Stock" (the "Series A Stock"); (B) 17,005,330 shares shall be designated "Series B Convertible Preferred Stock" (the "Series B Stock"); (C) 3,157,895 shares shall have been designated "Series C Convertible Preferred Stock" (the "Series C Stock"); (D) 2,137,791 shares shall have been designated "Series D Convertible Preferred Stock" (the "Series D Stock"); (E) 7,137,304 shares shall have been designated "Series E Convertible Preferred Stock" (the "Series E Stock"); (F) 250,000 shares shall have been designated "Series F Junior Convertible Preferred Stock" (the Series F Junior Stock"); and (ii) 21,674,478 shares of Common Stock, par value $.01 per share (the "Common Stock"). IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Financial Officer on this 31st day of July, 2003. NITROMED, INC. By:/s/ Joseph Grimm -------------------------- Joseph Grimm Chief Financial Officer EX-3.2 4 a2116973zex-3_2.txt EXHIBIT 3.2 EXHIBIT 3.2 CERTIFICATE OF AMENDMENT OF SIXTH RESTATED CERTIFICATE OF INCORPORATION OF NITROMED, INC. Pursuant to Section 242 of the General Corporation Law of the State of Delaware ------------------------ NitroMed, Inc. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Laws of the State of Delaware, does hereby certify as follows: At a meeting of the Board of Directors of the Corporation a resolution was duly adopted, pursuant to Section 242 of the General Corporation Law of the State of Delaware, setting forth amendments to the Sixth Restated Certificate of Incorporation of the Corporation and declaring said amendments to be advisable. The stockholders of the Corporation duly adopted said amendments by written consent in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware. Said amendments have been duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware. The resolution setting forth the amendments is as follows: RESOLVED: That the Sixth Restated Certificate of Incorporation of the Corporation (the "Restated Certificate") be amended as follows: (1) Article III(a) of the Restated Certificate is deleted in its entirety and the following new paragraph is inserted in lieu thereof: "(a) AUTHORIZATION. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 69,688,320 consisting of: (i) 34,688,320 shares of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of which: (A) 5,000,000 shares shall be designated "Series A Convertible Preferred Stock" (the "Series A Stock"); (B) 17,005,330 shares shall be designated "Series B Convertible Preferred Stock" (the "Series B Stock"); (C) 3,157,895 shares shall have been designated "Series C Convertible Preferred Stock" (the "Series C Stock"); (D) 2,137,791 shares shall have been designated "Series D Convertible Preferred Stock" (the "Series D Stock"); (E) 7,137,304 shares shall have been designated "Series E Convertible Preferred Stock" (the "Series E Stock"); (F) 250,000 shares shall have been designated "Series F Junior Convertible Preferred Stock" (the "Series F Junior Stock"); and (ii) 35,000,000 shares of Common Stock, par value $.01 per share (the "Common Stock")." (2) Article III, Section A.7, of the Restated Certificate shall be amended by adding the following new Section A.7(k): "A.7(k) All holders of record of shares of Series Preferred Stock shall be given written notice of the mandatory conversion of Series Preferred Stock pursuant to Section A.7(j) above and such notice shall designate the place for such mandatory conversion. Such notice need not be given in advance of the mandatory conversion date. Such notice shall be sent by first class or registered mail, postage prepaid, or given by electronic communication in compliance with the provisions of the General Corporation Law, to each record holder of Series Preferred Stock. Upon receipt of such notice, each holder of shares of Series Preferred Stock shall surrender his or its certificate or certificates for all such shares to the Corporation at the place designated in such notice, and shall thereafter receive certificates for the number of shares of Common Stock to which such holder is entitled pursuant to Section A.7(j) above. As of the conversion date of the Series Preferred Stock, all outstanding shares of Series Preferred Stock shall be deemed to have been converted into shares of Common Stock, which shall be deemed to be outstanding of record, and all rights with respect to the Series Preferred Stock so converted, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Series Preferred Stock has been converted. All certificates evidencing shares of Series Preferred Stock converted into shares of Common Stock pursuant to Section A.7(j) above shall, from and after such conversion date, be deemed to have been retired and canceled, notwithstanding the failure of the holder or holders thereof to surrender such certificates to the Corporation in accordance with the provisions hereof. Upon the closing of the sale of shares of Common Stock in a firm commitment underwriting meeting the requirements of Section A.7(j) above, the number of authorized shares of Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Junior Stock shall be automatically reduced by the number of shares of Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Junior Stock that had been designated as Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Junior Stock and all provisions included under Article III(a)(i)(A)-(F) and all references to the Series A Stock, Series B Stock, Series C Stock, Series D Stock, Series E Stock and Series F Junior Stock in this Sixth Restated Certificate of Incorporation shall be deleted and of no further force or effect. (3) Article V of the Restated Certificate is deleted in its entirely and the following is inserted in lieu thereof: ARTICLE V BOARD OF DIRECTORS (a) Subject to paragraph (b) below of this Article V, and subject to the provisions of Section A.6(c) of Article III hereof, the number of directors of the Board of Directors shall not be in excess of seven (7) persons, five (5) of whom shall be Preferred Directors, as defined in Section A.6(b)(i) of Article III hereof. Unless and except to the extent that the By-laws of the Corporation otherwise require, the election of directors of the Corporation need not be by written ballot. - 2 - (b) Upon the closing of the sale of shares of Common Stock in a firm commitment underwriting meeting the requirements of Section A.7(j), Article V(a) shall terminate and be of no further force or effect and the following provisions shall apply from and after such date: (i) NUMBER OF DIRECTORS; ELECTION OF DIRECTORS. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the Corporation shall not be less than three. The exact number of directors within the limitations specified in the preceding sentence shall be determined from time to time by, or in the manner provided in, the By-laws of the Corporation. Election of directors need not be by written ballot, except as and to the extent provided in the By-laws of the Corporation. (ii) CLASSES OF DIRECTORS. Subject to the rights of holders of any series of Preferred Stock to elect directors, the Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the authorized number of directors by three, then, if such fraction is one-third, the extra director shall be a member of Class I, and if such fraction is two-thirds, one of the extra directors shall be a member of Class I and one of the extra directors shall be a member of Class II, unless otherwise provided by resolution of the Board of Directors. (iii) TERMS OF OFFICE. Subject to the rights of holders of any series of Preferred Stock to elect directors, each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each director initially appointed to Class I shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2004; each director initially appointed to Class II shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2005; and each director initially appointed to Class III shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2006; provided further, that the term of each director shall continue until the election and qualification of his successor and be subject to his earlier death, resignation or removal. (iv) ALLOCATION OF DIRECTORS AMONG CLASSES IN THE EVENT OF INCREASES OR DECREASES IN THE AUTHORIZED NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member until the expiration of his current term, subject to his earlier death, resignation or removal and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors in accordance with the provisions of Subsection b(ii) of this Article V. To the extent possible, consistent with the provisions of Subsection b(ii) of this Article V, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution of the Board of Directors. (v) QUORUM. A majority of the directors at any time in office shall constitute a quorum for the transaction of business. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each director so disqualified. In no case, however, shall less than - 3 - one-third of the number of directors fixed pursuant to Subsection(b)(i) of this Article V constitute a quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. (vi) ACTION AT MEETING. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by this Certificate of Incorporation, or by the By-laws of the Corporation. (vii) REMOVAL. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed only for cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors. (viii) VACANCIES. Subject to the rights of holders of any series of Preferred Stock, any vacancy or newly created directorships in the Board of Directors, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy shall be elected to hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of his successor and to his earlier death, resignation or removal. (ix) STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the By-laws of the Corporation. (x) AMENDMENTS TO ARTICLE V. Notwithstanding any other provisions of law, this Sixth Restated Certificate of Incorporation or the By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article V." (4) Article X of the Restated Certificate is deleted in its entirely and the following is inserted in lieu thereof: "ARTICLE X LIMITATION OF LIABILITY Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability - 4 - of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal." (5) Article XI of the Restated Certificate is deleted in its entirely and the following is inserted in lieu thereof: "ARTICLE XI INDEMNIFICATION The Corporation shall provide indemnification as follows: 1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. 2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any Indemnitee who was or is a party to or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 2 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee - 5 - is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware shall deem proper. 3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any other provisions of this Article XI, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article XI, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, Indemnitee shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe his conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. 4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to an Indemnitee's right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit, proceeding or investigation, other than as provided below in this Section 4. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit, proceeding or investigation, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit, proceeding or investigation or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit, proceeding or investigation, in each of which cases the fees and expenses of counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article XI. The Corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify Indemnitee under this Article XI for any amounts paid in settlement of any action, suit, proceeding or investigation effected without its written consent. The Corporation shall not settle any action, suit, proceeding or investigation in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement. - 6 - 5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 of this Article XI, in the event that the Corporation does not assume the defense pursuant to Section 4 of this Article XI of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article XI, any expenses (including attorneys' fees) incurred by or on behalf of Indemnitee in defending an action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided, however, that the payment of such expenses incurred by or on behalf of Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article XI; and further provided that no such advancement of expenses shall be made under this Article XI if it is determined (in the manner described in Section 6) that (i) Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe his conduct was unlawful. Such undertaking shall be accepted without reference to the financial ability of Indemnitee to make such repayment. 6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article XI, an Indemnitee shall submit to the Corporation a written request. Any such advancement of expenses shall be made promptly, and in any event within 30 days after receipt by the Corporation of the written request of Indemnitee, unless the Corporation determines within such 30-day period that Indemnitee did not meet the applicable standard of conduct set forth in Section 1, 2 or 5 of this Article XI, as the case may be. Any such indemnification, unless ordered by a court, shall be made with respect to requests under Section 1 or 2 only as authorized in the specific case upon a determination by the Corporation that the indemnification of Indemnitee is proper because Indemnitee has met the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance (a) by a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, be independent legal counsel (who may, to the extent permitted by law, by regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation. 7. REMEDIES. The right to indemnification or advancement of expenses as granted by this Article XI shall be enforceable by Indemnitee in any court of competent jurisdiction. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 of this Article XI that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses (including attorneys' fees) reasonably incurred in connection with successfully establishing Indemnitee's right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. 8. LIMITATIONS. Notwithstanding anything to the contrary in this Article XI, except as set forth in Section 7 of the Article XI, the Corporation shall not indemnify an - 7 - Indemnitee pursuant to this Article XI in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Article XI, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund indemnification payments to the Corporation to the extent of such insurance reimbursement. 9. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this Article XI or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. 10. OTHER RIGHTS. The indemnification and advancement of expenses provided by this Article XI shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee's official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of Indemnitee. Nothing contained in this Article XI shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article XI. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article XI. 11. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which Indemnitee is entitled. 12. INSURANCE. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. 13. SAVINGS CLAUSE. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), - 8 - judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. 14. DEFINITIONS. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i)." (6) A new Article XII shall be inserted into the Restated Certificate as follows: "ARTICLE XII STOCKHOLDER MEETINGS Upon the closing of the sale of shares of Common Stock in a firm commitment underwriting meeting the requirements of Section A.7(j), Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, this Sixth Restated Certificate of Incorporation or the By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article XII." IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer on this ___ day of _________, 2003. NITROMED, INC. By: -------------------------- Name: Michael D. Loberg Title: Chief Executive Officer - 9 - EX-3.3 5 a2116973zex-3_3.txt EXHIBIT 3.3 EXHIBIT 3.3 RESTATED CERTIFICATE OF INCORPORATION OF NITROMED, INC. -------------------------------- Pursuant to Section 242 and 245 of the General Corporation Law of the State of Delaware -------------------------------- The undersigned, for the purpose of amending and restating the Certificate of Incorporation of NitroMed, Inc., as amended and supplemented heretofore under the laws of the State of Delaware, hereby certifies as follows: 1. The original name of this corporation is NitroMed, Inc. and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on March 9, 1992. A Restated Certificate of Incorporation was filed on December 2, 1993. A Certificate of Amendment was filed on each of July 27, 1994 and December 20, 1994. A Second Restated Certificate of Incorporation was filed on June 19, 1995. A Certificate of Amendment was filed on each of January 10, 1996, April 11, 1996, September 30, 1996, December 17, 1996, February 10, 1997, April 4, 1997, April 7, 1997 and July 31, 1997. A Third Restated Certificate of Incorporation was filed on December 31, 1997. A Fourth Restated Certificate of Incorporation was filed on May 17, 1999. A Certificate of Amendment was filed on May 1, 2000. A Fifth Restated Certificate of Incorporation was filed on May 22, 2001. A Certificate of Amendment was filed on June 15, 2001. A Sixth Restated Certificate of Incorporation was filed on November 20, 2001. A Certificate of Amendment was filed on each of May 12, 2003, July 31, 2003 and [_____], 2003. 2. At a meeting of the Board of Directors of the Corporation a resolution was duly adopted pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, setting forth this Restated Certificate of Incorporation and declaring said Restated Certificate to be advisable. The stockholders of the Corporation duly approved and adopted said proposed Restated Certificate of Incorporation by written consent in accordance with Sections 228, 242 and 245 of the General Corporation Law of State of Delaware, and written notice of such consent has been given to all stockholders who have not consented in writing to said Restated Certificate of Incorporation. 3. The Certificate of Incorporation of this Corporation, as previously amended, is hereby further amended and restated in its entirety to read as follows: FIRST: The name of the Corporation is Nitromed, Inc. SECOND: The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 70,000,000 shares, consisting of (i) 65,000,000 shares of Common Stock, $0.01 par value per share ("Common Stock"), and (ii) 5,000,000 shares of Preferred Stock, $0.01 par value per share ("Preferred Stock"). The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation. A COMMON STOCK. 1. GENERAL. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series. 2. VOTING. The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder. There shall be no cumulative voting. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. 3. DIVIDENDS. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock. 4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding Preferred Stock. B PREFERRED STOCK. Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided. Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, 2 limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise provided in this Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware. FIFTH: Except as otherwise provided herein, the Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. SIXTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation's By-laws. The affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present shall be required to adopt, amend, alter or repeal the Corporation's By-laws. The Corporation's By-laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors. Notwithstanding any other provisions of law, this Certificate of Incorporation or the By-Laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article SIXTH. SEVENTH: Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. EIGHTH: The Corporation shall provide indemnification as follows: 1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise 3 (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. 2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation shall indemnify any Indemnitee who was or is a party to or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 2 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware shall deem proper. 3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding any other provisions of this Article, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article EIGHTH, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, Indemnitee shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a plea of guilty or NOLO CONTENDERE by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe his conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto. 4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to an Indemnitee's right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice 4 from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit, proceeding or investigation, other than as provided below in this Section 4. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit, proceeding or investigation, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit, proceeding or investigation or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit, proceeding or investigation, in each of which cases the fees and expenses of counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify Indemnitee under this Article EIGHTH for any amounts paid in settlement of any action, suit, proceeding or investigation effected without its written consent. The Corporation shall not settle any action, suit, proceeding or investigation in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement. 5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 of this Article EIGHTH, in the event that the Corporation does not assume the defense pursuant to Section 4 of this Article EIGHTH of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, any expenses (including attorneys' fees) incurred by or on behalf of Indemnitee in defending an action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; PROVIDED, however, that the payment of such expenses incurred by or on behalf of Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article; and further provided that no such advancement of expenses shall be made under this Article EIGHTH if it is determined (in the manner described in Section 6) that (i) Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe his conduct was unlawful. Such undertaking shall be accepted without reference to the financial ability of Indemnitee to make such repayment. 6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article EIGHTH, an Indemnitee shall submit to the Corporation a written request. Any such advancement of expenses shall be made promptly, and in any event within 30 days after receipt by the Corporation of the written request of Indemnitee, unless the Corporation determines within such 30-day period that Indemnitee did not meet the applicable standard of conduct set forth in Section 1, 2 or 5 of this Article EIGHTH, as the case may be. Any such indemnification, unless ordered by a court, shall be made with respect to requests under Section 1 or 2 only as authorized in the specific case upon a determination by the Corporation that the indemnification of Indemnitee is proper because Indemnitee has met the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance (a) by a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, be independent legal 5 counsel (who may, to the extent permitted by law, by regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation. 7. REMEDIES. The right to indemnification or advancement of expenses as granted by this Article shall be enforceable by Indemnitee in any court of competent jurisdiction. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 of this Article EIGHTH that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses (including attorneys' fees) reasonably incurred in connection with successfully establishing Indemnitee's right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation. 8. LIMITATIONS. Notwithstanding anything to the contrary in this Article, except as set forth in Section 7 of the Article EIGHTH, the Corporation shall not indemnify an Indemnitee pursuant to this Article EIGHTH in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Article, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund indemnification payments to the Corporation to the extent of such insurance reimbursement. 9. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this Article or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. 10. OTHER RIGHTS. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee's official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. 11. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which Indemnitee is entitled. 6 12. INSURANCE. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware. 13. SAVINGS CLAUSE. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. 14. DEFINITIONS. Terms used herein and defined in Section 145(h) and Section 145(i) of the General Corporation Law of Delaware shall have the respective meanings assigned to such terms in such Section 145(h) and Section 145(i). NINTH: This Article is inserted for the management of the business and for the conduct of the affairs of the Corporation. 1. NUMBER OF DIRECTORS; ELECTION OF DIRECTORS. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the Corporation shall not be less than three. The exact number of directors within the limitations specified in the preceding sentence shall be determined from time to time by, or in the manner provided in, the By-laws of the Corporation. Election of directors need not be by written ballot, except as and to the extent provided in the By-laws of the Corporation. 2. TENURE. Subject to the rights of holders of any series of Preferred Stock to elect directors, each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until such director's earlier death, resignation or removal. 3. QUORUM. A majority of the directors at any time in office shall constitute a quorum for the transaction of business. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each director so disqualified. In no case, however, shall less than one-third of the number of directors fixed pursuant to Section 1 of this Article NINTH constitute a quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. 4. ACTION AT MEETING. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by this Certificate of Incorporation, or by the By-laws of the Corporation. 5. REMOVAL. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed only for cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors. 7 6. VACANCIES. Subject to the rights of holders of any series of Preferred Stock, any vacancy or newly created directorships in the Board of Directors, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy shall be elected to hold office until the next annual meeting of stockholders, subject to the election and qualification of his successor and to his earlier death, resignation or removal. 7. STOCKHOLDER NOMINATIONS AND INTRODUCTION OF BUSINESS, ETC. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the By-laws of the Corporation. 8. AMENDMENTS TO ARTICLE. Notwithstanding any other provisions of law, this Certificate of Incorporation or the By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article NINTH. TENTH: Stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, this Certificate of Incorporation or the By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TENTH. ELEVENTH: Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors, the Chairman of the Board or the Chief Executive Officer, but such special meetings may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provision of law, this Certificate of Incorporation or the By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article ELEVENTH. IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of Incorporation, which restates, integrates and amends the Certificate of Incorporation of the Corporation, has been executed by its duly authorized officer this ____ day of ___________, 2003. NITROMED, INC. By: ---------------------------------------- Name: Michael D. Loberg Title: Chief Executive Officer 8 EX-3.4 6 a2116973zex-3_4.txt EXHIBIT 3.4 EXHIBIT 3.4 RESTATED BY-LAWS OF NITROMED, INC. BY-LAWS TABLE OF CONTENTS

- i - ARTICLE 4 - Capital Stock...............................................9 4.1 Issuance of Stock.............................................9 4.2 Certificates of Stock.........................................9 4.3 Transfers....................................................10 4.4 Lost, Stolen or Destroyed Certificates.......................10 4.5 Record Date..................................................11 ARTICLE 5 - General Provisions.........................................11 5.1 Fiscal Year..................................................11 5.2 Corporate Seal...............................................11 5.3 Waiver of Notice.............................................11 5.4 Voting of Securities.........................................12 5.5 Evidence of Authority........................................12 5.6 Certificate of Incorporation.................................12 5.7 Transactions with Interested Parties.........................12 5.8 Severability.................................................13 5.9 Pronouns.....................................................13 ARTICLE 6 - Amendments.................................................13

- ii - RESTATED BY-LAWS OF NITROMED, INC. ARTICLE 1 - STOCKHOLDERS 1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Board of Directors or the President or, if not so designated, at the registered office of the corporation. 1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date to be fixed by the Board of Directors or the President (which date shall not be a legal holiday in the place where the meeting is to be held) at the time and place to be fixed by the Board of Directors or the President and stated in the notice of the meeting. If no annual meeting is held in accordance with the foregoing provisions, the Board of Directors shall cause the meeting to be held as soon thereafter as convenient. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-Laws to the annual meeting of the stockholders shall be deemed to refer to such special meeting. 1.3 SPECIAL MEETINGS. Special meetings of stockholders may be called at any time by the President or by the Board of Directors. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. 1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, written notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, date and hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. 1.5 VOTING LIST. The officer who has charge of the stock ledger of the corporation shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, at a place within the city where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. 1.6 QUORUM. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business. 1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these By-Laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as Secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. 1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided in the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting, may vote or express such consent or dissent in person or may authorize another person or persons to vote or act for him by written proxy executed by the stockholder or his authorized agent and delivered to the Secretary of the corporation. No such proxy shall be voted or acted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period. - 2 - 1.9 ACTION AT MEETING. When a quorum is present at any meeting, the holders of shares of stock representing a majority of the votes cast on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of shares of stock of that class representing a majority of the votes cast on a matter) shall decide any matter to be voted upon by the stockholders at such meeting, except when a different vote is required by express provision of law, the Certificate of Incorporation or these By-Laws. When a quorum is present at any meeting, any election by stockholders shall be determined by a plurality of the votes cast on the election. 1.10 ACTION WITHOUT MEETING. Any action required or permitted to be taken at any annual or special meeting of stockholders of the corporation may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote on such action were present and voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE 2 - DIRECTORS 2.1 GENERAL POWERS. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law or the Certificate of Incorporation. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled. 2.2 NUMBER; ELECTION AND QUALIFICATION. The number of directors which shall constitute the whole Board of Directors shall be determined by resolution of the stockholders or the Board of Directors, but in no event shall be less than one. The number of directors may be decreased at any time and from time to time either by the stockholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. Directors need not be stockholders of the corporation. - 3 - 2.3 ENLARGEMENT OF THE BOARD. Subject to the requirements of Section 5 of that certain Stockholders' Agreement among the Corporation and the Investors set forth on Schedule 1 attached thereto, as such Stockholders' Agreement may be amended from time to time (the "Stockholders' Agreement"), the number of directors may be increased at any time and from time to time by the stockholders or by a majority of the directors then in office. 2.4 TENURE. Each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.5 VACANCIES. Subject to the requirements of Section 5 of the Stockholders' Agreement, unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until his earlier death, resignation or removal. 2.6 RESIGNATION. Any director may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. 2.7 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. 2.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time and place, within or without the State of Delaware, designated in a call by the Chairman of the Board, President, two or more directors, or by one director in the event that there is only a single director in office. 2.9 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving - 4 - notice to such director in person or by telephone at least 48 hours in advance of the meeting, (ii) by sending a telegram or telex, or delivering written notice by hand, to his last known business or home address at least 48 hours in advance of the meeting, or (iii) by mailing written notice to his last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting. 2.10 MEETINGS BY TELEPHONE CONFERENCE CALLS. Directors or any members of any committee designated by the directors may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. 2.11 QUORUM. A majority of the total number of the whole Board of Directors shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified; provided, however, that in no case shall less than one-third (1/3) of the number so fixed constitute a quorum. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. 2.12 ACTION AT MEETING. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws. 2.13 ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing, and the written consents are filed with the minutes of proceedings of the Board or committee. 2.14 REMOVAL. Except as otherwise provided by the General Corporation Law of Delaware or by Section 5 of the Stockholders' Agreement, any one or more or all of the directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except that the directors elected by the holders of a particular class or series of stock may be removed without cause only by vote of the holders of a majority of the outstanding shares of such class or series. - 5 - 2.15 COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the General Corporation Law of the State of Delaware, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors. 2.16 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service. ARTICLE 3 - OFFICERS 3.1 ENUMERATION. The officers of the corporation shall consist of a President, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors shall determine, including a chairman of the Board, a Vice-Chairman of the Board, and one or more Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate. 3.2 ELECTION. The President, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting. - 6 - 3.3 QUALIFICATION. No officer need be a stockholder. Any two or more offices may be held by the same person. 3.4 TENURE. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his successor is elected and qualified, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal. 3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering his written resignation to the corporation at its principal office or to the President or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation. 3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is elected and qualified, or until his earlier death, resignation or removal. 3.7 CHAIRMAN OF THE BOARD AND VICE-CHAIRMAN OF THE BOARD. The Board of Directors may appoint a Chairman of the Board and may designate the Chairman of the Board as Chief Executive Officer. If the Board of Directors appoints a Chairman of the Board, he shall perform such duties and possess such powers as are assigned to him by the Board of Directors. If the Board of Directors appoints a Vice-Chairman of the Board, he shall, in the absence or disability of the Chairman of the Board, perform the duties and exercise the powers of the Chairman of the Board and shall perform such other duties and possess such other powers as may from time to time be vested in him by the Board of Directors. - 7 - 3.8 PRESIDENT. The President shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the corporation. Unless otherwise provided by the Board of Directors, he shall preside at all meetings of the stockholders and, if he is a director, at all meetings of the Board of Directors. Unless the Board of Directors has designated the Chairman of the Board or another officer as Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The President shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe. 3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the President may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors. 3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the President may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents. Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the President or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary, (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary. In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting. - 8 - 3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned to him by the Board of Directors or the President. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these By-Laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation. The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the President or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer, (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer. 3.12 SALARIES. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. ARTICLE 4 - CAPITAL STOCK 4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any unissued balance of the authorized capital stock of the corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such consideration and on such terms as the Board of Directors may determine. 4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by him in the corporation. Each such certificate shall be signed by, or in the name of the corporation by, the Chairman or Vice-Chairman, if any, of the Board of Directors, or the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on the certificate may be a facsimile. - 9 - Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of shareholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of each certificate representing shares of such class or series of stock, provided that in lieu of the foregoing requirements there may be set forth on the face or back of each certificate representing shares of such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 4.3 TRANSFERS. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-Laws. 4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as - 10 - the Board of Directors may require for the protection of the corporation or any transfer agent or registrar. 4.5 RECORD DATE. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders or to express consent (or dissent) to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 10 days after the date of adoption of a record date for a written consent without a meeting, nor more than 60 days prior to any other action to which such record date relates. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is properly delivered to the corporation. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE 5 - GENERAL PROVISIONS 5.1 FISCAL YEAR. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January in each year and end on the last day of December in each year. 5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be approved by the Board of Directors. 5.3 WAIVER OF NOTICE. Whenever any notice whatsoever is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a waiver of such notice either in writing signed by the person entitled to such notice or such person's duly authorized attorney, or by telegraph, cable or any other available - 11 - method, whether before, at or after the time stated in such waiver, or the appearance of such person or persons at such meeting in person or by proxy, shall be deemed equivalent to such notice. 5.4 VOTING OF SECURITIES. Except as the directors may otherwise designate, the President or Treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at, any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by this corporation. 5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action. 5.6 CERTIFICATE OF INCORPORATION. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time. 5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or - 12 - (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 5.8 SEVERABILITY. Any determination that any provision of these By-Laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-Laws. 5.9 PRONOUNS. All pronouns used in these By-Laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. ARTICLE 6 - AMENDMENTS These By-Laws may be altered, amended or repealed or new by-laws may be adopted in the manner set forth in Section A.6(c) of the Restated Certificate of Incorporation. - 13 - EX-3.5 7 a2116973zex-3_5.txt EXHIBIT 3.5 EXHIBIT 3.5 ------------------------------------- AMENDED AND RESTATED BY-LAWS OF NITROMED, INC. -------------------------------------- APPROVED BY THE BOARD OF DIRECTORS AUGUST 18, 2003 APPROVED BY THE STOCKHOLDERS [___________], 2003 TABLE OF CONTENTS
PAGE ---- ARTICLE I STOCKHOLDERS....................................................................................1 1.1 Place of Meetings...............................................................................1 1.2 Annual Meeting..................................................................................1 1.3 Special Meetings................................................................................1 1.4 Notice of Meetings..............................................................................1 1.5 Voting List.....................................................................................1 1.6 Quorum..........................................................................................2 1.7 Adjournments....................................................................................2 1.8 Voting and Proxies..............................................................................2 1.9 Action at Meeting...............................................................................2 1.10 Nomination of Directors.........................................................................3 1.11 Notice of Business at Annual Meetings...........................................................4 1.12 Conduct of Meetings.............................................................................6 1.13 No Action by Written Consent in Lieu of a Meeting...............................................7 ARTICLE II DIRECTORS.......................................................................................7 2.1 General Powers..................................................................................7 2.2 Number, Election and Qualification..............................................................7 2.3 Tenure..........................................................................................7 2.4 Quorum..........................................................................................7 2.5 Action at Meeting...............................................................................7 2.6 Removal.........................................................................................8 2.7 Vacancies.......................................................................................8 2.8 Resignation.....................................................................................8 2.9 Regular Meetings................................................................................8 2.10 Special Meetings................................................................................8 2.11 Notice of Special Meetings......................................................................8 2.12 Meetings by Conference Communications Equipment.................................................8 2.13 Action by Consent...............................................................................8 2.14 Committees......................................................................................9 2.15 Compensation of Directors.......................................................................9 ARTICLE III OFFICERS........................................................................................9 3.1 Titles..........................................................................................9 3.2 Election........................................................................................9 3.3 Qualification...................................................................................9 3.4 Tenure.........................................................................................10 3.5 Resignation and Removal........................................................................10 3.6 Vacancies......................................................................................10 3.7 Chairman of the Board..........................................................................10 3.8 President; Chief Executive Officer.............................................................10 3.9 Vice Presidents................................................................................10 3.10 Secretary and Assistant Secretaries............................................................11
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3.11 Treasurer and Assistant Treasurers.............................................................11 3.12 Salaries.......................................................................................11 ARTICLE IV CAPITAL STOCK..................................................................................12 4.1 Issuance of Stock..............................................................................12 4.2 Certificates of Stock..........................................................................12 4.3 Transfers......................................................................................12 4.4 Lost, Stolen or Destroyed Certificates.........................................................12 4.5 Record Date....................................................................................13 ARTICLE V GENERAL PROVISIONS.............................................................................13 5.1 Fiscal Year....................................................................................13 5.2 Corporate Seal.................................................................................13 5.3 Waiver of Notice...............................................................................13 5.4 Voting of Securities...........................................................................13 5.5 Evidence of Authority..........................................................................14 5.6 Certificate of Incorporation...................................................................14 5.7 Transactions with Interested Parties...........................................................14 5.8 Severability...................................................................................14 5.9 Pronouns.......................................................................................14 ARTICLE VI AMENDMENTS.....................................................................................15
ii ARTICLE I STOCKHOLDERS 1.1 PLACE OF MEETINGS. All meetings of stockholders shall be held at such place as may be designated from time to time by the Board of Directors, the Chairman of the Board or the Chief Executive Officer or, if not so designated, at the principal office of the corporation. 1.2 ANNUAL MEETING. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors, the Chairman of the Board or the Chief Executive Officer (which date shall not be a legal holiday in the place where the meeting is to be held). If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these By-laws to the annual meeting of the stockholders shall be deemed to refer to such special meeting. 1.3 SPECIAL MEETINGS. Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors, the Chairman of the Board or the Chief Executive Officer, but such special meetings may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. 1.4 NOTICE OF MEETINGS. Except as otherwise provided by law, notice of each meeting of stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. Without limiting the manner by which notice otherwise may be given to stockholders, any notice shall be effective if given by a form of electronic transmission consented to (in a manner consistent with the General Corporation Law of the State of Delaware) by the stockholder to whom the notice is given. The notices of all meetings shall state the place, date and time of the meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. If notice is given by mail, such notice shall be deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the corporation. If notice is given by electronic transmission, such notice shall be deemed given at the time specified in Section 232 of the General Corporation Law of the State of Delaware. 1.5 VOTING LIST. The Secretary shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the corporation. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 1.6 QUORUM. Except as otherwise provided by law, the Certificate of Incorporation or these By-laws, the holders of a majority of the shares of the capital stock of the corporation issued and outstanding and entitled to vote at the meeting, present in person, present by means of remote communication in a manner, if any, authorized by the Board of Directors in its sole discretion, or represented by proxy, shall constitute a quorum for the transaction of business. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. 1.7 ADJOURNMENTS. Any meeting of stockholders may be adjourned from time to time to any other time and to any other place at which a meeting of stockholders may be held under these By-laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, or, if no stockholder is present, by any officer entitled to preside at or to act as secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than 30 days if the time and place of the adjourned meeting, and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. 1.8 VOTING AND PROXIES. Each stockholder shall have one vote for each share of stock entitled to vote held of record by such stockholder and a proportionate vote for each fractional share so held, unless otherwise provided by law or the Certificate of Incorporation. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person (including by means of remote communications, if any, by which stockholders may be deemed to be present in person and vote at such meeting) or may authorize another person or persons to vote for such stockholder by a proxy executed or transmitted in a manner permitted by the General Corporation Law of the State of Delaware by the stockholder or such stockholder's authorized agent and delivered (including by electronic transmission) to the Secretary of the corporation. No such proxy shall be voted upon after three years from the date of its execution, unless the proxy expressly provides for a longer period. 1.9 ACTION AT MEETING. When a quorum is present at any meeting, any matter other than the election of directors to be voted upon by the stockholders at such meeting shall be decided by the vote of the holders of shares of stock having a majority of the votes cast by the holders of all of the shares of stock present or represented and voting on such matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on such matter), except when a different vote is required by law, the Certificate of Incorporation or these By-laws. When a quorum is present at any meeting, any election by stockholders of directors shall be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. 2 1.10 NOMINATION OF DIRECTORS. (a) Except for (i) any directors entitled to be elected by the holders of preferred stock and (ii) any directors elected in accordance with Section 2.7 hereof by the Board of Directors to fill a vacancy or newly-created directorships, only persons who are nominated in accordance with the procedures in this Section 1.10 shall be eligible for election as directors. Nomination for election to the Board of Directors of the corporation at a meeting of stockholders may be made (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the corporation who (x) complies with the notice procedures set forth in Section 1.10(b) and (y) is a stockholder of record on the date of the giving of such notice and on the record date for the determination of stockholders entitled to vote at such meeting. (b) To be timely, a stockholder's notice must be received in writing by the Secretary at the principal executive offices of the corporation as follows: (x) in the case of an election of directors at an annual meeting of stockholders, not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that (i) in the case of the annual meeting of stockholders of the corporation to be held in 2004 or (ii) in the event that the date of the annual meeting in any other year is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of the preceding year's annual meeting, a stockholder's notice must be so received not earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of (A) the sixtieth day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs; or (y) in the case of an election of directors at a special meeting of stockholders, not earlier than the ninetieth day prior to such special meeting and not later than the close of business on the later of (i) the sixtieth day prior to such special meeting and (ii) the tenth day following the day on which notice of the date of such special meeting was mailed or public disclosure of the date of such special meeting was made, whichever first occurs. The stockholder's notice to the Secretary shall set forth: (a) as to each proposed nominee (i) such person's name, age, business address and, if known, residence address, (ii) such person's principal occupation or employment, (iii) the class and number of shares of stock of the corporation which are beneficially owned by such person, and (iv) any other information concerning such person that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b) as to the stockholder giving the notice (i) such stockholder's name and address, as they appear on the corporation's books, (ii) the class and number of shares of stock of the corporation which are owned, beneficially and of record, by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice and (v) a representation whether the stockholder intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock required to elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such nomination; and (c) as to the beneficial owner, if any, on whose behalf the nomination is being made (i) such beneficial owner's name and address, (ii) the 3 class and number of shares of stock of the corporation which are beneficially owned by such beneficial owner, (iii) a description of all arrangements or understandings between such beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made and (iv) a representation whether the beneficial owner intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock requirement to elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such nomination. In addition, to be effective, the stockholder's notice must be accompanied by the written consent of the proposed nominee to serve as a director if elected. The corporation may require any proposed nominee to furnish such other information as may reasonably be required to determine the eligibility of such proposed nominee to serve as a director of the corporation. (c) The chairman of any meeting shall, if the facts warrant, determine that a nomination was not made in accordance with the provisions of this Section 1.10 (including whether the stockholder or beneficial owner, if any, on whose behalf the nomination is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder's nominee in compliance with the representations with respect thereto required by this Section 1.10). (d) Except as otherwise required by law, nothing in this Section 1.10 shall obligate the corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the corporation or the Board of Directors information with respect to any nominee for director submitted by a stockholder. (e) Notwithstanding the foregoing provisions of this Section 1.10, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the corporation. (f) For purposes of this Section 1.10, "public disclosure" shall include disclosure in a press release reported by the Dow Jones New Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. 1.11 NOTICE OF BUSINESS AT ANNUAL MEETINGS. (a) At any annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, (i) if such business relates to the election of directors of the corporation, the procedures in Section 1.10 must be complied with and (ii) if such business relates to any other matter, the stockholder must (x) have given timely notice thereof in writing 4 to the Secretary in accordance with the procedures set forth in Section 1.11(b) and (y) be a stockholder of record on the date of the giving of such notice and on the record date for the determination of stockholders entitled to vote at such annual meeting. (b) To be timely, a stockholder's notice must be received in writing by the Secretary at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that (i) in the case of the annual meeting of stockholders of the corporation to be held in 2004 or (ii) in the event that the date of the annual meeting in any other year is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of the preceding year's annual meeting, a stockholder's notice must be so received not earlier than the ninetieth day prior to such annual meeting and not later than the close of business on the later of (A) the sixtieth day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. The stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of stock of the corporation which are owned, of record and beneficially, by the stockholder and beneficial owner, if any, (iv) a description of all arrangements or understandings between such stockholder or such beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of the stockholder or such beneficial owner, if any, in such business, (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (vi) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporation's outstanding capital stock required to approve or adopt the proposal and/or (b) otherwise to solicit proxies from stockholders in support of such proposal. Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at any annual meeting of stockholders except in accordance with the procedures set forth in this Section 1.11; provided that any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the corporation's proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 1.11. (c) The chairman of any meeting shall, if the facts warrant, determine that business was not properly brought before the meeting in accordance with the provisions of this Section 1.11 (including whether the stockholder or beneficial owner, if any, on whose behalf the proposal is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholder's proposal in compliance with the representation with respect thereto required by this Section 1.11), and if the chairman should so determine, the chairman shall so declare to the meeting and such business shall not be brought before the meeting. 5 (d) Notwithstanding the foregoing provisions of this Section 1.11, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the corporation to present business, such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the corporation. (e) For purposes of this Section 1.11, "public disclosure" shall include disclosure in a press release reported by the Dow Jones New Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. 1.12 CONDUCT OF MEETINGS. (a) CHAIRMAN OF MEETING. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the Chairman's absence by the Vice Chairman of the Board, if any, or in the Vice Chairman's absence by the Chief Executive Officer, or in the Chief Executive Officer's absence by a Vice President, or in the absence of all of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen by vote of the stockholders at the meeting. The Secretary shall act as secretary of the meeting, but in the Secretary's absence the chairman of the meeting may appoint any person to act as secretary of the meeting. (b) RULES, REGULATIONS AND PROCEDURES. The Board of Directors of the corporation may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. (c) CLOSING OF POLLS. The chairman of the meeting shall announce at the meeting when the polls for each matter to be voted upon at the meeting will be opened and closed. If no announcement is made, the polls shall be deemed to have opened when the meeting is convened and closed upon the final adjournment of the meeting. After the polls close, no ballots, proxies or votes or any revocations or changes thereto may be accepted. 6 (d) INSPECTORS OF ELECTION. In advance of any meeting of stockholders, the Board of Directors, the Chairman of the Board or the Chief Executive Officer shall appoint one or more inspectors or election to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is present, ready and willing to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the corporation. Each inspector, before entering upon the discharge of such inspector's duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector's ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote in completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by law. 1.13 NO ACTION BY WRITTEN CONSENT IN LIEU OF A MEETING. Stockholders of the corporation may not take any action by written consent in lieu of a meeting. ARTICLE II DIRECTORS 2.1 GENERAL POWERS. The business and affairs of the corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the corporation except as otherwise provided by law, the Certificate of Incorporation or these By-laws. 2.2 NUMBER, ELECTION AND QUALIFICATION. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors which shall constitute the whole Board of Directors shall be determined from time to time by resolution of the Board of Directors, but in no event shall be less than three. The directors shall be elected at the annual meeting of stockholders by such stockholders as have the right to vote on such election. Directors need not be stockholders of the corporation. 2.3 TENURE. Subject to the rights of holders of any series of Preferred Stock to elect directors, each director shall hold office until the next annual meeting of stockholders and until a successor is elected and qualified, or until such director's earlier death, resignation or removal. 2.4 QUORUM. A majority of the directors at any time in office shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time without further notice other than announcement at the meeting, until a quorum shall be present. 2.5 ACTION AT MEETING. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by the Certificate of Incorporation or by these By-laws. 7 2.6 REMOVAL. Subject to the rights of holders of any series of Preferred Stock, directors of the corporation may be removed only for cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors. 2.7 VACANCIES. Subject to the rights of holders of any series of Preferred Stock, any vacancy or newly-created directorships in the Board of Directors, however occurring shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy shall be elected to hold office until the next annual meeting of stockholders, subject to the election and qualification of a successor and to such director's earlier death, resignation or removal. 2.8 RESIGNATION. Any director may resign by delivering a resignation in writing or by electronic transmission to the corporation at its principal office or to the Chairman of the Board, the Chief Executive Officer or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event. 2.9 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such time and place as shall be determined from time to time by the Board of Directors; provided that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. 2.10 SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time and place designated in a call by the Chairman of the Board, the Chief Executive Officer, two or more directors, or by one director in the event that there is only a single director in office. 2.11 NOTICE OF SPECIAL MEETINGS. Notice of any special meeting of directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. Notice shall be duly given to each director (i) by giving notice to such director in person or by telephone at least 24 hours in advance of the meeting, (ii) by sending a telegram, telecopy or electronic mail, or delivering written notice by hand, to such director's last known business, home or electronic mail address at least 48 hours in advance of the meeting, or (iii) by sending written notice, via first-class mail or reputable overnight courier, to such director's last known business or home address at least 72 hours in advance of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting. 2.12 MEETINGS BY CONFERENCE COMMUNICATIONS EQUIPMENT. Directors may participate in meetings of the Board of Directors or any committee thereof by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation by such means shall constitute presence in person at such meeting. 2.13 ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing or by 8 electronic transmission, and the written consents or electronic transmissions are filed with the minutes of proceedings of the Board or committee. 2.14 COMMITTEES. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members of the committee present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-laws for the Board of Directors. 2.15 COMPENSATION OF DIRECTORS. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service. ARTICLE III OFFICERS 3.1 TITLES. The officers of the corporation shall consist of a Chief Executive Officer, President, a Chief Financial Officer, a Secretary, a Treasurer and such other officers with such other titles as the Board of Directors may determine, including a Chairman of the Board, a Vice Chairman of the Board, and one or more Senior Vice Presidents, Vice Presidents, Assistant Treasurers, and Assistant Secretaries. The Board of Directors may appoint such other officers as it may deem appropriate. 3.2 ELECTION. The Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary shall be elected annually by the Board of Directors at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board of Directors at such meeting or at any other meeting. 3.3 QUALIFICATION. No officer need be a stockholder. Any two or more offices may be held by the same person. 9 3.4 TENURE. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-laws, each officer shall hold office until such officer's successor is elected and qualified, unless a different term is specified in the resolution electing or appointing such officer, or until such officer's earlier death, resignation or removal. 3.5 RESIGNATION AND REMOVAL. Any officer may resign by delivering a written resignation to the corporation at its principal office or to the Chief Executive Officer or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some later time or upon the happening of some later event. Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office. Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following such officer's resignation or removal, or any right to damages on account of such removal, whether such officer's compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation. 3.6 VACANCIES. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of Chief Executive Officer, President, Treasurer and Secretary. Each such successor shall hold office for the unexpired term of such officer's predecessor and until a successor is elected and qualified, or until such officer's earlier death, resignation or removal. 3.7 CHAIRMAN OF THE BOARD. The Board of Directors may appoint from its members a Chairman of the Board. If the Board of Directors appoints a Chairman of the Board, such Chairman shall perform such duties and possess such powers as are assigned by the Board of Directors and, if the Chairman of the Board is also designated as the corporation's Chief Executive Officer, shall have the powers and duties of the Chief Executive Officer prescribed in Section 3.8 of these By-laws. Unless otherwise provided by the Board of Directors, the Chairman of the Board shall preside at all meetings of the Board of Directors and stockholders. 3.8 PRESIDENT; CHIEF EXECUTIVE OFFICER. Unless the Board of Directors has designated the Chairman of the Board or another person as the corporation's Chief Executive Officer, the President shall be the Chief Executive Officer of the corporation. The Chief Executive Officer shall have general charge and supervision of the business of the Corporation subject to the direction of the Board of Directors. The President shall perform such other duties and shall have such other powers as the Board of Directors and the Chief Executive Officer (if the Chairman of the Board or another person is serving in such position) may from time to time prescribe. 3.9 VICE PRESIDENTS. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer or the President (if the President is not the Chief Executive Officer), the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the Chief Executive Officer and when so performing shall have all the 10 powers of and be subject to all the restrictions upon the Chief Executive Officer. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors. 3.10 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents. Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary. In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the chairman of the meeting shall designate a temporary secretary to keep a record of the meeting. 3.11 TREASURER AND ASSISTANT TREASURERS. The Treasurer shall perform such duties and shall have such powers as may from time to time be assigned by the Board of Directors or the Chief Executive Officer. In addition, the Treasurer shall perform such duties and have such powers as are incident to the office of treasurer, including without limitation the duty and power to keep and be responsible for all funds and securities of the corporation, to deposit funds of the corporation in depositories selected in accordance with these By-laws, to disburse such funds as ordered by the Board of Directors, to make proper accounts of such funds, and to render as required by the Board of Directors statements of all such transactions and of the financial condition of the corporation. The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer. 3.12 SALARIES. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. 11 ARTICLE IV CAPITAL STOCK 4.1 ISSUANCE OF STOCK. Unless otherwise voted by the stockholders and subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the corporation or the whole or any part of any shares of the authorized capital stock of the corporation held in the corporation's treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board of Directors in such manner, for such lawful consideration and on such terms as the Board of Directors may determine. 4.2 CERTIFICATES OF STOCK. Every holder of stock of the corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned by such holder in the corporation. Each such certificate shall be signed by, or in the name of the corporation by, the Chairman or Vice Chairman, if any, of the Board of Directors, or the Chief Executive Officer and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on the certificate may be a facsimile. Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these By-laws, applicable securities laws or any agreement among any number of stockholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction. There shall be set forth on the face or back of each certificate representing shares of such class or series of stock of the corporation a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 4.3 TRANSFERS. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock until the shares have been transferred on the books of the corporation in accordance with the requirements of these By-laws. 4.4 LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including 12 the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the corporation or any transfer agent or registrar. 4.5 RECORD DATE. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action to which such record date relates. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. If no record date is fixed, the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE V GENERAL PROVISIONS 5.1 FISCAL YEAR. Except as from time to time otherwise designated by the Board of Directors, the fiscal year of the corporation shall begin on the first day of January of each year and end on the last day of December in each year. 5.2 CORPORATE SEAL. The corporate seal shall be in such form as shall be approved by the Board of Directors. 5.3 WAIVER OF NOTICE. Whenever notice is required to be given by law, by the Certificate of Incorporation or by these By-laws, a written waiver signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before, at or after the time stated in such notice, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. 5.4 VOTING OF SECURITIES. Except as the Board of Directors may otherwise designate, the President or the Treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for this corporation (with or without power of substitution) at any meeting of stockholders or shareholders of any other corporation or organization, the securities of which may be held by this corporation. 13 5.5 EVIDENCE OF AUTHORITY. A certificate by the Secretary, or an Assistant Secretary, or a temporary Secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action. 5.6 CERTIFICATE OF INCORPORATION. All references in these By-laws to the Certificate of Incorporation shall be deemed to refer to the Certificate of Incorporation of the corporation, as amended and in effect from time to time. 5.7 TRANSACTIONS WITH INTERESTED PARTIES. No contract or transaction between the corporation and one or more of the directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors at which the contract or transaction is authorized or solely because any such director's or officer's votes are counted for such purpose, if: (a) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (b) The material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee of the Board of Directors, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 5.8 SEVERABILITY. Any determination that any provision of these By-laws is for any reason inapplicable, illegal or ineffective shall not affect or invalidate any other provision of these By-laws. 5.9 PRONOUNS. All pronouns used in these By-laws shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require. 14 ARTICLE VI AMENDMENTS These By-laws may be altered, amended or repealed, in whole or in part, or new By-laws may be adopted by the Board of Directors or by the stockholders as provided in the Certificate of Incorporation. 15 EX-10.1 8 a2116973zex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 NITROMED, INC. RESTATED 1993 EQUITY INCENTIVE PLAN 1. PURPOSE. The purpose of this plan (the "Plan") is to secure for NitroMed, Inc. (the "Company") and its stockholders the benefits arising from capital stock ownership by employees, officers and directors of, and consultants or advisors to, the Company and its parent and subsidiary corporations who are expected to contribute to the Company's future growth and success. Except where the context otherwise requires, the term "Company" shall include the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the "Code"). 2. TYPE OF OPTIONS AND AWARDS; ADMINISTRATION. (a) TYPES OF OPTIONS AND AWARDS. Options granted pursuant to the Plan shall be authorized by action of the Board of Directors of the Company (or a Committee designated by the Board of Directors) and may be either incentive stock options ("Incentive Stock Options") meeting the requirements of Section 422 of the Code or non-statutory options which are not intended to meet the requirements of Section 422 of the Code. Awards granted pursuant to the Plan shall be authorized by action of the Board of Directors of the Company (or a Committee designated by the Board of Directors) and shall meet the requirements of Section 14 of the Plan. (b) ADMINISTRATION. The Plan will be administered by the Board of Directors of the Company, whose construction and interpretation of the terms and provisions of the Plan shall be final and conclusive. The Board of Directors may in its sole discretion (i) grant options to purchase shares of the Company's Common Stock (as defined in Section 4 of the Plan), and issue shares upon exercise of such options as provided in the Plan and (ii) make awards for the purchase of shares of Common Stock pursuant to Section 14 of the Plan. The Board shall have authority, subject to the express provisions of the Plan, to construe the respective option agreements, awards and the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of the respective option agreements and awards, which need not be identical, and to make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option agreement or award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board of Directors shall be liable for any action or determination made in good faith. The Board of Directors may, to the full extent permitted by or consistent with applicable laws or regulations (including, without limitation, applicable state law and Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule ("Rule 16b-3")), delegate any or all of its powers under the Plan to a committee (the "Committee") appointed by the Board of Directors, and if the Committee is so appointed all references to the Board of Directors in the Plan shall mean and relate to such Committee to the extent authority is so delegated to such Committee. 1 (c) APPLICABILITY OF RULE 16B-3. Those provisions of the Plan which make express reference to Rule 16b-3 shall apply only to such persons as are required to file reports under Section 16(a) of the Exchange Act (a "Reporting Person"). 3. ELIGIBILITY. (a) GENERAL. Options and awards may be granted or made to persons who are, at the time of grant, employees, officers or directors (so long as such officers and directors are also employees) of, or consultants or advisors to, the Company; PROVIDED, that the class of employees to whom Incentive Stock Options may be granted shall be limited to all employees of the Company. A person who has been granted an option or award may, if he or she is otherwise eligible, be granted additional options or awards if the Board of Directors shall so determine. (b) GRANT OF OPTIONS TO DIRECTORS AND OFFICERS. From and after the registration of the Common Stock of the Company under the Exchange Act, the selection of a director or an officer (as the terms "director" and "officer" are defined for purposes of Rule 16b-3) as a participant, the timing of the option grant or award, the exercise price of the option or the sale price of the award and the number of shares for which an option or award may be granted to such director or officer shall be determined either (i) by the Board of Directors, of which all members shall be "disinterested persons" (as hereinafter defined), or (ii) by a committee of two or more directors having full authority to act in the matter, of which all members shall be "disinterested persons." For the purposes of the Plan, a director shall be deemed to be "disinterested" only if such person qualifies as a "disinterested person" within the meaning of Rule 16b-3, as such term is interpreted from time to time. 4. STOCK SUBJECT TO PLAN.CTORS AND OF Subject to adjustment as provided in Section 17 below, the total number of shares which may be issued and sold under the Plan is 2,288,200 shares of Common Stock, $.01 par value per share ("Common Stock"). If an option or award granted under the Plan shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject to such option shall again be available for subsequent option grants or awards under the Plan. 5. FORMS OF OPTION AGREEMENTS. As a condition to the grant of an option under the Plan, each recipient of an option shall execute an option agreement in such form not inconsistent with the Plan as may be approved by the Board of Directors. Such option agreements may differ among recipients. 2 6. PURCHASE PRICE UPON EXERCISE OF OPTIONS. (a) GENERAL. The purchase price per share of Common Stock deliverable upon the exercise of an option shall be determined by the Board of Directors, PROVIDED, HOWEVER, the exercise price shall not be less than 100% of the fair market value of such stock, as determined by the Board of Directors, at the time of grant of such option, or less than 110% of such fair market value in the case of options described in Section 11(b). (b) PAYMENT OF PURCHASE PRICE. Options granted under the Plan may provide for the payment of the exercise price by delivery of cash or a check to the order of the Company in an amount equal to the exercise price of such options, or, to the extent provided in the applicable option agreement, (i) by delivery to the Company of shares of Common Stock of the Company already owned by the optionee having a fair market value equal in amount to the exercise price of the options being exercised, (ii) by any other means (including without limitation by delivery of a promissory note of the optionee payable on such terms as are specified by the Board of Directors) which the Board of Directors determines are consistent with the purpose of the Plan and with applicable laws and regulations (including, without limitation, the provisions of Rule 16b-3 and Regulation T promulgated by the Federal Reserve Board) or (iii) by any combination of such methods of payment. The fair market value of any shares of the Company's Common Stock or other non-cash consideration which may be delivered upon exercise of an option shall be determined in such manner as may be prescribed by the Board of Directors. 7. OPTION PERIOD. Each option and all rights thereunder shall expire on such date as shall be set forth in the applicable option agreement, except that such date shall in no case be later than ten years after the date on which the option is granted. 8. EXERCISE OF OPTIONS. Each option granted under the Plan shall be exercisable either in full or in installments at such time or times and during such period as shall be set forth in the agreement evidencing such option, subject to the provisions of the Plan. 9. NONTRANSFERABILITY OF OPTIONS. Options shall not be assignable or transferable by the person to whom it is granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the optionee, shall be exercisable only by the optionee; provided, however, that non-statutory options granted to Reporting Persons may be transferred pursuant to a qualified domestic relations order (as defined in Rule 16b-3). 3 10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. Except as provided in Section 11(d) with respect to Incentive Stock Options and Section 12 with respect to non-statutory options, and subject to the provisions of the Plan, the Board of Directors shall determine the period of time during which an optionee may exercise an option following (i) the termination of the optionee's employment or other relationship with the Company or (ii) the death or disability of the optionee. Such periods shall be set forth in the agreement evidencing such option. 11. INCENTIVE STOCK OPTIONS. Options granted under the Plan which are intended to be Incentive Stock Options shall be subject to the following additional terms and conditions: (a) EXPRESS DESIGNATION. All Incentive Stock Options granted under the Plan shall, at the time of grant, be specifically designated as such in the option agreement covering such Incentive Stock Options. (b) 10% STOCKHOLDER. If any employee to whom an Incentive Stock Option is to be granted under the Plan is, at the time of the grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (after taking into account the attribution of stock ownership rules of Section 424(d) of the Code), then the following special provisions shall be applicable to the Incentive Stock Option granted to such individual: (i) The purchase price per share of the Common Stock subject to such Incentive Stock option shall not be less than 110% of the fair market value of one share of Common Stock at the time of grant; and (ii) The option exercise period shall not exceed five years from the date of grant. (c) DOLLAR LIMITATION. For so long as the Code shall so provider options granted to any employee under the Plan (and any other incentive stock option plans of the Company) which are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to the extent that such options, in the aggregate, become exercisable for the first time in any one calendar year for shares of Common Stock with an aggregate fair market value (determined as of the respective date or dates of grant) of more than $100,000. (d) TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY. No Incentive Stock Option may be exercised unless, at the time of such exercise, the optionee is, and has been continuously since the date of grant of his or her option, employed by the Company, except that: (i) an Incentive Stock Option may be exercised within the period of three months after the date the optionee ceases to be an employee of the Company (or within such lesser period as may be specified in the applicable option agreement), PROVIDED, that the agreement with respect to such option, may designate a longer exercise period and that the exercise after such three-month period shall be treated as the exercise of a non-statutory option under the Plan; 4 (ii) if the optionee dies while in the employ of the Company, or within three months after the optionee ceases to be such an employee, the Incentive Stock Option may be exercised, by the person to whom it is transferred by will or the laws of descent and distribution, within the period of one year after the date of death (or within such lesser period as may be specified in the applicable option agreement); and (iii) if the optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provision thereto) while in the employ of the Company, the Incentive Stock Option may be exercised within the period of one year after the date the optionee ceases to be such an employee because of such disability (or within such lesser period as may be specified in the applicable option agreement). For all purposes of the Plan and any option or award granted hereunder, "employment" shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations). Notwithstanding the foregoing provisions, no stock option may be exercised after its expiration date. 12. NON-STATUTORY OPTIONS. Non-statutory options granted under the Plan shall be subject to the following additional terms and conditions with respect to the termination of employment, death or disability: (a) If the holder of a non-statutory option is employed by the Company, a non-statutory option held by such optionee may be exercised within the period of three months after the date the optionee ceases to be an employee of the Company (or within such lesser period as may be specified in the applicable option agreement), PROVIDED, that the agreement with respect to such option may designate a longer exercise period; (b) If the holder of a non-statutory option dies while in the employ of the Company, or within three months after the optionee ceases to be such an employee, the non-statutory option may be exercised, by the person to whom it is transferred by will or the laws of descent and distribution, within the period of one year after the date of death (or within such lesser period as may be specified in the applicable option agreement); and (c) If the holder of a non-statutory option becomes disabled (within the meaning of Section 22(e)(3) of the Code or any successor provision thereto) while in the employ of the Company, the non-statutory option may be exercised within the period of one year after the date the optionee ceases to be such an employee because of such disability (or within such lesser period as may be specified in the applicable option agreement). 5 13. ADDITIONAL PROVISIONS. (a) ADDITIONAL OPTION PROVISIONS. The Board of Directors may, in its sole discretion, include additional provisions in any option granted under the Plan, including without limitation restrictions on transfer and repurchase rights or such other provisions as shall be determined by the Board of Directors; PROVIDED THAT such additional provisions shall not be inconsistent with any other term or condition of the Plan. (b) ACCELERATION, EXTENSION, ETC. The Board of Directors may, in its sole discretion, (i) accelerate the date or dates on which all or any particular option or options granted under the Plan may be exercised or (ii) extend the dates during which all or any particular option or options granted under the Plan may be exercised; provided, however, that no such extension shall be permitted if it would cause the Plan to fail to comply with Section 422 of the Code or with Rule 16b-3. 14. AWARDS. A restricted stock award ("award") shall consist of the sale and issuance by the Company of shares of Common Stock, and purchase by the recipient of such shares, subject to the terms, conditions and restrictions described in the document evidencing the award and in this Section 14 and elsewhere in the Plan. (a) EXECUTION OF RESTRICTED STOCK AWARD AGREEMENT. As a condition to an award under the Plan, each recipient of an award shall execute an agreement in such form, which may differ among recipients, as shall be specified by the Board of Directors at the time of such award. (b) PRICE. The Board of Directors shall determine the price at which shares of Common Stock shall be sold to recipients of awards under the Plan. The purchase price shall be paid in cash or by check payable to the order of the Company at the time that the award is accepted by the recipient, or by such other means as may be approved by the Board of Directors. (c) NUMBER OF SHARES. The award shall specify the number of shares of Common Stock granted thereunder. (d) RESTRICTIONS ON TRANSFER. In addition to such other terms, conditions and restrictions upon awards as shall be imposed by the Board of Directors, all shares issued pursuant to an award shall be subject to the following restrictions: (1) All shares of Common Stock subject to an award (including any shares issued pursuant to paragraph (e) of this Section) shall be subject to certain restrictions on disposition and obligations of resale to the Company as provided in subparagraph (2) below for the period specified in the document evidencing the award, and shall not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of until such restrictions lapse. The period during which such restrictions are applicable is referred to as the "Restricted Period." 6 (2) In the event that a recipient's employment with the Company (or consultancy or advisory relationship, as the case may be) is terminated within the Restricted Period, whether such termination is voluntary or involuntary, with or without cause, or because of the death or disability of the recipient, the Company shall have the right and option for a period of three months following such termination to buy for cash that number of the shares of Common Stock purchased under the award as to which the restrictions on transfer and the forfeiture provisions contained in the award have not then lapsed, at a price equal to the price per share originally paid by the recipient. If such termination occurs within the last three months of the applicable restrictions, the restrictions and repurchase rights of the Company shall continue to apply until the expiration of the Company's three month option period. (3) The Board of Directors may, in its discretion, impose upon the recipient of an award at the time of such award such other restrictions on any shares of Common Stock issued pursuant to such award as the Board of Directors may deem advisable. (e) ADDITIONAL SHARES. Any shares received by a recipient of an award as a stock dividend on, or as a result of stock splits, combinations, exchanges of shares, reorganizations, mergers, consolidations or otherwise with respect to, shares of Common Stock received pursuant to such award shall have the same status and shall bear the same restrictions, all on a proportionate basis, as the shares initially purchased pursuant to such award. (f) TRANSFERS IN BREACH OF AWARD. If any transfer of shares purchased pursuant to an award is made or attempted contrary to the terms of the Plan and of such award, the Board of Directors shall have the right to purchase for the account of the Company those shares from the owner thereof or his or her transferee at any time before or after the transfer at the price paid for such shares by the person to whom they were awarded under the Plan. In addition to any other legal or equitable remedies which it may have, the Company may enforce its rights by specific performance to the extent permitted by law. The Company may refuse for any purpose to recognize as a stockholder of the Company any transferee who receives any shares contrary to the provisions of the Plan and the applicable award or any recipient of an award who breaches his or her obligation to resell shares as required by the provisions of the Plan and the applicable award, and the Company may retain and/or recover all dividends on such shares which were paid or payable subsequent to the date on which the prohibited transferor breach was made or attempted. (g) ADDITIONAL AWARD PROVISIONS. The Board of Directors may, in its sole discretion, include additional provisions in any award granted under the Plan as shall be determined by the Board of Directors. 7 15. GENERAL RESTRICTIONS. (a) INVESTMENT REPRESENTATIONS. The Company may require any person to whom an option or award is granted, as a condition of exercising such option or purchasing the shares subject to the award, to give written assurances in substance and form satisfactory to the Company to the effect that such person is acquiring the Common Stock subject to the option or award for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws. (b) COMPLIANCE WITH SECURITIES LAWS. Each option and award shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such option or award upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connections with, the issuance or purchase of shares thereunder, such option or award may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration, or qualification, or to satisfy such condition. 16. RIGHTS AS A STOCKHOLDER. The holder of an option or recipient of an award shall have no rights as a stockholder with respect to any shares covered by the option or award (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to him or her for such shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 17. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS AND RELATED TRANSACTIONS. (a) GENERAL. If, through or as a result of any merger, consolidation sale of all or substantially all of the assets of the Company, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding shares of Common Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such, shares of Common Stock or other securities, an appropriate and proportionate adjustment shall be made in (x) the maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of shares or other securities subject to then outstanding options under the Plan, and (z) the price for each share subject to any then outstanding options under the Plan or repurchase rights of the Company, without changing the aggregate purchase price as to which such options remain exercisable, provided that no adjustment shall be made pursuant to this Section 17 if such adjustment would cause the Plan to fail to comply with Section 422 of the Code or with Rule 16b-3. 8 (b) BOARD AUTHORITY TO MAKE ADJUSTMENTS. Any adjustments under this Section 17 will be made by the Board of Directors, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued under the Plan on account of any such adjustments. 18. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC. (a) General. In the event of a consolidation or merger in which outstanding shares of Common Stock are exchanged for securities, cash or other property of any other corporation or business entity or in the event of a liquidation of the Company or sale of all or substantially all of the assets of the Company, the Board of Directors of the Company, or the board of directors of any corporation assuming the obligations of the Company, may, in its discretion, take any one or more of the following actions, as to outstanding options and awards: (i) provide that such options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof), provided that any such options substituted for incentive Stock Options shall meet the-requirements of Section 424(a) of the Code, (ii) upon written notice to the optionees, provide that all unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the optionee within a specified period following the date of such notice, (iii) in the event of a merger under the terms of which holders of the Common Stock of the Company will receive upon consummation thereof a cash payment for each share surrendered in the merger (the "Merger Price"), make or provide for a cash payment to the optionees equal to the difference between (A) the Merger Price times the number of shares of Common Stock subject to such outstanding options (to the extent then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price of all such outstanding options in exchange for the termination of such options, and (iv) provide that all or any outstanding options shall become exercisable in full, any restrictions on exercising outstanding options issued pursuant to the Plan prior to: any given date shall terminate and any restrictions on and rights of the Company to repurchase shares covered by outstanding awards issued pursuant to the Plan shall terminate. (b) SUBSTITUTE OPTIONS. The Company may grant options under the Plan in substitution for options held by employees of another corporation who become employees of the Company, or a subsidiary of the Company, as the result of a merger or consolidation of the employing corporation with the Company or a subsidiary of the Company, or as a result of the acquisition by the Company, or one of its subsidiaries, of property or stock of the employing corporation. The Company may direct that substitute options be granted am such terms and conditions as the Board of Directors considers appropriate in the circumstances. 9 19. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any option or award shall confer upon any recipient of an award or optionee any right with respect to the continuation of his or her employment by the Company or interfere in any way with the right of the Company at any time to terminate such employment or to increase or decrease the compensation of the optionee. 20. OTHER EMPLOYEE BENEFITS. Except as to plans which by their terms include such amounts as compensation, neither the amount of any compensation deemed to be received by an employee as a result of the exercise of an option or the sale of shares received upon such exercise nor the value of an award granted to an employee will constitute compensation with respect to which any other employee benefits of such employee are determined, including, without limitation, benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan, except as otherwise specifically determined by the Board of Directors. 21. AMENDMENT OF THE PLAN. (a) The Board of Directors may at any time, and from time to time, modify or amend the Plan in any respect, except that if at any time the approval of the stockholders of the Company is required as to such modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options or under Rule 16b-3 with respect to options held by or awards made to Reporting Persons, the Board of Directors may not effect such modification or amendment without such approval. (b) The termination or any modification or amendment of the Plan shall not, without the consent of an optionee or recipient of an award, affect his or her rights under an option or award previously granted to him or her. With the consent of the optionee or recipient of the award affected, the Board of Directors may amend outstanding option agreements or awards in a manner not inconsistent with the Plan. The Board of Directors shall have the right to amend or modify (i) the terms and provisions of the Plan and of any outstanding Incentive Stock Options granted under the Plan to the extent necessary to qualify any or all such options for such favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code and (ii) the terms and provisions of the Plan and of any outstanding option or award to the extent necessary to ensure the qualification of the Plan under Rule 16b-3 or any successor rule. 22. CANCELLATION AND NEW GRANT OF OPTIONS, ETC. The Board of Directors shall have the authority to effect, at any time and from time to time, with the consent of the affected optionees, (i) the cancellation of any or all outstanding options under the Plan and the grant in substitution therefor of new options under the Plan covering the same or different numbers of shares of Common Stock and having an option exercise price per share which may be lower or higher than the exercise price per share of the cancelled options or (ii) the amendment of the terms of any and all outstanding options under the Plan to provide an option exercise price per share which is higher or lower than the then current exercise price per share of such outstanding options. 10 23. EFFECTIVE DATE AND DURATION OF THE PLAN. (a) EFFECTIVE DATE. The Plan shall become effective when adopted by the Board of Directors, but no Incentive Stock Option granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months after the date of the Board's adoption of the Plan, no options previously granted under the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall be granted thereafter. Amendments to the Plan not requiring stockholder approval shall become effective when adopted by the Board of Directors; amendments requiring stockholder approval (as provided in Section 21) shall become effective when adopted by the Board of Directors, but no Incentive Stock Option issued after the date of such amendment shall become exercisable (to the extent that such amendment to the Plan was required to enable the Company to grant such Incentive Stock Option to a particular optionee) unless and until such amendment shall have been approved by the Company's stockholders. If such stockholder approval is not obtained within twelve months of the Board's adoption of such amendment, any Incentive Stock Options granted on or after the date of such amendment shall terminate to the extent that such amendment to the Plan was required to enable the Company to grant such option to a particular optionee. Subject to this limitation, options and awards may be granted under the Plan at any time after the effective date and before the date fixed for termination of the Plan. (b) TERMINATION. Unless sooner terminated in accordance with Section 17, the Plan shall terminate, with respect to Incentive Stock Options, upon the earlier of (i) the close of business on the day next preceding the tenth anniversary of the date of its adoption by the Board of Directors, on (ii) the date on which all shares available for issuance under the Plan shall have been issued pursuant to the exercise or cancellation of options or the final vesting of awards granted under the Plan. Unless sooner terminated in accordance with Section 17, the Plan shall terminate with respect to options which are not Incentive Stock Options and awards on the date specified in (ii) above. If the date of termination is determined under (i) above, then options outstanding on such date shall continue to have force and effect in accordance with the provisions of the instruments evidencing such options. 11 PROVISION FOR FOREIGN PARTICIPANTS. The Board of Directors may, without amending the Plan, modify awards or options granted to participants who are foreign nationals or employed outside the United States to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters. ADOPTED BY THE BOARD OF DIRECTORS: AUGUST 18, 2003 EX-10.2 9 a2116973zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 NITROMED, INC. AMENDED AND RESTATED 2003 STOCK INCENTIVE PLAN ------------------------- 1. PURPOSE The purpose of this Amended and Restated 2003 Stock Incentive Plan (the "Plan") of NitroMed, Inc., a Delaware corporation (the "Company"), is to advance the interests of the Company's stockholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's stockholders. Except where the context otherwise requires, the term "Company" shall include any of the Company's present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code") and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the "Board"). 2. ELIGIBILITY All of the Company's employees, officers, directors, consultants and advisors are eligible to be granted options, restricted stock awards, or other stock-based awards (each, an "Award") under the Plan. Each person who has been granted an Award under the Plan shall be deemed a "Participant". 3. ADMINISTRATION AND DELEGATION (a) ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board's sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award. No director or person acting pursuant to the authority delegated by the Board shall be liable for any action or determination relating to or under the Plan made in good faith. (b) APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a "Committee"). All references in the Plan to the "Board" shall mean the Board or a Committee of the Board or the executive officers referred to in Section 3(c) to the extent that the Board's powers or authority under the Plan have been delegated to such Committee or executive officers. (c) DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future subsidiary corporations and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such executive officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the executive officers may grant; provided further, however, that no executive officer shall be authorized to grant Awards to any "executive officer" of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or to any "officer" of the Company (as defined by Rule 16a-1 under the Exchange Act). 4. STOCK AVAILABLE FOR AWARDS. (a) NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may be made under the Plan for up to 2,500,000 shares of common stock, $0.01 par value per share, of the Company (the "Common Stock"). If any Award expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan, subject, however, in the case of Incentive Stock Options, to any limitations under the Code. Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares. (b) PER PARTICIPANT LIMIT. Subject to adjustment under Section 8, for Awards granted after the Common Stock is registered under the Securities Exchange Act of 1934 (the "Exchange Act"), the maximum number of shares of Common Stock with respect to which Awards may be granted to any Participant under the Plan shall be 500,000 per calendar year. The per Participant limit described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code ("Section 162(m)"). 5. STOCK OPTIONS (a) GENERAL. The Board may grant options to purchase Common Stock (each, an "Option") and determine the number of shares of Common Stock to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable. An Option which is not intended to be an Incentive Stock Option (as hereinafter defined) shall be designated a "Nonstatutory Stock Option". (b) INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an "incentive stock option" as defined in Section 422 of the Code (an "Incentive Stock Option") shall only be granted to employees of the Company, and any of the Company's present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option. -2- (c) EXERCISE PRICE. The Board shall establish the exercise price at the time each Option is granted and specify it in the applicable option agreement. (d) DURATION OF OPTIONS. Each Option shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable option agreement. (e) EXERCISE OF OPTION. Options may be exercised by delivery to the Company of a written notice of exercise signed by the proper person or by any other form of notice (including electronic notice) approved by the Board together with payment in full as specified in Section 5(f) for the number of shares for which the Option is exercised. (f) PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an Option granted under the Plan shall be paid for as follows: (1) in cash or by check, payable to the order of the Company; (2) except as the Board may, in its sole discretion, otherwise provide in an option agreement, by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price and any required tax withholding; (3) when the Common Stock is registered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board in good faith ("Fair Market Value"), provided (i) such method of payment is then permitted under applicable law and (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant at least six months prior to such delivery; (4) to the extent permitted by the Board, in its sole discretion by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or (5) by any combination of the above permitted forms of payment. (g) SUBSTITUTE OPTIONS. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Options in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Options may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Options contained in the other sections of this Section 5 or in Section 2. 6. RESTRICTED STOCK (a) GRANTS. The Board may grant Awards entitling recipients to acquire shares of Common Stock, subject to the right of the Company to repurchase all or part of such shares at their issue price or other stated or formula price (or to require forfeiture of such shares if issued at no cost) from the recipient in the event that conditions specified by the Board in the applicable Award are not satisfied prior to the -3- end of the applicable restriction period or periods established by the Board for such Award (each, a "Restricted Stock Award"). (b) TERMS AND CONDITIONS. The Board shall determine the terms and conditions of any such Restricted Stock Award, including the conditions for repurchase (or forfeiture) and the issue price, if any. (c) STOCK CERTIFICATES. Any stock certificates issued in respect of a Restricted Stock Award shall be registered in the name of the Participant and, unless otherwise determined by the Board, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant's death (the "Designated Beneficiary"). In the absence of an effective designation by a Participant, Designated Beneficiary shall mean the Participant's estate. 7. OTHER STOCK-BASED AWARDS The Board shall have the right to grant other Awards based upon the Common Stock having such terms and conditions as the Board may determine, including the grant of shares based upon certain conditions, the grant of securities convertible into Common Stock and the grant of stock appreciation rights. 8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS (a) CHANGES IN CAPITALIZATION. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a normal cash dividend, (i) the number and class of securities available under this Plan, (ii) the per Participant limit set forth in Section 4(b), (iii) the number and class of securities and exercise price per share subject to each outstanding Option, (iv) the repurchase price per share subject to each outstanding Restricted Stock Award, and (v) the terms of each other outstanding Award shall be appropriately adjusted by the Company (or substituted Awards may be made, if applicable) to the extent the Board shall determine, in good faith, that such an adjustment (or substitution) is necessary and appropriate. If this Section 8(a) applies and Section 8(b) also applies to any event, Section 8(b) shall be applicable to such event, and this Section 8(a) shall not be applicable. (b) REORGANIZATION EVENTS (1) DEFINITION. A "Reorganization Event" shall mean: (a) any merger or consolidation of the Company with or into another entity as a result of which all of the Common Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property, (b) any exchange of all of the Common Stock of the Company for cash, securities or other property pursuant to a share exchange transaction, or (c) a liquidation or dissolution of the Company. (2) CONSEQUENCES OF A REORGANIZATION EVENT ON OPTIONS. Upon the occurrence of a Reorganization Event, or the execution by the Company of any agreement with respect to a Reorganization Event, except to the extent specifically provided for in any agreement evidencing an -4- Option hereunder, the Board shall in its discretion, take any one or more of the following actions with respect to outstanding Options: (a) provide that all outstanding Options shall be assumed, or equivalent options shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof). For purposes hereof, an Option shall be considered to be assumed if, following consummation of the Reorganization Event, the Option confers the right to purchase, for each share of Common Stock subject to the Option immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Common Stock for each share of Common Stock held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise of Options to consist solely of common stock of the acquiring or succeeding corporation (or an affiliate thereof) equivalent in fair market value to the per share consideration received by holders of outstanding shares of Common Stock as a result of the Reorganization Event; (b) upon written notice to the Participants, provide that all then unexercised Options will become exercisable in full as of a specified time prior to the Reorganization Event and will terminate immediately prior to the consummation of such Reorganization Event, except to the extent exercised by the Participants before the consummation of such Reorganization Event; or (c) in the event of a Reorganization Event under the terms of which holders of Common Stock will receive upon consummation thereof a cash payment for each share of Common Stock surrendered pursuant to such Reorganization Event (the "Acquisition Price"), then the Board may provide that all outstanding Options shall terminate upon consummation of such Reorganization Event and that each Participant shall receive, in exchange therefor, a cash payment equal to the amount (if any) by which (A) the Acquisition Price multiplied by the number of shares of Common Stock subject to such outstanding Options (to the extent then exercisable), exceeds (B) the aggregate exercise price of such Options. (3) CONSEQUENCES OF A REORGANIZATION EVENT ON RESTRICTED STOCK AWARDS. Upon the occurrence of a Reorganization Event, except to the extent specifically provided for in any agreement evidencing a Restricted Stock Award hereunder, the repurchase and other rights of the Company under -5- each outstanding Restricted Stock Award shall inure to the benefit of the Company's successor and shall apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to the Common Stock subject to such Restricted Stock Award. (4) CONSEQUENCES OF A REORGANIZATION EVENT ON OTHER AWARDS. The Board shall specify the effect of a Reorganization Event on any other Award granted under the Plan at the time of the grant of such Award. 9. REPRICING OF OPTIONS. The Board shall have the authority, at any time and from time to time, with the consent of the affected option holders, to amend any or all outstanding options granted under the Plan to provide an option exercise price per share which may be lower or higher than the original option exercise price, and/or cancel any such options and grant in substitution therefor new options covering the same or different numbers of shares of Common Stock having an option exercise price per share which may be lower or higher than the exercise price of the canceled options. 10. GENERAL PROVISIONS APPLICABLE TO AWARDS (a) TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine or provide in an Award, Awards shall not be sold, assigned, transferred, pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the life of the Participant, shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees. (b) DOCUMENTATION. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan. (c) BOARD DISCRETION. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly. (d) TERMINATION OF STATUS. The Board shall determine the effect on an Award of the disability, death, retirement, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, the Participant's legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award. (e) WITHHOLDING. Each Participant shall pay to the Company, or make provision satisfactory to the Board for payment of, any taxes required by law to be withheld in connection with Awards to such Participant no later than the date of the event creating the tax liability. Except as the Board may otherwise provide in an Award, when the Common Stock is registered under the Exchange Act, Participants may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company's minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such -6- supplemental taxable income). The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant. (f) AMENDMENT OF AWARD. The Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant's consent to such action shall be required unless the Board determines that the action, taking into account any related action, would not materially and adversely affect the Participant. (g) CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to deliver any shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company's counsel, all other legal matters in connection with the issuance and delivery of such shares have been satisfied, including any applicable securities laws and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations. (h) ACCELERATION. The Board may at any time provide that any Award shall become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. (i) DEFERRED DELIVERY OF SHARES ISSUABLE PURSUANT TO AN AWARD. The Board may, at the time any Award is granted, provide that, at the time Common Stock would otherwise be delivered pursuant to the Award, the Participant shall instead receive an instrument evidencing the right to future delivery of Common Stock at such time or times, and on such conditions, as the Board shall specify. The Board may at any time accelerate the time at which delivery of all or any part of the Common Stock shall take place. 11. MISCELLANEOUS (a) NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award. (b) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed with respect to an Award until becoming the record holder of such shares. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to such Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend. -7- (c) EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the date on which it is adopted by the Board. No Awards shall be granted under the Plan after the completion of ten years from the earlier of (i) the date on which the Plan was adopted by the Board or (ii) the date the Plan was approved by the Company's stockholders, but Awards previously granted may extend beyond that date. (d) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or any portion thereof at any time, provided that to the extent required by Section 162(m), no Award granted to a Participant that is intended to comply with Section 162(m) after the date of such amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and until such amendment shall have been approved by the Company's stockholders as required by Section 162(m) (including the vote required under Section 162(m)). (e) AUTHORIZATION OF SUB-PLANS. The Board may from time to time establish one or more sub-plans under the Plan for purposes of satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplements to this Plan containing (i) such limitations on the Board's discretion under the Plan as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shall be deemed to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be required to provide copies of any supplement to Participants in any jurisdiction which is not the subject of such supplement. (f) GOVERNING LAW. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, without regard to any applicable conflicts of law. * * * APPROVED BY THE BOARD OF DIRECTORS AUGUST 18, 2003 APPROVED BY THE STOCKHOLDERS ON [_________], 2003 -8- EX-10.3 10 a2116973zex-10_3.txt EXHIBIT 10.3 EXHIBIT 10.3 NITROMED, INC. 2003 EMPLOYEE STOCK PURCHASE PLAN The purpose of this Plan is to provide eligible employees of NitroMed, Inc. (the "Company") and certain of its subsidiaries with opportunities to purchase shares of the Company's common stock, $0.01 par value (the "Common Stock"), commencing on January 1, 2002. Seventy-Five Thousand (75,000) shares of Common Stock in the aggregate have been approved for this purpose. This Plan is intended to qualify as an "employee stock purchase plan" as defined in Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder, and shall be interpreted consistent therewith. 1. ADMINISTRATION. The Plan will be administered by the Company's Board of Directors (the "Board") or by a Committee appointed by the Board (the "Committee"). The Board or the Committee has authority to make rules and regulations for the administration of the Plan and its interpretation and decisions with regard thereto shall be final and conclusive. 2. ELIGIBILITY. All employees of the Company, including Directors who are employees, and all employees of any subsidiary of the Company (as defined in Section 424(f) of the Code) designated by the Board or the Committee from time to time (a "Designated Subsidiary"), are eligible to participate in any one or more of the offerings of Options (as defined in Section 9) to purchase Common Stock under the Plan provided that: (a) they are customarily employed by the Company or a Designated Subsidiary for more than 20 hours a week and for more than five months in a calendar year; and (b) they have been employed by the Company or a Designated Subsidiary for at least six months prior to enrolling in the Plan; and (c) they are employees of the Company or a Designated Subsidiary on the first day of the applicable Plan Period (as defined below). No employee may be granted an option hereunder if such employee, immediately after the option is granted, owns 5% or more of the total combined voting power or value of the stock of the Company or any subsidiary. For purposes of the preceding sentence, the attribution rules of Section 424(d) of the Code shall apply in determining the stock ownership of an employee, and all stock which the employee has a contractual right to purchase shall be treated as stock owned by the employee. 3. OFFERINGS. The Company will make one or more offerings ("Offerings") to employees to purchase stock under this Plan. Offerings will begin each January 1 and July 1, or the first business day thereafter (the "Offering Commencement Dates"). Each Offering Commencement Date will begin a six month period (a "Plan Period") during which payroll deductions will be made and held for the purchase of Common Stock at the end of the Plan Period. The Board or the Committee may, at its discretion, choose a different Plan Period of twelve (12) months or less for subsequent Offerings. 4. PARTICIPATION. An employee eligible on the Offering Commencement Date of any Offering may participate in such Offering by completing and forwarding a payroll deduction authorization form to the employee's appropriate payroll office at least ten days prior to the applicable Offering Commencement Date. The form will authorize a regular payroll deduction from the Compensation received by the employee during the Plan Period. Unless an employee files a new form or withdraws from the Plan, his deductions and purchases will continue at the same rate for future Offerings under the Plan as long as the Plan remains in effect. The term "Compensation" means the amount of money reportable on the employee's Federal Income Tax Withholding Statement, excluding overtime, shift premium, incentive or bonus awards, allowances and reimbursements for expenses such as relocation allowances for travel expenses, income or gains on the exercise of Company stock options or stock appreciation rights, and similar items, whether or not shown on the employee's Federal Income Tax Withholding Statement, but including, in the case of salespersons, sales commissions to the extent determined by the Board or the Committee. 5. DEDUCTIONS. The Company will maintain payroll deduction accounts for all participating employees. With respect to any Offering made under this Plan, an employee may authorize a payroll deduction in any dollar amount up to a maximum of 10% of the Compensation he or she receives during the Plan Period or such shorter period during which deductions from payroll are made. Payroll deductions may be at the rate of 2%, 4%, 6%, 8% or 10% of Compensation with any change in compensation during the Plan Period to result in an automatic corresponding change in the dollar amount withheld. 6. DEDUCTION CHANGES. An employee may decrease or discontinue his payroll deduction once during any Plan Period, by filing a new payroll deduction authorization form. However, an employee may not increase his payroll deduction during a Plan Period. If an employee elects to discontinue his payroll deductions during a Plan Period, but does not elect to withdraw his funds pursuant to Section 8 hereof, funds deducted prior to his election to discontinue will be applied to the purchase of Common Stock on the Exercise Date (as defined below). 7. INTEREST. Interest will not be paid on any employee accounts, except to the extent that the Board or the Committee, in its sole discretion, elects to credit employee accounts with interest at such per annum rate as it may from time to time determine. 8. WITHDRAWAL OF FUNDS. An employee may at any time prior to the close of business on the last business day in a Plan Period and for any reason permanently draw out the balance accumulated in the employee's account and thereby withdraw from participation in an Offering. Partial withdrawals are not permitted. The employee may not begin participation again during the remainder of the Plan Period. The employee may participate in any subsequent Offering in accordance with terms and conditions established by the Board or the Committee. 9. PURCHASE OF SHARES. On the Offering Commencement Date of each Plan Period, the Company will grant to each eligible employee who is then a participant in the Plan an option ("Option") to purchase on the last business day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter provided for, the largest number of whole shares of Common Stock of the Company as does not exceed the number of shares determined by multiplying $2,083 by the number of full months in the Offering Period and dividing the result by the closing price (as defined below) on the Offering Commencement Date of such Plan Period. Notwithstanding the above, no employee may be granted an Option (as defined in Section 9) which permits his rights to purchase Common Stock under this Plan and any other employee stock purchase plan (as defined in Section 423(b) of the Code) of the Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of the fair market value of such Common Stock (determined at the Offering Commencement Date of the Plan Period) for each calendar year in which the Option is outstanding at any time. - 2 - The purchase price for each share purchased will be 85% of the closing price of the Common Stock on (i) the first business day of such Plan Period or (ii) the Exercise Date, whichever closing price shall be less. Such closing price shall be (a) the closing price on any national securities exchange on which the Common Stock is listed, (b) the closing price of the Common Stock on the Nasdaq National Market or (c) the average of the closing bid and asked prices in the over-the-counter-market, whichever is applicable, as published in THE WALL STREET JOURNAL; provided that, with respect to the first Plan Period, the closing price on the Offering Commencement Date shall be the initial public offering price provided for in the underwriting agreement entered into by the Company in connection with the IPO. If no sales of Common Stock were made on such a day, the price of the Common Stock for purposes of clauses (a) and (b) above shall be the reported price for the next preceding day on which sales were made. Each employee who continues to be a participant in the Plan on the Exercise Date shall be deemed to have exercised his Option at the Option Price on such date and shall be deemed to have purchased from the Company the number of full shares of Common Stock reserved for the purpose of the Plan that his accumulated payroll deductions on such date will pay for, but not in excess of the maximum number determined in the manner set forth above. Any balance remaining in an employee's payroll deduction account at the end of a Plan Period will be automatically refunded to the employee, except that any balance which is less than the purchase price of one share of Common Stock will be carried forward into the employee's payroll deduction account for the following Offering, unless the employee elects not to participate in the following Offering under the Plan, in which case the balance in the employee's account shall be refunded. 10. ISSUANCE OF CERTIFICATES. Certificates representing shares of Common Stock purchased under the Plan may be issued only in the name of the employee, in the name of the employee and another person of legal age as joint tenants with rights of survivorship, or (in the Company's sole discretion) in the name of a brokerage firm, bank or other nominee holder designated by the employee. The Company may, in its sole discretion and in compliance with applicable laws, authorize the use of book entry registration of shares in lieu of issuing stock certificates. 11. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In the event of a participating employee's termination of employment prior to the last business day of a Plan Period, no payroll deduction shall be taken from any pay due and owing to an employee and the balance in the employee's account shall be paid to the employee or, in the event of the employee's death, (a) to a beneficiary previously designated in a revocable notice signed by the employee (with any spousal consent required under state law) or (b) in the absence of such a designated beneficiary, to the executor or administrator of the employee's estate or (c) if no such executor or administrator has been appointed to the knowledge of the Company, to such other person(s) as the Company may, in its discretion, designate. If, prior to the last business day of the Plan Period, the Designated Subsidiary by which an employee is employed shall cease to be a subsidiary of the Company, or if the employee is transferred to a subsidiary of the Company that is not a Designated Subsidiary, the employee shall be deemed to have terminated employment for the purposes of this Plan. 12. OPTIONEES NOT STOCKHOLDERS. Neither the granting of an Option to an employee nor the deductions from his pay shall constitute such employee a stockholder of the shares of Common Stock covered by an Option under this Plan until such shares have been purchased by and issued to him. 13. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the employee's lifetime only by the employee. - 3 - 14. APPLICATION OF FUNDS. All funds received or held by the Company under this Plan may be combined with other corporate funds and may be used for any corporate purpose. 15. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the event of a subdivision of outstanding shares of Common Stock, or the payment of a dividend in Common Stock, the number of shares approved for this Plan, and the share limitation set forth in Section 9, shall be increased proportionately, and such other adjustment shall be made as may be deemed equitable by the Board or the Committee. In the event of any other change affecting the Common Stock, such adjustment shall be made as may be deemed equitable by the Board or the Committee to give proper effect to such event. 16. MERGER. If the Company shall at any time merge or consolidate with another corporation and the holders of the capital stock of the Company immediately prior to such merger or consolidation continue to hold at least 80% by voting power of the capital stock of the surviving corporation ("Continuity of Control"), the holder of each Option then outstanding will thereafter be entitled to receive at the next Exercise Date upon the exercise of such Option for each share as to which such Option shall be exercised the securities or property which a holder of one share of the Common Stock was entitled to upon and at the time of such merger or consolidation, and the Board or the Committee shall take such steps in connection with such merger or consolidation as the Board or the Committee shall deem necessary to assure that the provisions of Section 15 shall thereafter be applicable, as nearly as reasonably may be, in relation to the said securities or property as to which such holder of such Option might thereafter be entitled to receive thereunder. In the event of a merger or consolidation of the Company with or into another corporation which does not involve Continuity of Control, or of a sale of all or substantially all of the assets of the Company while unexercised Options remain outstanding under the Plan, (a) subject to the provisions of clauses (b) and (c), after the effective date of such transaction, each holder of an outstanding Option shall be entitled, upon exercise of such Option, to receive in lieu of shares of Common Stock, shares of such stock or other securities as the holders of shares of Common Stock received pursuant to the terms of such transaction; or (b) all outstanding Options may be cancelled by the Board or the Committee as of a date prior to the effective date of any such transaction and all payroll deductions shall be paid out to the participating employees; or (c) all outstanding Options may be cancelled by the Board or the Committee as of the effective date of any such transaction, provided that notice of such cancellation shall be given to each holder of an Option, and each holder of an Option shall have the right to exercise such Option in full based on payroll deductions then credited to his account as of a date determined by the Board or the Committee, which date shall not be less than ten (10) days preceding the effective date of such transaction. 17. AMENDMENT OF THE PLAN. The Board may at any time, and from time to time, amend this Plan in any respect, except that (a) if the approval of any such amendment by the shareholders of the Company is required by Section 423 of the Code, such amendment shall not be effected without such approval, and (b) in no event may any amendment be made which would cause the Plan to fail to comply with Section 423 of the Code. 18. INSUFFICIENT SHARES. In the event that the total number of shares of Common Stock specified in elections to be purchased under any Offering plus the number of shares purchased under previous Offerings under this Plan exceeds the maximum number of shares issuable under this Plan, the Board or the Committee will allot the shares then available on a pro rata basis. 19. TERMINATION OF THE PLAN. This Plan may be terminated at any time by the Board. Upon termination of this Plan all amounts in the accounts of participating employees shall be promptly refunded. - 4 - 20. GOVERNMENTAL REGULATIONS. The Company's obligation to sell and deliver Common Stock under this Plan is subject to listing on a national stock exchange or quotation on the Nasdaq National Market (to the extent the Common Stock is then so listed or quoted) and the approval of all governmental authorities required in connection with the authorization, issuance or sale of such stock. 21. GOVERNING LAW. The Plan shall be governed by Delaware law except to the extent that such law is preempted by federal law. 22. ISSUANCE OF SHARES. Shares may be issued upon exercise of an Option from authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any other proper source. 23. NOTIFICATION UPON SALE OF SHARES. Each employee agrees, by entering the Plan, to promptly give the Company notice of any disposition of shares purchased under the Plan where such disposition occurs within two years after the date of grant of the Option pursuant to which such shares were purchased. 24. WITHHOLDING. Each employee shall, no later than the date of the event creating the tax liability, make provision satisfactory to the Board for payment of any taxes required by law to be withheld in connection with any transaction related to Options granted to or shares acquired by such employee pursuant to the Plan. The Company may, to the extent permitted by law, deduct any such taxes from any payment of any kind otherwise due to an employee. 25. EFFECTIVE DATE AND APPROVAL OF SHAREHOLDERS. The Plan shall take effect on August [18], 2003 subject to approval by the shareholders of the Company as required by Section 423 of the Code, which approval must occur within twelve months of the adoption of the Plan by the Board. * * * ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 18, 2003 APPROVED BY THE STOCKHOLDERS ON [_____], 2003 - 5 - EX-10.4 11 a2116973zex-10_4.txt EXHIBIT 10.4 EXHIBIT NO. 10.4 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. DEVELOPMENT AND LICENSE AGREEMENT BY AND BETWEEN NITROMED, INC. AND BOSTON SCIENTIFIC CORPORATION TABLE OF CONTENTS
PAGE Article I Definitions..............................................................1 Section 1.1 "Affiliate"..............................................................1 Section 1.2 "Blocking Third Party Intellectual Property".............................1 Section 1.3 "BSC Intellectual Property"..............................................2 Section 1.4 "BSC Know-How"...........................................................2 Section 1.5 "BSC Patent Rights"......................................................2 Section 1.6 "Confidential Information"...............................................2 Section 1.7 "Effective Date".........................................................2 Section 1.8 "Executive Officers".....................................................2 Section 1.9 "FDA"....................................................................2 Section 1.10 "Field"..................................................................2 Section 1.11 "First Commercial Sale"..................................................2 Section 1.12 "FTE"....................................................................3 Section 1.13 "IDE"....................................................................3 Section 1.14 "Joint Intellectual Property"............................................3 Section 1.15 "Joint Know-How".........................................................3 Section 1.16 "Joint Patent Rights"....................................................3 Section 1.17 "Know-How"...............................................................3 Section 1.18 "Limited License Compounds"..............................................3 Section 1.19 "Net Sales"..............................................................3 Section 1.20 "Nitric Oxide Releasing Compounds".......................................4 Section 1.21 "NitroMed Composition Patent Rights".....................................4 Section 1.22 "NitroMed Delivered Compounds"...........................................4 Section 1.23 "NitroMed Intellectual Property".........................................4 Section 1.24 "NitroMed Know-How"......................................................4 Section 1.25 "NitroMed Nitric Oxide Releasing Compounds"..............................4 Section 1.26 "NitroMed Patent Rights".................................................4 Section 1.27 "Party"..................................................................5 Section 1.28 "Patent Rights"..........................................................5 Section 1.29 "Phase II Clinical Study"................................................5 Section 1.30 "Phase III Clinical Study"...............................................5 Section 1.31 "Program Director".......................................................5 Section 1.32 "R&D Plan"...............................................................5 Section 1.33 "R&D Program"............................................................5 Section 1.34 "R&D Term"...............................................................5 Section 1.35 "ROFR Field".............................................................5 Section 1.36 "Royalty-Bearing Product"................................................6 Section 1.37 "Royalty Term"...........................................................6 Section 1.38 "Territory"..............................................................6 Section 1.39 Additional Definitions...................................................6
TABLE OF CONTENTS (Continued)
PAGE Article II R&D Program..............................................................7 Section 2.1 General..................................................................7 Section 2.2 Joint Steering Committee.................................................7 Section 2.3 Decisionmaking...........................................................7 Section 2.4 Management of R&D Program................................................8 Section 2.5 R&D Program Responsibilities.............................................8 Section 2.6 Extensions of R&D Program................................................9 Section 2.7 NitroMed Exclusivity Obligations.........................................9 Section 2.8 Commercial Supply of NitroMed Delivered Compounds........................9 Article III Grant of Rights.........................................................10 Section 3.1 NitroMed Grants.........................................................10 Section 3.2 BSC Research License Grant..............................................11 Section 3.3 NitroMed Retained Rights................................................11 Section 3.4 Compound Right of First Refusal.........................................11 Section 3.5 ROFR Field Exclusivity Option...........................................12 Article IV Financial Provisions....................................................12 Section 4.1 Equity Investment.......................................................12 Section 4.2 License Payment.........................................................12 Section 4.3 Milestone Payments......................................................12 Section 4.4 Royalty Payments........................................................14 Section 4.5 Length of Royalty Payments..............................................14 Section 4.6 Royalties Payable Only Once.............................................14 Section 4.7 Royalty Reports and Accounting..........................................15 Section 4.8 Currency Exchange.......................................................15 Section 4.9 Tax Withholding.........................................................15 Section 4.10 Late Payments...........................................................15 Article V Intellectual Property Ownership, Protection and Related Matters.........16 Section 5.1 Ownership of Inventions.................................................16 Section 5.2 Prosecution and Maintenance of Patent Rights............................17 Section 5.3 Exploitation of Joint Intellectual Property.............................18 Section 5.4 Third Party Infringement................................................18 Section 5.5 Claimed Infringement; Claimed Invalidity................................20 Section 5.6 Patent Term Extensions..................................................21 Section 5.7 Patent Marking..........................................................21 Article VI Confidentiality.........................................................21 Section 6.1 Confidential Information................................................21 Section 6.2 Employee and Advisor Obligations........................................22 Section 6.3 Term....................................................................22 Section 6.4 Publications............................................................22
TABLE OF CONTENTS (Continued)
PAGE Article VII Representations and Warranties..........................................23 Section 7.1 Representations of Authority............................................23 Section 7.2 Consents................................................................23 Section 7.3 No Conflict.............................................................23 Section 7.4 Enforceability..........................................................23 Section 7.5 Employee Obligations....................................................23 Section 7.6 Intellectual Property...................................................23 Section 7.7 No Warranties...........................................................24 Article VIII Term and Termination....................................................24 Section 8.1 Term....................................................................24 Section 8.2 Survival of Commercialization License upon Expiration...................24 Section 8.3 Termination For Material Breach.........................................25 Section 8.4 Effect of Termination...................................................25 Section 8.5 Survival................................................................25 Article IX Dispute Resolution......................................................25 Section 9.1 Alternative Dispute Resolution..........................................25 Section 9.2 No Limitation...........................................................26 Article X Miscellaneous Provisions................................................26 Section 10.1 Indemnification.........................................................26 Section 10.2 Governing Law...........................................................27 Section 10.3 Assignment..............................................................27 Section 10.4 Amendments..............................................................27 Section 10.5 Notices.................................................................28 Section 10.6 Force Majeure...........................................................28 Section 10.7 Public Announcements....................................................28 Section 10.8 Disclosure of Provisions of Agreement...................................29 Section 10.9 Independent Contractors.................................................29 Section 10.10 No Strict Construction..................................................29 Section 10.11 Headings................................................................29 Section 10.12 No Implied Waivers; Rights Cumulative...................................29 Section 10.13 Severability............................................................29 Section 10.14 Execution in Counterparts...............................................30 Section 10.15 No Consequential Damages................................................30 Exhibit A R&D Plan
DEVELOPMENT AND LICENSE AGREEMENT This Development and License Agreement (the "Agreement") is entered into as of the 20th day of November, 2001 (the "Execution Date") by and between NitroMed, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 12 Oak Park Drive, Bedford, Massachusetts 01730 ("NitroMed"), and Boston Scientific Corporation, a corporation organized and existing under the laws of the State of Delaware and having its principal office at One Boston Scientific Place, Natick, Massachusetts 01760 ("BSC"). INTRODUCTION 1. NitroMed is engaged in the business of discovering and developing nitric oxide releasing compounds for use in drug products and medical devices. 2. BSC is engaged in the business of developing and marketing medical devices, including vascular stents and specialty catheters. 3. NitroMed and BSC are interested in collaborating in the development and pre-clinical evaluation of certain nitric oxide releasing compounds for delivery using vascular stents to be developed by BSC for the treatment of restenosis in humans. NOW, THEREFORE, NitroMed and BSC agree as follows: ARTICLE I DEFINITIONS When used in this Agreement, each of the following terms shall have the meanings set forth in this Article I: Section 1.1 "AFFILIATE". Affiliate shall mean any corporation, company, partnership, joint venture or other entity which controls, is controlled by, or is under common control with a person or entity. For purposes of this Section 1.1, "control" shall mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. Section 1.2 "BLOCKING THIRD PARTY INTELLECTUAL PROPERTY". Blocking Third Party Intellectual Property shall mean, on a country-by-country basis, issued patent claims owned or controlled by a third party other than an Affiliate or sublicensee of BSC that cover the composition of matter or use of a NitroMed Nitric Oxide Releasing Compound that is incorporated into a Royalty-Bearing Product, but only if the manufacture, use or sale of such Royalty-Bearing Product in such country would, in the absence of a license granted by such third party, infringe such issued patent claims. Section 1.3 "BSC INTELLECTUAL PROPERTY". BSC Intellectual Property shall mean BSC Know-How and BSC Patent Rights, collectively. Section 1.4 "BSC KNOW-HOW". BSC Know-How shall mean any Know-How that (a) either (i) is in BSC's possession on the Effective Date, or (ii) BSC develops or acquires during the R&D Term (including, but not limited to, BSC's rights in Device Inventions and Other Sole Inventions), and (b) BSC and NitroMed reasonably and jointly determine to be useful to discover and develop Nitric Oxide Releasing Compounds for incorporation into Royalty-Bearing Products, and (c) is owned or controlled by, or licensed to, BSC and to which BSC has the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. Section 1.5 "BSC PATENT RIGHTS". BSC Patent Rights shall mean Patent Rights (a) that cover BSC Know-How, and (b) that are owned or controlled by, or licensed to, BSC and to which BSC has the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. Section 1.6 "CONFIDENTIAL INFORMATION". Confidential Information shall mean all Know-How or other information, including, without limitation, proprietary information and materials (whether or not patentable) regarding a Party's technology, products, business information or objectives, which is designated as confidential in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such Know-How or other information is disclosed by the disclosing Party to the other Party. Notwithstanding the foregoing, all information which is orally, electronically or visually disclosed by a Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a Party (a) if the disclosing Party, within thirty (30) days after such disclosure, delivers to the other Party a written document or documents describing the information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made, or (b) if such information constitutes NitroMed Know-How, if NitroMed is the disclosing Party, or BSC Know-How, if BSC is the disclosing Party. Section 1.7 "EFFECTIVE DATE". Effective Date shall mean November 20, 2001. Section 1.8 "EXECUTIVE OFFICERS". Executive Officers shall mean the Chief Executive Officer of BSC (or a senior executive officer of BSC designated by BSC) and the Chief Executive Officer of NitroMed (or a senior executive officer of NitroMed designated by NitroMed). Section 1.9 "FDA". FDA shall mean the United States Food and Drug Administration. Section 1.10 "FIELD". Field shall mean [**]. Section 1.11 "FIRST COMMERCIAL SALE". First Commercial Sale shall mean, for each Royalty-Bearing Product, the first commercial sale in a country by BSC, its Affiliates, distributors and/or agents. Sales for test marketing, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale. 2 Section 1.12 "FTE". FTE shall mean a full time equivalent person year of scientific, technical or managerial work on or directly related to the R&D Program. Section 1.13 "IDE". IDE shall mean an investigational device exemption application or similar application that is required to be filed with the FDA before beginning clinical testing of a Royalty-Bearing Product. Section 1.14 "JOINT INTELLECTUAL PROPERTY". Joint Intellectual Property shall mean Joint Know-How and Joint Patent Rights, collectively. Section 1.15 "JOINT KNOW-HOW". Joint Know-How shall mean any Know-How that is developed or acquired jointly by the Parties during the R&D Term, including Compound/Device Inventions and Other Joint Inventions, but excluding Compound Inventions, Device Inventions and Other Sole Inventions. Section 1.16 "JOINT PATENT RIGHTS". Joint Patent Rights shall mean Patent Rights that cover Joint Know-How. Section 1.17 "KNOW-HOW". Know-How shall mean any information, inventions, copyrights, trade secrets, data or materials, whether proprietary or not, including, without limitation, Nitric Oxide Releasing Compounds and data generated in pre-clinical and clinical studies. Section 1.18 "LIMITED LICENSE COMPOUNDS". Limited License Compounds shall mean NitroMed Nitric Oxide Releasing Compounds not covered by NitroMed Composition Patent Rights. Section 1.19 "NET SALES". Net Sales shall mean, with respect to a Royalty-Bearing Product, the gross amount invoiced by BSC, its Affiliates and/or its sublicensees on sales or other dispositions of the Royalty-Bearing Product to unrelated third parties, less the following items: (a) Trade, cash and quantity discounts actually allowed and taken directly with respect to such sales; (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly with respect to the production, sale, delivery or use of the Royalty-Bearing Product (excluding national, state or local taxes based on income); (c) Amounts repaid or credited by reason of rejections, defects, recalls or returns or because of chargebacks, refunds, rebates or retroactive price reductions; and (d) Separately invoiced distribution expenses (such as freight, transportation and insurance expenses). Such amounts shall be determined from the books and records of BSC, its Affiliates and/or its sublicensees, maintained in accordance with generally accepted accounting principles, consistently applied. 3 Net Sales shall not include amounts separately invoiced by BSC, its Affiliates and/or its sublicensees for devices other than a Royalty-Bearing Product that are included in the same package as the Royalty-Bearing Product if such other devices are included other than in connection with the use or administration of the NitroMed Nitric Oxide Releasing Compound incorporated into such Royalty-Bearing Product. Section 1.20 "NITRIC OXIDE RELEASING COMPOUNDS". Nitric Oxide Releasing Compounds shall mean compounds that [**]. Section 1.21 "NITROMED COMPOSITION PATENT RIGHTS". NitroMed Composition Patent Rights shall mean NitroMed Patent Rights that cover compounds as compositions of matter. Section 1.22 "NITROMED DELIVERED COMPOUNDS". NitroMed Delivered Compounds shall mean the Nitric Oxide Releasing Compounds provided by NitroMed to BSC pursuant to Section 2.5 for incorporation into Royalty-Bearing Products. Section 1.23 "NITROMED INTELLECTUAL PROPERTY". NitroMed Intellectual Property shall mean NitroMed Know-How and NitroMed Patent Rights, collectively. Section 1.24 "NITROMED KNOW-HOW". NitroMed Know-How shall mean any Know-How that (a) either (i) is in NitroMed's possession on the Effective Date, or (ii) NitroMed develops or acquires during the R&D Term (including, but not limited to, NitroMed's rights in Compound Inventions and Other Sole Inventions), and (b) NitroMed and BSC reasonably and jointly determine to be useful to discover and develop Nitric Oxide Releasing Compounds for incorporation into Royalty-Bearing Products, and (c) is owned or controlled by, or licensed to, NitroMed and to which NitroMed has the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. Section 1.25 "NITROMED NITRIC OXIDE RELEASING COMPOUNDS". NitroMed Nitric Oxide Releasing Compounds shall mean Nitric Oxide Releasing Compounds the discovery, development or use of which uses NitroMed Know-How or the making, using, offering to sell, selling or importation of which would, in the absence of a license directly or indirectly from NitroMed, infringe any NitroMed Patent Rights, including without limitation Limited License Compounds and NitroMed Delivered Compounds. Section 1.26 "NITROMED PATENT RIGHTS". NitroMed Patent Rights shall mean Patent Rights (a) that cover NitroMed Know-How, and (b) that are owned or controlled by, or are licensed to, NitroMed and to which NitroMed has the right to grant licenses or sublicenses without violating the terms of any agreement with a third party. Section 1.27 "PARTY". Party shall mean NitroMed or BSC; "PARTIES" shall mean NitroMed and BSC. As used in this Agreement, references to "third parties" do not include a Party or its Affiliates. Section 1.28 "PATENT RIGHTS". Patent Rights shall mean all existing patents and patent applications and all patent applications hereafter filed, including any continuations, continuations-in-part, divisions, provisionals or any substitute applications, any patent issued 4 with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing. Section 1.29 "PHASE II CLINICAL STUDY". Phase II Clinical Study shall mean a preliminary efficacy and safety study of a candidate drug or medical device product in the target patient population. Section 1.30 "PHASE III CLINICAL STUDY". Phase III Clinical Study shall mean a controlled study to confirm with statistical significance the efficacy and safety of a candidate drug or medical device product performed to obtain marketing and/or manufacturing approval for the product in any country. Section 1.31 "PROGRAM DIRECTOR". Program Director shall mean the research executive appointed by a Party to serve as such Party's principal coordinator and liaison for the R&D Program. Section 1.32 "R&D PLAN". R&D Plan shall mean the R&D plan describing the activities to be undertaken in the R&D Program, which is attached as EXHIBIT A to this Agreement, as such plan may be updated or amended pursuant to Section 2.4. Section 1.33 "R&D PROGRAM". R&D Program shall mean the research and development program to be performed by the Parties to develop Royalty-Bearing Products. Section 1.34 "R&D TERM". R&D Term shall mean, subject to extension in accordance with Section 2.6, the period commencing on the Effective Date and ending on the latest of (a) the second anniversary of the Effective Date, (b) the date twelve (12) months after delivery of the first NitroMed Delivered Compound and (c) the date six (6) months after delivery of the second NitroMed Delivered Compound. Notwithstanding the foregoing, the R&D Term may be terminated by BSC in its sole discretion upon thirty (30) days prior written notice to NitroMed. Notwithstanding any provisions of this Section to the contrary, but subject to extension in accordance with Section 2.6, for purposes of Sections 2.7, 3.4 and 3.5, the R&D Term shall end on the earlier of (x) the date on which the R&D Term otherwise ends in accordance with this Section and (y) the date thirty (30) months after the Effective Date. Section 1.35 "ROFR FIELD". ROFR Field shall mean the [**]. Section 1.36 "ROYALTY-BEARING PRODUCT". Royalty-Bearing Product shall mean a medical device or a specialty catheter product developed for use in the Field, in either case incorporating one or more NitroMed Nitric Oxide Releasing Compounds. Section 1.37 "ROYALTY TERM". Royalty Term shall mean, with respect to each Royalty-Bearing Product in each country of the Territory, the period of time ending on the later of: (i) twelve (12) years from the date of the First Commercial Sale of such Royalty-Bearing Product in such country, PROVIDED THAT, during such time BSC maintains at least a [**]% market share in delivery of the Nitric Oxide Releasing Compound contained in such Royalty-Bearing Product in the Field in such country as measured in any [**] period, and (ii) the latest date on 5 which the manufacture, use or sale of such Royalty-Bearing Product in such country is (A) covered by a claim of NitroMed Patent Rights or (B) in the case of Royalty-Bearing Products containing NitroMed Delivered Compounds, covered by a claim of Joint Patent Rights. Section 1.38 "TERRITORY". Territory shall mean all countries of the world. Section 1.39 ADDITIONAL DEFINITIONS. Each of the following definitions is set forth in the section of this Agreement indicated below:
DEFINITION SECTION - ---------- ------- "1974 Convention" 10.2 "AAA" 9.1(a) "Agreement" Preamble "Breaching Party" 8.3 "BSC" Preamble "BSC Claim" 5.5(b) "BSC Indemnified Parties" 10.1(b) "Compound/Device Inventions" 5.1(c) "Compound Inventions" 5.1(a) "Compound Notification" 3.4(a) "Compound Response Period" 3.4(b) "Compound Right of First Refusal" 3.4 "Device Inventions" 5.1(b) "Electing Party" 5.2(c) "Execution Date" Preamble "Invalidity Claim" 5.5(e) "Joint Steering Committee" 2.2 "NitroMed" Preamble "NitroMed Claim" 5.5(b) "NitroMed Indemnified Parties" 10.1(a) "Non-Breaching Party" 8.3 "Non-Electing Party" 5.2(c) "Other Joint Inventions" 5.1(d) "Other Sole Inventions" 5.1(d) "SEC" 10.8(b) "Stock Purchase Agreement" 4.1 "Third Party Claim" 5.5(a)
ARTICLE II R&D PROGRAM Section 2.1 GENERAL. Pursuant to the terms of this Agreement, the Parties have agreed to collaborate on the research and development of Royalty-Bearing Products. The objective of the R&D Program will be for NitroMed to identify and deliver to BSC two (2) NitroMed Delivered Compounds meeting the criteria set forth in the R&D Plan and for BSC to develop and commercialize Royalty-Bearing Products based on such NitroMed Delivered Compounds. Both 6 Parties will be engaged in, and responsible for, the conduct of the R&D Program. BSC will be responsible for the commercialization of Royalty-Bearing Products. Section 2.2 JOINT STEERING COMMITTEE. The Parties shall establish a Joint Steering Committee (the "Joint Steering Committee"), comprised of the Program Directors and such other representatives of the Parties, if any, as each Party may designate from time to time. Each Party shall make its designation of its representative(s) not later than thirty (30) days after the Effective Date. Each Party shall designate as its representative(s) individuals who have the requisite experience and knowledge to oversee the R&D Program. The Joint Steering Committee shall meet within thirty (30) days after the Effective Date and, thereafter, at least quarterly during the R&D Term and thereafter through the First Commercial Sale of a Royalty-Bearing Product in the United States, to (i) review the efforts of the Parties in the conduct of the R&D Program and (ii) review and approve updates and amendments to the R&D Plan. The location of such meetings of the Joint Steering Committee shall be in Massachusetts, or as otherwise agreed by the Parties. The Joint Steering Committee may also meet by means of a telephone or video conference call, and may take action by vote at a meeting or telephone or video conference call, or pursuant to a written vote. Each Party may change any one or more of its representative(s) to the Joint Steering Committee at any time upon notice to the other Party. Each Party shall use reasonable efforts to cause its representative(s) to attend the meetings of the Joint Steering Committee. If a representative of a Party is unable to attend a meeting, such Party may designate an alternate to attend such meeting in place of the absent representative. In addition, each Party may, at its discretion, invite non-voting employees, and, with the consent of the other Party, consultants or scientific advisors (provided they are engaged under obligations of confidentiality) to attend the meetings of the Joint Steering Committee. Section 2.3 DECISIONMAKING. All decisions of the Joint Steering Committee shall be made by unanimous vote of the representatives of the Parties, with each Party's representatives collectively having one vote, and the goal of all decision making shall be to achieve consensus. Upon ten (10) business days written notice, either Party may convene a special meeting of the Joint Steering Committee for the purpose of resolving disputes. If the Joint Steering Committee is unable to reach agreement on any matter referred to it for resolution by the Parties within thirty (30) days after the matter is referred to it, such matter shall be referred to the Executive Officers for resolution. If the Executive Officers are unable to resolve a matter referred to them under this Section within thirty (30) days after the matter is referred to them, the provisions of Article IX shall apply. 7 Section 2.4 MANAGEMENT OF R&D PROGRAM. a. PROGRAM DIRECTORS. NitroMed and BSC shall each appoint a Program Director prior to the Effective Date. Each Party shall have the right, after consultation with the other Party, to designate a different Program Director. The Program Directors shall jointly oversee the conduct of the R&D Program and shall be responsible for, among other things, recommending to the Joint Steering Committee any updates and amendments to the R&D Plan. b. R&D PLAN. The Parties shall undertake the R&D Program during the R&D Term in accordance with the R&D Plan. The Program Directors shall review the R&D Plan from time to time and submit any proposed updates or amendments to the Joint Steering Committee for its review. Any such updates or amendments shall not become effective until approved by the Joint Steering Committee. The Joint Steering Committee shall review and consider any such proposed updates or amendments on an expeditious basis. Section 2.5 R&D PROGRAM RESPONSIBILITIES. a. GENERAL. Each Party agrees to use commercially reasonable efforts to (i) undertake the responsibilities assigned to such Party in the R&D Plan, (ii) perform its obligations hereunder in good faith in a scientific, commercially reasonable and workmanlike manner; (iii) as appropriate, make available to the other Party those resources set forth in the R&D Plan; and (iv) carry out all work done in the course of the R&D Program in material compliance with all applicable federal, state or local laws, regulations and guidelines governing the conduct of such work. b. NITROMED RESPONSIBILITIES. NitroMed shall undertake those activities set forth in the R&D Plan which are to be undertaken by NitroMed in connection with the R&D Program, including, but not limited to: (i) providing BSC with [**] NitroMed Delivered Compounds meeting the criteria set forth in the R&D Plan, [**] which shall be delivered to BSC within [**] of the Effective Date and [**] which shall be delivered to BSC within [**] of the Effective Date; (ii) dedicating an average of [**] FTEs to the R&D Program over the course of the R&D Term; (iii) providing BSC with analytical support during the R&D Term; (iv) conducting the initial in-vivo pre-clinical studies specified in the R&D Plan at NitroMed's facilities in conjunction with BSC [**] (v) supplying BSC [**] with sufficient quantities of clinical grade NitroMed Delivered Compounds to support BSC's pre-clinical activities for purposes of porcine studies; (vi) supplying BSC, at NitroMed's [**] percent ([**]%), with clinical grade NitroMed Delivered Compounds for BSC's use in clinical trials throughout the Territory; (vii) conducting pre-clinical studies, including but not limited to stability, characterization and animal studies, as required to develop the NitroMed Delivered Compounds to a point where such compounds are ready for porcine studies as reasonably determined by the Joint Steering Committee; (viii) providing BSC with support for BSC's regulatory submissions and meetings with regulatory bodies; (ix) submitting to regulatory bodies and maintaining with such regulatory bodies drug master files or their equivalent with respect to NitroMed Delivered Compounds; and (x) preparation, filing, prosecution and maintenance of patent applications and patents relating to NitroMed Intellectual Property and Joint Intellectual Property, as further provided in Section 5.2. 8 c. BSC RESPONSIBILITIES. BSC shall undertake those activities set forth in the R&D Plan which are to be undertaken by BSC in connection with the R&D Program, including, but not limited to: (i) providing such biological and technical resources as may be available for use in the R&D Program; (ii) preparing the coating, blending the NitroMed Delivered Compounds into such coating, applying such coating to the medical device or specialty catheter, and sterilizing such device or catheter for use in pre-clinical evaluation of the resulting Royalty-Bearing Product; (iii) coordinating [**] Royalty-Bearing Product; (iv) preparation, filing, prosecution and maintenance of patent applications and patents relating to BSC Intellectual Property and Joint Intellectual Property, as further provided in Section 5.2; and (v) sharing expertise and providing such support as is reasonably required by NitroMed in order for NitroMed to perform its responsibilities under Section 2.5(b). Section 2.6 EXTENSIONS OF R&D PROGRAM. If either Party desires to extend the R&D Program, such Party shall give notice of such desire to the other Party at least ninety (90) days prior to the expiration of the R&D Term. Upon such notice, the Parties shall in good faith discuss extending the R&D Program and, if the Parties determine to extend the R&D Program, the terms on which the R&D Program will be extended. If the Parties agree to extend the R&D Term and to continue substantially the same scope of R&D Program activities during the extension period, and without obligating either Party to agree to any extension, the Parties anticipate that the terms of such extension would include license fees and/or program funding payable by BSC to NitroMed based on NitroMed's fully absorbed costs relating to R&D Program activities during the extension period plus a mutually agreed mark-up over such costs, as well as additional milestone and royalty payment provisions based on development and commercialization of products developed during the extension period. Section 2.7 NITROMED EXCLUSIVITY OBLIGATIONS. During the R&D Term, NitroMed agrees that NitroMed will [**] in the ROFR Field [**] (other than the R&D Program) [**] for use in the ROFR Field. In addition, during the Royalty Term(s) relating to any Royalty-Bearing Product(s) incorporating a NitroMed Delivered Compound, NitroMed will [**] such NitroMed Delivered Compound, [**]. Section 2.8 COMMERCIAL SUPPLY OF NITROMED DELIVERED COMPOUNDS. NitroMed shall supply NitroMed Delivered Compounds to BSC for use in the commercial manufacture of Royalty-Bearing Products. Prior to the First Commercial Sale of a Royalty-Bearing Product, the Parties shall negotiate the terms and conditions of a separate supply agreement under which NitroMed shall supply such NitroMed Delivered Compounds to BSC. ARTICLE III GRANT OF RIGHTS Section 3.1 NITROMED GRANTS. a. DEVELOPMENT LICENSE. Subject to the terms and conditions of this Agreement, NitroMed hereby grants to BSC a non-exclusive, non-royalty-bearing right and license in the Territory, without the right to grant sublicenses, under NitroMed's rights in 9 NitroMed Intellectual Property, to make and use NitroMed Nitric Oxide Releasing Compounds in the course of the R&D Program to develop Royalty-Bearing Products. b. COMMERCIALIZATION LICENSES. Subject to the terms and conditions of this Agreement, NitroMed hereby grants to BSC: i. an exclusive, royalty-bearing right and license in the Territory during the Royalty Term, with the right to grant sublicenses only to the extent provided in Section 3.1(c), under NitroMed's rights in NitroMed Intellectual Property and Joint Intellectual Property, to make, use, sell, offer to sell and import Royalty-Bearing Products incorporating NitroMed Delivered Compounds; and ii. a non-exclusive, royalty-bearing right and license in the Territory during the Royalty Term, with the right to grant sublicenses only to the extent provided in Section 3.1(c), under NitroMed's rights in the NitroMed Intellectual Property other than the NitroMed Composition Patent Rights, to make, use, sell, offer to sell and import Royalty-Bearing Products incorporating Limited License Compounds. c. BSC SUBLICENSE RIGHTS. i. If BSC determines that, solely for the purpose of facilitating commercial distribution of a Royalty-Bearing Product, it would be advantageous to grant a sublicense to a third party for such purpose, then BSC may grant such sublicense; PROVIDED THAT such sublicense occurs pursuant to a written agreement that subjects the sublicensee to all relevant restrictions and limitations in this Agreement. ii. Any third party granted a sublicense in accordance with subsection (i) above shall have no right to grant further sublicenses. iii. BSC shall be jointly and severally responsible with its sublicensees for failure by such sublicensees to comply with, and BSC guarantees to NitroMed the compliance by each of its sublicensees with, all relevant restrictions and limitations in this Agreement. iv. BSC shall provide NitroMed with a copy of each sublicense agreement entered into by BSC in accordance with this Section 3.1(c) within thirty (30) days after the execution of such sublicense agreement Section 3.2 BSC RESEARCH LICENSE GRANT. Subject to the terms and conditions of this Agreement, BSC hereby grants to NitroMed and its Affiliates a non-exclusive, non-sublicensable, non-royalty-bearing right and license in the Territory under BSC's rights in BSC Intellectual Property and Joint Intellectual Property, to the extent necessary for NitroMed to undertake its responsibilities as set forth in the R&D Plan or as otherwise determined by the Joint Steering Committee for research and other non-commercial purposes only. Such grant is to automatically terminate upon the expiration of the R&D Term. Section 3.3 NITROMED RETAINED RIGHTS. Except as otherwise specifically provided for herein, NitroMed retains, and BSC hereby covenants not to assert any of BSC's rights in 10 NitroMed Intellectual Property or Joint Intellectual Property in any manner that would restrict NitroMed's exercise of, all rights and licenses to exploit NitroMed Intellectual Property and NitroMed's rights in Joint Intellectual Property. Section 3.4 COMPOUND RIGHT OF FIRST REFUSAL. In respect of NitroMed Nitric Oxide Releasing Compounds, BSC shall, in addition to the rights set forth in Section 3.1, have the rights set forth in this Section 3.4. Provided BSC has not terminated the R&D Term prior to its expiration, if, at any time during [**] the R&D Term, with respect to any such NitroMed Nitric Oxide Releasing Compounds, NitroMed desires to undertake development or commercialization activities in the Field with respect to such NitroMed Nitric Oxide Releasing Compound and any compounds structurally derived in one or more steps from such NitroMed Nitric Oxide Releasing Compound in collaboration with a third party or grant or assign a license or other rights to a third party to undertake such activities in the Field, then [**] NitroMed's rights in NitroMed Intellectual Property and Joint Intellectual Property to such NitroMed Nitric Oxide Releasing Compound for development and commercialization in the Field (such opportunity, a "Compound Right of First Refusal"). A Compound Right of First Refusal shall operate as follows: a. NitroMed shall notify BSC in writing (the "Compound Notification") of its desire and shall provide to BSC an identification of the specific compound class of such NitroMed Nitric Oxide Releasing Compound. b. [**] after its receipt of the Compound Notification (the "Compound Response Period"), BSC shall notify NitroMed of [**] such NitroMed Nitric Oxide Releasing Compound. c. In the event that BSC notifies NitroMed prior to the termination of the Compound Response Period [**] such NitroMed Nitric Oxide Releasing Compound, the Parties shall thereafter, for a period not to exceed [**] unless otherwise mutually agreed by the Parties, negotiate in good faith the terms under which [**] such NitroMed Nitric Oxide Releasing Compound. d. If (A) BSC fails to notify NitroMed prior to the termination of the Compound Response Period that [**], or (B) BSC notifies NitroMed prior to the termination of the Compound Response Period that [**], or (C) the Parties [**], then NitroMed shall be entitled to enter into the proposed collaboration, license or other arrangement. Section 3.5 ROFR FIELD EXCLUSIVITY OPTION. If BSC notifies NitroMed prior to the expiration or termination of the R&D Term that [**], then the Parties shall negotiate in good faith for a period of up to [**] after such notification the terms under which NitroMed would grant BSC an exclusive, royalty-bearing right and license in the Territory during the Royalty Term under NitroMed's rights in NitroMed Intellectual Property and Joint Intellectual Property, to make, use, sell, offer to sell and import Royalty-Bearing Products incorporating NitroMed Nitric Oxide Releasing Compounds for use in the ROFR Field or sub-field, as the case may be. 11 ARTICLE IV FINANCIAL PROVISIONS Section 4.1 EQUITY INVESTMENT. On or prior to the Effective Date, NitroMed and BSC are entering into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which, subject to the terms and conditions contained therein, BSC shall purchase Series F convertible preferred stock of NitroMed for an aggregate purchase price of Three Million Five Hundred Thousand U.S. Dollars (US$3,500,000) at a per share price of Fourteen U.S. Dollars (US$14). Section 4.2 LICENSE PAYMENT. On the Effective Date, and in consideration of the grant by NitroMed to BSC of the rights granted under Article III, BSC shall make a non-refundable license payment to NitroMed of One Million Five Hundred Thousand U.S. Dollars (US$1,500,000). Section 4.3 MILESTONE PAYMENTS. a. FIRST ROYALTY-BEARING PRODUCT. BSC shall make the following milestone payments to NitroMed in connection with the first Royalty-Bearing Product incorporating a NitroMed Delivered Compound upon achievement of the following milestones: 12
PAYMENT DUE UPON ACHIEVEMENT MILESTONE OF MILESTONE [**] [**] U.S. Dollars (US$[**]) [**] [**] U.S. Dollars (US$[**])
b. ALL ROYALTY-BEARING PRODUCTS. BSC shall make the following milestone payment to NitroMed in connection with each Royalty-Bearing Product upon achievement of the following milestone:
PAYMENT DUE UPON ACHIEVEMENT MILESTONE OF MILESTONE ~~[**] [**] U.S. Dollars (US$[**])~~
A Royalty-Bearing Product shall be deemed a distinct Royalty-Bearing Product for which the milestone payment set forth in this Section 4.3(b) is payable if such Royalty-Bearing Product either (i) [**] a previous Royalty-Bearing Product or (ii) is developed [**]. For purposes of clarity, [**] a Royalty-Bearing Product shall not in itself make such Royalty-Bearing Product a distinct Royalty-Bearing Product for which the milestone payment set forth in this Section 4.3(b) is payable if such Royalty-Bearing Product does not otherwise satisfy one of the criteria set forth in the immediately preceding sentence. For purposes of this Section 4.3(b), a previous Royalty-Bearing Product is a Royalty-Bearing Product for which the milestone payment required under this Section 4.3(b) has previously been paid. c. COMMERCIAL SUCCESS MILESTONES. BSC shall make the following milestone payments to NitroMed in connection with each Royalty-Bearing Product upon achievement of the following milestones:
PAYMENT DUE UPON ACHIEVEMENT MILESTONE OF MILESTONE ~~[**] [**] U.S. Dollars (US$[**]) [**] [**] U.S. Dollars (US$[**])~~
13 For purposes of clarity, the milestone payments set forth in this Section 4.3(c) are separate milestone payments and both can become payable during the same twelve (12) month period or during overlapping twelve (12) month periods. d. TIMING OF PAYMENTS. Each milestone payment shall be made by BSC to NitroMed within forty-five (45) days after the achievement of the applicable milestone. Section 4.4 ROYALTY PAYMENTS. a. Subject to adjustment as set forth in subsection (b) below, BSC shall pay to NitroMed a [**] percent ([**]%) royalty with respect to Net Sales of any Royalty-Bearing Product. b. The royalty with respect to Net Sales set forth in subsection (a) above shall be reduced by an amount equal to [**]percent ([**]%) of royalties paid by BSC with respect of such Net Sales to third parties for licenses under Blocking Third Party Intellectual Property; PROVIDED THAT the royalty reduction provided for in this subsection (b) shall not reduce such royalty below [**] percent ([**]%) of such Net Sales of Royalty-Bearing Products. Section 4.5 LENGTH OF ROYALTY PAYMENTS. The royalties payable under Section 4.4 shall be paid on a country-by-country basis on each Royalty-Bearing Product until the expiration of the Royalty Term. Section 4.6 ROYALTIES PAYABLE ONLY ONCE. BSC's obligation to pay royalties under Section 4.4 is imposed only once with respect to the same unit of Royalty-Bearing Product. Except as specifically provided in this Agreement, there shall be no deductions from the royalties payable hereunder. Section 4.7 ROYALTY REPORTS AND ACCOUNTING. a. ROYALTY REPORTS; ROYALTY PAYMENTS. BSC shall deliver to NitroMed, within forty-five (45) days after the end of each calendar quarter, reasonably detailed written accountings of Net Sales of Royalty-Bearing Products that are subject to royalty payments due to NitroMed for such calendar quarter. Such quarterly reports shall indicate (i) gross sales and Net Sales on a country-by-country and Royalty-Bearing Product-by-Royalty-Bearing Product basis, and (ii) the calculation of royalties from such gross sales and Net Sales. When BSC delivers such accounting to NitroMed, BSC shall also deliver all royalty payments due under Section 4.4 to NitroMed for the calendar quarter. b. AUDITS BY NITROMED. BSC shall keep, and shall require its Affiliates, distributors, agents and sublicensees to keep, complete and accurate records of the latest three (3) years relating to gross sales, Net Sales and all information relevant under Sections 4.4, 4.8, 4.9 and 4.10. For the sole purpose of verifying amounts payable to NitroMed, NitroMed shall have the right annually, at NitroMed's expense, to retain an independent certified public accountant selected by NitroMed and reasonably acceptable to BSC, to review such records in the location(s) where such records are maintained by BSC, its Affiliates and sublicensees upon reasonable notice and during regular business hours and under obligations of strict confidence. Results of such review shall be made available to both Parties. If the review reflects an underpayment to NitroMed, such underpayment shall be promptly remitted to NitroMed, together with interest calculated in the manner provided in Section 4.10. If the underpayment is 14 equal to or greater than ten percent (10%) of the amount that was otherwise due, NitroMed shall be entitled to have BSC pay all of the costs of such review. If the review reflects an overpayment, such amount will be refunded by NitroMed promptly to BSC. Section 4.8 CURRENCY EXCHANGE. With respect to sales of Royalty-Bearing Products invoiced in U.S. Dollars, the sales and royalties payable shall be expressed in U.S. Dollars. With respect to sales of Royalty-Bearing Products invoiced in a currency other than U.S. Dollars, the sales and royalties payable shall be expressed in their U.S. Dollar equivalent calculated using the applicable average conversion rate for buying U.S. Dollars determined by reference to the conversion rates published by Bloomberg for the calendar quarter to which the royalty report relates. All royalty payments shall be made in U.S. Dollars. Section 4.9 TAX WITHHOLDING. The Parties shall use all reasonable and legal efforts to reduce tax withholding on payments made to NitroMed. Notwithstanding such efforts, if BSC concludes that tax withholdings under the laws of any country are required with respect to payments to NitroMed, BSC shall withhold the required amount and pay it to the appropriate governmental authority. In such case, BSC shall promptly provide NitroMed with original receipts or other evidence reasonably required and sufficient to allow NitroMed to document such tax withholdings adequately for purposes of claiming foreign tax credits and similar benefits. Section 4.10 LATE PAYMENTS. BSC shall pay interest to NitroMed on the aggregate amount of any payments that are not paid on or before the date such payments are due under this Agreement at a rate per annum equal to the lesser of one and one-half percent (1 1/2%) per month or the highest rate permitted by applicable law, calculated on the number of days such payments are paid after the date such payments are due. ARTICLE V INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS Section 5.1 OWNERSHIP OF INVENTIONS. a. COMPOUND INVENTIONS. NitroMed shall exclusively own all inventions made by either Party, their employees, agents and consultants, or jointly by any of the foregoing, in the course of, and while engaged in, the R&D Program that relate solely to the composition of Nitric Oxide Releasing Compounds ("Compound Inventions"). b. DEVICE INVENTIONS. BSC shall exclusively own all inventions made by either Party, their employees, agents and consultants, or jointly by any of the foregoing, in the course of, and while engaged in, the R&D Program that relate solely to medical devices, coatings for medical devices or the use of medical devices ("Device Inventions"). c. COMPOUND/DEVICE INVENTIONS. BSC and NitroMed shall jointly own all inventions made by either Party, their employees, agents and consultants, or jointly by any of the foregoing, in the course of, and while engaged in, the R&D Program that relate to both the composition or use of Nitric Oxide Releasing Compounds, on the one hand, and medical devices, 15 coatings for medical devices or the use of medical devices, on the other ("Compound/Device Inventions"). d. OTHER JOINT INVENTIONS AND OTHER SOLE INVENTIONS. All inventions other than Compound Inventions, Device Inventions and Compound/Device Inventions made jointly by employees, agents and consultants of BSC and employees, agents and consultants of NitroMed in the course of the R&D Program ("Other Joint Inventions") shall be owned jointly on the basis of each Party having an undivided interest in the whole. All inventions other than Compound Inventions, Device Inventions and Compound/Device Inventions made solely by employees, agents and consultants of a Party in the course of the R&D Program ("Other Sole Inventions") shall be owned exclusively by such Party. e. INVENTORSHIP. The determination of inventorship shall be made in accordance with United States patent laws. In the event of a dispute regarding inventorship, if the Parties are unable to resolve the dispute, mutually acceptable independent patent counsel not regularly employed by either Party shall resolve such dispute. f. DATA OWNERSHIP; RIGHT OF REFERENCE. All data generated in pre-clinical studies of NitroMed Nitric Oxide Releasing Compounds and Royalty-Bearing Products in the course of the R&D Program shall be jointly owned by the Parties and the Parties shall have equal access to such data. Each Party shall have access to and a right of reference with respect to all data generated in clinical studies of Royalty-Bearing Products. g. FURTHER ACTIONS AND ASSIGNMENTS. Each Party shall take all further actions and execute all assignments requested by the other Party and reasonably necessary or desirable to vest in the other Party the ownership rights set forth in this Section 5.1. Section 5.2 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS. a. COMPOUND INVENTIONS AND OTHER SOLE INVENTIONS OWNED BY NITROMED. NitroMed shall have the exclusive right and option to file and prosecute any patent applications and maintain any patents covering Compound Inventions and Other Sole Inventions owned by NitroMed; PROVIDED THAT in the event that NitroMed declines the option to file and prosecute any such patent applications or maintain any such patents that pertain solely to Royalty-Bearing Products, it shall give BSC reasonable notice to this effect and thereafter BSC may, upon written notice to NitroMed, file and prosecute such patent applications and maintain such patents in NitroMed's name, all at BSC's expense, and all such Compound Inventions and Other Sole Inventions shall remain owned exclusively by NitroMed. b. DEVICE INVENTIONS AND OTHER SOLE INVENTIONS OWNED BY BSC. BSC shall have the exclusive right and option to file and prosecute any patent applications and to maintain any patents covering Device Inventions and Other Sole Inventions owned by BSC; PROVIDED THAT in the event that BSC declines the option to file and prosecute any such patent applications or maintain any such patents that pertain solely to Royalty-Bearing Products, it shall give NitroMed reasonable notice to this effect and thereafter NitroMed may, upon written notice to BSC, file and prosecute such patent applications and maintain such patents in BSC's name, all at 16 NitroMed's expense, and all such Device Inventions and Other Sole Inventions shall remain owned exclusively by BSC. c. COMPOUND/DEVICE INVENTIONS AND OTHER JOINT INVENTIONS. The Joint Steering Committee shall determine which Party shall have the right and option to file and prosecute any patent applications and to maintain any patents covering Compound/Device Inventions and Other Joint Inventions at the shared expense of both parties; PROVIDED THAT in the event that either Party declines an option to file and prosecute any such patent applications or maintain any such patents that pertain solely to Royalty-Bearing Products or declines to share in such filing, prosecution and maintenance expenses ("Non-Electing Party"), it shall give the other Party ("Electing Party") reasonable notice to this effect and thereafter the Electing Party may, upon written notice to the Non-Electing Party, file and prosecute such patent applications and maintain such patents in its sole name and expense, and the Non-Electing Party shall assign any of its rights therein to the Electing Party for no additional consideration. d. COSTS AND EXPENSES. Each Party shall bear its own costs and expenses in preparing, filing, prosecuting, maintaining and extending Patent Rights. e. COOPERATION. Each Party agrees to cooperate with the other with respect to the preparation, filing, prosecution, maintenance and extension of patents and patent applications pursuant to this Section 5.2, including, without limitation, the execution of all such documents and instruments and the performance of such acts as may be reasonably necessary in order to permit the other Party to continue any preparation, filing, prosecution, maintenance or extension of patents and patent applications that such Party has elected not to pursue, as provided for in Sections 5.2(a), (b) and (c). Section 5.3 EXPLOITATION OF JOINT INTELLECTUAL PROPERTY. Subject to all provisions of this Agreement, including without limitation (a) the grant of licenses to NitroMed and BSC, respectively, under Article III, and (b) BSC's royalty obligations pursuant to Article IV, each Party shall be free to exploit Joint Intellectual Property worldwide without restriction and without payment of any additional compensation to the other Party. Section 5.4 THIRD PARTY INFRINGEMENT. a. NOTICE. Each Party shall promptly report in writing to the other Party during the term of this Agreement any (i) known or suspected infringement of any of the BSC Patent Rights, the NitroMed Patent Rights or the Joint Patent Rights or (ii) known or suspected unauthorized use of any of the BSC Know-How, the NitroMed Know-How or the Joint Know-How, of which such Party becomes aware, and shall provide the other Party with all available evidence supporting such infringement, suspected infringement, unauthorized use or suspected unauthorized use. b. INFRINGEMENT ACTION. i. NitroMed shall have the initial right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the NitroMed Intellectual Property. To the extent that any such suit or actions pertains to Royalty-Bearing Products, NitroMed shall give BSC sufficient advance notice of its intent to file any such suit or take any 17 such action and the reasons therefor, and shall provide BSC with an opportunity to make suggestions and comments regarding such suit or action. Thereafter, NitroMed shall keep BSC promptly informed, and shall from time to time consult with BSC regarding the status of any such suit or action and shall provide BSC with copies of all material documents (i.e., complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action. ii. BSC shall have the initial right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the BSC Intellectual Property. To the extent that any such suit or actions pertains to Royalty-Bearing Products, BSC shall give NitroMed sufficient advance notice of its intent to file any such suit or take any such action and the reasons therefor, and shall provide NitroMed with an opportunity to make suggestions and comments regarding such suit or action. Thereafter, BSC shall keep NitroMed promptly informed, and shall from time to time consult with NitroMed regarding the status of any such suit or action and shall provide NitroMed with copies of all material documents (i.e., complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action. c. CONDUCT OF ACTION; COSTS. The Party initiating suit shall have the sole and exclusive right to select counsel for any suit initiated by it under this Section 5.4. If required under applicable law in order for such Party to initiate and/or maintain such suit, the other Party shall join as a party to the suit. The other Party shall offer reasonable assistance to the Party initiating suit in connection therewith at no charge to such Party except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such assistance. The Party initiating suit shall assume and pay all of its own out-of-pocket costs incurred in connection with any litigation or proceedings described in this Section 5.4, including, without limitation, the fees and expenses of the counsel selected by it. The other Party shall have the right to participate and be represented in any such suit by its own counsel at its own expense. The Party initiating suit shall not settle any such suit involving rights of the other Party in the Field without obtaining the prior written consent of such other Party, which consent shall not be unreasonably withheld or delayed. d. STEP-IN RIGHT. If the Party with the right to initiate suit pursuant to subsection (b) fails to initiate a suit or take such other appropriate action within sixty (60) days after becoming aware of the alleged infringements or unauthorized use, then, to the extent that such alleged infringement or unauthorized use pertains to Royalty-Bearing Products, the other Party may, in its discretion, provide the Party with the initial right with written notice of its intent to initiate a suit or take other appropriate action, such notice to be provided within thirty (30) days after the expiration of such sixty (60) day period. If such other Party provides such notice and the Party with the initial right fails to initiate a suit or take such other appropriate action within thirty (30) days after receipt of such notice from such other Party, then such other Party shall have the right to initiate a suit or take other appropriate action that it believes is reasonably required to protect the BSC Intellectual Property, the NitroMed Intellectual Property and Joint 18 Intellectual Property, as applicable. Such other Party shall give the Party with the initial right sufficient advance notice of its intent to file any such suit or take any such action and the reasons therefor, and shall provide the Party with the initial right with an opportunity to make suggestions and comments regarding such suit or action. Thereafter, such other Party shall keep the Party with the initial right promptly informed, and shall from time to time consult with the Party with the initial right regarding the status of any such suit or action and shall provide the Party with the initial right with copies of all material documents (i.e., complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action. In addition, the provisions of subsection (c) above shall apply to suits initiated under this subsection (d). e. RECOVERIES. To the extent that any such suit or action pertains to Royalty-Bearing Products, any recovery obtained as a result of any proceeding described in this Section 5.4 or from any counterclaim or similar claim asserted in a proceeding described in Section 5.5, by settlement or otherwise, shall be applied in the following order of priority: i. first, the Party initiating the suit or action shall be reimbursed for all costs in connection with such proceeding paid by such Party and not otherwise recovered; ii. second, the other Party shall be reimbursed for all costs in connection with such proceeding paid by the other Party and not otherwise recovered; and iii. third, any remainder shall be paid [**] percent ([**]%) to NitroMed and the balance to BSC. Section 5.5 CLAIMED INFRINGEMENT; CLAIMED INVALIDITY. a. NOTICE. In the event that a third party at any time provides written notice of a claim to, or brings an action, suit or proceeding against a Party, or any of its Affiliates or sublicensees, claiming infringement of such third party's Patent Rights or unauthorized use of such third party's Know-How, based upon an assertion or claim arising out of the research, development, manufacture, use or sale of Royalty-Bearing Products by such Party (a "Third Party Claim"), such Party shall promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and/or all papers served. Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party. b. DEFENSE OF THIRD PARTY CLAIM. NitroMed shall have sole and exclusive responsibility for the defense of any Third Party Claim brought against NitroMed or its Affiliates or sublicensees arising out of the research, development, manufacture, use or sale of Royalty-Bearing Products (a "NitroMed Claim"). BSC shall have sole and exclusive responsibility for the defense of any Third Party Claim brought against BSC or its Affiliates or sublicensees arising out of the research, development, manufacture, use or sale of Royalty-Bearing Products (a "BSC Claim"). 19 c. CONDUCT OF DEFENSE; COSTS. NitroMed shall have the sole and exclusive right to select counsel for any NitroMed Claim and BSC shall have the sole and exclusive right to select counsel for any BSC Claim. Each Party shall from time to time consult with the other Party regarding the status of any such Third Party Claim and shall provide the other Party with copies of all documents filed in, and all written communications relating to, such Third Party Claim. Each Party shall offer reasonable assistance to the other Party in connection therewith at no charge to the other Party except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such assistance. Each Party shall assume and pay all of its own out-of-pocket costs incurred in connection therewith, including, without limitation, the fees and expenses of the counsel selected by it. d. SETTLEMENT OF THIRD PARTY CLAIMS. Neither Party shall settle any claims or suits involving rights of the other Party without obtaining the prior written consent of the other Party, which consent shall not be unreasonably withheld. e. PATENT INVALIDITY CLAIM. If a third party at any time asserts a claim that any BSC Patent Right, NitroMed Patent Right or Joint Patent Right is invalid or otherwise unenforceable (an "Invalidity Claim"), whether as a defense in an infringement action brought by NitroMed pursuant to Section 5.4 or in a Third Party Claim brought against NitroMed or BSC, the Parties shall cooperate with each other in preparing and formulating a response to such Invalidity Claim. Neither Party shall settle or compromise any Invalidity Claim without the consent of the other Party, which consent shall not be unreasonably withheld. Section 5.6 PATENT TERM EXTENSIONS. The Parties shall cooperate, if necessary and appropriate, with each other in gaining patent term extension wherever applicable to BSC Patent Rights, NitroMed Patent Rights or Joint Patent Rights covering Royalty-Bearing Products. The Parties shall, if necessary and appropriate, use reasonable efforts to agree upon a joint strategy relating to patent term extensions, but, in the absence of mutual agreement with respect to any extension issue, a patent shall be extended if either Party elects to extend such patent. All filings for such extension shall be made by the Party owning the patent, PROVIDED, HOWEVER, that in the event that the Party owning the patent elects not to file for an extension, such Party shall (i) inform the other Party of its intention not to file and (ii) grant the other Party the right to file for such extension. Section 5.7 PATENT MARKING. BSC agrees to comply with any applicable patent marking statutes in any country in which Royalty-Bearing Products are sold by BSC, its Affiliates and/or sublicensees. ARTICLE VI CONFIDENTIALITY Section 6.1 CONFIDENTIAL INFORMATION. Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other Party (a) shall not be used by the receiving Party except in connection with the activities contemplated by this Agreement or in 20 order to further the purposes of this Agreement, (b) shall be maintained in confidence by the receiving Party, and (c) shall not be disclosed by the receiving Party to any third party who is not an Affiliate or consultant of, or an advisor to, the receiving Party without the prior written consent of the disclosing Party. Notwithstanding the foregoing, the receiving Party shall be entitled to use and disclose Confidential Information that: a. was known or used by the receiving Party or its Affiliates prior to its date of disclosure to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates; or b. either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party rightfully in possession of the Confidential Information and not bound by confidentiality obligations to the disclosing party; or c. either before or after the date of the disclosure to the receiving Party or its Affiliates is or becomes published or otherwise is or becomes part of the public domain through no breach hereof on the part of the receiving Party or its Affiliates; or d. is independently developed by or for the receiving Party or its Affiliates without reference to or reliance upon the Confidential Information as demonstrated by competent written records; or e. is reasonably necessary for the filing, prosecution and maintenance of Patent Rights; or f. is required to be disclosed by the receiving Party to comply with applicable laws, to defend or prosecute litigation or to comply with governmental regulations, PROVIDED THAT the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. Section 6.2 EMPLOYEE AND ADVISOR OBLIGATIONS. NitroMed and BSC each agree that they shall provide Confidential Information received from the other Party only to their respective employees, consultants and advisors, and to the employees, consultants and advisors of such Party's Affiliates, who have a need to know such Confidential Information to assist such Party in fulfilling its obligations under this Agreement, PROVIDED THAT such employees, consultants and advisors agree to treat such information and materials as confidential. Section 6.3 TERM. All obligations of confidentiality imposed under this Article VI shall expire five (5) years following termination or expiration of this Agreement. Section 6.4 PUBLICATIONS. The Parties acknowledge that scientific lead time is a key element of the value of the R&D Program and further agree to use commercially reasonable efforts to monitor public scientific disclosures of the results of the R&D Program to prevent any potential adverse effect of any premature public disclosure of such results. The Parties shall establish a procedure for publication review and each Party shall first submit to the other Party an early draft of all such publications, whether they are to be presented orally or in written form, 21 at least thirty (30) days prior to submission for publication. Each Party shall review such proposed publication in order to avoid the unauthorized disclosure of a Party's Confidential Information and to preserve the patentability of inventions arising from the R&D Program. If, as soon as reasonably possible, but no longer than thirty (30) days following receipt of an advance copy of a Party's proposed publication, the other Party informs such Party that its proposed publication contains Confidential Information of the other Party, then such Party shall delete such Confidential Information from its proposed publication. In addition, if at any time during such thirty (30) day period, the other Party informs such Party that its proposed publication discloses inventions made by either Party in the course of the R&D Program which are subject to the rights granted by one Party to the other Party pursuant to Sections 3.1 or 3.2 of this Agreement, or the public disclosure of such proposed publication could be expected to have a material adverse effect on any Patent Rights or Know-How of such other Party, then such Party shall delay such proposed publication, for up to sixty (60) days from the date the other Party informed such Party of its objection to the proposed publication, to permit the timely preparation and first filing of patent application(s) on the information involved. The Parties agree that all publications of results of the R&D Program by NitroMed or BSC shall acknowledge the contribution of the other Party and third party collaborators, as applicable, to such results. ARTICLE VII REPRESENTATIONS AND WARRANTIES Section 7.1 REPRESENTATIONS OF AUTHORITY. NitroMed and BSC each represents and warrants to the other Party that it has full corporate right, power and authority to enter into this Agreement and to perform its respective obligations under this Agreement and, subject to Section 7.6 hereof, that it has the right to grant to the other the licenses and sublicenses granted pursuant to this Agreement. Section 7.2 CONSENTS. NitroMed and BSC each represents and warrants to the other Party that all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been or shall be obtained by the Effective Date. Section 7.3 NO CONFLICT. NitroMed and BSC each represents and warrants to the other Party that, notwithstanding anything to the contrary in this Agreement, the execution and delivery of this Agreement, the performance of such Party's obligations in the conduct of the R&D Program and the licenses and sublicenses to be granted pursuant to this Agreement (a) do not and will not conflict with or violate any requirement of applicable laws or regulations existing as of the Execution Date and (b) do not and will not conflict with, violate, breach or constitute a default under any contractual obligations of such Party or any of its Affiliates existing as of the Effective Date. Section 7.4 ENFORCEABILITY. NitroMed and BSC each represents and warrants to the other Party that this Agreement is a legal and valid obligation binding upon it and is enforceable in accordance with its terms. 22 Section 7.5 EMPLOYEE OBLIGATIONS. NitroMed and BSC each represents and warrants that all of its employees, officers, consultants and advisors who are or will be involved in the R&D Program have executed or will have executed agreements or have existing obligations under law requiring assignment to such Party of all intellectual property made during the course of and as the result of their association with such Party, and obligating the individual to maintain as confidential such Party's Confidential Information, to the extent required to support such Party's obligations under this Agreement. NitroMed and BSC each represents and warrants that to its knowledge, none of its employees who are or will be involved in the R&D Program are, as a result of the nature of such R&D Program to be conducted by the Parties, in violation of any covenant in any contract with a third party relating to non-disclosure of proprietary information, non-competition or non-solicitation. Section 7.6 INTELLECTUAL PROPERTY. a. NitroMed represents and warrants to BSC that, to the knowledge of NitroMed, as of the Execution Date, the Know-How of NitroMed that is expected to be utilized by the Parties in the R&D Program (based on the duties expected to be performed by them under the R&D Plan as of the Execution Date) has not been developed or obtained by NitroMed or its Affiliates in violation of any contractual obligation to any third party nor has it been misappropriated from any third party or obtained without the proper consent of any third party. b. NitroMed represents and warrants to BSC that, as of the Execution Date, there is no action, suit or proceeding which is pending or, to the knowledge of the officers of NitroMed or its Affiliates, no written claim or demand of any third party that has been received, that challenges or would materially adversely affect (i) the right of the Parties to use in the conduct of the R&D Program the Patent Rights or Know-How of NitroMed that are reasonably expected to be utilized by the Parties to fulfill their duties under the R&D Plan that they expect to perform as of the Execution Date, or (ii) the right of NitroMed to grant to BSC the rights and licenses to use such Patent Rights or Know-How granted as of the Effective Date. c. BSC represents and warrants to NitroMed that, to the knowledge of BSC, as of the Execution Date, the Know-How of BSC that is expected to be utilized by the Parties in the R&D Program (based on the duties expected to be performed by it under the R&D Plan as of the Execution Date) has not been developed or obtained by BSC or its Affiliates in violation of any contractual obligation to any third party nor has it been misappropriated from any third party or obtained without the proper consent of any third party. d. BSC represents and warrants to NitroMed that, as of the Execution Date, there is no action, suit or proceeding which is pending or, to the knowledge of the officers of BSC or its Affiliates, no written claim or demand of any third party that has been received, that challenges or would materially adversely affect (i) the right of BSC to use in the conduct of the R&D Program the Patent Rights or Know-How of BSC that are reasonably expected to be utilized by the Parties to fulfill their duties under the R&D Plan that they expect to perform as of the Execution Date, or (ii) the right of BSC to grant to NitroMed the rights and licenses to use such Patent Rights or Know-How granted as of the Effective Date. 23 Section 7.7 NO WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED. THE PARTIES SPECIFICALLY DISCLAIM ANY WARRANTIES THAT ROYALTY-BEARING PRODUCTS WILL BE SUCCESSFULLY DEVELOPED HEREUNDER, AND IF DEVELOPED, WILL HAVE COMMERCIAL UTILITY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. ARTICLE VIII TERM AND TERMINATION Section 8.1 TERM. This Agreement shall become effective as of the Effective Date, may be terminated as set forth in this Article VIII, and shall otherwise remain in effect until the expiration of all obligations to make payments set forth in Article IV. Section 8.2 SURVIVAL OF COMMERCIALIZATION LICENSE UPON EXPIRATION. Upon the expiration of BSC's obligations to pay royalties to NitroMed under Section 4.4 with respect to each Royalty-Bearing Product in any country, the licenses under NitroMed's rights in NitroMed Intellectual Property and Joint Intellectual Property set forth in Section 3.1(b) shall be deemed to be perpetual and fully paid-up licenses. Section 8.3 TERMINATION FOR MATERIAL BREACH. Upon any breach of a material provision of this Agreement by a Party (the "Breaching Party"), the other Party (the "Non-Breaching Party") may terminate this Agreement by providing sixty (60) days written notice to the Breaching Party, specifying the material breach. The termination shall become effective at the end of the sixty (60) days period unless the Breaching Party cures such breach during such sixty (60) days period. Notwithstanding the foregoing, if such breach, by its nature, is incurable, this Agreement may be terminated immediately. The Parties shall use reasonable efforts to work together to cure any breach. Section 8.4 EFFECT OF TERMINATION. a. TERMINATION BY BSC PURSUANT TO SECTION 8.3. If this Agreement is terminated under Section 8.3 and NitroMed is the Breaching Party, (i) the license granted by BSC to NitroMed under Section 3.2 shall terminate as of the effective date of such termination and (ii) the licenses granted by NitroMed to BSC under Sections 3.1(a) and 3.1(b) shall, at the election of BSC (to be made in writing within thirty (30) days after the effective date of termination), continue in effect, subject to the payment obligations set forth in Article IV of this Agreement. b. TERMINATION BY NITROMED PURSUANT TO SECTION 8.3. If this Agreement is terminated under Section 8.3 and BSC is the Breaching Party, the licenses granted by NitroMed to BSC under Sections 3.1(a) and 3.1(b) shall terminate as of the effective date of such termination, and all sublicenses granted to third parties by BSC pursuant to Section 3.1 shall also terminate as of such date. 24 Section 8.5 SURVIVAL. In the event of any expiration or termination of this Agreement, (a) all financial obligations under Article IV or Article V owed as of the effective date of such expiration or termination shall remain in effect, and (b) the obligations set forth in Article VI and in Sections 5.4, 5.5, and 10.1, and all other terms, provisions, representations, rights and obligations contained in this Agreement which by their sense and context are intended to survive expiration or termination of this Agreement, shall survive. ARTICLE IX DISPUTE RESOLUTION Section 9.1 ALTERNATIVE DISPUTE RESOLUTION. Any controversy, claim or dispute arising out of or relating to this Agreement that has not been resolved by the Executive Officers within thirty (30) days of referral in accordance with Section 2.3 shall be resolved through binding arbitration as follows: a. All disputes arising out of this Agreement and referred to arbitration pursuant to this Section 9.1 shall be finally resolved by arbitration conducted in the English language in Boston, Massachusetts, in accordance with the American Arbitration Association ("AAA") Arbitration Rules and Supplementary Procedures for Large, Complex Disputes. b. The arbitrator shall rule on each disputed issue within ninety (90) days after he or she has accepted the appointment to serve as an arbitrator, provided that if the arbitrator is unable to render a decision within such ninety (90) day period, he or she shall render such decision as soon thereafter as is practicable. The arbitrator shall issue a written decision in order to explain the basis of the ruling. The arbitrator shall not have the authority to award punitive damages. c. The arbitrator shall be paid reasonable fees plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing Party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows: i. If the arbitrator rules in favor of one Party on all disputed issues in the arbitration, the losing Party shall pay 100% of such fees and expenses. ii. If the arbitrator rules in favor of one Party on some issues and the other Party on other issues, the arbitrator shall issue with the ruling a written determination as to how such fees and expenses shall be allocated between the Parties. The arbitrator shall allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the arbitration, with the Party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses. d. Any decision or award of the arbitrator shall be final, conclusive, and binding on the Parties to the dispute, and judgment may be entered on any award in any court of competent jurisdiction. To the extent lawful, the Parties exclude any right of application or appeal to the Massachusetts, United States or other courts in connection with any question of law 25 arising in the arbitration or in connection with any award or decision made by the arbitrator, except as is necessary to recognize or enforce such award or decision. Section 9.2 NO LIMITATION. Notwithstanding the foregoing, nothing in this Article IX shall be construed as limiting in any way the right of a Party to seek injunctive or other equitable relief from a court of competent jurisdiction with respect to any actual or threatened breach of this Agreement. ARTICLE X MISCELLANEOUS PROVISIONS Section 10.1 INDEMNIFICATION. a. BSC. BSC agrees to defend NitroMed and its Affiliates at its cost and expense, and shall indemnify and hold NitroMed and its Affiliates and their respective directors, officers, employees and agents (the "NitroMed Indemnified Parties") harmless from and against any losses, costs, damages, fees or expenses arising out of any third party claim relating to (i) any breach by BSC of any of its representations, warranties or obligations pursuant to this Agreement or (ii) personal injury resulting from the development, manufacture, use, sale or other disposition of any Royalty-Bearing Products offered by BSC or its Affiliates or sublicensees. In the event of any such claim against the NitroMed Indemnified Parties by any third party, NitroMed shall promptly notify BSC in writing of the claim and BSC shall manage and control, at its sole expense, the defense of the claim and its settlement. The NitroMed Indemnified Parties shall cooperate with BSC and may, at their option and expense, be represented in any such action or proceeding. BSC shall not be liable for any litigation costs or expenses incurred by the NitroMed Indemnified Parties. In addition, BSC shall not be responsible for the indemnification of any NitroMed Indemnified Party arising from any negligent or wrongful acts by such party, or as the result of any settlement or compromise by the NitroMed Indemnified Parties without BSC's prior written consent. b. NITROMED. NitroMed agrees to defend BSC and its Affiliates at its cost and expense, and shall indemnify and hold BSC and its Affiliates and their respective directors, officers, employees and agents (the "BSC Indemnified Parties") harmless from and against any losses, costs, damages, fees or expenses arising out of any third party claim relating to any breach by NitroMed of any of its representations, warranties or obligations pursuant to this Agreement. In the event of any claim against the BSC Indemnified Parties by any third party, BSC shall promptly notify NitroMed in writing of the claim and NitroMed shall manage and control, at its sole expense, the defense of the claim and its settlement. The BSC Indemnified Parties shall cooperate with NitroMed and may, at their option and expense, be represented in any such action or proceeding. NitroMed shall not be liable for any litigation costs or expenses incurred by the BSC Indemnified Parties. In addition, NitroMed shall not be responsible for the indemnification of any BSC Indemnified Party arising from any negligent or wrongful acts by such party, or as the result of any settlement or compromise by the BSC Indemnified Parties without NitroMed's prior written consent. 26 Section 10.2 GOVERNING LAW. This Agreement shall be construed and the respective rights of the Parties determined (including the determination of substantive rights in any arbitration proceeding under Article IX) according to the substantive laws of the Commonwealth of Massachusetts notwithstanding the provisions governing conflict of laws under such Massachusetts law to the contrary and without giving effect to the United Nations Convention on Contracts for the International Sale of Goods, the 1974 Convention on the Limitation Period in the International Sale of Goods (the "1974 Convention") and the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, except matters of intellectual property law which shall be determined in accordance with the national intellectual property laws relevant to the intellectual property in question. Section 10.3 ASSIGNMENT. Neither NitroMed nor BSC may assign this Agreement in whole or in part without the consent of the other Party, except if such assignment is to an Affiliate of the assigning Party or occurs in connection with the sale or transfer of all or substantially all of the business or assets of the assigning Party to which the subject matter of this Agreement pertains. Section 10.4 AMENDMENTS. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all previous arrangements with respect to the subject matter hereof, whether written or oral. Any amendment or modification to this Agreement shall be made in writing signed by both Parties. Section 10.5 NOTICES. Notices to NitroMed shall be addressed to: NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 Telefacsimile: (781) 275-2282 Attention: Chief Executive Officer Notices to BSC shall be addressed to: Boston Scientific Corporation One Boston Scientific Place Natick, Massachusetts 01760 Telefacsimile: (508) 650-8951 Attention: Chief Financial Officer Any Party may change its address by giving notice to the other Party in the manner herein provided. Any notice required or provided for by the terms of this Agreement shall be in writing and shall be (a) sent by registered or certified mail, return receipt requested, postage prepaid, (b) sent via a reputable overnight courier service, or (c) sent by facsimile transmission with an original to be followed the same day via a reputable overnight courier service, in each case 27 properly addressed in accordance with the paragraph above. The effective date of notice shall be the actual date of receipt by the Party receiving the same. Section 10.6 FORCE MAJEURE. No failure or omission by the Parties in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; and invasion and provided that such failure or omission resulting from one of the above causes is cured as soon as is practicable after the occurrence of one or more of the above-mentioned causes. Section 10.7 PUBLIC ANNOUNCEMENTS. The timing and content of press releases, if any, announcing the execution of this Agreement shall be mutually agreed. Any announcements or similar publicity with respect to the execution of this Agreement, if any, shall be agreed upon between the Parties in advance of such announcement. In the event that the existence or material terms of this Agreement are required by law, regulation or judicial order to be disclosed, the Parties will consent to the minimum required disclosure. The Parties agree that any such announcement will not contain confidential business or technical information other than the existence or material terms of this Agreement and, if disclosure of confidential business or technical information is required by law or regulation, will make commercially reasonable efforts to minimize such disclosure and obtain confidential treatment for any such information which is disclosed to a governmental agency or group. The contents of any announcement or similar publicity which has been reviewed and agreed by the Parties can be re-released by either Party without a requirement for re-approval. Section 10.8 DISCLOSURE OF PROVISIONS OF AGREEMENT. a. Each Party agrees to hold as confidential the terms of this Agreement except that each Party shall have the right to disclose such terms to potential investors and other third parties in connection with financing activities, provided that any such third party has entered into a written obligation with the disclosing Party to treat such information and materials as confidential. At the request of the other Party, the disclosing Party shall use commercially reasonable efforts to enforce such obligations against such third parties. b. In the event that this Agreement shall be included in any report, statement or other document filed by either Party or an Affiliate of either Party with the United States Securities and Exchange Commission (the "SEC"), such Party shall use, or shall cause its Affiliate, as the case may be, to use, reasonable efforts to obtain confidential treatment from the SEC of any financial information or other information of a competitive or confidential nature, and shall include in such confidentiality request such provisions of this Agreement as may be reasonably requested by the other Party. Section 10.9 INDEPENDENT CONTRACTORS. It is understood and agreed that the relationship between the Parties hereunder is that of independent contractors and that nothing in this 28 Agreement shall be construed as authorization for either NitroMed or BSC to act as agent for the other. Section 10.10 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and shall not be strictly construed against any Party. Section 10.11 HEADINGS. The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof. Section 10.12 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of NitroMed or BSC to exercise, and no delay in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege. Section 10.13 SEVERABILITY. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties as nearly as may be possible and (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. Section 10.14 EXECUTION IN COUNTERPARTS. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. Section 10.15 NO CONSEQUENTIAL DAMAGES. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 10.15 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY. [Remainder of page intentionally left blank] 29 IN WITNESS WHEREOF, the Parties have executed this Development and License Agreement as of the Execution Date. NITROMED, INC. By: /s/ Joseph Grimm ------------------------------- Name: Joseph Grimm ------------------------------- Title: SVP and Chief Financial Officer ------------------------------- BOSTON SCIENTIFIC CORPORATION By: /s/ Illegible ------------------------------- Name: ------------------------------- Title: ------------------------------- 30 EXHIBIT A R&D PLAN The flow chart for the screening and identification of a development compound is outlined in Fig 1. In the compound selection process, the criteria for identification of an [**] compound as a development candidate is as follows: COMPOUND SELECTION NitroMed will provide BSCI with a list of proprietary [**] compounds with SUPPORTING DATA that meet the following criteria:
- ------------------------------------------------------------------------------ ASSAY PERFORMANCE MEASUREMENT - ------------------------------------------------------------------------------ At least [**] [**] - ------------------------------------------------------------------------------ Solubility[**] [**] - ------------------------------------------------------------------------------ Stability [**] [**] - ------------------------------------------------------------------------------ Sterilizable [**] [**] - ------------------------------------------------------------------------------ Demonstrated [**] [**] - ------------------------------------------------------------------------------ [**] - ------------------------------------------------------------------------------
(*[**]) BSCI will select [**] as follows: 1. [**] STENT COATING o Boston Scientific Corporation will provide stents and perform all coating, sterilization and packaging of stents. NitroMed will perform the following assays to determine the [**]
- ------------------------------------------------------------------------------ ASSAY ([**]) PERFORMANCE MEASUREMENT - ------------------------------------------------------------------------------ Content [**] [**] - ------------------------------------------------------------------------------ Loss [**] [**] - ------------------------------------------------------------------------------ [**] stability [**] [**] - ----------------------------------------------------------------------------- [**] [**] [**] profile - ------------------------------------------------------------------------------
A-1 [**] EVALUATION NitroMed will perform the following [**]: 1. [**]. 2. [**]. 3. [**]. [**] EVALUATION NitroMed will [**] 1. [**] 2. [**] 3. [**] (ALL STUDIES WILL BE CONDUCTED WITH [**] DOCUMENTATION: [**] equivalent documentation. Upon meeting the criteria above, the [**] compounds shall be " NITROMED DELIVERED COMPOUNDS". BSCI will select appropriate formulations of coated stents [**] 1. [**] 2. [**] 3. [**] (ALL STUDIES WILL BE CONDUCTED WITH [**] B-2 FIGURE 1. FLOW CHART FOR SCREENING OF [**] STENTS. [FLOW CHART] B-3 EX-10.5 12 a2116973zex-10_5.txt EXHIBIT 10.5 EXHIBIT NO. 10.5 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. RESEARCH COLLABORATION AND LICENSE AGREEMENT between MERCK FROSST CANADA & CO., And NITROMED, INC. RESEARCH COLLABORATION AND LICENSE AGREEMENT THIS AGREEMENT effective as of the date of last signature (the "Effective Date") between MERCK FROSST CANADA & CO., a corporate entity existing pursuant to the laws of Nova Scotia ("MERCK") a wholly-owned subsidiary of Merck & Co., Inc., a corporation organized and existing under the laws of New Jersey and NITROMED, INC., a corporation organized and existing under the laws of Delaware ("NITROMED"). WITNESSETH: WHEREAS, NITROMED has developed NITROMED Know-How (as hereinafter defined) and has rights to Patent Rights (as hereinafter defined); WHEREAS, MERCK and NITROMED desire to enter into a research collaboration to develop Licensed Products (as hereinafter defined) upon the terms and conditions set forth herein; WHEREAS, MERCK desires to obtain a license under the Patent Rights and NITROMED Know-How, upon the terms and conditions set forth herein and NITROMED desires to grant such a license; NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows: ARTICLE I DEFINITIONS Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below: 1.1 The term "Affiliate" shall mean (i) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by MERCK or NITROMED; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of MERCK or NITROMED. 1.2 The term "Calendar Quarter" shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31. 1.3 The term "Calendar Year" shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31. 1.4 The term "Change of Control" shall mean the occurrence of any of the following: 1 (a) An acquisition of any voting securities of NITROMED (the "Voting Securities") by any "Person" (as the term "person" is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of the combined voting power of NITROMED's then-outstanding Voting Securities; or (b) The consummation of: (i) A merger, consolidation or reorganization (1) with or into NITROMED or a direct or indirect subsidiary of NITROMED or (2) in which securities of NITROMED are issued (a "Merger"), unless such Merger is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a Merger in which the stockholders of NITROMED immediately before such Merger own directly or indirectly immediately following such Merger at least fifty percent (50%) of the combined voting power of the outstanding voting securities of (x) the surviving corporation, if there is no parent corporation or (y) if there is one or more than one parent corporation, the ultimate parent corporation; (ii) A complete liquidation or dissolution of NITROMED; or (iii) The sale or other disposition of all or substantially all of the assets of NITROMED and its Affiliates taken as a whole to any Person. Notwithstanding the foregoing, for purposes of subsection (a), (b)(i) and (iii) above, a Change of Control shall be deemed to exist only if the acquiror (together with any of its affiliates), in its most recently completed fiscal year, had total sales of pharmaceutical products in excess of [**] dollars ($[**]). 1.5 The term "Combination Product" shall mean a Licensed Product that includes [**]. 1.6 The term "Commercially Reasonable Efforts" shall mean with respect to the efforts to be expended by a Party with respect to any objective, reasonable, diligent, good faith efforts to accomplish such objective as such Party would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that with respect to the research, development or commercialization of any NO-Enhanced COX-2 Compound or Licensed Product, such efforts shall be substantially equivalent to those efforts and resources commonly used by a Party for a product owned by it or to which it has rights, which product is at a similar stage in its development or product life and is of similar market potential taking into account efficacy, safety, approved labeling, the competitiveness of alternative products in the marketplace, the patent and other proprietary position of the product, the likelihood of regulatory approval given the regulatory structure involved, the profitability of the product including the royalties payable to licensors of patent or other intellectual property rights, alternative products and other relevant factors. Commercially Reasonable Efforts shall be determined on a 2 market-by-market and indication-by-indication basis for a particular product, and it is anticipated that the level of effort will change over time, reflecting changes in the status of the Licensed Product and the market(s) involved. 1.7 The term "Committee" shall mean the joint research and development committee described in Section 2.4.1. 1.8 The term "Competitive Product" shall mean product(s) containing the same active ingredient(s) as the Licensed Product would be considered substitutable for Licensed Product and [**] as measured by prescriptions or other similar information in the country of sale. 1.9 The term "Control" shall mean with respect to any (a) item of information, including, without limitation, NITROMED Know-How, or (b) intellectual property right, the possession (whether by ownership in whole or in part or license, other than pursuant to this Agreement) by a Party of the ability to grant to the other Party access and/or a license as provided herein under such item or right without violating the terms of any agreement or other arrangements with any Third Party. 1.10 The term "COX-2 Compound" shall mean any compound that [**] as measured in the human whole blood assays as described in Brideau et al., Inflamm Res 45:68-74 (1996). 1.11 The term "Development Work" shall mean preclinical and clinical drug development activities, including test method development and stability testing, toxicology, formulation, quality assurance/quality control development, statistical analysis, clinical studies and regulatory affairs, product approval and registration. 1.12 The term "Field" shall mean [**]. 1.13 The term "First Commercial Sale" shall mean, with respect to any Licensed Product, the first sale for end use or consumption of such Licensed Product in a country after all required approvals, excluding pricing approvals, have been granted by the governing health authority of such country. 1.14 The term "Full Time Equivalent" or "FTE" shall mean the equivalent of a full-time scientist's work time over a twelve-month period (including normal vacations, sick days and holidays). The portion of an FTE year devoted by a scientist to the Research Program shall be determined by dividing the number of days during any twelve (12) month period devoted by such employee to the Research Program by the total number of working days during such twelve-month period. 1.15 The term "FTE Rate" shall mean [**] dollars ($[**]) per FTE. The FTE Rate shall include all personnel, equipment, reagents and all other expenses including support staff and overhead for or associated with an FTE. 1.16 The term "Improvement" shall mean any enhancement in the manufacture, formulation, ingredients, preparation, presentation, means of delivery, dosage or packaging of the Licensed Product. 3 1.17 The term "Indication" shall mean the use in the treatment and/or prevention of diseases, conditions or disorders involving each of [**]. 1.18 The term "Joint Information and Inventions" shall have the meaning set forth in Section 2.7. 1.19 The term "Licensed Product(s)" shall mean preparations in final form, either as a fixed combination or intended for concomitant administration, for sale by prescription, over-the-counter or any other method for all uses in the Field, which contain a NO-Enhanced COX-2 Compound including, without limitation, any Combination Product. 1.20 The term "Major European Market" shall mean any one of the following countries: the United Kingdom, France, Germany, Italy or Spain. 1.21 The term "Major Market" shall mean any one of the following countries: United States, Japan, the United Kingdom, France, Germany, Italy or Spain. 1.22 The term "Marketing Approval" shall mean any and all approvals (including price and reimbursement approvals), licenses, registrations, or authorizations of the European Union or any country, federal, state or local regulatory agency, department, bureau or other government entity that is necessary for the manufacture, use, storage, import, transport and/or sale of a Licensed Product for human use in such jurisdiction and following which the Licensed Product may be legally sold in such jurisdiction. 1.23 The term "MERCK Information and Inventions" shall have the meaning set forth in Section 2.7. 1.24 The term "MERCK Know-How" shall mean all secret, substantial and identified information and materials, including but not limited to, discoveries, Improvements, processes, formulas, data, inventions, know-how and trade secrets, patentable or otherwise, which, during the Research Program Term, are (i) Controlled by MERCK, (ii) are not generally known, and (iii) in MERCK's reasonable opinion are required by NITROMED in the performance of its obligations under the Research Program. 1.25 The term "NDA" shall mean a New Drug Application and all amendments and supplements thereto filed with the FDA (as more fully defined in 21 CFR 314.5 et seq.), or the equivalent application filed with any equivalent agency or governmental authority outside the United States (including any supra-national agency such as in the European Union) requiring such filing, including all documents, data, and other information concerning a pharmaceutical product which are necessary for gaining regulatory approval to market and sell such pharmaceutical product. 1.26 The term "Net Sales" shall mean the gross invoice price of Licensed Product sold by MERCK, its affiliates or sublicensees (which term does not include distributors which are not Affiliates of MERCK, its Affiliates or sublicensees) to a Third Party after deducting, if not previously deducted, in the amount invoiced or received: (a) trade and quantity discounts; 4 (b) returns, rebates and allowances; (c) chargebacks and other amounts paid on sale or dispensing of Licensed Product; (d) retroactive price reductions that are actually allowed or granted; (e) a fixed amount equal to three percent (3%) of the amount invoiced to cover bad debt, sales or excise taxes, early payment cash discounts, and additional special transportation, custom duties, and other governmental charges; and (f) the standard inventory cost of devices or delivery systems used for dispensing or administering Licensed Product which accompany Licensed Product as it is sold. In the case of any sale of the Licensed Product(s) for consideration other than cash, such as barter or countertrade, Net Sales shall be calculated on the fair market value of the consideration received. In the event the Licensed Product is sold as part of a Combination Product, the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product during the applicable royalty reporting period, by the fraction, A/A+B, where A is the average sale price of the Licensed Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Licensed Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Licensed Product and all other products(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the fair market value of the Licensed Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product. In such event, MERCK shall in good faith make a determination of the respective fair market values of the Licensed Product and all other pharmaceutical products included in the Combination Product, and shall notify NITROMED of such determination and provide NITROMED with data to support such determination. NITROMED shall have the right to review such determination and supporting data, and to notify MERCK if it disagrees with such determination. If NITROMED does not agree with such determination and if the Parties are unable to agree in good faith as to such respective fair market values, then such matter shall be resolved in accordance with Section 9.6. 1.27 The term "NITROMED Indemnified Parties" shall have the meaning set forth in Section 6.4. 1.28 The term "NITROMED Information and Inventions" shall have the meaning set forth in Section 2.7. 1.29 The term "NITROMED Know-How" shall mean all secret, substantial and identified information and materials, including but not limited to, discoveries, Improvements, processes, formulas, data, inventions, know-how and trade secrets, patentable or 5 otherwise, which during the Research Program Term (i) are Controlled by NITROMED , (ii) are not generally known and (iii) are reasonably necessary or useful to MERCK in connection with the Research Program within the Field or the research, development, manufacture, marketing, use of sale of Licensed Products in the Territory. 1.30 The term "NO" shall mean nitric oxide. 1.31 The term "NO-Enhanced COX-2 Compound" shall mean [**]. 1.32 The term "NO-COX-2 Compound" shall mean [**]. 1.33 The term "NO-donor" shall mean [**]. 1.34 The term "Other Indication" shall mean the use in the treatment and/or prevention of diseases, conditions or disorders other than the categories (i), (ii) and (iii) in Section 1.17 or those specifically set out therein. 1.35 The term "Party" shall mean MERCK or NITROMED; "Parties" shall mean MERCK OR NITROMED. As used in this Agreement, references to Third Parties do not include a Party or its Affiliates. 1.36 The term "Patent Rights" shall mean any and all patents and patent applications in the Territory (which for the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention) which during the Research Program Term and for one (1) year thereafter are Controlled by NITROMED, including, but not limited to, those listed on Attachment 1.36, which: (i) claim, cover or relate to NO-Enhanced COX-2 Compounds or Licensed Products; or (ii) are divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates, utility, models and the like of any such patents and patent applications and foreign equivalents thereof. 1.37 The term "Phase I Studies" shall mean a human clinical trial in any country that is intended to initially evaluate the safety and/or pharmacological effect of a NO-Enhanced COX-2 Compound or Licensed Product in subjects or that would otherwise satisfy requirements of 21 CFR 312.21(a), or its foreign equivalent. 1.38 The term "Phase III Studies" shall mean a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a NO-Enhanced COX-2 Compound or Licensed Product as a basis for a NDA or that would otherwise satisfy requirements of 21 CFR 312.21(c), or its foreign equivalent. 1.39 The term "Project Leader" shall have the meaning set forth in Section 2.4.3. 1.40 The term "Proprietary Information" shall mean all MERCK Know-How, NITROMED Know-How, and all other scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing or oral or by sensory detection, which is provided by one Party to the other Party in connection with this Agreement. 6 1.41 The term "Research Information and Inventions" shall mean NITROMED Information and Inventions, MERCK Information and Inventions and Joint Information and Inventions. 1.42 The term "Research Plan" shall have the meaning set forth in Section 2.1. 1.43 The term "Research Program" means the collaborative research effort between the Parties hereto to develop NO-Enhanced COX-2 Compounds and Licensed Products as set forth in Article II and Attachment 2.1. 1.44 The term "Research Program Term" shall have the meaning set forth in Section 2.8. 1.45 The term "Royalty Period" shall have the meaning set forth in Section 5.4.1. 1.46 The term "Safety Assessment Candidate" or "SAC" shall mean a NO-Enhanced COX-2 Compound for human use with a scientific data package that at MERCK's sole discretion is evaluated and approved by the Merck Safety Assessment Review Committee or its successor as a development candidate for safety testing prior to initiation of clinical trials. 1.47 The term "Status Notice" shall mean a notice provided by NITROMED to MERCK that (a) requests that [**] MERCK with respect to a specific [**]; (b) requests that [**] Merck with respect to [**] with respect to a specified Indication or (c) requests that [**] MERCK with respect to [**] that is not being pursued by MERCK (or on its behalf) and for which NITROMED has [**] for conducting such research. For purpose of this Section 1.47 a [**] must be based on data existing at the time any such notice is provided. 1.48 The term "Territory" shall mean all of the countries in the world. 1.49 The term "Third Party(ies)" shall mean any person(s) or entity(ies) other than MERCK, NITROMED or their respective Affiliates. 1.50 The term "Valid Patent Claim" means a claim of (a) any patent application within the Territory included within Patent Rights and/or Research Information and Inventions that has been pending less than six (6) years from the earliest date on which such patent application claims priority and such patent claim has not have been cancelled, withdrawn or abandoned , or (b) an issued and unexpired patent included within the Patent Rights and/or Research Information and Inventions, which has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed with the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise. 7 ARTICLE II RESEARCH PROGRAM 2.1 GENERAL. NITROMED and MERCK shall engage in the Research Program upon the terms and conditions set forth in this Agreement. The activities to be undertaken in the course of Research Program are set forth in the "Research Plan" (Attachment 2.1) which may be amended from time to time upon the mutual written agreement of the Parties. 2.2 NITROMED SPECIFIC RESPONSIBILITIES. Under the direction of the Committee, NITROMED shall make available scientific and managerial personnel with sufficient expertise and experience necessary to undertake NITROMED's responsibilities, as set forth in the Research Plan and in the following sentence. In particular, NITROMED shall devote to the Research Program [**] FTEs for the [**] year of the Research Program Term and [**] FTEs for the [**] year and [**] FTEs for the [**] year of the Research Program Term, all of which shall be funded by MERCK according to Section 5.1 hereof. It is understood that the Parties through mutual agreement may increase the numbers of FTEs devoted to the Research Program in the second and third years. 2.3 MERCK SPECIFIC RESPONSIBILITIES. MERCK shall be responsible for performing all Development Work necessary to obtain Marketing Approvals for Licensed Products in certain countries in the Territory pursuant to MERCK's obligation under Section 3.4. NITROMED acknowledges and agrees that MERCK may use its Affiliates or Third Parties to perform certain of its obligations under this Agreement from time to time. MERCK shall, during the Research Program Term, keep NITROMED advised of its activities under this Section 2.3 through MERCK's Committee representatives during each quarterly meeting, pursuant to Section 2.4.2. 2.4 COMMITTEE. The Parties hereby establish a Committee to facilitate the Research Program as follows: 2.4.1 COMPOSITION OF THE COMMITTEE. The Research Program shall be conducted under the direction of a joint research committee (the "Committee") comprised of three (3) named representatives of MERCK and three (3) named representatives of NITROMED. Each Party shall appoint its respective representatives to the Committee from time to time, and may substitute one or more of its representatives, in its sole discretion, effective upon notice to the other Party of such change. These representatives shall have appropriate technical credentials, experience and knowledge, and ongoing familiarity with the Research Program. Additional representatives or consultants may from time to time, by mutual consent of the Parties, be invited to attend Committee meetings, subject to compliance with Section 4.1. The Committee shall be chaired by a representative of MERCK. Decisions of the Committee shall be made by a majority of the members. In the event that the Committee cannot or does not, after good faith efforts, reach agreement on an issue within thirty (30) days after the issue is first referred to it, such issue shall be referred for resolution to the Chief Executive Officer (or a senior executive officer designated by such CEO) of each Party. In the event such officers, after good faith efforts, cannot come to a resolution, the resolution and/or course of conduct shall be [**]; 8 provided, however, any such resolution and/or course of conduct shall not be inconsistent with the provisions of this Agreement or impose any obligation or burden [**] that is outside the scope of this Agreement. Each Party shall bear its own expenses related to the attendance of such meetings by its representatives. 2.4.2 MEETINGS. The Committee shall meet at least once each Calendar Quarter with the location for such meetings alternating between NITROMED and MERCK facilities (or such other locations as is determined by the Committee). Alternatively, the Committee may meet by means of teleconference, videoconference or other similar communications equipment. The Committee shall confer regarding the status of the Research Program, review relevant data, consider and advise on any technical issues that arise, consider issues of priority, and review and advise on any budgetary and economic matters relating to the Research Program which is referred to the Committee. 2.4.3 PROJECT LEADERS. MERCK and NITROMED each shall appoint a person (a "Project Leader") from the Committee to coordinate its part of the Research Program. The Project Leaders shall be the primary contact between the Parties with respect to the Research Program. Each Party shall notify the other within thirty (30) days of the date of the Agreement of the appointment of its Project Leader and shall notify the other Party as soon as practicable upon changing this appointment. 2.5 EXCHANGE OF INFORMATION. Upon execution of this Agreement, NITROMED shall disclose to MERCK in English and in writing all NITROMED Know-How not previously disclosed. During the Research Project Term, NITROMED shall also promptly disclose to MERCK in English and in writing on an ongoing basis all NITROMED Know-How. Upon the execution of this Agreement and on an ongoing basis during the Research Project Term, MERCK shall promptly disclose to NITROMED all MERCK Know-How. 2.6 RECORDS AND REPORTS. 2.6.1 RECORDS. Each Party shall maintain records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved in the performance of the Research Program. 2.6.2 COPIES AND INSPECTION OF RECORDS. During the Research Program Term and for a period of two (2) years thereafter, MERCK shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of NITROMED referred to in Section 2.6.1. MERCK shall maintain such records and the information disclosed therein in confidence in accordance with Section 4.1. During the Research Program Term and for a period of two (2) years thereafter, MERCK shall have the right to arrange for its employees and/or consultants involved in the activities contemplated hereunder to visit NITROMED at its offices and laboratories during normal business hours and upon reasonable notice, and to discuss the Research Program work and its results in detail with the technical personnel and consultants of NITROMED. 2.6.3 QUARTERLY REPORTS. Within thirty (30) days following the end of each Calendar Quarter during the term of this Agreement, each Party shall provide to the other Party a written 9 progress report which shall describe (i) the work performed to date on the Research Program, evaluate the work performed in relation to the goals of the Research Program and provide such other information required by the Research Program or reasonably requested by the other Party relating to the progress of the goals or performance of the Research Program, and (ii) the status of the Development Work undertaken in the previous Calendar Quarter, PROVIDED THAT no further reports under this Section 2.6.3 shall be required following either a Change of Control or the First Commercial Sale of a Licensed Product for each Indication in all Major Markets. Upon written request, each Party shall provide to the other Party copies of the records described in Section 2.6.1 above; provided however that Merck may in its discretion make certain records available for inspection at its facilities without an obligation to provide copies of such records to NITROMED. 2.7 RESEARCH INFORMATION AND INVENTIONS. The entire right, title and interest in all discoveries, Improvements, processes, formulas, data, inventions, know-how and trade secrets, patentable or otherwise, arising from the Research Program (all being "Research Information and Inventions") developed or invented: (a) solely by employees of NITROMED shall be owned solely by NITROMED ("NITROMED Information and Inventions"); (b) solely by employees of MERCK shall be owned solely by MERCK ("MERCK Information and Inventions"); and (c) jointly by employees of NITROMED and MERCK shall be owned jointly by NITROMED and MERCK ("Joint Information and Inventions"). NITROMED shall promptly disclose to MERCK the development, making, conception or reduction to practice of NITROMED Information and Inventions. MERCK shall disclose to NITROMED the development, making, conception or reduction to practice of MERCK Information and Inventions no later than promptly after the filing of a patent application on such Merck Information and Invention. 2.8 RESEARCH PROGRAM TERM. Except as otherwise provided herein, the term of the Research Program shall commence on the January 1, 2003 and continue for a period of three (3) years (the "Research Program Term"). The Parties may, upon mutual written agreement, extend the term of the Research Program for additional one (1) year periods, at least one hundred twenty (120) days prior to the three (3) year anniversary of the commencement of the Research Program and, thereafter, at least one hundred twenty (120) days prior to each subsequent anniversary. Upon any extension of the term of Research Program, if desirable, Attachment 2.1 setting forth the Research Program shall be amended in writing by mutual agreement. As used throughout the Agreement any reference to Research Program Term shall include any extension thereof. If there is a Change of Control event, MERCK shall have the right , to terminate the Research Program by providing written notice to NITROMED within ninety (90) days after MERCK receives written notice of the Change of Control event. Any such termination by MERCK shall terminate its obligations under Section 5.1 and shall not terminate the Agreement. 10 ARTICLE III LICENSE; EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION 3.1 LICENSE GRANT. (a) NITROMED hereby grants to MERCK an exclusive, royalty bearing license in the Territory, with a right to sublicense as provided in subsection (c) below, under Patent Rights, NITROMED Information and Inventions, NITROMED's rights to the Joint Information and Inventions and NITROMED Know-How to practice under the Patent Rights, NITROMED Information and Inventions, NITROMED's rights to the Joint Information and Inventions and NITROMED Know-How, to the extent required to develop, make, have made, use, sell, offer to sell or import NO-Enhanced COX-2 Compounds and Licensed Product(s) in the Field. (b) Any of NITROMED's rights to the Patent Rights, NITROMED Information and Inventions, NITROMED's rights to the Joint Information and Inventions and NITROMED Know-How not specifically licensed to MERCK pursuant to Section 3.1(a) shall be retained by NITROMED, including, but not limited to, any applications outside of the Field. NITROMED shall retain only the rights necessary under Patent Rights, NITROMED Information and Inventions, NITROMED's rights to the Joint Information and NITROMED Know-How, in the Field, to discover, develop, make and use a Licensed Product in the Territory and solely for the purpose of fulfilling its obligations under the Research Plan. (c) MERCK shall have the right to enter into sublicenses relating to the license granted in Sections 3.1(a) to Third Parties and/or Affiliates. Each such sublicense shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement, including but not limited to provisions related to confidentiality (Article IV), consequential damages, commercialization and development, record-keeping and audit provisions and shall provide that any such sublicensee shall not further sublicense. MERCK shall remain responsible for the performance of its sublicensees, and shall ensure that any such sublicensees comply with the relevant provisions of this Agreement. In the event of a material default by any sublicensee under a sublicense agreement, MERCK will inform NITROMED and take such action which in MERCK's reasonable business judgment will address such default. (d) MERCK hereby grants to NITROMED a non-exclusive license in the Territory to practice under the MERCK Know-How (including any related patents) and Merck Information and Inventions to the extent required to perform its obligations under this Agreement. At NITROMED's request, MERCK shall consider, on a case-by-case basis, the grant of a license to NITROMED under the MERCK Information and Inventions for use that (i) is outside the Field and (ii) related to NO, with the Parties agreeing on the terms of such license, including the amount of royalty payments, if any, provided that the decision whether to grant such license shall be in MERCK's sole discretion. 11 3.2 COVENANT NOT TO SUE. In the event the development, making, having made, use, sale or import by MERCK, its Affiliates and/or sublicensees of NO-Enhanced COX-2 Compounds and Licensed Product(s) would infringe during the term of this Agreement a claim of an issued patent which NITROMED Controls and which patent is not covered by the grant in Section 3.1, NITROMED hereby covenants not to sue MERCK, its sublicensees, successors and assigns under such issued patent with respect to the development, making, having made, using, selling, offering for sale or importing NO-Enhanced COX-2 Compounds and Licensed Product(s) in the Territory. NITROMED's successor and assigns shall agree in writing to be bound by similar terms as NITROMED under this Section 3.2. 3.3 SECTION 365(n) OF THE BANKRUPTCY CODE. All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual property" as defined under Section 101(35A) of the U.S. Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the U.S. Bankruptcy Code. The Parties agree that MERCK, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code, and that upon commencement of a bankruptcy proceeding by or against NITROMED under the U.S. Bankruptcy Code, MERCK shall be entitled to a complete duplicate of or complete access to (as MERCK deems appropriate), any such intellectual property and all embodiments of such intellectual property, provided MERCK continues to fulfill its payment and/or royalty obligations as specified herein in full. Such intellectual property and all embodiments thereof shall be promptly delivered to MERCK (i) upon any such commencement of a bankruptcy proceeding upon written request therefore by MERCK, unless NITROMED elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under (i) above, upon the rejection of this Agreement by or on behalf of NITROMED upon written request therefore by MERCK. The foregoing is without prejudice to any rights MERCK may have arising under the U.S. Bankruptcy Code or other applicable law. 3.4 DEVELOPMENT AND COMMERCIALIZATION. MERCK shall use Commercially Reasonable Efforts, at its own expense, to undertake the Development Work and to commercialize a Licensed Product for each Indication (and, if applicable, Other Indication) in each country in the Territory where in MERCK's reasonable opinion it is commercially viable to do so, PROVIDED THAT MERCK shall undertake such Development Work and commercialization for each Indication (and, if applicable, Other Indication) in each Major Market. MERCK shall, in writing and on a quarterly basis, keep NITROMED advised of its activities under this Section 3.4 in accordance with Section 2.6.3 and shall no more frequently than a semi-annual basis upon the request of NITROMED hold a meeting for MERCK to inform NITROMED of commercialization and development activities for Licensed Products that occurred since the last such meeting and plans for the next six (6) months; provided however that in the event of a Change of Control, MERCK's obligations to meet and discuss any commercialization and development activities under this Section 3.4 shall cease. 12 3.5 EXCUSED PERFORMANCE. The obligations of MERCK with respect to any Licensed Product under Section 3.4 are expressly conditioned upon the continuing absence of any adverse condition or event relating to the safety or efficacy of the Licensed Product, on an Indication-by-Indication basis (including, if applicable, any Other Indication), and the obligation of MERCK to develop or market any such Licensed Product for an Indication shall be delayed or suspended so long as in MERCK's reasonable opinion any such condition or event exists for any such Indication. MERCK shall promptly notify NITROMED of such adverse conditions or events and during any such delay or suspension under this Section 3.5, the Parties shall on a quarterly basis hold a meeting to discuss the efforts undertaken by MERCK to remove the adverse condition or event relating to the safety or efficacy of the Licensed Product. 3.6 RIGHTS REVERSION. After the Research Term, if NITROMED sends a Status Notice to MERCK, MERCK shall, in good faith, consider such Status Notice and notify NITROMED in writing as soon as MERCK makes a determination (which shall not be later than [**] of MERCK receiving a Status Notice) of whether or not (i) it intends to use Commercially Reasonable Efforts to pursue research, development or commercialization of the specific NO-Enhanced COX-2 Compound specified in the Status Notice, (ii) it intends to use Commercially Reasonable Efforts to pursue research, development or commercialization of a NO-Enhanced COX-2 Compound or Licensed Product for the Indication or Other Indication specified in the Status Notice, or (iii) whether it intends to pursue dispute resolution under Section 9.6 regarding the Status Notice (a "MERCK Notice"). If MERCK indicates that it intends to use such Commercially Reasonable Efforts, MERCK shall, as soon as practicable (which shall be no later than [**] after providing the MERCK Notice), begin research, development or commercialization, using Commercially Reasonable Efforts, to research, develop and/or commercialize the applicable NO-Enhanced COX-2 Compound or Licensed Product in the applicable Indication or Other Indication. In the event that MERCK indicates it intends to begin research for an Other Indication, the parties shall promptly begin to develop a workplan and amendment to the Research Plan reflecting such research. If any one of the following events occur: (i) MERCK fails to provide a Merck Notice within [**] of the Status Notice, (ii) MERCK indicates in a Merck Notice that it does not intend to use such Commercially Reasonable Efforts, (iii) MERCK fails to initiate dispute resolution within [**] from the date of the MERCK Notice indicating it will pursue dispute resolution, (iv) MERCK fails to initiate research, development or commercialization of a Licensed Product in the applicable Indication or Other Indication within [**] from the date of the MERCK Notice indicating it will pursue such research, development or commercialization, or (v) after dispute resolution pursuant to Section 9.6 MERCK is determined not to have pursued Commercially Reasonable Efforts, then MERCK's licenses under Section 3.1 shall become non-exclusive with respect to such Indication, Other Indication or specific NO Enhanced COX-2 Compound as applicable; provided however that Merck's licenses under Section 3.1 shall continue to be exclusive for all Indications or Other Indications with respect to any specific NO-Enhanced COX 2 Compound or Licensed Product that Merck is pursuing with Commercially Reasonable Efforts. 13 ARTICLE IV CONFIDENTIALITY AND PUBLICATION 4.1 NONDISCLOSURE OBLIGATION. All Proprietary Information disclosed by one Party to the other Party hereunder shall be maintained in confidence by the receiving Party and shall not be disclosed to a Third Party or used for any purpose except as set forth herein without the prior written consent of the other Party, except to the extent that such Proprietary Information: (a) is known by receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by business records; (b) is in the public domain through no fault of the receiving Party; (c) is subsequently disclosed to a receiving Party by a Third Party who may lawfully do so and is not under an obligation of confidentiality to the disclosing Party; (d) is developed by the receiving Party independently of Proprietary Information received from the other Party; (e) is disclosed to governmental or other regulatory agencies in order to obtain patents or to gain approval to conduct clinical trials or to market Licensed Product, but such disclosure may be only to the extent reasonably necessary to obtain patents or authorizations; (f) is deemed necessary by each Party to be disclosed to sublicensees, agents, consultants, Affiliates and/or other Third Parties for the research and development, manufacturing and/or marketing of the Licensed Product (or for such parties to determine their interest in performing such activities) in accordance with this Agreement on the condition that such Third Parties agree to be bound by the confidentiality obligations contained this Agreement, PROVIDED the term of confidentiality for such Third Parties shall be no less than seven (7) years; or (g) is required to be disclosed by law or court order, provided that notice is promptly delivered to the other Party in order to provide an opportunity to challenge or limit the disclosure obligations. Each Party shall retain all rights to the Proprietary Information it provides to the other Party. 4.2 PUBLICATION. MERCK and NITROMED each acknowledge the other Party's interest in publishing its results to obtain recognition within the scientific community and to advance the state of scientific knowledge. Each Party also recognizes the mutual interest in obtaining valid patent protection and in protecting business interests and trade secret information. Consequently, either Party, its employees or consultants wishing to make a publication shall deliver to the other Party a copy of the proposed written publication or 14 an outline of an oral disclosure at least sixty (60) days prior to submission for publication or presentation. The reviewing Party shall have the right (a) to propose modifications to the publication for patent reasons, trade secret reasons or business reasons or (b) to request a reasonable delay in publication or presentation in order to protect patentable information. If the reviewing Party requests a delay, the publishing Party shall delay submission or presentation for a period of ninety (90) days to enable patent applications protecting each Party's rights in such information to be filed in accordance with Article VII below. Upon expiration of such ninety (90) days, the publishing Party shall be free to proceed with the publication or presentation. If the reviewing Party requests modifications to the publication, the publishing Party shall edit such publication to prevent disclosure of trade secret or proprietary business information prior to submission of the publication or presentation. 4.3 PRESS RELEASE. The Parties agree that NITROMED may issue a press release after execution of the Agreement in a form to be mutually agreed upon. The Parties recognize that either Party may desire to make public announcements with respect to the activities undertaken pursuant to this Agreement. The Parties agree that any such announcement will not contain confidential business or technical information of the other Party and, if disclosure of confidential business or technical information is required by law or regulation, will make reasonable efforts to minimize such disclosure and obtain confidential treatment for any such information that is disclosed to a governmental agency or group. Each Party agrees to provide to the other Party a copy of any public announcement as soon as reasonably practicable under the circumstances prior to its scheduled release. Except under extraordinary circumstances, each Party shall provide the other with an advance copy of any press release at least five (5) business days prior to the scheduled disclosure. Each Party shall have the right to expeditiously review and indicate reasonable changes to any announcement regarding this Agreement or the subject matter of this Agreement; provided that such right of review and recommendation shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of substantially similar information that has previously been disclosed. Except as otherwise required by law, the Party whose press release has been reviewed shall remove any information the reviewing Party reasonably deems to be inappropriate for disclosure. 4.4 DISCLOSURE. Either Party may disclose the terms of this Agreement to the extent required, in the reasonable opinion of such Party's legal counsel, to comply with applicable laws, including without limitation the rules and regulations promulgated by the United States Securities and Exchange Commission or any other governmental agency. Notwithstanding the foregoing, before disclosing this Agreement or any of the terms hereof pursuant to this Section 4.4, the Parties will consult with one another on the terms of this Agreement to be redacted in making any such disclosure. If a Party discloses this Agreement or any of the terms hereof in accordance with this Section 4.4, such Party agrees, at its own expense, to seek confidential treatment of the portions of this Agreement or such terms, as may be reasonably requested by the other Party. 15 ARTICLE V PAYMENTS; ROYALTIES AND REPORTS 5.0 UNITED STATES CURRENCY. Unless otherwise expressly stated herein all references to currency amounts as dollars or $ shall mean amounts in United States dollars. 5.1 RESEARCH PROGRAM FUNDING. As consideration to NITROMED for the research and development activities undertaken by NITROMED pursuant to this Agreement, MERCK shall pay to NITROMED during the Research Program Term, for the FTEs set forth in Section 2.2, in advance on a quarterly basis at the beginning of each Calendar Quarter, at the FTE Rate commencing upon the Effective Date. The first payment due under this section shall be paid within thirty (30) days of the Effective Date. 5.2 CONSIDERATION FOR LICENSE. In consideration for the licenses granted herein under the Patent Rights, NITROMED Information and Inventions, NITROMED'S rights to the Joint Information and Inventions, and NITROMED Know-How, upon the terms and conditions contained herein, MERCK shall pay to NITROMED the following amounts: A non-refundable technology access fee accruing $10,000,000. upon execution of the Agreement MERCK shall pay the fee due under this Section 5.2 to NITROMED within thirty (30) days of the Effective Date. 5.3 MILESTONE PAYMENTS. Subject to the terms and conditions in this Agreement, MERCK shall pay to NITROMED the following milestone payments: $5,000,000. (a) Upon [**] $[**]. (b) Upon [**] $[**]. (c) Upon [**] $[**]. $[**]. (d) Upon [**] $[**]. (e) Upon [**] $[**]. (f) Upon [**] (g) Upon [**]

16 MERCK shall notify NITROMED in writing within [**] days upon the achievement of each milestone, such notice to be accompanied by payment of the appropriate milestone payment. The payment under Section 5.3(a) shall be made only once. The payment under the milestones described in Section 5.3(b) through (d) shall be made once for each individual Indication (by way of example, payment under Section 5.3(b) may be made up to [**] times, once for each Indication in subsections (i) - (iii) in Section 1.17) and the milestone described in Sections 5.3(e) through (g) shall be paid as follows: (i) each of such milestones shall be payable no more than [**] for each Indication, irrespective of the number of Licensed Products for which such milestone is achieved; (ii) with respect to each Licensed Product, each of such milestones shall be payable only upon the first occurrence of such milestone for each Indication; (iii) for no more than [**] Indications for a specific Licensed Product; (iv) for purpose of the foregoing, Licensed Products which contain the same [**] shall be considered to be the same Licensed Product; and (v) as a result of the foregoing limitations, each of such milestones shall be payable a maximum of [**] times. For example, if Licensed Product X is developed for [**] Indications, the milestones are paid for each of such Indications; if Licensed Product Y is developed for all [**] Indications and is developed as well for an additional disease state within one of these Indications, the milestones are paid for the [**] Indications, [**]. 5.4 ROYALTIES. 5.4.1 ROYALTIES PAYABLE BY MERCK. Subject to the terms and conditions of this Agreement, MERCK shall pay to NITROMED royalties on a Licensed Product-by-Licensed Product basis the following amounts. (a) For the initial [**] dollars of sales of each Licensed Product in [**] percent the Territory in a Calendar Year by MERCK, its Affiliates or ([**]%) of sublicensees Net Sales (b) For those sales greater than [**] dollars and less than or equal [**] percent to [**] dollars of each Licensed Product in the Territory in a ([**]%) of Calendar Year by MERCK, its Affiliates or sublicensees Net Sales (c) For those sales greater than [**] dollars and less than or equal [**] percent to [**] dollars of each Licensed Product in the Territory in a ([**]%) of Calendar Year by MERCK, its Affiliates or sublicensees Net Sales (d) For those sales over [**] dollars of each Licensed Product in the [**] percent Territory in a Calendar Year by MERCK, its Affiliates or ([**]%) of sublicensees Net Sales

Royalties on each Licensed Product at the rate set forth above shall continue on a country-by-country basis until the expiration of the later of: (i) last-to-expire patent with a Valid Patent Claim that would be infringed by the use or sale of such Licensed 17 Product in such country but for the licenses granted herein; or (ii) for a period of ten (10) years after First Commercial Sale of such Licensed Product in such country (the "Royalty Period"). In those countries of the Territory where (A) there are no Patent Rights containing a Valid Patent Claim that would be infringed by the use or sale of the Licensed Product in such country, or (B) when the last Valid Patent Claim expires during the Royalty Period, royalties shall be paid at [**] percent of the rates set forth in (a) to (d) above (calculated as the last sales made in the Territory for the Calendar Quarter). All royalties are subject to the following conditions: (a) that only one royalty shall be due with respect to the same unit of Licensed Product; (b) that no royalties shall be due upon the sale or other transfer among MERCK, its Affiliates or sublicensees, but in such cases the royalty shall be due and calculated upon MERCK's or its Affiliate's or its sublicense's Net Sales to a Third Party; (c) no royalties shall accrue on the disposition of Licensed Product in reasonable quantities by MERCK, Affiliates or its sublicenses as samples (promotion or otherwise) or as donations (for example, to non-profit institutions or government agencies for a non-commercial purpose); and (d) for purposes of aggregating sales on a Licensed Product-by-Licensed Product basis, a Licensed Product shall include all products [**] 5.4.2 ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is understood by the Parties that MERCK may sell Licensed Product(s) to an independent Third Party (such as a retailer or wholesaler) and may subsequently perform services relating to Licensed Product(s) and other products under a managed pharmaceutical benefits contract or other similar contract. In such cases, it is agreed by the Parties that Net Sales shall be based on the invoice price to an independent retailer or wholesaler, as set forth in Section 1.26, notwithstanding that MERCK may receive compensation arising from the performance of such services. 5.4.3 CHANGE IN SALES PRACTICES. The Parties acknowledge that during the term of this Agreement, MERCK's sales practices for the marketing and distribution of Licensed Product may change to the extent to which the calculation of the payment for royalties on Net Sales may become impractical or even impossible. In such event the Parties agree to meet and discuss in good faith new ways of compensating NITROMED to the extent currently contemplated under Section 5.4.1; provided, however, if the Parties cannot agree in new ways of compensating NITROMED, the terms of this Agreement shall remain in full force and effect. 5.4.4 ROYALTIES FOR BULK NO-ENHANCED COX-2 COMPOUND. In those cases where MERCK sells bulk NO-Enhanced COX-2 Compound rather than Licensed Product in packaged form to an independent Third Party, the royalty obligations of this Article V shall be applicable to the bulk NO-Enhanced COX-2 Compound; provided however that if MERCK obtains additional compensation relating to either (i) use or commercialization of such bulk NO-Enhanced COX-2 Compound, or (ii) sublicensing intellectual property rights granted to MERCK in Article III, then the Parties agree that there shall be 18 additional compensation to NITROMED in an amount to be mutually agreed upon by the Parties. 5.4.5. COMPULSORY LICENSES. If a compulsory license is granted to a Third Party with respect to Licensed Product in any country in the Territory [**] provided by Section 5.4.1., then the royalty rate to be paid by MERCK on Net Sales in that country under Section 5.4.1 [**]. 5.4.6 COMPETITIVE PRODUCT. In the event a Competitive Product is sold in a country, then the royalty rate to be paid by MERCK on Net Sales in that country under Section 5.4.1 shall be [**] percent ([**]%) in such country during such time that a Competitive Product is sold in such country; provided, however, this Section shall not be applicable if the royalty rate in such country [**] pursuant to Section 5.4.1. 5.4.7 THIRD PARTY LICENSES. In the event that one or more patent licenses from other Third Parties are required by MERCK, its Affiliates and sublicensees in order to develop, make, have made, use or sell the Licensed Product (hereinafter "Third Party Patent Licenses"), and, in the absence of such license, the use by MERCK of the Patent Rights, NITROMED Know-How or NITROMED Information and Inventions would infringe such Third Party patents, then [**] percent ([**]%) of any consideration actually paid under such Third Party Patent Licenses by MERCK, its Affiliates or sublicensees, for sale of such Licensed Product in a country for such Calendar Quarter shall be creditable against the royalty payments due NITROMED by MERCK with respect to the sale of such Licensed Products in such country; PROVIDED THAT the royalty payment to NITROMED in any Calendar Quarter shall not be reduced by more than [**] percent ([**]%) of the monies otherwise owed to NITROMED; and any amounts not able to be reduced due to the immediately foregoing limitation shall be carried forward to future Calendar Quarters for crediting against future royalties in such country. Notwithstanding the foregoing, NITROMED shall assume full responsibility for any payments to the extent necessary for rights under the patents identified in Attachment 5.4.7 and/or bear all costs associated with any legal actions to invalidate such patents. 5.5. REPORTS; PAYMENT OF ROYALTY. During the term of the Agreement following the First Commercial Sale of a Licensed Product, MERCK shall furnish to NITROMED a quarterly written report for the Calendar Quarter showing the sales of all Licensed Products subject to royalty payments sold by MERCK, its Affiliates and its sublicensees in the Territory during the reporting period and the royalties payable under this Agreement. Reports shall be due on the sixtieth (60) day following the close of each Calendar Quarter. Royalties shown to have accrued by each royalty report shall be due and payable on the date such royalty report is due. MERCK shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined. 5.6. AUDITS. (a) Upon the written request of NITROMED and not more than once in each Calendar Year, MERCK shall permit an independent certified public accounting firm of nationally 19 recognized standing selected by NITROMED and reasonably acceptable to MERCK, at NITROMED's expense, to have access during normal business hours to such of the records of MERCK as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall disclose to NITROMED only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to NITROMED. (b) If such accounting firm concludes that additional royalties were owed during such period, MERCK shall pay the additional royalties within thirty (30) days of the date NITROMED delivers to MERCK such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by NITROMED unless the underpayment exceeded five hundred thousand ($500,000) dollars and five percent (5%) of the royalty owed by MERCK to NITROMED for such Calendar Year, in which case, MERCK shall pay the fees charged by such accounting firm. (c) MERCK shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to MERCK, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by NITROMED's independent accountant to the same extent required of MERCK under this Agreement. Upon the expiration of twenty-four (24) months following the end of any year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon NITROMED, and MERCK and its sublicensees shall be released from any liability or accountability with respect to royalties for such year. (d) NITROMED shall treat all financial information subject to review under this Section 5.6 or under any sublicense agreement in accordance with the confidentiality provisions of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with MERCK obligating it to retain all such financial information in confidence pursuant to such confidentiality agreement; provided however nothing shall prevent NITROMED from using such financial information in any dispute resolution pursuant to Section 9.6. 5.7 PAYMENT EXCHANGE RATE. All payments to be made by MERCK to NITROMED under this Agreement shall be made in United States dollars and may be paid by check made to the order of NITROMED or bank wire transfer in immediately available funds to such bank account in the United States designated in writing by NITROMED from time to time. In the case of sales outside the United States, the rate of exchange to be used in computing the amount of currency equivalent in United States dollars due NITROMED shall be made at the rate of exchange utilized by MERCK in its worldwide accounting system, prevailing on the third to the last business day of the month prior to the month for which Merck records such sales. 5.8 INCOME TAX WITHHOLDING. If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article V, MERCK shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Article V. MERCK shall submit original receipts or 20 other appropriate proof of payment of the withholding taxes to NITROMED within a reasonable period of time and which are sufficient to allow NITROMED to document such tax withholdings adequately for purposes of claiming foreign tax credits and similar benefits. ARTICLE VI REPRESENTATIONS AND WARRANTIES AND LIABILITY 6.1 REPRESENTATIONS AND WARRANTIES OF NITROMED. NITROMED represents and warrants to MERCK that as of the Effective Date: (a) to the best of NITROMED's knowledge, the Patent Rights and NITROMED Know-How exist and are not invalid or unenforceable, in whole or in part; (b) it has the full right, power and authority to enter into this Agreement, to perform the Research Program and to grant the licenses granted under Article III hereof; (c) it has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in Patent Rights or NITROMED Know-How; (d) to the best of NITROMED's knowledge, it is the sole and exclusive owner of the Patent Rights and NITROMED Know-How, all of which are (and shall be, in the case of NITROMED Information and Invention) free and clear of any liens, charges and encumbrances, and no other person, corporate or other private entity, or governmental entity or subdivision thereof, has or shall have any claim of ownership with respect to the Patent Rights and NITROMED Know-How, whatsoever; (e) to the best of NITROMED's knowledge, the exercise of the license granted to MERCK under the Patent Rights and NITROMED Know-How do not infringe any intellectual property rights owned or possessed by any Third Party; (f) there are no claims, judgments or settlements against or owed by NITROMED or pending or threatened claims or litigation relating to the Patent Rights and NITROMED Know-How; and (g) NITROMED has disclosed to MERCK all reasonably relevant information regarding the Patent Rights and NITROMED Know-How licensed under this Agreement, including the existence of any patent opinions obtained by NITROMED related thereto. 6.2 REPRESENTATIONS AND WARRANTIES OF MERCK. MERCK represents and warrants to NITROMED that as of the Effective Date: (a) to the best of MERCK's knowledge, the MERCK Know-How does not infringe any intellectual property rights owned or possessed by any Third Party; 21 (b) MERCK shall provide all necessary MERCK Know-How, that is in MERCK's possession, to NITROMED to permit NITROMED to perform NITROMED's obligations under the Research Program; (c) it has the full right, power and authority to enter into this Agreement and to fulfill it obligations hereunder; and (d) that all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by MERCK in connection with the execution, delivery and performance of this Agreement have been or shall be obtained. 6.3 NO WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND PARTICULARLY THAT THE LICENSED PRODUCT(S) WILL BE SUCCESSFULLY DEVELOPED HEREUNDER, AND IF LICENSED PRODUCT(S) ARE DEVELOPED, WITH RESPECT TO SUCH LICENSED PRODUCT(S), THE PARTIES DISCLAIM ALL IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 6.4 INDEMNIFICATION. MERCK agrees to defend NITROMED and its Affiliates at its cost and expense, and will indemnify and hold NITROMED and its Affiliates and their respective directors, officers, employees and agents (the "NITROMED Indemnified Parties") harmless from and against any losses, costs, damages, fees or expenses arising out of any Third Party claim relating to personal injury or death from the development, manufacture, use, sale or other disposition of the Licensed Product by MERCK and/or its Affiliates, sublicensees or collaborators. In the event of any such claim against the NITROMED Indemnified Parties by any Third Party, NITROMED shall promptly notify MERCK in writing of the claim and MERCK shall manage and control, at its sole expense, the defense of the claim and its settlement. The NITROMED Indemnified Parties shall cooperate with MERCK and may, at their option and expense, be represented in any such action or proceeding. MERCK shall not be liable for any litigation costs or expenses incurred by the NITROMED Indemnified Parties without MERCK's prior written authorization. In addition, MERCK shall not be responsible for the indemnification of any NITROMED Indemnified Party arising from any negligent or intentional acts by such NITROMED Indemnified Party, or as the result of any settlement or compromise by the NITROMED Indemnified Parties without MERCK's prior written consent. 6.5 NO CONSEQUENTIAL DAMAGES. UNLESS RESULTING FROM A PARTY'S WILLFUL MISCONDUCT, NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSS OF PROFITS, LOSS OF DATA OR LOSS OF USE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER BASED UPON WARRANTY, CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF 22 ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 6.5 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER THIS AGREEMENT. ARTICLE VII PATENT PROVISIONS 7.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS. (a) PATENT RIGHTS. NITROMED shall have the exclusive right and option to file and prosecute any patent applications and maintain any patents covering the Patent Rights licensed to MERCK under this Agreement, upon appropriate consultation with MERCK including an opportunity to review and comment on any papers to be filed in any patent office prior to their submission. NITROMED shall promptly give notice to MERCK of the allowance, grant, lapse, revocation, surrender, invalidation or abandonment of any Patent Rights licensed to MERCK for which NITROMED is responsible for the filing, prosecution and maintenance. If NITROMED declines to file and prosecute any such patent applications or maintain any such patents covering any Patent Rights licensed to MERCK under this Agreement, it shall give MERCK reasonable notice to this effect and thereafter MERCK may, upon written notice to NITROMED, file and prosecute such patent applications and maintain such patents in NITROMED's name. (b) NITROMED INFORMATION AND INVENTIONS. NITROMED shall have the exclusive right and option to file and prosecute any patent applications and maintain any patents covering NITROMED Information and Inventions, upon appropriate consultation with MERCK including an opportunity to review and comment on any papers to be filed in any patent office prior to their submission. If NITROMED declines the option to file and prosecute any such patent applications or maintain any such patents covering any NITROMED Information and Invention, it shall give MERCK reasonable notice to this effect and thereafter MERCK may, upon written notice to NITROMED, file and prosecute such patent applications and maintain such patents in NITROMED's name. (c) JOINT INFORMATION AND INVENTIONS. MERCK shall have the exclusive right and option to file and prosecute any patent applications and to maintain any patents covering Joint Information and Inventions owned jointly by MERCK and NITROMED, upon appropriate consultation with NITROMED including an opportunity to review and comment on any papers to be filed in any patent office prior to their submission. If MERCK declines the option to file and prosecute any such patent applications or maintain any such patents covering any such Joint Information and Inventions, it shall give NITROMED reasonable notice to this effect and thereafter NITROMED may, upon written notice to MERCK, file and prosecute such patent applications and maintain such patents jointly in both Parties' names. 23 (d) MERCK INFORMATION AND INVENTIONS. MERCK shall have the exclusive right and option to file and prosecute any patent applications and to maintain any patents covering MERCK Information and Inventions, at MERCK's expense. (e) EXPENSES. All costs associated with filing, prosecuting and maintaining the COX-2 Compound Specific Patent Rights shall be shared equally by the Parties. All costs associated with filing, prosecuting and maintaining all other NITROMED Information and Inventions shall be borne by NITROMED. All costs associated with the filing, prosecuting and maintaining the Joint Information and Inventions and MERCK Information and Inventions under Sections 7.1(c) and (d) shall be at MERCK's expense. If the initial prosecuting Party declines to file, prosecute and/or maintain any of the Patent Rights and Research Information and Inventions under Sections 7.1 (a)-(c) and the other Party assumes such responsibilities, the initial prosecuting Party shall continue to pay [**] percent ([**]%) of the costs associated with these patents or patent applications; provided however that if the initial prosecuting Party wishes to abandon any such patents or patent applications it shall notify the other Party who shall have the option to continue such patents or patent applications at its own expense and the initial prosecuting Party shall assign it rights to the other Party and the assigned patents or patent applications shall no longer be Patent Rights or Research Information and Inventions. As used herein the term "COX-2 Compound Specific Patent Rights" means (i) those Patent Rights, and (ii) those NITROMED Information and Inventions, whose patents or patent application principally contain claims that relate to COX-2 Compounds, NO-COX-2 Compounds or NO-Enhanced COX-2 Compounds. 7.2 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. (a) NITROMED shall, within ten (10) days of learning of such event, inform MERCK of any request for, or filing or declaration of, any interference, opposition, or reexamination relating to Patent Rights. MERCK and NITROMED shall thereafter consult and cooperate fully to determine a course of action with respect to any such proceeding. MERCK shall have the right to review and approve any submission to be made in connection with such proceeding. (b) NITROMED shall not initiate any reexamination, opposition, interference or reissue proceeding relating to Patent Rights without the prior written consent to MERCK, which consent shall not be unreasonably withheld. (c) In connection with any interference, opposition, reissue, or reexamination proceeding relating to Patent Rights, MERCK and NITROMED will cooperate fully and will provide each other with any information or assistance that either may reasonably request. NITROMED shall keep MERCK informed of developments in any such action or proceeding, including to the extent permissible by law, consultation and approval of any settlement. (d) The Parties shall equally bear the expense of any interference, opposition, reexamination, or reissue proceeding specified in this Section 7.2 relating to COX-2 24 Compound Specific Patent Rights, including but not limited to any costs incurred by NITROMED in fulfilling its obligations under this Section 7.2. NITROMED shall bear the expense of any interference, opposition, reexamination, or reissue proceeding specified in this Section 7.2 relating to any NitroMed Information and Inventions that do not constitute COX-2 Compound Specific Patent Rights, including but not limited to any costs incurred by NITROMED in fulfilling its obligations under this Section 7.2. 7.3 ENFORCEMENT AND DEFENSE. (a) NITROMED shall give MERCK notice of either (i) any infringement of Patent Rights, (ii) any misappropriation or misuse of NITROMED Know-How; or (iii) infringement, misappropriation or misuse of the Research Information and Inventions, that may come to NITROMED's attention. MERCK and NITROMED shall thereafter consult and cooperate fully to determine a course of action, including but not limited to the commencement of legal action by either or both MERCK and NITROMED, to terminate any infringement of Patent Rights, Research Information and Inventions or any misappropriation or misuse of NITROMED Know-How. However, NITROMED, upon notice to MERCK, shall have the first right to initiate and prosecute such legal action (other than for the MERCK Information and Inventions) at its own expense and in the name of NITROMED and MERCK, or to control the defense of any declaratory judgment action relating to Patent Rights, Research Information and Inventions or NITROMED Know-How. NITROMED shall promptly inform MERCK if it elects not to exercise such first right and MERCK shall thereafter have the right to either initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of MERCK and, if necessary, NITROMED and the Parties shall share the expense of such suit equally; provided that MERCK shall pay all costs and shall recoup NITROMED's [**]percent ([**]%) share as a set-off against royalties or milestones until NITROMED's share has been fully paid; provided that the royalty payment to NITROMED in any Calendar Quarter shall not be reduced by more than [**] percent ([**]%) of the monies otherwise owed to NITROMED; and any amounts not able to be reduced due to the immediately foregoing limitation shall be carried forward to future Calendar Quarters for crediting against future royalties in such country. Each Party shall have the right to be represented by counsel of its own choice. (b) For any action to terminate any infringement of Patent Rights or any misappropriation or misuse of NITROMED Know-How, in the event that MERCK is unable to initiate or prosecute such action solely in its own name, NITROMED will join such action voluntarily and will execute and cause its Affiliates to execute all documents necessary for MERCK to initiate litigation to prosecute and maintain such action. (c) Prior to commencing any action pursuant to subsections (a) or (b) above, each Party shall consult with the other Party and shall consider the views of the other Party regarding the advisability of the proposed action. In connection with any action, MERCK and NITROMED will cooperate fully and will provide each other with any 25 information or assistance that either may reasonably request any such action. MERCK shall keep NITROMED informed of developments in any action or proceeding, including the consultation and approval of any settlement negotiations and the terms of any offer related thereto. Neither Party shall enter into any settlement, consent judgment, or other voluntary final disposition without the prior written consent of the other Party. (d) Any recovery obtained by either or both MERCK and NITROMED in connection with or as a result of any action contemplated by this Section 7.3, whether by settlement or otherwise, shall be shared in order as follows: (i) the Party which initiated and prosecuted the action shall recoup all of its costs and expenses incurred in connection with the action; (ii) the other Party shall then, to the extent possible, recover its costs and expenses incurred in connection with the action; (iii) the amount of any recovery remaining from ordinary damages shall then be allocated between the Parties such that MERCK shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales, or whichever measure of damages the court shall have applied, and that NITROMED shall receive a reasonable approximation of the royalties and other amounts that MERCK would have paid to NITROMED if MERCK had sold the infringing products rather than the infringer, and on a pro rata basis taking into consideration the relative economic losses suffered by each Party; and (iv) the amount of any recovery remaining from special or punitive damages shall be shared equally by the Parties in any such award. (e) NITROMED shall inform MERCK of any certification regarding any Patent Rights it has received pursuant to either 21 U.S.C. ss.ss.355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or its successor provisions or any similar provisions in a country in the Territory other than the United States and shall provide MERCK with a copy of such certification within five (5) days of receipt. NITROMED's and MERCK's rights with respect to the initiation and prosecution of any legal action as a result of such certification or any recovery obtained as a result of such legal action shall be as defined in Sections 7.3(a)-(d) hereof; provided, however, NITROMED shall exercise its first right to initiate and prosecute any action and shall inform MERCK of such decision within ten (10) days of receipt of the certification, after which time MERCK shall have the right to initiate and prosecute such action. (f) In the event that a Third Party brings an action against NITROMED or MERCK alleging invalidity, unenforceability, or non-infringement of the Patent Rights, the Parties shall cooperate as defined above and shall mutually agree upon an appropriate course of action. 26 7.4 PATENT TERM RESTORATION. The Parties hereto shall cooperate with each other in obtaining patent term restoration or supplemental protection certificates or their equivalents in any country in the Territory where applicable to Patent Rights. In the event that elections with respect to obtaining such patent term restoration are to be made, MERCK shall have the right to make a good faith election of the patent to be used. In the event MERCK does not promptly make an election of a patent for patent term restoration, NITROMED shall have the right to make a good faith election of the patent to be used. ARTICLE VIII TERM AND TERMINATION 8.1 TERM AND EXPIRATION. This Agreement shall be effective as of the Effective Date and unless terminated earlier pursuant to Sections 8.2 or 8.3 below, the term of this Agreement shall continue in effect until expiration of all royalty obligations hereunder. Upon expiration of this Agreement due to expiration of all royalty obligations hereunder, MERCK's licenses pursuant to Section 3.1 shall become non-exclusive, fully paid-up, perpetual licenses which shall be limited to the Field. 8.2 TERMINATION BY MERCK. Notwithstanding anything contained herein to the contrary, MERCK shall have the right to terminate this Agreement at any time in its sole discretion after the Research Program Term, by giving ninety (90) days advance written notice to NITROMED. In the event of such termination, the rights and obligations hereunder, including any payment obligations not due and owing as of the termination date shall terminate and NITROMED will grant MERCK a fully paid-up non-exclusive license to use the NITROMED Information and Inventions solely for internal research purposes. 8.3 TERMINATION. 8.3.1 TERMINATION FOR CAUSE. This Agreement may be terminated by notice by either Party at any time during the term of this Agreement if the other Party is in breach of its material obligations hereunder by causes and reasons within its control and has not cured such breach within ninety (90) days after written notice requesting cure of the breach (other than for non-payment which must be cured within forty five (45) days); provided, however, in the event of a good faith dispute with respect to the existence of a material breach, the ninety (90) day or forty five (45) day cure period shall be followed until such time as the dispute is resolved pursuant to Section 9.6 hereof. 8.3.2 EFFECT OF TERMINATION FOR CAUSE ON LICENSE. In the event MERCK terminates this Agreement under Section 8.3.1, MERCK's licenses pursuant to Sections 3.1 shall become exclusive, perpetual licenses which are limited to the Field; provided, however, MERCK shall continue to fulfill MERCK's payment and/or royalty obligations as specified herein; provided, further, MERCK may reduce such payment and/or royalty obligations by the amount of monetary damage suffered by MERCK as a direct result of NITROMED's breach of this Agreement and NITROMED shall, within thirty (30) days after such 27 termination return or cause to be returned to MERCK all Licensed Products, NO-Enhanced COX-2 Compounds, MERCK Know-How or other substances or compositions delivered or provided by MERCK, as well as any other material provided by MERCK in any medium. In the event that NITROMED terminates this Agreement under Section 8.3.1, MERCK's licenses pursuant to Sections 3.1 shall terminate as of such termination date and MERCK shall, within thirty (30) days after such termination, return or cause to be returned to NITROMED all Licensed Products, NO-Enhanced COX-2 Compounds, Know-How or other substances or compositions delivered or provided by NITROMED, as well as any other material provided by NITROMED in any medium. 8.4 EFFECT OF TERMINATION. Expiration or termination of the Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination and nothing in this Agreement shall be construed to release either Party from any obligations that matured prior to the effective date of expiration or termination, and the provisions of Sections 2.6.1, 2.6.2, 3.3, 6.3, 6.4, 6.5, 8.3.2, Articles IV, V, VII and IX shall survive the expiration or termination of the Agreement. Any expiration or early termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement prior to termination, including the obligation to pay royalties for Licensed Product(s) sold prior to such termination. ARTICLE IX MISCELLANEOUS 9.1. FORCE MAJEURE. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, but not limited to, fire, floods, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other Party. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical. 9.2. ASSIGNMENT. The Agreement may not be assigned or otherwise transferred, nor, except as expressly provided hereunder, may any right or obligations hereunder be assigned or transferred, by either Party without the consent of the other Party; PROVIDED, HOWEVER, that either Party may, without such consent, assign the Agreement and its rights and obligations hereunder to an Affiliate or in connection with the transfer or sale of all or substantially all of its assets related to the Licensed Products or the business, or in the event of its merger or consolidation or change in control or similar transaction. Any permitted assignee shall assume all obligations of its assignor under the Agreement. 9.3. SEVERABILITY. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be 28 affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affect the substantive rights of the Parties. The Parties shall in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement. 9.4. NOTICES. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by telecopier (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to NITROMED, to: NitroMed, Inc. 12 Oak Park Drive Bedford, MA 01730 Attention: Chief Executive Officer Telephone: (781) 275-9700 Facsimile No.: (781) 275-2282 with a copy to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Steven D. Singer, Esq. Telephone: (617) 526-6410 Facsimile No.: (617) 526-5000 if to MERCK, to: Merck Frosst Canada & Co. 16711 Trans Canada Hwy. Kirkland, Quebec Canada H9H 3L1 Attention: President Telephone: (514) 428-2638 Facsimile: (514) 428-2662 with a copies to: Merck Frosst Canada & Co. 16711 Trans Canada Hwy. Kirkland, Quebec Canada H9H 3L1 Attention: Director, Legal Affairs Telephone: (514) 428-8577 Facsimile: (514) 428-4925 and 29 Merck & Co., Inc. One Merck Drive P.O. Box 100 Whitehouse Station, NJ 08889-0100 Attention: Corporate Secretary Telephone: (908) 423-1000 Facsimile: (908) 735-1224 or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by telecopier on a business day, on the business day after dispatch if sent by nationally-recognized overnight courier and on the third business day following the date of mailing if sent by mail. 9.5. APPLICABLE LAW. The Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey and the United States without reference to any rules of conflict of laws or renvoi. 9.6. DISPUTE RESOLUTION. The Parties shall negotiate in good faith and use reasonable efforts to settle any dispute, controversy or claim arising from or related to this Agreement or the breach thereof. If the Parties do not fully settle, and a Party wishes to pursue the matter, each such dispute, controversy or claim that is not an "Excluded Claim" shall be finally resolved by binding arbitration in accordance with the Commercial Arbitration Rules and Supplementary Procedures for Large Complex Disputes of the American Arbitration Association ("AAA"), and judgment on the arbitration award may be entered in any court having jurisdiction thereof. The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business: within 30 days after initiation of arbitration, each Party shall select one person to act as arbitrator and the two party-selected arbitrators shall select a third arbitrator within 30 days of their appointment. If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the third arbitrator shall be appointed by the AAA. The place of arbitration shall be New York, New York. Either Party may apply to the arbitrators for interim injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any injunctive or provisional relief necessary to protect the rights or property of that Party pending the arbitration award. The arbitrators shall have no authority to award punitive or any other type of damages not measured by a Party's compensatory damages. Each Party shall bear its own costs and expenses and attorneys' fees and an equal share of the arbitrators' and any administrative fees of arbitration. Except to the extent necessary to confirm an award or as may be required by law, neither a Party nor an arbitrator may disclose the existence, content, or results of an arbitration without the prior written consent of both Parties. In no event shall an arbitration be initiated after the date when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations. As used in this Section 9.6, the term "Excluded Claim" shall mean a dispute, controversy or claim that concerns (a) the validity or infringement of a patent, trademark 30 or copyright; or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory. 9.7. ENTIRE AGREEMENT. The Agreement contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of the Agreement. The Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto. 9.8. HEADINGS. The captions to the several Articles and Sections hereof are not a part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. 9.9. INDEPENDENT CONTRACTORS. It is expressly agreed that NITROMED and MERCK shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency. Neither NITROMED nor MERCK shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other Party. 9.10. WAIVER. The waiver by either Party hereto of any right hereunder or the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise. 9.11. COUNTERPARTS. The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.12. WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply. 9.13 ENGLISH LANGUAGE. The parties hereto confirm that it is their wish that this Agreement as well as all other documents relating hereto, including notices, have been and shall be drawn up in the English language only. Les parties aux presentes confirment leur volonte que cette convention de meme que tous les documents, y compris tout avis, s'y rattachant, soient rediges en langue anglaise seulement. 31 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above. MERCK FROSST CANADA & CO. NITROMED, INC. By: /s/ JUDY C. LEWENT By: /s/ MICHAEL D. LOBERG ---------------------------- ----------------------------- Judy C. Lewent Michael D. Loberg Title: Vice President Title: CEO Date: 12/12/02 Date: 12/11/02 -------- -------- Merck & Co., Inc. a corporation organized under the laws of the State of New Jersey hereby guarantees the performance of all the foregoing obligations of its subsidiary, Merck Frosst Canada & Co. MERCK & CO., INC. By: /s/ JUDY C. LEWENT ---------------------------- Judy C. Lewent Title: Executive Vice President and Chief Financial Officer Date: 12/12/02 -------- 32 ATTACHMENT 1.36 PATENT RIGHTS
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ATTACHMENT 2.1 RESEARCH PROGRAM Merck is interested in determining the viability of developing therapies which will [**]. [**]. The proposed collaboration would [**]. Merck would bring to the collaboration [**] NitroMed would bring its [**] In general, Merck will perform the following components of the workplan: 1. [**] 2. [**] 3. [**] 4. [**] 5. [**] In general, NitroMed will perform the following components of the workplan: 1. [**] 2. [**] 3. [**] A. COMPOUND DISCOVERY AND INITIAL CHARACTERIZATION Merck will [**]. Initially, these efforts will [**] as outlined in the Merck NitroMed agreement. [**] to support this effort are as follows: 1. [**] 2. [**] 3. [**] 4. [**] 5. [**] 6. [**] SPECIFIC ASSAY DETAILS: [**] (MERCK) [**] [**] (MERCK) [**] From time to time, the collaboration may merit NitroMed performing the two above mentioned assays. In these cases, the specific assay details are: [**] (NITROMED) [**] (NITROMED) [**] B. [**] (MERCK) Merck considers it essential to [**]. This is particularly important in the [**], Merck plans to [**]. Merck would like to [**], Merck hopes to [**] described above. From this information, [**]. C. [**] INTEREST [**], performed predominantly by NitroMed. These include the following: Merck 1. [**] 2. [**] 3. [**] 4. [**] 5. [**] NitroMed 1. [**] 2. [**] 3. [**] 4. [**] 5. [**] 6. [**] SPECIFIC ASSAY DETAILS: [**] (MERCK) Compounds are [**]. The use of [**]. [**]. [**] (MERCK) [**] for the study of [**]. To study the [**].[**] according to the manufacturer's instructions. [**]) according to the manufacturer's instructions. [**] (MERCK) [**]. [**] (NITROMED) [**] [**] (NITROMED) [**] [**]. [**] (NITROMED) [**]. [**] (NITROMED) [**]. [**] (NITROMED) [**].[**] [**] (NITROMED) [**] (NITROMED) [**]. [**] (NITROMED) [**]. D. NITROMED FTE ASSIGNMENTS In the first year of the agreement, [**]FTEs will be assigned by NitroMed and supported by Merck. Their approximate allocation to the above mentioned experiments will be as follows: [**]: A total of [**]FTE's dedicated to evaluating selected compounds from Merck in the following models 2 1. [**] 2. [**] 3. [**] 4. [**] 5. [**] 6. [**] 7. [**] [**]: A total of [**] FTE's dedicated to evaluating selected compounds from Merck in the following models: 1. [**] 2. [**] 3. [**] 3 ATTACHMENT 5.4.7 [**] PATENTS
========================== =========== ================================================ ===================== PATENT/ DATE FILED TITLE STATUS APPLICATION NUMBER - -------------------------- ----------- ------------------------------------------------ ===================== [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] - -------------------------- ----------- ------------------------------------------------ --------------------- [**] [**] [**] [**] ========================== =========== ================================================ =====================
and any extensions (including Supplementary Protection Certificates), divisionals, reissues and continuations of any of the above patents or applications for patent, including any foreign counterparts derived therefrom, equivalent thereto or claiming priority thereof, as well as any European national patents entered from patents granted in the European Patent Office and National Phase filings entered from applications filed under the Patent Cooperation Treaty. 4 EX-10.6 13 a2116973zex-10_6.txt EXHIBIT 10.6 EXHIBIT NO. 10.6 - ------------------------------------------------------------------------------- Confidential Materials Omitted and filed separately with the Securities and Exchange Commission. Asterisks denote ommissions. - ------------------------------------------------------------------------------- RESEARCH AND LICENSE AGREEMENT This Agreement is effective August 1, 1992 ("the EFFECTIVE DATE") by and between The Brigham and Women's Hospital, Inc. ("HOSPITAL"), having an address at 75 Francis Street, Boston, Massachusetts 02115, and NitroMed, Inc., a Delaware Corporation having offices at c/o Healthcare Investment Corp., 379 Thornall Street, Edison, New Jersey 08837 ("NITROMED"). WHEREAS, NITROMED desires to fund certain work to be performed at HOSPITAL in exchange for exclusive licenses in and to certain Patents, technology, materials and information; and WHEREAS, HOSPITAL desires to receive such funding and is willing to grant the exclusive licenses desired by NITROMED. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1 - DEFINITIONS. The terms used in this Agreement have the following meaning: 1.1 The term "AFFILIATE" as applied to NITROMED shall mean any company or other legal entity other than NITROMED in whatever country organized, controlling, controlled by or under common control with NITROMED. The term "control" means possession, of the power to direct or cause the direction of the management and policies whether through the ownership of voting securities, by contract or otherwise. 1 1.2 The term "FIRST COMMERCIAL SALE" shall mean in each country the first sale of any PRODUCT by NITROMED, its AFFILIATES or SUBLICENSEES, following approval of its marketing by the appropriate governmental agency for the country in which the sale is to be made and when governmental approval is not required, the first sale in that country. 1.3 The term "RESEARCH INVENTION" shall mean any process, use, article of manufacture, composition of matter conceived or first actually or constructively reduced to practice in the performance of SPONSORED RESEARCH and/or any other research funded in whole or in part by NITROMED pursuant to this Agreement solely or jointly by at least one INVESTIGATOR, whether or not in the FIELD OF RESEARCH. 1.4 The term "BACKGROUND INVENTION" shall mean any process, use, article of manufacture, composition of matter conceived or reduced to practice by PRINCIPAL INVESTIGATOR (alone or with others) prior to the EFFECTIVE DATE, which is within the FIELD OF RESEARCH. 1.5 "INVENTION" shall mean individually and collectively RESEARCH INVENTION and BACKGROUND INVENTION. 1.6 The term "INVESTIGATOR" means PRINCIPAL INVESTIGATOR, any other member of the HOSPITAL Professional Staff, graduate student, undergraduate student, or employee of HOSPITAL who shall perform SPONSORED RESEARCH. 1.7 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party licensed by NITROMED to make, have made, import, use or sell any PRODUCT or use any PROCESS under PATENT RIGHTS. 2 1.8 The term "BACKGROUND MATERIAL" shall mean any material or substance which relates to the FIELD OF RESEARCH and is in the possession of HOSPITAL through the PRINCIPAL INVESTIGATOR or the PRINCIPAL INVESTIGATOR on the EFFECTIVE DATE. 1.9 The term "RESEARCH MATERIAL" shall mean any material or substance which is discovered, produced or derived by an INVESTIGATOR in the performance of SPONSORED RESEARCH and/or any other research funded in whole or in part by NITROMED pursuant to this Agreement. 1.10 "HOSPITAL MATERIAL" shall mean individually and collectively BACKGROUND MATERIAL and RESEARCH MATERIAL. 1.11 "NET SALES PRICE" means the total amount received by NITROMED or its AFFILIATES or SUBLICENSEE from sale of PRODUCT, less transportation charges and insurance, sales taxes, use taxes, excise taxes, value added taxes, customs duties or other imposts, normal and customary quantity and cash discounts, and allowances and credit on account of rejection or return of PRODUCT. PRODUCT shall be considered "sold" when billed out or invoiced. 1.12 The term "BACKGROUND PATENT RIGHT(s)" shall mean any United States patent application, including any division, continuation, or continuation-in-part thereof and any foreign patent application or equivalent corresponding thereto and any Letters Patent or the equivalent thereof issuing thereon or reissue or extension thereof, insofar as it contains one or more claims to a BACKGROUND INVENTION, BACKGROUND INFORMATION, or BACKGROUND MATERIAL. The BACKGROUND PATENT RIGHTS are tabulated in Appendix B. 3 1.13 The term "RESEARCH PATENT RIGHT(S)" shall mean any United States patent application, including any division, continuation, or continuation-in-part thereof and any foreign patent application or equivalent corresponding thereto and any Letters Patent or the equivalent thereof issuing thereon or reissue or extension thereof, insofar as it contains one or more claims to a RESEARCH INVENTION, RESEARCH INFORMATION, or RESEARCH MATERIAL. 1.14 "PATENT RIGHT(S)" shall mean individually and collectively BACKGROUND PATENT RIGHTS and RESEARCH PATENT RIGHTS. 1.15 The term "PRINCIPAL INVESTIGATOR" shall mean either or both Dr. Joseph Loscalzo and Dr. Jonathan Stamler. 1.16 The term "PRODUCT" shall mean any article, composition, apparatus, substance, chemical, material, method or service which is an HOSPITAL MATERIAL, or which is, incorporates or utilizes an INVENTION and/or INFORMATION, or the manufacture, import, sale or use of which is covered by PATENT RIGHTS. 1.17 The term "PROCESS" shall mean any process or method for the production, manufacture or use of any PRODUCT. 1.18 The term "BACKGROUND INFORMATION" shall mean any data, formulas, process information or other information pertaining to the FIELD OF RESEARCH known to HOSPITAL through PRINCIPAL INVESTIGATOR or the PRINCIPAL INVESTIGATOR on the EFFECTIVE DATE. 1.19 "RESEARCH INFORMATION" shall mean any data, formulas, process information or other information produced by an INVESTIGATOR in the performance of SPONSORED RESEARCH and/or any other research funded in whole or in part by NITROMED pursuant to this Agreement. 4 1.20 "INFORMATION" shall mean individually and collectively RESEARCH INFORMATION and BACKGROUND INFORMATION. 1.21 The term "RESEARCH PROPOSAL" shall mean the written description of SPONSORED RESEARCH attached hereto as Appendix A, including a budget that details the equipment, materials and the personnel to be provided by use of the funds to be supplied by NITROMED to support the research described in such proposal or any other written description of research attached hereto by Agreement of the parties pursuant to Paragraph 2.2. 1.22 The term "SPONSORED RESEARCH" shall mean described in the RESEARCH PROPOSAL. 1.23 VALID CLAIM shall mean (i) a claim of a pending patent Application which has been pending for no more than seven (7) years from the filing date of the original subject matter covered by the claim or, (ii) a claim of an issued patent which has not lapsed or become abandoned or been declared invalid or unenforceable by a court of competent jurisdiction or an administrative agency from which no appeal can be or is taken. 1.24 "FIELD OF RESEARCH" means (i) nitric oxide compounds, nitrosothiol compounds, nitroso protein compounds and nitrosylated compounds, and/or compounds related to the above and/or (ii) uses for such compounds including but not limited to diagnostic, therapeutic and prophylactic and/or (iii) agonists and antagonists thereof. 1.25 "AGREEMENT YEAR" shall mean the twelve month period beginning on the EFFECTIVE DATE, and each subsequent twelve (12) month period thereafter. 1.26 "LICENSED TERRITORY" shall mean all countries of the world. 5 1.27 The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine. SECTION 2 - FUNDING. 2.1 (A) In consideration of the undertaking of SPONSORED RESEARCH by HOSPITAL, during the period in which SPONSORED RESEARCH is being conducted: (i) subject to Paragraph 13.1, NITROMED shall make annual research grants to HOSPITAL for the support of SPONSORED RESEARCH as follows:
AGREEMENT RESEARCH YEAR GRANT PER YEAR ---- -------------- 1 $[**] ====== 2 $[**] ====== 3 through 10 $[**] ======
(ii) each annual grant shall be paid in four equal quarterly payments. The first payment shall be paid within thirty (30) days of the execution of this Agreement by NITROMED; (iii) the funding shall include direct and/or indirect expenses as set forth in the RESEARCH PROPOSAL; (B) at least sixty (60) days prior to the end of an AGREEMENT YEAR, HOSPITAL shall submit to NITROMED for its approval a plan and budget for use of the funding for the following AGREEMENT YEAR, which approval shall not be unreasonably denied. NITROMED shall provide such approval or disapproval within thirty (30) days from receipt of HOSPITAL's plan and budget. Such approved-plan and budget shall be attached and made a part hereof. The approved plan and budget for the first AGREEMENT YEAR is attached hereto as Appendix C. 6 (C) within sixty (60) days after the end of an AGREEMENT YEAR, HOSPITAL shall provide NITROMED with an accounting of the expenditure of research funds for such AGREEMENT YEAR in accordance with HOSPITAL standard procedures for such accounting. (D) NITROMED shall pay the costs of leasing those items of equipment listed or to be listed in Appendix D which are selected by PRINCIPAL INVESTIGATOR and leased by HOSPITAL and which have an aggregate fair market value not exceeding $[**] in the first AGREEMENT YEAR, and $[**] in each of the subsequent AGREEMENT YEARS, all of such equipment shall be owned by HOSPITAL upon completion of the term of the relevant lease. All such leases shall have terms at least as long as the initial term of the RESEARCH PROPOSAL for the research in which the equipment is to be used. NITROMED shall pay HOSPITAL the amounts owed under each lease at least thirty (30) days prior to the date on which payments are due to the lessor. 2.2 During the period during which NITROMED is funding SPONSORED RESEARCH under this Agreement, either party may propose in writing additional research not previously described in the RESEARCH PROPOSAL appended hereto as Appendix A. Each such proposal shall include a description of the additional research proposed and a budget of the costs to be funded by NITROMED and a schedule of payment of such costs. When and if such proposal is accepted by HOSPITAL and NITROMED, it shall be appended hereto as a RESEARCH PROPOSAL and shall be subject to the terms and conditions of this Agreement unless otherwise specified, and the SPONSORED RESEARCH described therein shall commence and additional budgeted amounts shall be paid as set forth in the proposal or as otherwise agreed by the parties in writing. When and if such proposal is rejected by NITROMED, subject to Paragraph 2.3 below, HOSPITAL may seek funding from another commercial sponsor. 7 2.3 During the period during which NITROMED is funding SPONSORED RESEARCH under this Agreement, an INVESTIGATOR may not seek funding from another commercial sponsor for an additional research proposal in the FIELD of RESEARCH until such proposal has been submitted to NITROMED in accordance with the foregoing Paragraph 2.2 and the parties have not agreed to append such proposal hereto as a RESEARCH PROPOSAL. In the event of such failure to agree, an INVESTIGATOR shall be free to seek and accept funding from another commercial sponsor for such research proposal, provided, that the subject. In the event an INVESTIGATOR is permitted to seek funding from another commercial sponsor under this Paragraph 2.3, INVESTIGATOR shall discuss with NITROMED potential commercial sponsors from whom INVESTIGATOR intends to seek such funding. 2.4 The Hospital shall have the right to choose one or more outside observers to make an independent scientific review of the research conducted hereunder by the Hospital and to report to the Hospital on an annual basis. The costs and expenses of the review, not to exceed $[**] per year, shall be paid by NITROMED. It is expected that the annual cost will generally be no more than $[**] per year. SECTION 3 - WORK OF HOSPITAL. 3.1 During the thirty (30) days next following the EFFECTIVE DATE, HOSPITAL, through the PRINCIPAL INVESTIGATOR, shall disclose to NITROMED such BACKGROUND INFORMATION and BACKGROUND MATERIAL which shall be known to HOSPITAL and PRINCIPAL INVESTIGATOR on the EFFECTIVE DATE. 8 3.2 Beginning on the EFFECTIVE DATE and thereafter unless sooner terminated, HOSPITAL shall: (a) through the PRINCIPAL INVESTIGATOR conduct SPONSORED RESEARCH, and apply the funds paid by NITROMED pursuant to Paragraph 2.1 or 2.2 to support the expenses of SPONSORED RESEARCH in accordance with the RESEARCH PROPOSAL and shall use reasonable efforts and diligence consistent with HOSPITAL's professional standards to achieve the goals set forth in such RESEARCH PROPOSAL. (b) promptly and systematically disclose to NITROMED, INFORMATION, INVENTIONS and HOSPITAL MATERIAL, and NITROMED shall be entitled to use such INFORMATION, INVENTIONS and HOSPITAL MATERIAL as provided herein. (c) for the purpose of facilitating disclosure to NITROMED of RESEARCH INFORMATION, INVENTIONS, and HOSPITAL MATERIAL, permit duly authorized employees of or representatives of NITROMED to visit the PRINCIPAL INVESTIGATOR'S laboratories at HOSPITAL or other HOSPITAL facilities where SPONSORED RESEARCH is conducted at reasonable times and with reasonable notice; (d) promptly advise NITROMED of any INVENTION and adequate advance notice of the intent to file, filing, allowance and issuance of any PATENT RIGHT; and (e) at NITROMED's request provide NITROMED with HOSPITAL MATERIALS. 9 3.3 HOSPITAL shall, on a continuing basis, advise NITROMED of the results of the SPONSORED RESEARCH and at least once every six (6) months provide NITROMED with written progress reports concerning the SPONSORED RESEARCH. A final written report setting forth in detail the results achieved under and pursuant to the SPONSORED RESEARCH shall be submitted by HOSPITAL to NITROMED within ninety (90) days of termination of the SPONSORED RESEARCH. Such final report shall include: (i) a complete summary of the research carried out; (ii) a scientific assessment by the PRINCIPAL INVESTIGATOR of the SPONSORED RESEARCH; and (iii) detailed experimental protocols of the assays performed in the course of the SPONSORED RESEARCH. SECTION 4 - HOSPITAL MATERIALS. 4.1 (a) During the period in which the SPONSORED RESEARCH is being conducted, and in which NITROMED holds a license, HOSPITAL and INVESTIGATORS shall not, without NITROMED's prior written approval, distribute or knowingly allow HOSPITAL MATERIALS to be distributed to for-profit entities or persons known to be employed thereby or consulting or performing research therefor other than under a license permitted under this Agreement. (a) HOSPITAL and PRINCIPAL INVESTIGATOR shall have the right to transfer HOSPITAL MATERIALS to not-for-profit entities or persons known to be affiliated therewith provided that such entities or persons sign the Material Transfer Agreement attached hereto as Appendix E or any other Agreement consented to by the parties. (b) Prior to any such distribution of any such HOSPITAL MATERIAL, HOSPITAL and NITROMED shall use reasonable efforts to consider the patentability of such HOSPITAL MATERIALS and cooperate to file, where appropriate, PATENT RIGHTS protecting such HOSPITAL MATERIALS prior to their distribution. 10 4.2 Notwithstanding anything else to the contrary, HOSPITAL and INVESTIGATOR agree not to publish or disclose to third parties the identity of new compounds, or new methods of synthesis, conceived or developed as part of the performance of the SPONSORED RESEARCH without supplying NITROMED with a copy of the material to be disclosed or published to third parties at least sixty (60) days prior notice of such publication or disclosure so that NITROMED may evaluate such material to determine whether the material contains patentable subject matter relating to an INVENTION on which a patent application should be filed or contains NITROMED Confidential Information as defined in Paragraph 6.1. NITROMED shall review the material within fifteen (15) days of submission to NITROMED. At NITROMED's request, HOSPITAL initially will delay submission of the manuscript for an additional thirty (30) days in order to enable the preparation and filing of a patent application on any such patentable subject matter and will cooperate with NITROMED in deleting from any such manuscript NITROMED Confidential Information the inclusion of which would contravene Paragraphs 6.1 and 6.3 hereof. Notwithstanding anything to the contrary HOSPITAL will not be required to withhold submission of such material for a period which is more than ninety (90) days after NITROMED is first provided with the material to be disclosed or published. SECTION 5 - GRANTS. 5.1 (a) HOSPITAL hereby grants to NITROMED and NITROMED hereby accepts from HOSPITAL a sole and exclusive royalty bearing right and license for the LICENSED TERRITORY under PATENT RIGHTS and INVENTION to make, have made, use and sell or have sold on its behalf PRODUCT or LICENSED PROCESS, including the right to sublicense third parties. NITROMED shall have the right to extend such license to its AFFILIATES. 11 (b) In the event that PATENT RIGHTS and INVENTIONS are co-owned by HOSPITAL and a third party, the license granted in Paragraph 5.1(a) shall only apply to HOSPITAL'S interest in such PATENT RIGHTS and INVENTIONS. For PATENT RIGHTS or INVENTIONS owned jointly by HOSPITAL and at least one third party, HOSPITAL shall pursuant to Paragraph 7.1(a) of this Agreement attempt to obtain an agreement granting on behalf of all of the owners thereof a sole and exclusive right and license to NITROMED. If terms agreeable to all of the parties (including such third party assignees) can not be reached or, at NITROMED's request, HOSPITAL will be relieved from its obligations under Paragraph 7.1(a) of this Agreement and only HOSPITAL'S interest in such PATENT RIGHTS and INVENTION shall be licensed to NITROMED under Paragraph 5.1(a) of this Agreement. 5.2 NITROMED agrees to forward to HOSPITAL a copy of any and all fully executed sublicense agreements, and further agrees to forward to HOSPITAL annually a copy of such reports received by NITROMED from its SUBLICENSEES during the preceding twelve (12) month period under the sublicensees as shall be pertinent to a royalty accounting to HOSPITAL under said sublicense agreements. 5.3 The above licenses to sell any PRODUCT includes the right of NITROMED, its AFFILIATES, and SUBLICENSEES to grant to the purchaser thereof the right to use and/or resell such purchased PRODUCT. 5.4 All licenses pursuant to Paragraphs 5.2 and 5.3 above to PATENT RIGHTS conceived or first actually reduced to practice during the course of research funded by a U.S. federal agency are subject to the rights, conditions and limitations imposed by U.S. law. The words "sole and exclusive license" as used herein shall mean sole and exclusive except for the royalty free non-exclusive license granted to the U.S. government by HOSPITAL pursuant to 35 USC Section 202(c)(4) for any PATENT RIGHTS claiming any INVENTION subject to 35 USC Section 201 and any other federal laws and applicable regulations. 12 5.5 HOSPITAL agrees not to enter into an agreement with a third party to acquire materials for use in SPONSORED RESEARCH under terms that will prevent HOSPITAL from granting NITROMED exclusive rights to PATENT RIGHTS and INVENTION. 5.6 (a) Taking into account the complexity, and stage of development of the PRODUCT and the science related thereto, NITROMED shall select and use reasonable efforts and diligence under the circumstances to research, develop and then commercialize a selected PRODUCT. The efforts of a SUBLICENSEE and/or an AFFILIATE and the SPONSORED RESEARCH shall be considered as efforts of NITROMED. (b) In the event that HOSPITAL reasonably believes that NITROMED is not making reasonable efforts under the circumstances to research, develop and then commercialize a selected PRODUCT by NITROMED pursuant to Paragraph 5.6(a) then HOSPITAL shall provide written notice to NITROMED which specifies HOSPITAL's basis for such belief and what additional efforts HOSPITAL believes should be made by NITROMED. Upon receipt of such written notice, HOSPITAL and NITROMED shall enter into good faith negotiations in order to reach mutual agreement as to what efforts by NITROMED shall satisfy the requirements of this Paragraph 5.6, and if such mutual agreement is not reached within [**] days after receipt of such written notice, then the parties agree to submit to arbitration pursuant to Paragraph 14.2 to determine the efforts which should be exerted by NITROMED. Thereafter, NITROMED shall exert the efforts determined by the parties or in such arbitration. 13 (c) If NITROMED fails to exert the efforts determined by the parties or in such arbitration, HOSPITAL's sole and exclusive remedy for NITROMED's failure to meet such efforts is for the licenses granted hereunder to be converted from an exclusive right and license to a non-exclusive license, provided that NITROMED has initiated and continues to expend a minimum of [**] dollars ($[**]) per year on the research and development of a selected PRODUCT until the FIRST COMMERCIAL SALE of a PRODUCT. If NITROMED does not initiate and continue the research and development of a selected PRODUCT as specified in this Paragraph 5.6(c), HOSPITAL's sole and exclusive remedy is for the such non-exclusive license to be terminated. 5.7 HOSPITAL acknowledges that NITROMED is in the business of developing, manufacturing and selling of medical processes and products and nothing in this Agreement shall be construed as restricting such business or imposing on NITROMED the duty to market, and/or sell and exploit PRODUCT for which royalties are due hereunder to the exclusion of or in preference to any other product or process. 5.8 Subject to Section 5.6, NITROMED shall have sole discretion for making all decisions relating to the commercialization and marketing of PRODUCT, and will bear the cost of preparing such PRODUCT for market and for obtaining governmental approvals where required. 5.9 Within sixty (60) days after the end of each calendar year, NITROMED shall report in writing to HOSPITAL on the progress of its efforts under Paragraph 5.6. SECTION 6 - CONFIDENTIALITY. 6.1 During the term of this Agreement, it is contemplated that each party will disclose to the other proprietary and confidential technology, inventions, technical information, biological materials and the like which are owned or controlled by the party providing such information or which that party is obligated to maintain in confidence and which is designated by the party providing such information as confidential ("Confidential Information"). Each party shall have the right to refuse to accept the other party's Confidential Information. Each party agrees to retain such Confidential Information in confidence and not to disclose any such Confidential Information to a third party without the prior written consent of the party providing such information and to use such Confidential Information only for the purposes of this Agreement. 14 6.2 The obligations of confidentiality will not apply to Confidential Information which: (i) was known to the receiving party or generally known to the public prior to its disclosure hereunder; or (ii) subsequently becomes known to the public by some means other than a breach of this Agreement, including publication and/or laying open to inspection of any patent applications or patents; (iii) is subsequently disclosed to the receiving party by a third party having a lawful right to make such disclosure; (iv) is disclosed to obtain regulatory approval for PRODUCT, provided that the disclosing party takes all reasonable steps to restrict and maintain the confidentiality of the disclosure ; (v) is required by law or BONA FIDE legal process to be disclosed, provided that the disclosing party takes all reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable notice to the non-disclosing party; or (vi) is approved for release by the parties. 15 SECTION 7 - PATENTS. 7.1 (a) Each INVESTIGATOR who during the course of SPONSORED RESEARCH shall make an INVENTION, solely or jointly, ("HOSPITAL INVENTOR") shall promptly report such INVENTION to HOSPITAL. Each HOSPITAL INVENTOR shall assign all of his rights, title and interest in an INVENTION and PATENT RIGHTS relating thereto to HOSPITAL. Each employee of NITROMED who makes an INVENTION jointly with an INVESTIGATOR, shall report such INVENTION to NITROMED and shall assign all his rights, title and interest in such INVENTION and PATENT RIGHTS relating thereto to NITROMED. INVENTIONS made jointly by one or more INVESTIGATORS and one or more NITROMED employees and PATENT RIGHTS relating thereto shall be jointly owned by HOSPITAL and NITROMED. HOSPITAL and NITROMED agree that for each PATENT RIGHT jointly owned by HOSPITAL and NITROMED, NITROMED and HOSPITAL each own a one-half undivided interest in such PATENT RIGHT in each country in which it is filed and HOSPITAL's interest therein is subject to the rights granted to NITROMED under this Agreement. In the event any INVENTION results from collaboration with personnel who is not affiliated with either HOSPITAL or NITROMED ("Unaffiliated Collaborator(s)"), HOSPITAL shall attempt to obtain the relevant rights from the institution of such Unaffiliated Collaborators and include same in the aforesaid rights granted to NITROMED under Section 5 of this Agreement. (b) HOSPITAL shall promptly advise NITROMED in writing of each INVENTION disclosed to HOSPITAL. Representatives of HOSPITAL and NITROMED shall then discuss whether a patent application or applications pertaining to such INVENTION should be filed and in which countries. The titles, serial numbers and other identifying data of patent applications claiming an INVENTION filed after the EFFECTIVE DATE by mutual agreement of HOSPITAL and NITROMED shall be listed in Appendix B and shall become PATENT RIGHTS. 16 NITROMED shall file, prosecute and maintain patent applications and patents directed to INVENTIONS through patent counsel selected by NITROMED who shall consult with and keep HOSPITAL advised with respect thereto. After the EFFECTIVE DATE of this Agreement, NITROMED shall bear the cost and expense for the filing, prosecution and maintenance of PATENT RIGHTS in the United States, European Patent Office, Canada, Japan and any other foreign countries designated by NITROMED. 7.2 With respect to any PATENT RIGHTS, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent issuing from such application shall be provided to HOSPITAL sufficiently prior to the filing of such application, response or request to allow for review and comment by HOSPITAL. HOSPITAL shall have the right to take any action that in its judgment is necessary to preserve such PATENT RIGHTS. 7.3 [**] percent ([**]%) of the amount paid by NITROMED pursuant to this Section 7 expended by NITROMED to secure or maintain any PATENT RIGHTS shall be fully creditable against royalties due under Section 8, but no royalty payment, after taking into consideration any deduction pursuant to Section 8.2, shall be reduced under this Paragraph 7.3 by more than [**]%. 17 SECTION 8 - ROYALTIES AND EQUITY. 8.1 (A) On all sales of PRODUCTS anywhere in the world by NITROMED, its AFFILIATES or SUBLICENSEE, following the FIRST COMMERCIAL SALE in such country by NITROMED its AFFILIATES or SUBLICENSEES, NITROMED shall pay HOSPITAL royalties in accordance with the following schedule, such undertaking and schedule having been agreed to for the purpose of reflecting and advancing the mutual convenience of the parties. For each PRODUCT sold or distributed by NITROMED or its AFFILIATES and SUBLICENSEES NITROMED shall pay to HOSPITAL one of the following: (1) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are a diagnostic product or service) sold or distributed by NITROMED or its AFFILIATES in a country and (ii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCT (other than PRODUCTS which are a diagnostic product or service) sold or distributed by SUBLICENSEES in a country (iii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES in a country and (iv) [**] ([**]%) of the NET SALES PRICE of PRODUCT which are diagnostic products or diagnostic services sold or distributed by SUBLICENSEES in a country so long as in each case the PRODUCT, its manufacture, use or sale in the country in question shall be subject to a VALID CLAIM of any PATENT RIGHT which is licensed exclusively to NITROMED In such country, or (2) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are diagnostic products or diagnostic services) sold or distributed by NITROMED or its AFFILIATES in a country and (ii) [**]percent ([**]%) of the NET SALES PRICE of PRODUCT (other than PRODUCTS which are diagnostic products or diagnostic services) sold or distributed by SUBLICENSEES in a country (iii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES and (iv) [**] percent ([**]%) of the NET SALES PRICE of PRODUCT which are diagnostic products or diagnostic services sold or distributed by SUBLICENSEES in a country, whenever, in each case, the PRODUCT, its manufacture, use or sale shall be subject to a VALID CLAIM of only such PATENT RIGHTS which are licensed non-exclusively to NITROMED in the country in question (the term non-exclusive license includes a license in which HOSPITAL co-owns the applicable PATENT RIGHTS with a third party(ies) and NITROMED does not receive an exclusive license under this Agreement from all of the owners), or 18 (3) (a) For each PRODUCT sold by NITROMED in which a competing product employing similar technology is not available, (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS sold or distributed by NITROMED or its AFFILIATES and (ii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCT sold or distributed by SUBLICENSEES (1) for ten (10) years next following the FIRST COMMERCIAL SALE of any PRODUCT whose manufacture, use or sale shall employ or incorporate any HOSPITAL MATERIAL where such HOSPITAL MATERIALS are not subject to one or more VALID CLAIMS of any PATENT RIGHT licensed to NITROMED in such country or (2) for the ten (10) years next following the FIRST COMMERCIAL SALE of any PRODUCT whose manufacture, use or sale shall employ as a significant part thereof INFORMATION which is not subject to any VALID CLAIM of a PATENT RIGHT licensed to NITROMED in such country; (B) In the event that a PRODUCT includes both component(s) covered by a VALID CLAIM of a PATENT RIGHT ("Patented Component(s)") and a component which is diagnostically useable or therapeutically active alone or in a combination which does not require the Patented Component and such component is not covered by a VALID CLAIM of a PATENT RIGHT ("Unpatented Component(s)") (such PRODUCT being a "Combined Product"), then NET SALES PRICE shall be the amount which is normally received by NITROMED or its AFFILIATES from a sale of the Patented Component(s) in an arm's length transaction with an unaffiliated third party. If the Patented Component(s) are not sold separately, then NET SALES PRICE upon which a royalty is paid shall be the NET SALES PRICE of the Combined Product multiplied by a fraction, the numerator of which is the cost for producing the Patented Components and the denominator of which is the cost for producing the Combined Product. 8.2 (a) In the event that royalties are to be paid by NITROMED to a party who is not an AFFILIATE of NITROMED for PRODUCT for which royalties are also due to HOSPITAL pursuant to Paragraph 8.1 ("Other Royalties"), then the royalties to be paid to HOSPITAL by NITROMED pursuant to Paragraph 8.1 shall be reduced by [**] of the amount of such Other Royalties, but in no event shall any royalties under Paragraph 8.1 be reduced by more than [**] percent ([**]%). (b) In addition to Paragraph 8.2(a), in the event that the royalty paid to HOSPITAL is a significant factor in the return realized by NITROMED so as to diminish NITROMED's capability to respond to competitive pressures in the market, HOSPITAL agrees to consider a reasonable reduction in the royalty paid to HOSPITAL as to each such PRODUCT for the period during which such market condition exists. Factors determining the size of the reduction will include profit margin on PRODUCT and on analogous products, prices of competitive products, and NITROMED's expenditures in PRODUCT development. 19 8.3 NITROMED shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable to HOSPITAL. Such books of account shall be kept at their principal place of business and, with all necessary supporting data shall, for the three (3) years next following the end of the calendar year to which each shall pertain be open for inspection by HOSPITAL or its designee upon reasonable notice during normal business hours at HOSPITAL's expense for the sole purpose of verifying royalty statements or compliance with this Agreement, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying royalties and shall be treated as NITROMED Confidential Information subject to the obligations of this Agreement. In the event that such inspection shall indicate that in any calendar year that the royalties which should have been paid by NITROMED are at least five percent (5%) greater than those which were actually paid by NITROMED, then NITROMED shall pay the cost of such inspection. 8.4 With each semi-annual payment, NITROMED shall deliver to HOSPITAL a full and accurate accounting to include at least the following information: (a) Quantity of each PRODUCT subject to royalty sold (by country) by NITROMED, and its AFFILIATES; (b) Total receipts for each PRODUCT subject to royalty (by country); (c) Total royalties payable to HOSPITAL; 20 (d) Royalties received from SUBLICENSEES. 8.5 In each year the amount of royalty due shall be calculated semi-annually as of June 30 and December 31 (each as being the last day of an "ACCOUNTING PERIOD") and shall be paid semi-annually within the sixty days next following such date, every such payment shall be supported by the accounting prescribed in Paragraph 8.4 and shall be made in United States currency. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the rate of exchange thereafter published in the Wall Street Journal for the business day closest to the applicable ACCOUNTING PERIOD, as the case may be. 8.6 If the transfer of or the conversion into United States Dollar Equivalent of any remittance due hereunder is not lawful or possible in any country, such remittance shall be made by the deposit thereof in the currency of the country to the credit and account of HOSPITAL or its nominee in any commercial bank or trust company located in that country, prompt notice of which shall be given to HOSPITAL. HOSPITAL shall be advised in writing in advance by NITROMED and provide to NITROMED a nominee, if so desired. 8.7 Any tax required to be withheld by NITROMED under the laws of any foreign country for the account of HOSPITAL, shall be promptly paid by NITROMED for and on behalf of HOSPITAL to the appropriate governmental authority, and NITROMED shall use its best efforts to furnish HOSPITAL with proof of payment of such tax. Any such tax actually paid on HOSPITAL's behalf shall be deducted from royalty payments due HOSPITAL. 8.8 Only one royalty shall be due and payable for the manufacture, use and sale of a PRODUCT irrespective of the number of patents or claims thereof which cover the manufacture, use and sale of such PRODUCT. 21 8.9 NITROMED shall sell to HOSPITAL common shares of NITROMED in accordance with a Restricted Stock Purchase Agreement which incorporates the following terms. (a) Upon each issuance of stock by NITROMED, up until and including issuances pursuant to which the aggregate gross proceeds, from the capitalization of NITROMED, (other than proceeds from sales to HOSPITAL) shall equal $3,500,000.00, HOSPITAL shall have the option to purchase a number of shares of common stock of NITROMED as may be required in order that HOSPITAL'S pro rata share of the equity of NITROMED on a fully diluted converted basis immediately after the exercise of such option shall equal fifteen percent (15%). The price per share is $.01 per share. In the event that the Research and License Agreement by and between NITROMED and HOSPITAL is terminated for any reason whatsoever, prior to the noted anniversaries, NITROMED shall have the right to repurchase from HOSPITAL at a price of $.01 per share the following percentage of the common shares of stock purchased pursuant to this paragraph. First Anniversary 80% Second Anniversary 40% Third Anniversary 20% (b) Prior to an IPO, in any venture capital round of financing, HOSPITAL has the right to purchase a number of shares offered in such round at the per share price of such round to maintain the HOSPITAL's percent ownership interest in NITROMED which exists prior thereto under the same terms provided to participating venture capital investors. (c) Prior to an IPO, HOSPITAL can not sell its purchased shares to a third party without first offering such shares to NITROMED on terms proposed by HOSPITAL. If NITROMED elects not to purchase, for a period of six months after such election by NITROMED, HOSPITAL can sell such shares to a third party on terms no more favorable than those offered NITROMED. NITROMED has the right to assign its right as set forth in this subparagraph 8.9(c) to any one or more of its shareholders. 22 (d) HOSPITAL is hereby granted "piggy-back" registration rights subject to underwriter cut-back, on a pro-rata basis with other selling shareholders under "piggy-back" rights. NITROMED will provide and pay for counsel for HOSPITAL for such registration, which counsel shall be the same as the counsel for other sellers in such round. The "piggy back" rights of this Paragraph, 8.9(d) shall also be applicable to demand registrations. (e) HOSPITAL agrees to be bound by any "lock-up" requirements of an underwriter, provided that they are no more stringent then those imposed on the venture capital shareholders. SECTION 9 - INFRINGEMENT AND NONASSERTION. 9.1 (a) If any of the PATENT RIGHTS under which NITROMED is the licensee is infringed by a third party, NITROMED shall have the right and option but not the obligation to bring an action for infringement, at its sole expense, against such third party in the name of HOSPITAL and/or in the name of NITROMED, and to join HOSPITAL as a party plaintiff if required. NITROMED shall promptly notify HOSPITAL of any such infringement and shall keep HOSPITAL informed as to the prosecution of any action for such infringement. No settlement, consent judgment or other voluntary final disposition of the suit which adversely affects PATENT RIGHTS may be entered into without the consent of HOSPITAL, which consent shall not unreasonably be withheld. (b) In the event that NITROMED shall undertake the enforcement and/or defense of the PATENT RIGHTS by litigation, NITROMED may withhold up to fifty percent (50%) of the royalties otherwise thereafter due HOSPITAL hereunder and apply the same toward reimbursement of its expenses, including reasonable attorneys' fees, in connection therewith. Any recovery of damages by NITROMED for any such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of NITROMED relating to the suit, and next toward reimbursement of HOSPITAL for any royalties withheld and applied pursuant to this Section 9. The balance remaining from any such recovery shall be divided between NITROMED and HOSPITAL, as follows (i) for that portion, if any, based on lost profits, HOSPITAL shall recover the royalty HOSPITAL "would have received under this Agreement if such sales had been made by NITROMED; and (ii) for any other recovery, HOSPITAL shall receive thirty percent (30%) of the remaining amount. 23 9.2 In the event that NITROMED elects not to pursue an action for infringement, upon written notice to HOSPITAL by NITROMED that an unlicensed third party is an infringer of a VALID CLAIM of PATENT RIGHTS licensed to NITROMED, HOSPITAL shall have the right and option, but not the obligation at its cost and expense to initiate infringement litigation and to retain any recovered damages. 9.3 In the event that litigation against NITROMED is initiated by a third-party charging NITROMED with infringement of a patent of the third party as a result of the manufacture, use or sale by NITROMED of PRODUCT covered by PATENT RIGHTS, NITROMED shall promptly notify HOSPITAL in writing thereof. NITROMED's costs as to any such defense shall be creditable against any and all payments due and payable to HOSPITAL under Paragraph 8.1 of this Agreement but no royalty payment after taking into consideration any such credit under this Paragraph 9.3 shall be reduced by more than [**]%. 24 9.4 In the event of a judgment in any suit in which a court of competent jurisdiction rules that the manufacture, use or sale by NITROMED of PRODUCT covered by a PATENT RIGHT has infringed on a third-party's patent requiring NITROMED to pay damages or a royalty to said third party, or in the event of a settlement of such suit requiring damages or royalty payments to be made, payments due to HOSPITAL under Paragraph 8.1 of this Agreement arising from the applicable PRODUCT shall be correspondingly reduced by the amounts due under the requirement of such judgment or under the terms of such settlement. In no case, however, shall the royalty payment after taking into consideration any such reduction under this Paragraph 9.4 be reduced by more than [**]%. 9.5 In any infringement suit either party may institute to enforce the PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the request of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs of HOSPITAL incurred in connection with rendering cooperation requested by NITROMED shall be paid by NITROMED. SECTION 10 - WARRANTIES. 10.1 Each of HOSPITAL and NITROMED warrants and represents to the other that it has the full right and authority to enter into this Agreement, and that it is not aware of any impediment which would inhibit its ability to perform the terms and conditions imposed on it by this Agreement. 10.2 HOSPITAL warrants and represents that the named inventors have assigned the PATENT RIGHTS tabulated in Appendix B to HOSPITAL, that it has not licensed or assigned any right or interest in or to INVENTIONS and PATENT RIGHTS to any third party; it has the right to grant the rights granted hereunder; that the granting of such rights does not require the consent of a third party; that there are and will be no outstanding agreements, assignments or encumbrances inconsistent with the provisions of this Agreement, and that all INVESTIGATORS performing SPONSORED RESEARCH will be obligated to assign to HOSPITAL, in accordance with the Patent Policy of HOSPITAL, the ownership of INVENTIONS and corresponding PATENT RIGHTS developed during SPONSORED RESEARCH. 25 10.3 HOSPITAL covenants, warrants and represents that no other patents or patent applications in the FIELD of RESEARCH naming the PRINCIPAL INVESTIGATORS exists other than the PATENT RIGHTS tabulated in Appendix B. 10.4 HOSPITAL covenants, warrants, represents that (i) HOSPITAL has not received any information with respect to any challenge by another as to the validity of the BACKGROUND PATENT RIGHTS tabulated in Appendix B and (ii) the HOSPITAL has not received any information that any of these BACKGROUND PATENT RIGHTS is involved in an interference action. SECTION 11 - INDEMNIFICATION. 11.1 (a) Each party shall notify the other of any claim, lawsuit or other proceeding related to PRODUCT. Subject to the preceding sentence, NITROMED shall indemnify, defend and hold harmless HOSPITAL and its trustees, officers, medical and professional staff, employees and agents and their respective successors, heirs and assigns (the "Indemnitees"), against any liability, damage, loss or expense (including 'reasonable attorneys' fees and expenses of litigation) incurred by or imposed upon the Indemnitees or any one of them in connection with: (i) claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty or strict liability) concerning any product, process or service relating to, or developed pursuant to this Agreement, or (ii) any third party claims, suits, actions, demands or judgments arising out of any activities to be carried out by Indemnitees pursuant to this Agreement. 26 (b) NITROMED's indemnification under (a) shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the negligent activities or intentional misconduct of the Indemnitees. (c) NITROMED agrees at its own expense, to provide attorneys reasonably acceptable to the HOSPITAL to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. (d) HOSPITAL shall notify NITROMED promptly of any claim or threatened claim under this Paragraph 11.1 and shall fully cooperate with all reasonable requests of NITROMED with respect thereto. (e) This Paragraph 11.1 shall survive expiration or termination of this agreement. 11.2 (a) At such time as any PRODUCT or PROCESS relating to, or developed pursuant to, this Agreement is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by NITROMED or by a licensee, AFFILIATE or agent of NITROMED, NITROMED shall, at its sole cost and expense, procure and maintain comprehensive general liability insurance in amounts not less than two million dollars ($2,000,000) per accident and two million dollars ($2,000,000) annual aggregate and naming the Indemnities as additional insureds. Such comprehensive general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for NITROMED's indemnification under Paragraph 11.1 of this Agreement. If NITROMED elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250,000 annual aggregate) such self-insurance program must be acceptable to the HOSPITAL and the Risk Management Foundation of the Harvard Medical Institutions, Inc. The minimum amounts of insurance coverage required under this Paragraph 11.2 shall not be construed to create a limit of NITROMED's liability with respect to its indemnification under Paragraph 11.2 of this Agreement. At such time NITROMED can request that HOSPITAL ascertain whether Risk Management Foundation has in effect Uniform Indemnification and Insurance Provisions more favorable than those of this Agreement, in which event NITROMED and HOSPITAL shall amend this Agreement to include such more favorable insurance provisions. 27 (b) NITROMED shall provide HOSPITAL with written evidence of such insurance upon request of HOSPITAL. NITROMED shall provide HOSPITAL with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance. (c) NITROMED shall maintain such comprehensive general liability insurance during (i) the period that any PRODUCT or PROCESS relating to, or developed pursuant to this Agreement is being commercially distributed to sold (other than that for the purpose of obtaining regulatory approvals) by NITROMED or by a licensee, AFFILIATE or agent of NITROMED and (ii) a reasonable period after the period referred to in (c)(i) above, which in no event shall be less than fifteen (15) years. The obligations of (c)(ii) above can be satisfied by the purchase of insurance by NITROMED or third party which covers claims made during such period of (c)(ii) above for PRODUCT or PROCESS commercially distributed or sold by NITROMED during the period referred in (c)(i) above. (d) This Paragraph 11.2 shall survive expiration or termination of this Agreement. SECTION 12 - ASSIGNMENT; SUCCESSORS. 12.1 This Agreement shall not be assignable by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld), except that NITROMED without the consent of HOSPITAL may assign this Agreement to an AFFILIATE or to a successor in interest of all or substantially all of the portion of the business to which this Agreement relates and HOSPITAL without the consent of NITROMED may assign this Agreement to THE BRIGHAM MEDICAL CENTER, INC. or any wholly owned subsidiary thereof. 12.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of NITROMED and HOSPITAL. Any such successor or assignee of a party's interest shall expressly assume in writing the performance of all the terms and conditions of this Agreement to be performed by said party and such Assignment shall not relieve the Assignor of any of its obligations under this Agreement. SECTION 13 - TERMINATION. 13.1 Except as otherwise specifically provided herein and unless sooner terminated pursuant to Paragraph 13.2 or 13.3 of this Agreement, this Agreement and the licenses and rights granted thereunder shall remain in full force and effect until the expiration of the last to expire PATENT RIGHT, at which time NITROMED shall have a fully paid-up license. 28 13.2 Except as qualified by Paragraph 13.7, NITROMED shall have the right to terminate this Agreement or any or all licenses under one or more PATENT RIGHTS in one or more countries upon sixty (60) days prior written notice. 13.3 Upon material breach of any material provisions of this Agreement by either party to this Agreement, in the event the breach is not cured within sixty (60) days after written notice to the breaching party by the other party, in addition to any other remedy it may have, the other party at its sole option may terminate this Agreement, provided that such other party is not then in breach of this Agreement. 13.4 Upon any termination of this Agreement NITROMED shall be entitled to finish any work-in-progress which is completed within six (6) months of termination of this Agreement and to sell any completed inventory of a PRODUCT covered by this Agreement which remains on hand as of the date of the termination, so long as NITROMED pays to HOSPITAL the royalties applicable to said subsequent sales in accordance with the same terms and conditions as set forth in this Agreement. 13.5 In the event that this Agreement is terminated any SUBLICENSEE shall have the right to become a direct license of HOSPITAL under PATENT RIGHTS and INVENTION, to the extent such SUBLICENSEE was previously licensed by NITROMED, provided that such SUBLICENSEE by written notice to HOSPITAL accepts the licensing term and conditions of this Agreement within thirty (30) days after such SUBLICENSEE receives notice that this Agreement has been terminated. Upon HOSPITAL'S receipt of such notice from SUBLICENSEE, SUBLICENSEE shall be automatically licensed under the licensing terms and conditions of this Agreement. 29 13.6 The obligations of Section 6 shall survive any termination of this Agreement. Further, the obligations of Section 11 shall perpetually survive any termination of this Agreement. 13.7 NITROMED may terminate funding of SPONSORED RESEARCH under Paragraph 2.1(A) and lease payments under Paragraph 2.1(D) under this Agreement on the twenty-fourth (24th) month from the EFFECTIVE DATE of this Agreement, or any day thereafter by giving HOSPITAL six (6) months prior written notice of its election to terminate. If such funding is so terminated, NITROMED shall pay HOSPITAL any reasonable costs and expenses which HOSPITAL has committed to pay directly related to performance of the SPONSORED RESEARCH which cannot be eliminated or reduced. 13.8 In the event PRINCIPAL INVESTIGATOR is no longer available or able to continue direction of SPONSORED RESEARCH, HOSPITAL shall promptly notify NITROMED and may nominate a replacement; if HOSPITAL does not nominate a replacement within thirty (30) days or if that replacement is unsatisfactory to NITROMED, NITROMED may immediately terminate funding of SPONSORED RESEARCH. If such funding is so terminated, NITROMED shall pay HOSPITAL any reasonable costs and expenses which HOSPITAL has committed to pay directly related to performance of the SPONSORED RESEARCH which cannot be eliminated or reduced. 13.9 Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. 30 SECTION 14 - GENERAL PROVISIONS. 14.1 The relationship between HOSPITAL and NITROMED is that of independent contractors. HOSPITAL and NITROMED are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. HOSPITAL shall have no power to bind or obligate NITROMED in any manner. Likewise, NITROMED shall have no power to bind or obligate HOSPITAL in any manner. 14.2 Any matter or disagreement under Paragraph 2.3 or 5.6 which this Agreement specifically specifies is to be resolved by arbitration shall be submitted to a mutually selected single arbitrator to so decide any such matter or disagreement. The arbitrator shall conduct the arbitration in accordance with the Rules of the American Arbitration Association, unless the parties agree otherwise. If the parties are unable to mutually select an arbitrator, the arbitrator shall be selected in accordance with the procedures of the American Arbitration Association. The decision and award rendered by the arbitrator shall be final and binding. Judgment upon the award may be entered in any court having jurisdiction thereof. Any arbitration pursuant to this section shall be held in Boston, MA, or such other place as may be mutually agreed upon in writing by the parties. 14.3 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 14.4 This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Massachusetts without reference to its choice of law principles. 31 14.5 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 14.6 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 14.7 Notices. Any notices given pursuant to this Agreement shall be in writing and shall be deemed delivered upon the earlier of (i) when received at the address set forth below, or (ii) three (3) business days after mailed by certified or registered mail postage prepaid and properly addressed, with return receipt requested, or (iii) by facsimile as confirmed by certified or registered mail. Notices shall be delivered to the respective parties as indicated: To NITROMED: NitroMed, Inc. c/o Healthcare Investments Corp. 379 Thornall Street Edison, NJ 08837 Attn: CEO Copy to: Carella, Byrne, Bain, Gilfillan, Cecchi & Stewart 6 Becker Farm Road Roseland, New Jersey 07068 Fax no. (201)994-1744 Attn: Elliot M. Olstein, Esq. To HOSPITAL: The Brigham and Women's Hospital, Inc. 75 Francis Street Boston, Massachusetts 02115 Attn: Maria I. Marmarinos Assistant Vice President/Ventures 32 Copy to: Brigham and Women's Medical Center, Inc. 10 Vining Street Boston, MA 02115 Attn: Office of General Counsel 14.8 NITROMED shall not use the name of the HOSPITAL or of any HOSPITAL staff member, employee or student or any adaptation thereof in any advertising, promotional or sales literature without the prior written approval of HOSPITAL. Except that NITROMED shall be permitted to use the name of the HOSPITAL or any HOSPITAL staff member, employee or student for the following (i) as required to obtain regulatory approval for PRODUCT; (ii) as required by law or BONA FIDE legal process; and (iii) in connection with a financing or offering of securities provided that HOSPITAL is permitted to review such material to determine the correctness thereof prior to release of the material to the general public. 33 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. NITROMED, INC. THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ JOSEPH F.X. MCGUIRL By: /s/ WILLIAM TERRY -------------------------- ------------------------ Name: Joseph F.X. McGuirl Name: William Terry ------------------------ ------------------------ Title: Chairman, NitroMed Inc. Title: Senior Vice President ----------------------- ---------------------- We, Drs. Joseph Loscalzo and Jonathan Stamler, named as PRINCIPAL INVESTIGATORS in this Agreement, attest that we have read this Agreement in its entirety; and that we consent to the terms herein. PRINCIPAL INVESTIGATORS By: /S/ JOSEPH LOSCALZO By: /S/ JONATHAN STAMLER ---------------------------- --------------------------- Dr. Joseph Loscalzo Dr. Jonathan Stamler 34 FIRST YEAR BUDGET AND OBJECTIVES For RESEARCH ON INTERMEDIARY NITRIC OXIDE METABOLISM: NOVEL COMPOUNDS, DELIVERY SYSTEMS, AND CELL REGULATION Joseph Loscalza, M.D., Ph.D. Jonathan Stamler, M.D. Brigham and Women's Hospital Boston, Massachusetts March, 1992 35 CARDIOVASCULAR EFFECTS OF S-NO ADDUCTS Personnel: Technicians (2) [**] ====== Postdocs (2) [**] ====== Administrator (1) [**] ====== Secretary (1) [**] ====== Supplies: [**] ====== Animals: [**] ====== Total Direct Costs: [**] ====== Total Indirect Costs ([**]%) [**] ====== Grand Total: [**] ====== OBJECTIVES -- synthesize and characterize [**] S-NO [**] -- examine [**] S-NO [**] -- [**] S-NO [**] 36 BASIC LONG-TERM PROJECT OBJECTIVES -- organic chemistry of [**] [**] -- cellular metabolism of [**]: [**] -- [**] of proteins -- [**] states * Over first five years; NOT dependent on milestones 39 EQUIPMENT EPR Spectrometer [**] ======= Chemiluminescence Spectrometer [**] ======= NMR Spectrometer [**] ======= Capillary Zone Electrophoresis [**] ======= w/ Indirect Fluorescence Detector Infrared Spectrometer [**] -====== CC/Mass Spectrometer System [**] ======= Quantitative Angiography System [**] ======= Intravascular Ultrasound System [**] ======= Microvascular Vasomotor Apparatus [**] ======= Microvascular Permeability Equipment [**] ======= [**] ======= 37 ANCILLARY PROJECTS AND BUDGETS I. PULMONARY EFFECTS OF S-NO ADDUCTS Personnel: Technicians (2) [**] ====== Postdocs (2) [**] ====== Supplies: [**] ====== Animals: [**] ====== Total Direct Costs: [**] ====== Total Indirect Costs ([**]%) [**] ====== GRAND TOTAL [**] ====== OBJECTIVES -- examine [**] S-NO [**] [**] NO [**] -- [**] NO [**] processes II. [**] EFFECTS OF S-NO [**] Personnel: Technicians (2) [**] ====== Postdocs (2) [**] ====== Supplies: [**] ====== Animals: [**] ====== Total Direct Costs: [**] ====== Total Indirect Costs ([**]%) [**] ====== GRAND TOTAL [**] ====== 38 OBJECTIVES -- evaluate effect of NO [**] -- evaluate effect of NO [**] -- assess effect of NO [**] 39
============================================================================================================================ Patent Applications or Invention Disclosures of Jonathan Stamler ET AL. - ---------------------------------------------------------------------------------------------------------------------------- Docket No. Title Inventors Status - ---------------------------------------------------------------------------------------------------------------------------- 0627.2210000 Nitrosylation of Hortocysteine Jonathan Stamler Application consisting of claim and As A Novel Antithrombotic Joseph Loscalzo abstract files April 10, 1991, Mechanism Serial No. 07/683,415. Application abandoned in favor of continuation-in-part application, Serial No. 07/339,188, filed February 21, 1992, Docket No. 0627.2960004. - ---------------------------------------------------------------------------------------------------------------------------- 0627,2460000 Nitrosylation of Protein SH Jonathan Stamler Application filed November 14, Groups And Amino Acid Residues Joseph Loscalzo 1991, Serial No. 07/791,668. Also As A Therapeutic Modality Daniel Simon include the subject matter David Siegel pertaining to nitrosation of tyrosine and other amino acids (invention disclosure; Docket No. 0627.290000). Plan to review the application to determine whether a continuation-in-part application including no data pertaining to ______ amino acids should be filed. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2470000 S-Nitroso-N-Acetylcysteine As A Jonathan Stamler Application consisting of claim and Treatment For Airway Obstruction Joseph Loscalzo abstract, filed March 29, 1991, Robert Brown Serial No. 7/676,691. Jeffrey Dazen Application abandoned in favor of continuation-in-part application, Serial No. 07/804,665; filed December 11, 1991; Docket No. 0627.2860004. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2480000 S-Nitroso-N-Acetylcysteine As A Jonathan Stamler This subject matter was included in Direct Biliary Smooth Muscle Adam Slivka the continuation-in-part Relaxant (Invention disclosure) Joseph Loscalzo application (Docket No. 0627.2860004) filed on December 11, 1991.
Page 1 Revision Date: 05/22/92 - ---------------------------------------------------------------------------------------------------------------------------- 0627.2490000 Low Molecular Weight Thiols For Daniel Simon This subject matter was included in Impotence (Invention disclosure) Jonathan Stamler the continuation-in-part Joseph Loscalzo application (Docket No. 0627.2860004) filed on December 11, 1991. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2560000 Novel Anionic-Iron Nitrosyl Jonathan Stamler No application to be filed at this Complexes With Smooth Muscle David Siegel time. We will reconsider when Relaxant And Antiplatelet Joseph Loscalzo additional information pertaining Properties (Invention disclosure) Daniel Simon to synthesis and testing of compounds becomes available. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2900000 S-Nitrosothiols As Smooth Muscle Jonathan Stamler Continuation-in-part application, Relaxants And Therapeutic Uses David Simon Serial No. 07/804,665, filed on Thereof (CIP of 07/676,691, Joseph Loscalzo December 11, 1991. Docket No. 0627.2470000) Robert Brown Jeffrey Dazen Application was foreign filed in Adam Slivka the PCT and Israel, on March 30, 1992. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2860004 O-Nitrosylation of Tyrosine And Jonathan Stamler This subject matter was included in Related Compounds (Invention Joseph Loscalzo CIP application 07/791,668 disclosure) (0627.2460000), which was filed on November 14, 1991. - ---------------------------------------------------------------------------------------------------------------------------- 0627.2960004 Nitrosylation of Homocysteine As Jonathan Stamler Continuation-in-part application a Novel Antithrombotic Mechanism Joseph Loscalzo No. 07/839,188, filed February 21, CIP of 07/683,415, Docket No. 1992. 0627.2210000 Application was foreign filed in the PCT and Israel on April 9, 1992 and April 10, 1992, respectively. - ---------------------------------------------------------------------------------------------------------------------------- 0627.3030000 Use of Guanylate Cyclase Jonathan Stamler Application filed April 8, 1992. Inhibitors In The Treatment of Joseph Loscalzo Shock - ---------------------------------------------------------------------------------------------------------------------------- 0627.3050000 The Use of Nitric Oxide Adducts Jonathan Stamler Preparation of application in on Artificial Surfaces to Joseph Loscalzo progress. Anticipate filing in Prevent Platlet Adherence and John Folts June 1992. Thrombosis - ----------------------------------------------------------------------------------------------------------------------------

Page 2 Revision Date: 05/22/92 - ---------------------------------------------------------------------------------------------------------------------------- 0627.3090000 The use of Nitric Oxide-Donating Jonathan Stamler Preparation of application in Compounds as Antidotes To NO Joseph Loscalzo progress. Anticipate filing in Synthetase Inhibitors June 1992. - ---------------------------------------------------------------------------------------------------------------------------- 0627.3100000 A Method For Detecting Nitric Jonathan Stamler Application filed April 22, 1992. Oxide, Nitrososonian Joseph Loscalzo Equivalents, S-Nitrosothiols and S-Nitroso-Proteins in Biological Systems - ---------------------------------------------------------------------------------------------------------------------------- 0627.3110000 The Use of Lipophilic Jonathan Stamler Preparation of patentability Thionitrates And Other Joseph Loscalzo opinion. Nitroso-Derivatives To Prevent Joseph Bonventura Barnacle Attachment To Marine Vessels - ---------------------------------------------------------------------------------------------------------------------------- 0627.3130000 Use of NO Synthetase Inhibitors Jonathan Stamler Preparation of patentability As A Treatment for Thinitis Joseph Loscalzo opinion. - ---------------------------------------------------------------------------------------------------------------------------- 0627.3140000 Short Acting Thionitrites And Jonathan Stamler Prepare application. Dithionitrites As Selective Joseph Loscalzo Pulmonary Vasorelaxants - ---------------------------------------------------------------------------------------------------------------------------- 0627.3170000 A Method For Detection And Jonathan Stamler Preparation of application in Separation of Thiols And Their Joseph Loscalzo progress. Anticipate filing in S-nitrosated Derivatives In June 1992. Biological Samples Using Capillary Electrophoresis - ---------------------------------------------------------------------------------------------------------------------------- 0627.3200000 Novel Uses for NO Synthetase Jonathan Stamler Preparation of patentability Inhibitors (includes uses Joseph Loscalzo opinion. disclosed in the 0627.3130000 invention disclosure other than for the treatment of rhinitis) ============================================================================================================================

Page 3 Revision Date: 05/22/92 BRIGHAM AND WOMEN'S H O S P I T A L MATERIALS TRANSFER AGREEMENT Agreement dated _____________ by and among _________________________ (the "Institution"), ___________________ (the "Investigator") and The Brigham and Women's Hospital, Inc. ("Brigham") with respect to samples of a In consideration of the receipt from Brigham by the Institution and the Investigator of the samples, the Institution and the Investigator agree to the following conditions: 1. These samples, their progeny and derivatives thereof (the "Materials") remain the property of Brigham. 2. The Investigator will use the Materials solely for academic non-commercial research conducted by the Investigator at the Institution a research program described in Exhibit A hereto (the "Research Program"). Neither the Investigator nor the Institution will use the results of the Research Program, including inventions, directly or indirectly for profit-making purposes without the consent of the Brigham 3. The Investigator and the Institution understand that Brigham has applied for a patent on the and derivatives thereof. 4. The Investigator will not give access to the Materials to any party not connected with the Research Program without written permission from Brigham. 5. The Investigator and the Institution accept the Materials with the knowledge that they are provided without warranty of merchantability of fitness for a particular purpose or any other warranty, express or implied. The Institution agrees to defend and indemnify and hold harmless Brigham and its employees and agents from all claims and damages (including legal fees) arising from the use, storage, handling, or direct sale of the Materials by the Institution and/or the Investigator. INSTITUTION: INVESTIGATOR: By:_________________________________ ____________________________________ THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By:_________________________________ AMENDMENT TO RESEARCH AND LICENSE AGREEMENT This Amendment is effective as of November 22, 1996 by and between The Brigham and Women's Hospital, Inc. ("HOSPITAL"), having an address at 75 Francis Street, Boston, Massachusetts 02115, and NitroMed, Inc., a Delaware Corporation having offices at 801 Albany Street, Boston, Massachusetts 02118 ("NITROMED"). WHEREAS, NITROMED and HOSPITAL entered into a RESEARCH AND LICENSE AGREEMENT effective as of August 1, 1992; and WHEREAS, HOSPITAL and NITROMED desire to amend such RESEARCH AND LICENSE AGREEMENT. NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: 1. All fully capitalized terms in this Amendment shall have the same meaning as in the RESEARCH AND LICENSE AGREEMENT. 2. Section 8.1A of the RESEARCH AND LICENSE AGREEMENT is amended and rewritten in its entirety to read as follows: 8.1 (A) On all sales of PRODUCTS anywhere in the world by NITROMED, its AFFILIATES or SUBLICENSEE, following the FIRST COMMERCIAL SALE in such country by NITROMED its AFFILIATES or SUBLICENSEES, NITROMED shall pay HOSPITAL royalties in accordance with the following schedule, such undertaking and schedule having been agreed to for the purpose of reflecting and advancing the mutual convenience of the parties. For each PRODUCT sold or distributed by NITROMED or its AFFILIATES and SUBLICENSEES, N1TROMED shall pay to HOSPITAL one of the following: (1) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are a diagnostic product or service) sold or distributed by NITROMED or its AFFILIATES in a country and or (ii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES in a country so long as in each case the PRODUCT, its manufacture, use or sale in the country in question shall be subject to a VALID CLAIM of any PATENT RIGHT which is licensed exclusively to NITROMED in such country, or (2) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are diagnostic products or diagnostic services) sold or distributed by NITROMED or its AFFILIATES in a country or (ii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES, whenever, in each case, the PRODUCT, its manufacture, use or sale shall be subject to a VALID CLAIM of only such PATENT RIGHTS which are licensed non-exclusively to NITROMED in the country is question (the term non-exclusive license includes a license in which HOSPITAL co-owns the applicable PATENT RIGHTS with a third party(ies) and NITROMED does not receive an exclusive license under this Agreement from all of the owners), or (3) the following percentage of royalties received from a SUBLICENSEE for sale or distribution of a PRODUCT whose manufacture, use or sale is subject to a VALID CLAIM of PATENT RIGHTS: (i) [**] percent ([**]%) where HOSPITAL owns all right and title in and to such PATENT RIGHTS; or (ii) [**] percent ([**]%) where HOSPITAL does not own all right and title in and to such PATENT RIGHTS. (4) (a) For each PRODUCT sold by NITROMED in which a competing product employing similar technology is not available, (i) [**] percent ([**]%) of the NET' SALES PRICE of PRODUCTS sold or distributed by NITROMED or its AFFILIATES and (ii) [**] percent ([**]%) of royalties received from a SUBLICENSEE for salt or distribution of PRODUCT (1) for ten (10) years next following the FIRST COMMERCIAL SALE of any PRODUCT whose manufacture, use or sale shall employ or incorporate any HOSPITAL MATERIAL where such HOSPITAL MATERIALS are not subject to one or more VALID CLAIMS of any PATENT RIGHT licensed to NITROMED in such country or (2) for the ten (10) years next following the FIRST COMMERCIAL SALE of any PRODUCT whose manufacture, use or sale shall employ as a significant part thereof INFORMATION which is not subject to any VALID CLAIM of a PATENT RIGHT licensed to NITROMED in such country; 3. Section 8.2(a) of the RESEARCH AND LICENSE AGREEMENT is amended and rewritten in its entirety to read as follows: 8.2 (a) In the event that royalties are to be paid by NITROMED to a party who is not an AFFILIATE of NITROMED for PRODUCT for which royalties are also due to HOSPITAL pursuant to Paragraph 8.1A(1), 8.1A(2), 8.IA(3)(i) or 8.1 A(4) ("Other Royalties"), then the royalties to be paid to HOSPITAL by NITROMED pursuant to such Paragraphs shall be reduced by one-half of the amount of such Other Royalties, but in no event shall any royalties under such Paragraphs be reduced by more than [**] percent ([**]%). 4. The RESEARCH AND LICENSE AGREEMENT is hereby amended effective as of the date first above written in accordance with Paragraph 14.3 thereof. Except as amended herein or previously amended, the terms and conditions of the RESEARCH AND LICENSE AGREEMENT remain in full force and effect as originally written. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. NITROMED, INC. THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By:/s/ MANUEL WORCEL By: /s/ SHELBY CALVERT MORSS ------------------------------------------- ----------------------------------------- Name: Manuel Worcel Name: Shelby Calvert Morss ------------------------------------ ---------------------------------------- Title: President and Chief Executive Officer Title: Vice President, Ventures Department ---------------------------------------- --------------------------------------

EX-10.7 14 a2116973zex-10_7.txt EXHIBIT 10.7 EXHIBIT NO. 10.7 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. COLLABORATION AND LICENSE AGREEMENT THIS COLLABORATION AND LICENSE AGREEMENT is made and entered into as of January 22, 1999 by and between NITROMED, INC. ("NitroMed"), a Delaware corporation with offices at 12 Oak Park Drive, Bedford, Massachusetts, 01730, and Professor Jay N. Cohn ("LICENSOR"), whose principal address is 4848 Russell Avenue South, Minneapolis, Minnesota 55410. INTRODUCTION 1. NitroMed is engaged in the business of developing and commercializing medical products, including therapeutics for cardiovascular disease. 2. LICENSOR has developed certain proprietary technology related to the combination of hydralazine and isosorbide dinitrate for the treatment of cardiovascular disease. 3. NitroMed and LICENSOR have agreed to collaborate together in order to develop, improve, and commercialize therapeutics for the treatment of cardiovascular disease based upon LICENSOR's proprietary technology. 4. LICENSOR is willing to grant, and NitroMed is desirous of acquiring, exclusive rights to use such proprietary technology in accordance with the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the terms and conditions set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, NitroMed and LICENSOR hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following terms shall have the following definitions. 1.1 AFFILIATE. "Affiliate" of a Party shall mean any company controlling, controlled by or under common control with such Party. For purposes of this Section 1.1, "control" shall mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with power to direct the management and policies of such non-corporate entities. A company shall be considered an "Affiliate" for only so long as such ownership or control exists. 1 1.2 ANNUAL SALES VOLUME. "Annual Sales Volume" means total worldwide Net Sales of all Collaboration Products during the twelve (12) month period commencing with the first full month following First Commercial Sale of a Collaboration Product. The first such Annual Sales Volume period for a Collaboration Product shall also include any partial month preceding such first full month. 1.3 BUSINESS DAY. "Business Day" shall mean a day on which banks are open for business in Boston, Massachusetts. 1.4 COLLABORATION. "Collaboration" shall mean the development collaboration to be conducted by NitroMed and LICENSOR pursuant to this Agreement. 1.5 COLLABORATION PRODUCT. "Collaboration Product" shall mean a product in the Field that is developed in the course of the Collaboration. 1.6 CONFIDENTIAL INFORMATION. "Confidential Information" means all materials, know-how or other information relating to the Field, including, without limitation, proprietary information and materials (whether or not patentable) regarding a Party's technology, products, business information or objectives, which is designated as confidential in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such material, trade secret or other information is disclosed by the disclosing Party to the other Party. Notwithstanding the foregoing to the contrary, materials, know-how or other information which is orally, electronically or usually disclosed by a Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a Party if the disclosing Party at the time of disclosure identifies such information as confidential or proprietary and, within ten (10) days after such disclosure, delivers to the other Party a written document or documents describing the materials, know-how or other information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made. 1.7 EFFECTIVE DATE. "Effective Date" shall mean the date first indicated above. 1.8 FIELD. "Field" shall mean the combination of hydralazine and isosorbide dinitrate (with or without one or more additional active ingredients) for the treatment of cardiovascular diseases. 1.9 FIRST COMMERCIAL SALE. "First Commercial Sale" means, for each Collaboration Product, the first commercial sale thereof in a country as part of a nationwide introduction by NitroMed, its Affiliates or its sublicensees. Sales for test marketing, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale. 1.10 LICENSED TECHNOLOGY. "Licensed Technology" shall mean the Patent Rights and the Technical Information. 1.11 NDA. "NDA" means a New Drug Application filed with the U.S. Food and Drug Administration. 2 1.12 NET SALES. "Net Sales" shall mean the gross amount received from an unrelated third party by NitroMed, its Affiliates and/or sublicensees on sales or other dispositions of Collaboration Products, less the following items: (a) trade, cash and quantity discounts, allowances and rebates actually allowed and taken directly with respect to such sales or dispositions; (b) tariffs, duties, excises, value-added and sales taxes or other taxes imposed upon and paid by NitroMed or through NitroMed by customers with respect to such sales or dispositions (excluding national, state and local taxes based on income); (c) actual amounts repaid or credited by reason of rejections, defects, recalls and returns or because of rebates or retroactive price reductions; and (d) freight, postage, insurance and other transportation charges separately invoiced in shipping such Collaboration Product. 1.13 PARTY. "Party" shall mean either NitroMed or LICENSOR "Parties" shall mean NitroMed and LICENSOR, collectively. 1.14 PATENT RIGHTS. "Patent Rights" shall mean: (a) the patents and patent applications owned by or licensed to LICENSOR listed on EXHIBIT A attached to this Agreement, including foreign counterparts thereof, and any and all continuations, divisions, reissues, extensions and foreign counterparts that LICENSOR may file; (b) Any and all patents, patent applications and other intellectual property rights with respect to any invention or discovery in the Field relating to such patents and patent applications, which patents, patent applications and such other rights (i) LICENSOR owns (either directly or through his Affiliates) at any time during the term of this Agreement; or (ii) which LICENSOR (either directly or through his Affiliates) acquires the right to use at any time during the term of this Agreement, with the right to grant licenses, sublicenses and rights of the type described in Article 2 below. (c) Any and all patents, patent applications and other intellectual property rights with respect to any invention or discovery in the Field, which patents, patent applications or other rights LICENSOR and NitroMed own jointly as a result of the Collaboration under this Agreement. 1.15 TECHNICAL INFORMATION. "Technical Information" shall mean all trade secrets, know-how, computer programs (including copyrights in said software), knowledge, technology, preclinical or clinical data, means, methods, processes, practices, formulas, techniques, procedures, technical assistance, designs, drawings, apparatus, written and oral rectifications of data, specifications, assembly procedures, schematics and other valuable information of whatever nature, whether confidential or not, and whether proprietary or not, which is now in (or hereafter, during the term of this Agreement, comes into) the possession of LICENSOR and which is relevant to the development, manufacture, use and/or commercialization of any Collaboration Product, PROVIDED THAT Technical Information shall not include such information as shall come into LICENSOR's possession after the Effective Date to the extent that LICENSOR does not have the right to use or disclose such information as a result of an agreement with a third party or otherwise. 3 1.16 VALID CLAIM. "Valid Claim" means any claim(s) in an unexpired patent which has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue, reexamination, disclaimer or otherwise. 2. GRANT OF RIGHTS AND LICENSES; TRANSFER OF ASSETS Subject to all of the terms and conditions set forth in this Agreement: 2.1 LICENSE GRANT. LICENSOR hereby grants to NitroMed an exclusive, worldwide right and license during the term of this Agreement under all of LICENSOR's rights in the Patent Rights and Technical Information to make, have made, use, have used, sell, have sold, and import, Collaboration Products. 2.2 RIGHT TO SUBLICENSE. NitroMed shall have the right to sublicense any of the rights and licenses granted hereunder, so long as each sublicensee confirms in writing to NitroMed that it agrees to be bound by all of the terms and conditions contained in this Agreement. However, any such sublicense shall not release NitroMed from its obligations under this Agreement. 2.3 NO RIGHTS BY IMPLICATION. No rights or licenses with respect to Licensed Technology are granted or deemed granted hereunder or in connection herewith, other than those rights or licenses expressly granted in this Agreement. 2.4 TRANSFER OF ASSETS. Effective as of the Effective Date, LICENSOR shall transfer and assign to NitroMed all of LICENSOR's rights in the assets, documentation, materials and data set forth on EXHIBIT C to this Agreement (the "Assets"). LICENSOR agrees to execute such further assignments and instruments as may be reasonably requested by NitroMed to effectively transfer all of LICENSOR's right, title and interest in and to the Assets to NitroMed. Without limiting the generality of the foregoing, it is the intention of the Parties that NitroMed be the holder of the NDA for all Collaboration Products (including the NDA currently submitted to the FDA), and, accordingly, LICENSOR shall as of the Effective Date execute all assignments and instruments necessary to constitute NitroMed as such NDA holder. 3. COLLABORATION; DEVELOPMENT PROGRAM; REGULATORY MATTERS; AND COMMERCIALIZATION. NitroMed and LICENSOR agree to collaborate to develop and to commercialize Collaboration Products as follows: 3.1 DEVELOPMENT PROGRAM. NitroMed shall be responsible for conducting, directly or through third parties, the clinical and other development work and tests with respect to Collaboration Products, in accordance with the development and commercialization plan attached as part of EXHIBIT B to this Agreement (the "Development Plan"). 3.2 REGULATORY MATTERS. NitroMed, in consultation with LICENSOR, will be responsible, at its sole expense, directly or through third parties, for the preparation and filing of all regulatory documents with respect to all Collaboration Products. LICENSOR shall provide exclusively to NitroMed all available files used in the previous NDA filed for BiDil (a combination of hydralazine and isosorbide dinitrate) as well as all other available enabling data and materials. Such available files, data and materials shall be delivered to NitroMed within thirty (30) days after the Effective Date. 4 3.3 MANUFACTURING AND MARKETING. Pursuant to the license set forth in Section 2.1, NitroMed has the exclusive right to manufacture, market and commercialize Collaboration Products during the term of this Agreement, and shall have full autonomy over all decisions relating thereto. 3.4 DILIGENCE. NitroMed will use reasonable best efforts, either directly or through Affiliates, sublicensees or third parties, to develop in accordance with the Development Plan and, upon receipt of required regulatory approvals, to manufacture, market and commercialize Collaboration Products in such countries as NitroMed may determine to be appropriate. NitroMed will have the full autonomy over the commercialization of the Collaboration Products, but will keep LICENSOR regularly informed on a quarterly basis regarding annual marketing, budget, and sales plans, as provided in Section 3.5. 3.5 REPORTS. NitroMed shall prepare and deliver quarterly reports to LICENSOR within thirty (30) days after the end of each calendar quarter summarizing the status of development and regulatory activities relating to Collaboration Products and the activities set forth in Sections 3.3 and 3.4. 3.6 LACK OF DILIGENCE. If LICENSOR concludes that NitroMed is not meeting its obligations under Section 3.4 for any reason other than (a) the withholding by a regulatory agency of marketing approval despite NitroMed's reasonable effort to obtain such approval; (b) unanticipated technical or scientific problems which have been promptly reported to LICENSOR in writing; or (c) other causes beyond the reasonable control of NitroMed which have been promptly reported to LICENSOR in writing; then LICENSOR may give written notice to NitroMed stating the basis for its conclusion and what additional efforts LICENSOR believes should be made by NitroMed. Upon receipt of such written notice, LICENSOR and NitroMed shall enter into good faith negotiations in order to reach mutual agreement as to what efforts by NitroMed shall satisfy the requirements of Section 3.4, and if such mutual agreement is not reached for any reason within ninety (90) days after receipt of such written notice, then LICENSOR may exercise any available rights under Section 10.2. 3.7 SAB MEMBERSHIP. LICENSOR shall be appointed by NitroMed to its Scientific Advisory Board ("SAB") and will sign an SAB Consulting Agreement in the form attached as EXHIBIT D to this Agreement, pursuant to which LICENSOR will receive a consulting fee of $[**] per half day for services and be granted a nonstatutory stock option to purchase 10,000 shares of NitroMed Common Stock. Notwithstanding anything contained in this Agreement to the contrary, except as set forth in the SAB Consulting Agreement, LICENSOR shall not be required to render any services under this Agreement or in connection with the Collaboration. 5 4. COMPENSATION PAYABLE TO LICENSOR. 4.1 MILESTONE PAYMENTS. Within thirty (30) days after the first achievement of each of the following milestones, NitroMed shall pay to LICENSOR the amounts set forth below, all of which shall be non creditable against royalties:
MILESTONE AMOUNT OF PAYMENT --------- ----------------- ~~1. [**] $[**] 2. [**]~~
$[**] 4.2 ROYALTIES. (a) NitroMed shall pay to LICENSOR royalties on Net Sales of Collaboration Products at the following rates:
ANNUAL SALES VOLUME ROYALTY RATE ------------------- ------------ ~~0 to $[**] million [**]% >$[**] million to $[**] million [**]% Over $[**] million [**]%~~
For purposes of clarification, if in a given annual royalty period there are Net Sales of $[**]million, the [**]% rate shall apply to the first $[**] million of Net Sales, the [**]% rate shall apply to the next $[**] million of Net Sales and the [**]% rate shall apply to the remaining $[**] million of Net Sales. (b) Although the rights granted to NitroMed in Section 2.1 above and elsewhere in this Agreement shall last for the entire term of this Agreement, NitroMed's obligation to pay royalties in accordance with this Section 4.2 shall only apply with respect to a Collaboration Product sold in a particular country until the later of (i) the expiration of the last-to-expire Valid Claim under any of the Patent Rights in such country which cover the Collaboration Product, or (ii) ten (10) years after the First Commercial Sale of such Collaboration Product in such country; PROVIDED, HOWEVER, that if in any country, there is no Valid Claim under any of the Patent Rights which covers the Collaboration Product, then the royalties which are otherwise payable under this Section 4.2 for such Collaboration Product in such country shall be reduced by [**]% of the royalty rates otherwise applicable. (c) In the event NitroMed, its Affiliates or sublicensees become obligated to pay amounts to a third party under a license or similar agreement with respect to a Collaboration Product, then, subject to compliance with Section 8.3, NitroMed may deduct [**] percent ([**]%) of such amounts owing to such third party (prior to reductions) from the royalty owing to LICENSOR for such Collaboration Product However, the amount to be paid to LICENSOR will not be so reduced to less than [**] percent ([**]%) of the amount that would otherwise be due to LICENSOR. 6 (d) Once a Collaboration Product is sold or otherwise disposed of and a royalty becomes payable hereunder, no other royalty shall become payable hereunder on that particular Collaboration Product, regardless of how such Collaboration Product may subsequently be sold or used. (e) In the event the Collaboration Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product during the applicable royalty reporting period, by the fraction, A/A+B, where A is the average sale price of the Collaboration Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Collaboration Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Collaboration Product and all other product(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the fair market value of the Collaboration Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product In such event, NitroMed shall in good faith make a determination of the respective fair market values of the Collaboration Product and all other pharmaceutical products included in the Combination Product, and shall notify LICENSOR of such determination and provide LICENSOR with data to support such determination. LICENSOR shall have the right to review such determination and supporting data, and to notify NitroMed if it disagrees with such determination. If the Parties are unable to agree in good faith as to such respective fair market values, then such matter shall be subject to arbitration pursuant to Section 11.3. As used above, the term "Combination Product" means any pharmaceutical product which comprises the Collaboration Product and other active compounds and/or active ingredients. During any such arbitration, NitroMed shall pay to LICENSOR the royalties determined by NitroMed, which payment shall be adjusted based upon the arbitrator's decision. 5. REPORTS AND PAYMENTS 5.1 CONTENTS OF NITROMED'S REPORTS. NitroMed shall deliver to LICENSOR within thirty (30) days after the end of each calendar quarter, beginning with the calendar quarter in which the First Commercial Sale occurs, a written report describing, for the applicable quarter: (a) the gross sales for each Collaboration Product by NitroMed, its Affiliates and sublicensees, together with the deductions therefrom and resulting Net Sales; and (b) the total royalty due on such Net Sales under Section 4.2 above. Each report shall be accompanied by full payment to LICENSOR of the royalties payable under Section 4.2 above. 7 5.2 ROYALTIES MISTAKENLY PAID ON RETURNED COLLABORATION PRODUCTS. If NitroMed pays a royalty on a Collaboration Product which has been or is subsequently returned to NitroMed or its Affiliate or sublicensee, the amount of the royalty so paid shall be deemed a nonrefundable credit against royalties payable by NitroMed for subsequent calendar quarters. 5.3 Payment of Royalties. (a) All payments under Section 5.1, above shall be made by check or wire transfer to such bank and account as LICENSOR may from time to time designate in writing. All such payments shall be made in U.S. Dollars. (b) Whenever any payment hereunder shall be stated to be due on a day which is not a Business Day, such payment shall be made on the immediately succeeding Business Day. (c) If the Net Sales of any Collaboration Product is stated in a currency other than U.S. Dollars, then, for the purpose of determining the amount of royalties payable hereunder, such Net Sales shall be converted into U.S. Dollars at the exchange rate between those two currencies most recently quoted in the WALL STREET JOURNAL in New York on or prior to the date which is five (5) Business Days before the date on which such royalties become due. (d) All payments due under Section 5.1 above but not paid by NitroMed on the due date thereof shall bear interest (in U.S. Dollars) at the U.S. prime rate of Citibank N.A. plus 2%. Such interest shall accrue on the balance of unpaid amounts from time to time outstanding from the date on which portions of such amounts become due and owing until payment thereof in full. 5.4 NITROMED'S BOOKS AND RECORDS. NitroMed agrees to make and keep, and agrees to cause its Affiliates and sublicensees to make and keep, full and accurate books and records in sufficient detail to enable royalties payable hereunder to be determined. On thirty (30) days' prior written notice to NitroMed, LICENSOR and its certified public accountants, on one occasion during each calendar year, shall each have reasonable access to such books and records of NitroMed and its Affiliates and sublicensees pertaining to activities under this Agreement and shall each have the right to make copies therefrom at LICENSOR's expense. LICENSOR and its certified public accountants shall each have such access at all reasonable times and from time to time during normal business hours. Prompt adjustment shall be made by the proper Party to compensate for any errors or omissions disclosed by such audit. LICENSOR shall bear the costs of such audit, unless such audit reveals that royalties paid by NitroMed for the audited period were less than ninety-five percent (95%) of the royalties actually due hereunder for such period, in which case NitroMed shall reimburse LICENSOR in full for its reasonable costs incurred in connection with such audit. LICENSOR agrees to hold confidential all information learned in the course of any examination of books and records hereunder, except when it is necessary for LICENSOR to reveal such information in order to enforce its rights under this Agreement in court or similar dispute resolution or enforcement proceeding or action, or except when compelled by law or when such information is publicly available without breach by LICENSOR. 8 5.5 NITROMED'S REPORTS CONCLUSIVELY CORRECT. In the absence of fraud, all reports and payments not disputed as to correctness by LICENSOR within three (3) years after receipt thereof shall thereafter conclusively be deemed correct for all purposes. 6. INVENTIONS 6.1 INVENTIONS IN THE FIELD; MODIFICATIONS AND/OR IMPROVEMENTS OF COLLABORATION PRODUCTS. Each Party shall own any inventions in the Field (including improvements and modifications to Collaboration Products) which are developed solely by such Party (the "developing Party"), subject to the licenses set forth in this Agreement. The Parties shall own jointly inventions in the Field (including improvements and modifications to Collaboration Products), developed jointly by NitroMed and LICENSOR during the term of this Agreement, subject to the licenses set forth in this Agreement. NitroMed shall be responsible, at its sole cost, for filing and prosecuting patent applications for jointly-owned inventions and for prosecuting patent applications for the Patent Rights licensed hereunder. NitroMed shall keep LICENSOR fully informed with respect to the prosecution of patent applications with claims relating to Collaboration Products. The developing Party agrees to notify the other Party of each invention in the Field (including improvements and modifications to Collaboration Products) which the developing Party has developed. Each Party hereto shall, at the request of the other Party, both during and after the term of this Agreement, execute such documents and render such assistance as may be reasonable and appropriate to enable NitroMed to file and prosecute patent applications in any jurisdiction in accordance with this Section 6.1. 7. CONFIDENTIAL INFORMATION 7.1 CONFIDENTIAL INFORMATION. All Confidential Information disclosed under this Agreement by a Party (the "disclosing Party") to the other Party (the "receiving Party") during the term of this Agreement shall not be used by the receiving Party except in connection with the activities contemplated by this Agreement, shall be maintained in confidence by the receiving Party (except to the extent reasonably necessary for regulatory approval of products developed by NitroMed or its Affiliates and sublicensees or for the filing, prosecution and maintenance of Patent Rights), and shall not otherwise be disclosed by the receiving Party to any other person, firm, or agency, governmental or private, without the prior written consent of the disclosing Party, except to the extent that the Confidential Information (as determined by competent documentation): (a) was known or used by the receiving Party prior to its date of disclosure to the receiving Party; or (b) either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party by sources other than the disclosing Party rightfully in possession of the Confidential Information; or (c) either before or after the date of the disclosure to the receiving Party becomes published or generally known to the public (including information known to the public through the sale of products in the ordinary course of business) through no fault or omission on the part of the receiving Party or its sublicensees; or 9 (d) is independently developed by or for the receiving Party without reference to or reliance upon the Confidential Information; or (e) is required to be disclosed by the receiving Party to comply with applicable laws, to defend or prosecute litigation or to comply with governmental regulations, PROVIDED THAT the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions, at the disclosing party's expense, to avoid and/or minimize the degree of such disclosure. 7.2 PUBLICATIONS. The Parties acknowledge that scientific lead time is a key element of the value of LICENSOR's proprietary technology in the Field and further agree that scientific publications must be strictly monitored to prevent any material adverse effect of the premature publication of Technical Information or other information relating to Collaboration Products. The Parties shall establish a procedure for publication review and approval and each Party (a "publishing Party") shall first submit to the other Party (the "reviewing Party") an early draft of all such publications, whether they are to be presented orally or in written form, at least thirty (30) days prior to submission for publication. Each Party shall review each such proposed publication in order to avoid the unauthorized disclosure of the reviewing Party's Confidential Information and to preserve the patentability of inventions in the Field. If, as soon as reasonably possible but no longer than thirty (30) days following receipt of an advance copy of a publishing Party's proposed publication, the reviewing Party informs the publishing Party that its proposed publication contains Confidential Information of the reviewing Party, then the publishing Party shall delete such Confidential Information from its proposed publication. If, as soon as reasonably possible but no longer than thirty (30) days following receipt of an advance copy of the publishing Party's proposed publication, the reviewing Party informs the publishing Party that its proposed publication could be expected to have a material adverse effect on any Patent Rights, then the publishing Party shall delay such proposed publication sufficiently long to permit the timely preparation and first filing of patent application(s) on the information involved. 8. PROTECTION OF LICENSED TECHNOLOGY 8.1 INFRINGEMENT OF LICENSED TECHNOLOGY. (a) NitroMed shall have the initial right to take any and all actions, legal or otherwise, which are necessary to: (i) terminate infringements of patent rights or other intellectual property rights relating to any part of the Collaboration Products; or (ii) terminate any misappropriation of the Technical Information, including without limitation obtaining damages, injunctions and all other appropriate relief. NitroMed shall keep LICENSOR informed regarding the status and progress of all actions instituted by NitroMed pursuant to this subsection (a). NitroMed shall bear all the expenses of all actions which it initiates pursuant to this subsection (a) (including without limitation attorneys' fees). (b) If NitroMed does not institute an action within one hundred twenty (120) days after receiving notice from LICENSOR of an infringement of patent rights or other intellectual property rights relating to any part of the Collaboration Products or of a misappropriation of Technical Information, then LICENSOR may institute an action with respect thereto. LICENSOR shall keep NitroMed informed regarding the status and progress of all such actions instituted by LICENSOR pursuant to this subsection (b). LICENSOR shall bear all the expenses of all actions which LICENSOR initiates pursuant to this subsection (b) (including without limitation attorneys' fees). 10 (c) Any recoveries or settlement fees received from suits or settlements involving an action initiated pursuant to subsections (a) and (b) above or agreed to shall be paid: (i) first, to the Party instituting such action under subsection (a) or (b) above as reimbursement for the expenses of such action (including without limitation attorneys' fees) which it incurred; and (ii) the balance (if any) shall be divided [**]% to the Party which initiated such action in accordance with subsections (a) or (b) hereof, and [**]% to the other Party. (d) Notwithstanding subsections (a), (b) and (c) above, NitroMed and LICENSOR may agree to jointly institute an action in order to: (i) terminate infringements of patent rights or other intellectual property rights relating to any part of the Collaboration Products; or (ii) terminate any misappropriation of Technical Information. NitroMed and LICENSOR shall share equally: (x) the expenses of all actions which they initiate pursuant to this subsection (d) (including without limitation attorneys' fees); and (y) the proceeds of any judgment rendered therein. 8.2 USE OF NAME IN SUIT. Where, in the judgment of the Party initiating an action under Section 8.1, it is necessary to use the other Party's name to prosecute such action, such other Party agrees to allow the initiating Party to so use the name of such other Party; provided, however, that the initiating Party agrees to defend and hold such other Party harmless against the award of court costs and damages resulting solely from the use of such other Party's name by the initiating Party in such action. 8.3 CLAIMED INFRINGEMENT. In the event that a Party becomes aware of any claim that the practice by NitroMed of Patent Rights and Technical Information that has been licensed to NitroMed pursuant to Section 2.1 infringes the intellectual property rights of any third party, such Party shall promptly notify the other Party. In any such instance, the Parties shall reasonably cooperate and shall mutually agree upon an appropriate course of action. 9. REPRESENTATIONS, WARRANTIES AND COVENANTS 9.1 NITROMED REPRESENTATIONS. (a) RIGHT, POWER AND AUTHORITY. NitroMed has full right, power and authority to enter into this Agreement and there is nothing which would prevent it from performing its obligations under the terms and conditions imposed on it by this Agreement. (b) BINDING OBLIGATION. This Agreement has been duly authorized by all necessary corporate and stockholder action of NitroMed and constitutes a valid and binding obligation of NitroMed, enforceable in accordance with the terms hereof. (c) CORPORATE GOOD STANDING. NitroMed represents and warrants that it is a corporation duly organized and validly existing in good standing under the laws of Delaware, United States, and is duly qualified and authorized to do business wherever the nature of its activities or properties requires such qualification or authorization. 11 (d) NO GOVERNMENT APPROVALS NEEDED. Except as expressly contemplated hereunder, no registration with or approval of any government agency or commission of any jurisdiction is necessary for the execution, delivery or performance by it of any of the terms of this Agreement, or for the validity and enforceability hereof or with respect to its obligations hereunder. (e) NO PROVISION CONTRAVENED. There is no provision in NitroMed's corporate charter, By-Laws and no provision in any existing mortgage, indenture, contract or agreement binding on it which would be contravened by the execution, delivery or performance by NitroMed of this Agreement. Without limiting the generality of the foregoing, NitroMed has not entered into any agreement or commitment that is inconsistent with the provisions of this Agreement. (f) NO PROCEEDINGS PENDING. There is no action or proceeding pending to NitroMed's knowledge, threatened against NitroMed before any court, administrative agency or other tribunal which might have a material adverse effect on its business or condition, financial or otherwise, or its operation of any business. (g) NOT CONTRAVENE ANY LAW. Neither the execution nor delivery of this Agreement by NitroMed, nor its fulfillment of or compliance with the terms and provisions hereof shall contravene any provision of the laws of any jurisdiction, including, without limitation, any statute, rule, regulation, judgment, decree, order, franchise or permit applicable to it. (h) NO OTHER REPRESENTATIONS. Except as expressly set forth in this Section 9.1, NitroMed is not making any representations or warranties to LICENSOR. 9.2 LICENSOR REPRESENTATIONS. (a) RIGHT, POWER AND AUTHORITY. LICENSOR has full right, power and authority to enter into this Agreement and there is nothing which would prevent him from performing his obligations under the terms and conditions imposed on LICENSOR by this Agreement. (b) BINDING OBLIGATION. This Agreement constitutes a valid and binding obligation of LICENSOR enforceable in accordance with the terms hereof. (c) NO GOVERNMENT APPROVALS NEEDED. No registration with or approval of any government agency or commission of any jurisdiction is necessary for the execution, delivery or performance by LICENSOR of any of the terms of this Agreement, or for the validity and enforceability hereof or with respect to its obligations hereunder. (d) NO PROVISIONS CONTRAVENED. There is no provision in any existing mortgage, indenture, contract or agreement binding on LICENSOR which would be contravened by the execution, delivery or performance by LICENSOR of this Agreement. Without limiting the generality of the foregoing, LICENSOR has not entered into any agreement or commitment that is inconsistent with the provisions of this Agreement. 12 (e) NO PROCEEDINGS PENDING. There is no action or proceeding pending or, to LICENSOR's knowledge, threatened against LICENSOR before any court, administrative agency or other tribunal which might have a material adverse effect on his ability to enter into and perform this Agreement. (f) NOT CONTRAVENE ANY LAW. Neither the execution nor delivery of this Agreement by LICENSOR, nor his fulfillment of or compliance with the terms and provisions hereof shall, to LICENSOR's knowledge, contravene any provision of the laws of any jurisdiction, including, without limitation, any statute, rule regulation, judgment, decree, order, franchise or permit applicable to him. (g) INTELLECTUAL PROPERTY. To the knowledge of LICENSOR, and without any requirement of investigation by LICENSOR relating thereto, as of the Effective Date, (i) neither the conduct by NitroMed of the Collaboration nor the commercialization of Collaboration Products infringes the rights of any third party in respect of Third Party Know How (as defined below) or issued patents or published patent applications owned by such third party; and (ii) none of the Patent Rights or Technical Information licensed NitroMed pursuant to Section 2.1 is being infringed by any third party. As of the Effective Date, LICENSOR has not received written notice of any claim or demand by any person pertaining to, and no proceeding against LICENSOR is pending or, to the knowledge of LICENSOR, threatened, that challenges the rights of LICENSOR in respect of the Patent Rights and/or Technical Information. As used above, "Third Party Know How" means trade secrets, know how, technology, preclinical or clinical data, methods, processes and other proprietary information owned by a third party. (h) NO OTHER REPRESENTATIONS. Except as expressly set forth in this Section 9.2, LICENSOR is not making any representations or warranties to NitroMed. 10. TERM AND TERMINATION 10.1 TERM OF AGREEMENT. Unless it is terminated earlier pursuant to this Article 10, this Agreement shall Continue in full force and effect in perpetuity. 10.2 TERMINATION FOR CAUSE. Upon any material breach of this Agreement by either Party (in such capacity, the "Breaching Party"), the other Party (in such capacity, the "Non-Breaching Party") may terminate this Agreement by providing thirty (30) days' written notice to the Breaching Party, specifying the material breach. The termination shall become effective at the end of the thirty (30) day period unless (a) the Breaching Party cures such breach during such thirty (30) day period, or (b) if such breach is not susceptible to cure within thirty (30) days of the receipt of written notice of the breach, the Breaching Party is diligently pursuing a cure (unless such breach, by its nature, is incurable, in which case the Agreement may be terminated immediately). Nonpayment of any amount in excess of $[**] shall be deemed a material breach. 10.3 TERMINATION BY NITROMED. NitroMed shall have the right to terminate this Agreement at any time, effective thirty (30) days after provision of written notice to LICENSOR to such effect. 10.4 TERMINATION BY LICENSOR. LICENSOR shall have the right to terminate this Agreement within thirty (30) days after the occurrence of a Nonperformance Event (as defined below), by providing written notice to NitroMed of such Nonperformance Event Such termination shall be effective thirty (30) days after provision of such notice. As used above, a "Nonperformance Event" shall be deemed to have occurred if, within twelve (12) months following approval by the U.S. Food and Drug Administration of the clinical development plan for the first Collaboration Product, NitroMed has not enrolled the first patient in such clinical trial. 13 10.5 CONSEQUENCES OF TERMINATION. (a) The Parties agree that, upon termination of this Agreement pursuant to Sections 10.2, 10.3 or 10.4, (i) the licenses set forth under this Agreement shall terminate, except as is provided in subsection (b) below, (ii) NitroMed, its Affiliates and sublicensees shall cease any use or practice of the Licensed Technology, except as is provided in subsection (b) below, (iii) NitroMed shall transfer and reassign to LICENSOR all of the Assets in its possession as of the effective date of such termination, and (iv) except in the case of a termination by NitroMed under Section 10.2 where LICENSOR is the Breaching Party, NitroMed will transfer and assign to LICENSOR all of its rights in any and all patents, patent applications and other technical information and know-how of every kind with respect to any invention or discovery in the Field as of the effective date of termination. Upon termination of this Agreement, all sublicenses granted by NitroMed during the term of this Agreement shall terminate. Each Party shall, at its own expense, return to the other Party all Confidential Information as soon as practicable after the date of such termination, including, but not limited to, original documents, drawings, computer diskettes, models, samples, notes, reports, notebooks, letters, manuals, prints, memoranda and any copies thereof, which have been received or derived by such Party. All such Confidential Information shall remain the exclusive property of the disclosing Party during the term of this Agreement and thereafter. Notwithstanding the foregoing, LICENSOR shall, on any such termination, own all Confidential Information relating to or derived from Collaboration Products. (b) The Parties hereto agree that, once this Agreement is terminated (other than pursuant to Section 10.2 if NitroMed is the Breaching Party), NitroMed, its Affiliates and sublicensees shall have the right: (i) subject to the same terms and conditions which existed immediately prior to such date of termination (including the payment of royalties), to make, use, sell and import Collaboration Products, whose manufacture commenced on or prior to such date of termination, for a period of one hundred twenty (120) days after such date of termination; and (ii) to continue to use the Licensed Technology in connection with their activities in accordance with subsection (b) (i) above. 10.6 PAYMENT OBLIGATIONS CONTINUE. Upon termination of this Agreement, nothing shall be construed to release NitroMed from its obligations to pay LICENSOR any and all royalties or other amounts accrued but unpaid hereunder prior to the date of such termination. 14 11. MISCELLANEOUS 11.1 ASSIGNMENTS. This Agreement and any and all of the rights and obligations of either Party hereunder shall not be assigned, delegated, sold, transferred or otherwise disposed of, by operation of law or otherwise, without the prior written consent of the other Party; PROVIDED, HOWEVER, that either Party may assign, delegate, sell, transfer or otherwise dispose of rights and obligations hereunder without such prior written consent to: (A) any of its respective Affiliates; and (b) in the case of NitroMed, to any purchaser of all or substantially all of the assets or stock of such Party, through merger, consolidation or otherwise, PROVIDED THAT in any such case such assignee or successor expressly assumes the obligations of the assignor hereunder and, if assigned to an Affiliate, NitroMed remains liable hereunder unless otherwise agreed to by LICENSOR. This Agreement shall be binding upon, and inure to the benefit of, NitroMed and LICENSOR and their respective successors and assigns, to the extent such assignments are in accordance with this Section 11.1. 11.2 GOVERNING LAW. This Agreement shall be governed, interpreted and construed in accordance with, and any arbitration hereunder shall apply, the laws of the Commonwealth of Massachusetts applicable to agreements made and to be fully performed therein. 11.3 DISPUTE RESOLUTION. (a) Any dispute, controversy or claim arising out of or relating to this Agreement, or to a breach thereof, including its interpretation, performance or termination, shall be submitted to and finally resolved by arbitration. The arbitration shall be conducted in accordance with the commercial arbitration rules of the American Arbitration Association ("AAA"). The arbitration, including the rendering of the award, shall take place in New York, New York. The decision of the arbitrators shall be executory, final and binding upon the parties hereto, shall be in writing setting forth the basis therefor, shall not exceed or expand the terms of this Agreement and the fees of the arbitration shall be paid as the arbitrators determine. Each Party shall bear its own attorneys' fees in such proceedings. (b) The arbitration shall be conducted by a single arbitrator nominated by the Parties or, if they cannot agree on the arbitrator, by the President of the American Arbitration Association. (c) Notwithstanding anything contained in Sections 11.3 (a) and (b) above to the contrary, each Party shall have the right to institute judicial proceedings against the other Party or anyone acting by, through or under such other Party in order to enforce the instituting Party's rights hereunder through reformation of contract, specific performance, injunction or similar equitable relief. 11.4 WAIVER. A waiver of any breach of any provision of this Agreement shall not be construed as a continuing waiver of other breaches of the same or other provisions of this Agreement. 11.5 NO OTHER RELATIONSHIP. Nothing herein contained shall be deemed to create a joint venture, agency or partnership relationship between the Parties hereto. Neither Party shall have any power to enter into any contracts or commitments in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever. 15 11.6 NOTICES. (a) Each notice required or permitted to be sent under this Agreement shall be given by facsimile transmission or by registered or recorded delivery letter to NitroMed and to LICENSOR at the addresses and facsimile numbers indicated below. For NitroMed 12 Oak Park Drive Bedford, Massachusetts 01730 Attention: Dr. Manuel Worcel Facsimile: 1-781-275-2282 with a copy to: Steven D. Singer, Esq. Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Facsimile: 1-617-526-5000 For LICENSOR Dr. Jay Cohn 4848 Russell Avenue South Minneapolis, Minnesota 55410 Facsimile: 612-624-2174 with a copy to: Howard S. Modlin, Esq. Weisman Celler Spett & Modlin, P.C. 445 Park Avenue New York, NY 10022 Facsimile: 1-212-371-5407 Either Party may change its address, contact person and/or facsimile number for purposes of this Agreement by giving the other Party written notice of its new address, contact person and/or facsimile number. (b) Any properly addressed notice if given or made by registered or recorded delivery letter shall be deemed to have been received on the earlier of the date actually received and the date five (5) Business Days after the same was posted (and in proving such it shall be sufficient to prove that the envelope containing the same was properly addressed and posted as aforesaid) and if given or made by facsimile transmission shall be deemed to have been received at the time of dispatch, unless such date of deemed receipt is not a Business Day, in which case the date of deemed receipt shall be the next succeeding Business Day. 16 11.7 ENTIRE UNDERSTANDING. This Agreement between the Parties entered into as of the date hereof embody the entire understanding between the Parties relating to the subject matter hereof, whether written or oral, and there are no prior representations, warranties or agreements between the Parties not contained in this Agreement 11.8 INVALIDITY. If any provision of this Agreement is declared invalid or unenforceable by a court having competent jurisdiction, it is mutually agreed that this Agreement shall endure except for the part declared invalid or unenforceable by order of such court. The Parties shall consult and use their best efforts to agree upon a valid and enforceable provision which shall be a reasonable substitute for such invalid or unenforceable provision in light of the intent of this Agreement. 11.9 AMENDMENTS. Any amendment or modification of any provision of this Agreement must be in writing, dated and signed by both parties hereto. 11.10 SURVIVAL OF AGREEMENT. Notwithstanding anything else in this Agreement to the contrary, the Parties agree that Sections 5.3, 5.4, 5.5, 6.1, 7.1, 72, 9.1, 92, 10.5, 10.6, and 11.3 shall survive the termination of this Agreement. 11.11 FORCE MAJEURE. (a) Neither NitroMed nor LICENSOR shall be liable in damages, or shall be subject to termination of this Agreement by the other party, for any delay or default in performing any obligation hereunder (other than payment obligations) if that delay or default is due to any cause beyond the reasonable control and without fault or negligence of such Party; PROVIDED, HOWEVER, that: (i) in order to excuse its delay or default hereunder, a Party shall notify the other Party of the occurrence or the cause, specifying the nature and particulars thereof and the expected duration thereof; (ii) within ten (10) Business Days after the termination of such occurrence or cause, such Party shall give notice to the other Party specifying the date of termination thereof. All obligations of both Parties shall return to being in full force and effect upon the termination of such occurrence or cause. (b) For the purposes of this Section 11.11, a "cause beyond the reasonable control" of a Party shall include, without limitation, any act of God, act of any government and exports (but excluding herefrom any delay by the FDA in approving the NDA) or other authority or statutory undertaking, industrial dispute, fire, explosion, accident, power failure, flood, riot or war (declared or undeclared). 11.12 COMPLIANCE WITH LAWS. NitroMed covenants and agrees that all of its activities under or pursuant to this Agreement shall comply with all applicable laws, rules and regulations. Specifically, but without limitation, NitroMed shall be responsible for obtaining all licenses, permits and approvals which are necessary or advisable for sales of the Collaboration Products and for the performance of its duties hereunder. 17 11.13 PUBLIC ANNOUNCEMENTS. Any announcements or similar publicity with respect to the execution of this Agreement shall be agreed upon by the Parties in advance of such announcement. Each Party understands that this Agreement is likely to be of interest to investors, analysts and others. The Parties agree that any public announcement will not contain confidential business or technical information and, if disclosure of confidential business or technical information is required by law or regulation, will make reasonable efforts to minimize such disclosure and obtain confidential treatment for any such information which is disclosed to a governmental agency or group. Each Party agrees to provide to the other Party with a copy of any public announcement as soon as reasonably practicable under the circumstances prior to its scheduled release. Except under extraordinary circumstances, each Party shall provide the other with an advance copy of any press release at least five (5) business days prior to the scheduled disclosure. Each Party shall have the right to expeditiously review and recommend changes to any announcement regarding this Agreement or the subject matter of this Agreement, provided that such right of review and recommendation shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of substantially similar information that has previously been disclosed. Except as otherwise required by law, the Party whose press release has been reviewed shall remove any information the reviewing Party reasonably deems to be inappropriate for disclosure. The term "public announcements" does not include discussions at seminars, classes, clinics, symposia or like proceedings which do not violate Sections 7.1 and 7.2. 11.14 HEADINGS. Any headings contained herein are for directory purposes only, do not constitute a part of this Agreement, and shall not be employed in interpreting this Agreement. 11.15 COUNTERPARTS. This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed to be an original. 11.16 EXHIBITS. All exhibits referred to in this Agreement are attached hereto and incorporated herein by this reference. IN WITNESS WHEREOF, the parties hereto have signed this Agreement. By /s/ Jay Cohn --------------------------------------- Professor Jay Cohn NITROMED, INC. By /s/ Michael D. Loberg --------------------------------------- Name: Michael D. Loberg Title: CEO 18 EXHIBIT A PATENT RIGHTS U.S. Patent No. 4,868,179 (issued September 19, 1989) entitled "Method of Reducing Mortality Associated with Congestive Heart Failure Using 1-Hydralazine and Isosorbide Dinitrate" (Jay N. Cohn). 19 EXHIBIT B DEVELOPMENT PLAN 1. NITROMED shall, in consultation with the U.S. Food and Drug Administration, develop a plan for refiling the NDA (201-727, BiDil) for Collaboration Products with the FDA. It is the goal of the Parties that the NDA be refiled without the need to conduct additional clinical studies. NITROMED will seek to meet with the FDA within six (6) months after the Effective Date with respect to the NDA. 2. NITROMED shall make its First Commercial Sale of a Collaboration Product in the United States and shall commence distribution of Collaboration Products within six (6) months after FDA approval of the NDA. 3. If NITROMED is required by the FDA to conduct additional clinical studies, it will promptly submit a clinical development plan to the FDA and enroll the first patient in such clinical trial within twelve (12) months following approval by the FDA of such plan and will complete such clinical trial pursuant to such plan. 20 EXHIBIT C ASSETS 4. All regulatory documents, correspondence and submissions relating to clinical trials in the Field, including CMCC information and the Investigational New Drug (IND) and the New Drug Application (NDA) entitled "201-727,BiDil". 5. Clinical supplies and inventories relating to the Field. 6. All preclinical and clinical data relating to the Field. 7. Marketing and product launch plans for the Collaboration Products. 8. Supply contracts for the Collaboration Products. 9. All relevant trademarks used by LICENSOR in the Field, including "BiDil", and all registrations for such trademark. The terms "Assets" does not include Patent Rights, it being expressly agreed that rights under Patent Rights are licensed under Section 2.1. 21 EXHIBIT D SAB CONSULTING AGREEMENT THIS SCIENTIFIC ADVISORY BOARD AGREEMENT (the "Agreement"), effective as of April 1, 1999, is entered into by NitroMed, Inc., a Delaware corporation with its principal place of business at 12 Oak Park Drive, Bedford, Massachusetts 01730 (the "Company"), and Dr. Jay Cohn, 4848 Russell Avenue South, Minneapolis, Minnesota 55410 (the "Advisor"). INTRODUCTION The Company desires to retain the services of the Advisor as a member of its Scientific Advisory Board ("SAB"), and the Advisor desires to serve as a member of the SAB. Accordingly, in consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, the parties agree as follows: 1. SERVICES. The Advisor agrees to serve on the SAB and, in connection therewith, to use his reasonable best efforts to perform such advisory and related services for the Company as may be reasonably requested from time to time by the Company. The Company anticipates that the SAB shall meet no more than three (3) times each year not to exceed one day's duration each, at times and locations to be determined by the Company in consultation with SAB members, PROVIDED THAT Advisor's attendance at any meetings in excess of four (4) in any calendar year shall require Advisor's consent. If the Advisor has a conflict of interest, or potential conflict of interest, with respect to any matter presented at a meeting of the SAB, he shall excuse himself from the discussion of such matter. 2. TERM. This Agreement shall commence on the date hereof and shall continue until March 31, 2000 (such period, as it may be extended in a writing signed by both parties, being referred to as the "Advisory Period"). Either party to this Agreement may terminate the Advisory Period upon 30 days' prior written notice to the other party. In the event of such termination, the Advisor shall be entitled to payment for fees and expenses incurred prior to the effective date of termination. 3. COMPENSATION. 3.1 ADVISORY FEES. The Company shall pay to the Advisor an advisory fee of $[**] per half day (4 hours). 3.2 STOCK OPTIONS. Subject to approval by the Board of Directors, the Company shall issue to the Advisor a non-statutory stock option to purchase 10,000 shares of the Common Stock, $.01 par value per share, of the Company, such stock option to have such terms and conditions, including terms with respect to exercise price, vesting and expiration, as shall be set forth in a stock option agreement by and between the Company and the Advisor. 3.3 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the Advisor for all reasonable and necessary expenses incurred or paid by the Advisor in connection with, or related to, his attendance at SAB meetings within 30 days after receipt of an itemization and documentation of such expenses. 22 4. INVENTIONS AND PROPRIETARY INFORMATION. 4.1 INVENTIONS. All inventions, discoveries, computer programs, data, technology, designs, innovations and improvements (whether or not patentable and whether or not copyrightable) ("Inventions") related to the business of the Company which are made, conceived, reduced to practice, created, written, designed or developed by the Advisor, solely or jointly with others and whether during normal business hours or otherwise, either (a) in the course of the performance of services hereunder during the Advisory Period, or (b) during the Advisory Period or within one (1) year after the expiration of the Advisory Period if resulting or directly derived from Proprietary Information (as defined in Section 4.2(b) below), shall be the sole property of the Company. The Advisor shall promptly disclose and hereby assigns to the Company all Inventions and any and all related patents, copyrights, trademarks, trade names, and other industrial and intellectual property rights and applications therefor, in the United States and elsewhere. Upon the request of the company and at the Company's expense, the Advisor shall execute such further assignments, documents and other instruments as may be necessary or desirable to fully and completely assign all such Inventions to the Company and to assist the Company in applying for, obtaining and enforcing patents or copyrights or other rights in the United States and in any foreign country with respect to any Invention. 4.2 PROPRIETARY INFORMATION. (a) The Advisor acknowledges that his relationship with the Company is one of high trust and confidence and that in the course of his service to the Company he will have access to and contact with Proprietary Information. The Advisor agrees that he will not, during the Advisory Period or at any time thereafter, disclose to others, or use for his benefit or the benefit of others, any Proprietary Information. (b) For purposes of this Agreement, Proprietary Information shall mean all information (whether or not patentable and whether or not copyrightable) owned, possessed or used by the Company, including, without limitation, any Invention, formula, vendor information, customer information, apparatus, equipment, trade secret, process, research, report, technical data, knowhow, computer program, software, software documentation, hardware design, technology, marketing or business plan, forecast, unpublished financial statement, budget, license, price, cost and employee list that is communicated to, learned of, developed or otherwise acquired by the Advisor in the course of his performance of services as an Advisor to the Company. (c) The Advisor's obligations under this Section 4.2 shall not apply to any information that (i) is or becomes known to the general public under circumstances involving no breach by the Advisor of the terms of this Section 4.2, (ii) is generally disclosed to third parties by the Company without restriction on such third parties, or (iii) is approved for release by written authorization of the Board of Directors of the Company, or (iv) is known by the Advisor prior to such disclosure or (v) is required to be disclosed by law, provided Advisor gives Company prompt notice and an opportunity to contest such disclosure, or (v) is independently developed by Advisor or is lawfully disclosed to the Advisor by sources other than the Company having the right to disclose such information 23 (d) Upon termination of this Agreement or at any other time upon request by the Company, the Advisor shall promptly deliver to the Company all Company records, files, memoranda, notes, designs, data, reports, price lists, customer lists, drawings, plans, computer programs, software, software documentation, sketches, laboratory and research notebooks and other documents (and all copies or reproductions of such materials) relating to the business of the Company, PROVIDED THAT the Advisor may retain one copy of all such materials for recordkeeping purposes. (e) The Advisor represents that his retention as an advisor with the Company and his performance under this Agreement does not, and shall not, breach any agreement that obligates him to keep in confidence any trade secrets or confidential or proprietary information of his or of any other party or to refrain from competing, directly or indirectly, with the business of any other party. The Advisor shall not disclose to the Company any trade secrets or confidential or proprietary information of any other party. 4.3 REMEDIES. The Advisor acknowledges that any breach of the provisions of this Section 4 may result in serious and irreparable injury to the Company for which the Company cannot be adequately compensated by monetary damages alone. The Advisor agrees, therefore, that, in addition to any other remedy it may have, the Company shall be entitled to enforce the specific performance of this Agreement by the Advisor and to seek both temporary and permanent injunctive relief (to the extent permitted by law) without the necessity of proving actual damages. 5. INDEPENDENT CONTRACTOR STATUS. The Advisor shall perform all services under this Agreement as an "independent contractor" and not as an employee or agent of the Company. The Advisor is not authorized to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the Company or to bind the Company in any manner and likewise the Company may not bind the Advisor in any manner. 6. NOTICES. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section. 7. MISCELLANEOUS. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement except it does not supersede or modify the Collaboration and License Agreement dated as of January 22, 1999 between the Company and the Advisor. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Advisor. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts. This Agreement shall be binding upon, and inure to the benefit of, both parties and their respective successors and assigns, including any corporation with which, or into which, the Company may be merged or which may succeed to its assets or business, PROVIDED THAT such successor or assignee expressly assumes the obligations of the Company, and provided further, that the obligations of the Advisor are personal and shall not be assigned by him. 24 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. NITROMED, INC. By ---------------------------------------------- Title ------------------------------------------- ADVISOR ------------------------------------------------ Social Security No. 25 AMENDMENT TO COLLABORATION AND LICENSE AGREEMENT THIS AMENDMENT (the "Amendment") TO COLLABORATION and LICENSE AGREEMENT (the "Agreement") is made and entered as of January 29, 2001 by and between NitroMed, Inc. ("NITROMED"), a Delaware corporation with offices at 12 Oak Park Drive, Bedford, Massachusetts 01730, and Professor Jay N. Cohn ("LICENSOR"), whose principal address is 4848 Russell Avenue South, Minneapolis, Minnesota 55410. 1. LICENSOR has granted and NITROMED has acquired exclusive rights to use certain proprietary technology in accordance with the terms and conditions set forth in the Agreement. 2. NITROMED represents and warrants that it will incur the following estimated increased out-of-pocket costs in excess of its planned costs because of prior licensee's limited work on the Collaboration Products as follows: A-HeFT CLINICAL STUDY Contract Research Organization $[**] Patient Costs [**] Clinical Travel [**] Consulting [**] Manufacturing [**] ------- Total $[**] 3. NITROMED requests that LICENSOR temporarily reduce royalties under Section 4.2(a) of the Agreement so that NITROMED can recover such costs actually expended and documented to Licensor. NOW THEREFORE the parties agree as follows: 1 1. NITROMED shall certify to LICENSOR the actual increase out-of-pocket costs ("Excess Costs") incurred by NITROMED associated with the A-HeFT Clinical Study and provide documentary evidence thereof. To the extent such documentation is reasonably satisfactory to LICENSOR, LICENSOR will reduce ("Reduction") the Royalty Rates set forth in Section 4.2(a) to a flat [**]% at all levels, until the aggregate savings ("Excess Cost Savings") to NITROMED, by reason of such reduced Royalty Rates, equal a maximum of [**] the aggregate amount of such Excess Costs or $[**], whichever is less. Upon such Excess Cost Savings being so recovered, the Royalty Rates will be reinstated to [**]%, [**]% and [**]% respectively, on a going forward basis. In consideration of the deferral NITROMED shall grant LICENSOR the option to purchase 50,000 shares of common stock at $1.30 per share. 2. In the event NITROMED grants a sublicense to an independent third party with respect to the sale of Collaboration Products, the royalties payable by NITROMED with respect to the Net Sales of Collaboration Products by such Sublicensee (the "Sublicensee Sales") shall be the lower of the rate in effect set forth in Paragraph 1 of this Amendment or [**]% of the royalties payments received by NITROMED. For example, if NITROMED receives a royalty of [**]% while the [**]% rate is in effect LICENSOR shall receive [**]% of the Sublicensee Sales and if the Royalty Rate subsequently increases after Excess Cost Savings have been recovered, LICENSOR shall receive [**]% of the Sublicense Sales. 3. All other terms and conditions of the Agreement remain in full force and effect without amendment. IN WITNESS WHEREOF, the parties have signed this Amendment to the Agreement. /s/ Jay Cohn ___________________________ Professor Jay Cohn NITROMED, INC. By: /s/ Michael D. Loberg ___________________________ 2 AMENDMENT TO COLLABORATION AND LICENSE AGREEMENT THIS AMENDMENT (the "Amendment") TO COLLABORATION and LICENSE AGREEMENT (the "Agreement") is made and entered as of March 15, 2002 by and between NitroMed, Inc. ("NITROMED"), a Delaware corporation with offices at 12 Oak Park Drive, Bedford, Massachusetts 01730, and Professor Jay N. Cohn ("LICENSOR"), whose principal address is 4848 Russell Avenue South, Minneapolis, Minnesota 55410. 4. LICENSOR has granted and NITROMED has acquired exclusive rights to use certain proprietary technology in accordance with the terms and conditions set forth in the Agreement. 5. NITROMED represents and warrants that it will incur the following estimated increased out-of-pocket costs in excess of its planned costs because of prior licensee's limited work on the Collaboration Products as follows: A-HeFT CLINICAL STUDY CRO and Patient Costs $[**] Testing, Distribution, Recruiting, etc. [**] Committees [**] Consulting [**] Clinical Drug Supply [**] ---- Total $[**]

6. NITROMED requests that LICENSOR temporarily reduce royalties under Section 4.2(a) of the Agreement so that NITROMED can recover such costs actually expended and documented to Licensor. 1 NOW THEREFORE the parties agree as follows: 4. NITROMED shall certify to LICENSOR the actual increase out-of-pocket costs ("Excess Costs") incurred by NITROMED associated with the A-HeFT Clinical Study and provide documentary evidence thereof. To the extent such documentation is reasonably satisfactory to LICENSOR, LICENSOR will reduce ("Reduction") the Royalty Rates set forth in Section 4.2(a) to a flat [**]% at all levels, until the aggregate savings ("Excess Cost Savings") to NITROMED, by reason of such reduced Royalty Rates, equal one times the amount Excess Costs exceeding $7,500,000. The arrangement for first $7,500,000 of such Excess Costs is specified in the amendment to the Agreement dated January 29, 2001 and remains unchanged. Upon such Excess Cost Savings being so recovered, the Royalty Rates will be reinstated to 6.0%, 7.0% and 8.0% respectively, on a going forward basis. 5. In the event NITROMED grants a sublicense to an independent third party with respect to the sale of Collaboration Products, the royalties payable by NITROMED with respect to the Net Sales of Collaboration Products by such Sublicensee (the "Sublicensee Sales") shall be the lower of the rate in effect set forth in Paragraph 1 of this Amendment or [**]% of the royalties payments received by NITROMED. For example, if NITROMED receives a royalty of [**]% while the [**]% rate is in effect LICENSOR shall receive [**]% of the Sublicensee Sales and if the Royalty Rate subsequently increases after Excess Cost Savings have been recovered, LICENSOR shall receive [**]% of the Sublicense Sales. 6. All other terms and conditions of the Agreement remain in full force and effect without amendment. IN WITNESS WHEREOF, the parties have signed this Amendment to the Agreement. /s/ Jay Cohn ---------------------------------- Professor Jay Cohn NITROMED, INC. By: /s/ Michael D. Loberg ----------------------------------- 2 EX-10.8 15 a2116973zex-10_8.txt EXHIBIT 10.8 EXHIBIT NO. 10.8 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. RESEARCH AND LICENSE AGREEMENT This Agreement is effective June 1, 1993 ("the EFFECTIVE DATE") by and between the Trustees of Boston University ("UNIVERSITY"), having an address at 80 E. Concord Street, Boston, Massachusetts 02118, and NitroMed, Inc., a Delaware Corporation having offices at One Kendall Square, Bldg. 100, Cambridge, Massachusetts 02139 ("NITROMED"). WHEREAS, the research program contemplated by this agreement is of mutual interest and benefit to UNIVERSITY and NITROMED and will further the instructional and research objectives of the UNIVERSITY in a manner consistent with its status as a non-profit, tax-exempt, educational institution; WHEREAS, NITROMED desires to fund certain work to be performed at UNIVERSITY in exchange for exclusive licenses in and to certain patents, technology, materials and information; and WHEREAS, UNIVERSITY desires to receive such funding and is willing to grant the exclusive licenses desired by NITROMED. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1: DEFINITIONS. The terms used in this Agreement have the following meaning: 1.1 The term "AFFILIATE" as applied to NITROMED shall mean any company or other legal entity other than NITROMED in whatever country organized, controlling, controlled by or under common control with NITROMED. The term "control" means possession of the power to direct or cause the direction of the management and policies whether through the ownership of voting securities, by contract or otherwise. 1.2 The term "FIRST COMMERCIAL SALE" shall mean in each country the first sale of any PRODUCT by NITROMED, its AFFILIATES or SUBLICENSEES, following approval of its marketing by the appropriate governmental agency for the country in which the sale is to be made and when governmental approval is not required, the first sale in that country. 1.3 The term "RESEARCH INVENTION" shall mean any process, use, article of manufacture, composition of matter conceived or first actually or constructively reduced to practice, solely or jointly by at least one INVESTIGATOR during the period in which his/her Sponsored Research Program is in effect, which either is in the FIELD OF RESEARCH, or which results from the performance of any research funded in whole or in part by NITROMED pursuant to this Agreement. 1.4 The term "BACKGROUND INVENTION" shall mean any process, use, article of manufacture, composition of matter conceived or reduced to practice by a PRINCIPAL INVESTIGATOR (alone or with others) prior to the effective date of a RESEARCH PROPOSAL for such PRINCIPAL INVESTIGATOR, which is within the FIELD OF RESEARCH and which is owned by UNIVERSITY and in and to which UNIVERSITY has transferable rights. 1.5 "INVENTION" shall mean individually and collectively RESEARCH INVENTION and BACKGROUND INVENTION. 1.6 The term "INVESTIGATOR" means PRINCIPAL INVESTIGATOR, any other member of the UNIVERSITY Professional Staff, graduate student, undergraduate student, or -2- employee of UNIVERSITY who shall perform or shall work on SPONSORED RESEARCH PROGRAM during the period in which the SPONSORED RESEARCH PROGRAM is in effect. 1.7 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party licensed by NITROMED to make, have made, import, use or sell any PRODUCT or use any PROCESS under PATENT RIGHTS. 1.8 The term "BACKGROUND MATERIAL" shall mean any material or substance which is in the FIELD OF RESEARCH and is in the possession of UNIVERSITY through the PRINCIPAL INVESTIGATOR or the PRINCIPAL INVESTIGATOR prior to the effective date of a RESEARCH PROPOSAL for such PRINCIPAL INVESTIGATOR and in and to which UNIVERSITY and/or PRINCIPAL INVESTIGATOR has a transferable right. 1.9 The term "RESEARCH MATERIAL" shall mean any material or substance which is discovered, produced or derived solely or jointly by at least one INVESTIGATOR during the period in which his/her Sponsored Research Program is in effect, which either is in the FIELD OF RESEARCH or which results from any research funded in whole or in part by NITROMED pursuant to this Agreement, and in and to which the UNIVERSITY and/or PRINCIPAL INVESTIGATOR has a transferable right. 1.10 "UNIVERSITY MATERIAL" shall mean individually and collectively BACKGROUND MATERIAL and RESEARCH MATERIAL. 1.11 "NET SALES PRICE" means the total amount received by NITROMED or its AFFILIATES or SUBLICENSEE from sale of PRODUCT, less transportation charges and insurance, sales taxes, use taxes, excise taxes, value added taxes, customs duties or other imposts, normal and customary quantity and cash discounts, rebates and disallowed reimbursements and allowances and credit on account of rejection or return of PRODUCT. -3- PRODUCT shall be considered "sold" when billed out or invoiced. 1.12 The term "BACKGROUND PATENT RIGHT(s)" shall mean any United States patent application, including any division, continuation, or continuation-in-part thereof and any foreign patent application or equivalent corresponding thereto and any Letters Patent or the equivalent thereof issuing thereon or reissue or extension thereof, which is owned by UNIVERSITY insofar as it contains one or more claims to a BACKGROUND INVENTION, BACKGROUND INFORMATION, or BACKGROUND MATERIAL. The BACKGROUND PATENT RIGHTS are and/or shall be tabulated in Appendix B hereto. 1.13 The term "RESEARCH PATENT RIGHT(S)" shall mean any United States patent application, including any division, continuation, or continuation-in-part thereof and any foreign patent application or equivalent corresponding thereto and any Letters Patent or the equivalent thereof issuing thereon or reissue or extension thereof, insofar as it contains one or more claims to a RESEARCH INVENTION, RESEARCH INFORMATION, or RESEARCH MATERIAL. The RESEARCH PATENT RIGHTS shall be tabulated in Appendix B hereto. 1.14 "PATENT RIGHT(S)" shall mean individually and collectively BACKGROUND PATENT RIGHTS and RESEARCH PATENT RIGHTS. 1.15 The term "PRINCIPAL INVESTIGATOR" shall mean each and every PRINCIPAL INVESTIGATOR named in a RESEARCH PROPOSAL. 1.16 The term "PRODUCT" shall mean any article, composition, apparatus, substance, chemical, material, method or service which is or which incorporates or utilizes an INVENTION, INFORMATION, and/or UNIVERSITY MATERIAL, or the manufacture, import, sale or use of which is covered by PATENT RIGHTS. -4- 1.17 The term "PROCESS" shall mean any or method for the production, manufacture or use of any PRODUCT. 1.18 The term "BACKGROUND INFORMATION" shall mean any data, formulas, process information or other information pertaining to the FIELD OF RESEARCH known to UNIVERSITY through PRINCIPAL INVESTIGATOR or the PRINCIPAL INVESTIGATOR prior to the effective date of a RESEARCH PROPOSAL for such PRINCIPAL INVESTIGATOR and in and to which UNIVERSITY and/or PRINCIPAL INVESTIGATOR has a transferable right. 1.19 "RESEARCH INFORMATION" shall mean any data, formulas, process information or other information produced solely or jointly by at least one INVESTIGATOR during the period in which his/her Sponsored Research Program is in effect, which either is in the FIELD OF RESEARCH or which results from any research funded in whole or in part by NITROMED pursuant to this Agreement, and in and to which the UNIVERSITY and/or PRINCIPAL INVESTIGATOR has a transferable right. 1.20 "INFORMATION" shall mean individually and collectively RESEARCH INFORMATION and BACKGROUND INFORMATION. 1.21 The term "RESEARCH PROPOSAL" shall mean the written description of a SPONSORED RESEARCH PROGRAM, which is or shall be attached hereto as part of Appendix A executed by duly authorized representatives of both parties, including a budget that details the equipment, materials and the personnel to be provided by use of the funds to be supplied by NITROMED to support the research described in such proposal. 1.22 The term "SPONSORED RESEARCH PROGRAM" shall mean research described in each RESEARCH PROPOSAL. -5- 1.23 "VALID CLAIM" shall mean (i) a claim of a pending patent application pending for no more than seven (7) years from the date of filing or from the date an election has been made to pursue separate claims (but only with respect to such claims) and (ii) a claim of an issued patent which has not lapsed or become abandoned or been declared invalid or unenforceable by a court of competent jurisdiction or an administrative agency from which no appeal can be or is taken. 1.24 "FIELD OF RESEARCH" means the field of research set forth in the RESEARCH PROPOSAL for each SPONSORED RESEARCH PROGRAM. 1.25 "AGREEMENT YEAR" shall mean for each SPONSORED RESEARCH PROGRAM the twelve month period beginning on the effective commencement date thereof as specified in the Research Proposal ("COMMENCEMENT DATE"), and each subsequent twelve (12) month period thereafter. 1.26 "LICENSED TERRITORY" shall mean all countries of the world. 1.27 The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine. SECTION 2: FUNDING. 2.1 (A) In consideration of the undertaking of a SPONSORED RESEARCH PROGRAM by UNIVERSITY, during the period in which SPONSORED RESEARCH PROGRAM is being conducted: (i) NITROMED shall make annual research grants to UNIVERSITY for the support of each SPONSORED RESEARCH PROGRAM in accordance with its RESEARCH PROPOSAL, so long as such RESEARCH PROPOSAL remains in effect and has not been terminated pursuant to Section 13 hereof. -6- (ii) each annual research grant shall be paid in four equal quarterly payments in advance, commencing on the COMMENCEMENT DATE. In addition, NITROMED shall provide Equipment Funding as provided in any RESEARCH PROPOSAL; (iii) Payments will be made in the name of "Trustees of Boston University", and will be sent to Boston University School of Medicine, Grant Accounting, 80 East Concord Street, Boston, Massachusetts 02118. UNIVERSITY shall retain title to all equipment purchased and/or fabricated by it with funds provided by NITROMED under this Agreement. (iv) the funding shall include direct and/or indirect expenses as set forth in the RESEARCH PROPOSAL; (B) at least sixty (60) days prior to the end of an AGREEMENT YEAR, for any SPONSORED RESEARCH PROGRAM which is more than one year, UNIVERSITY shall submit to NITROMED for its approval a plan and budget for use of the funding for the following AGREEMENT YEAR, which approval shall not be unreasonably denied. NITROMED shall provide such approval or disapproval within thirty (30) days from receipt of UNIVERSITY's plan and budget. Such approved plan and budget shall be attached and made a part of a RESEARCH PROPOSAL attached hereto as part of Appendix A (C) within sixty (60) days after the end of an AGREEMENT YEAR, UNIVERSITY shall provide NITROMED with an accounting of the expenditure of research funds for such AGREEMENT YEAR for each SPONSORED RESEARCH PROGRAM in accordance with UNIVERSITY standard procedures for such accounting. With respect to any SPONSORED RESEARCH PROGRAM, the amount of research funds not expended in an AGREEMENT -7- YEAR shall be applied to reduce NITROMED's funding obligation for such SPONSORED RESEARCH PROGRAM for the following AGREEMENT YEAR, and if there is no funding obligation for the next year, such amount shall be refunded to NITROMED. 2.2 Either party may propose in writing additional research not previously described in a RESEARCH PROPOSAL appended hereto as Appendix A. Each such proposal shall include a description of the additional research proposed and a budget of the costs to be funded by NITROMED and a schedule of payment of such costs. When and if such proposal is accepted by UNIVERSITY and NITROMED, it shall be appended hereto as a RESEARCH PROPOSAL and shall be subject to the terms and conditions of this Agreement, and the SPONSORED RESEARCH PROGRAM described therein shall commence and additional budgeted amounts shall be paid as set forth in the proposal or as otherwise agreed by the parties in writing. 2.3 During the period during which NITROMED is funding a SPONSORED RESEARCH PROGRAM under this Agreement, an INVESTIGATOR, during such time as he or she is working under such SPONSORED RESEARCH PROGRAM, may not seek or accept funding from a commercial sponsor in the FIELD of RESEARCH for such SPONSORED RESEARCH PROGRAM without the prior written consent of NITROMED. SECTION 3: WORK OF UNIVERSITY. 3.1 During the thirty (30) days next following the effective date for each SPONSORED RESEARCH PROGRAM, UNIVERSITY, through the PRINCIPAL INVESTIGATOR, shall disclose to NITROMED such BACKGROUND INFORMATION and BACKGROUND MATERIAL which shall be known to PRINCIPAL INVESTIGATOR on the EFFECTIVE DATE. -8- 3.2 Beginning on the EFFECTIVE DATE and thereafter unless sooner terminated, with respect to each SPONSORED RESEARCH PROGRAM, UNIVERSITY shall: (a) through the PRINCIPAL INVESTIGATOR conduct each SPONSORED RESEARCH PROGRAM, and apply the funds paid by NITROMED pursuant to Paragraph 2.1 to support the expenses of each SPONSORED RESEARCH PROGRAM in accordance with its RESEARCH PROPOSAL and shall use reasonable efforts and diligence consistent with UNIVERSITY's professional standards to achieve the goals set forth in such RESEARCH PROPOSAL. NITROMED understands that UNIVERSITY's primary mission is education and advancement of knowledge and that each SPONSORED RESEARCH PROGRAM will be performed consistent with the RESEARCH PROGRAM in a manner best suited to carry out that mission. The manner of performance of the SPONSORED RESEARCH PROGRAM shall be determined solely by the PRINCIPAL INVESTIGATOR, and UNIVERSITY does not guarantee specific results; (b) On a regular basis and in a timely manner disclose to NITROMED, INFORMATION, INVENTIONS and UNIVERSITY MATERIAL, and NITROMED shall be entitled to use such INFORMATION, INVENTIONS and UNIVERSITY MATERIAL for research purposes and pursuant to the terms of this Research and License Agreement; (c) for the purpose of facilitating disclosure to NITROMED of RESEARCH INFORMATION, INVENTIONS, and UNIVERSITY MATERIAL, permit duly authorized employees of or representatives of NITROMED to visit the -9- PRINCIPAL INVESTIGATOR'S laboratories at UNIVERSITY or other UNIVERSITY facilities where each SPONSORED RESEARCH PROGRAM is conducted at reasonable times and with reasonable notice; and (d) at NITROMED's request and through the PRINCIPAL INVESTIGATOR, provide NITROMED with UNIVERSITY MATERIALS. 3.3 UNIVERSITY shall, on a continuing basis, advise NITROMED of the results of each SPONSORED RESEARCH PROGRAM and at least once every three (3) months provide NITROMED with written progress reports concerning each SPONSORED RESEARCH PROGRAM. A final written report setting forth in detail the results achieved under and pursuant to each SPONSORED RESEARCH PROGRAM shall be submitted by UNIVERSITY to NITROMED within ninety (90) days of termination of each SPONSORED RESEARCH PROGRAM. Such final report shall include: (i) a complete summary of the research carried out; (ii) a scientific assessment by the PRINCIPAL INVESTIGATOR of the SPONSORED RESEARCH PROGRAM; and (iii) detailed experimental protocols of the assays performed in the course of the SPONSORED RESEARCH PROGRAM. SECTION 4: UNIVERSITY MATERIALS. 4.1 (a) During the period in which NITROMED holds a license, UNIVERSITY and INVESTIGATORS shall make reasonable efforts to ensure that they will not, without NITROMED's prior written approval, distribute or knowingly allow RESEARCH MATERIALS to be distributed to for-profit entities or persons known to be employed thereby or consulting or performing research therefor other than under a license permitted under this Agreement. (b) UNIVERSITY and PRINCIPAL INVESTIGATOR shall have the right to transfer UNIVERSITY MATERIALS to not-for-profit entities or persons known to be affiliated -10- therewith provided that such entities or persons sign the Material Transfer Agreement attached hereto as Appendix C or any other Agreement consented to by the parties. (c) Prior to any such distribution of any such UNIVERSITY MATERIAL, UNIVERSITY shall provide notice and a sample of such material to NITROMED and UNIVERSITY and NITROMED shall use reasonable efforts to consider the patentability of such UNIVERSITY MATERIALS and cooperate to file, where appropriate, PATENT RIGHTS protecting such UNIVERSITY MATERIALS prior to their distribution, provided that UNIVERSITY shall not be required to delay distribution to non-profit entities or persons affiliated therewith for more than sixty (60) days after notice to NITROMED. 4.2 Notwithstanding anything else to the contrary, UNIVERSITY and INVESTIGATOR will be free to publish the results of research under this Agreement provided that they agree not to publish or disclose to third parties any RESEARCH INVENTION or RESEARCH INFORMATION without supplying NITROMED with a copy of the material to be disclosed or to be submitted for publication to third parties at least forty-five (45) days prior to such publication, submission or disclosure so that NITROMED may evaluate such material to determine whether the material contains patentable subject matter relating to a RESEARCH INVENTION on which a patent application should be filed or contains NITROMED CONFIDENTIAL INFORMATION as defined in Paragraph 6.1. NITROMED shall review the material within thirty (30) days of submission to NITROMED. At NITROMED's request, UNIVERSITY initially may delay submission of the manuscript for an additional thirty (30) days in order to enable the preparation and filing of a patent application on any such patentable subject matter and will cooperate with NITROMED in deleting from any such manuscript -11- NITROMED CONFIDENTIAL INFORMATION AND MATERIAL the inclusion of which would contravene Paragraphs 6.1 hereof. 4.3 Title to and the right to determine the disposition of any copyrights or copyrightable material first produced or composed in the performance of a SPONSORED RESEARCH PROGRAM, shall remain with UNIVERSITY; provided, however, that UNIVERSITY shall grant to NITROMED an irrevocable, royalty-free, non-transferable, nonexclusive right to reproduce, translate and use all such copyrightable material; except that such right with respect to computer software and its programming documentation is applicable only to computer software and its programming documentation specified to be developed and delivered under the SPONSORED RESEARCH PROGRAM. SECTION 5: GRANTS. 5.1 (a) UNIVERSITY hereby grants to NITROMED and NITROMED hereby accepts from UNIVERSITY a sole and exclusive royalty bearing right and license for the LICENSED TERRITORY under PATENT RIGHTS, INFORMATION and INVENTION to make, have made, use and sell or have sold on its behalf PRODUCT or PROCESS, including the right to sublicense third parties. NITROMED shall have the right to extend such license to its AFFILIATES. Such license shall be subject to the provisions of Paragraph 4.2 hereunder. (b) In the event that PATENT RIGHTS and INVENTIONS are co-owned by UNIVERSITY and a third party, the license granted in Paragraph 5.1(a) shall only apply to UNIVERSITY'S interest in such PATENT RIGHTS and INVENTIONS. For PATENT RIGHTS or INVENTIONS owned jointly by UNIVERSITY and a third party, pursuant to Paragraph 7.1(a) of this Agreement, UNIVERSITY shall attempt to obtain an agreement granting on behalf of all of the owners thereof a sole and exclusive right and license to NITROMED. If -12- terms agreeable to all of the parties (including such third party assignees) can not be reached or, at NITROMED's request, UNIVERSITY will be relieved from its obligations under Paragraph 7.1(a) of this Agreement and only UNIVERSITY'S interest in such PATENT RIGHTS and INVENTION shall be licensed to NITROMED under Paragraph 5.1(a) of this Agreement. 5.2 NITROMED agrees to forward to UNIVERSITY a copy of any and all fully executed sublicense agreements, and further agrees to forward to UNIVERSITY annually a copy of such reports received by NITROMED from its SUBLICENSEES during the preceding twelve (12) month period under the sublicensees as shall be pertinent to a royalty accounting to UNIVERSITY under said sublicense agreements. 5.3 The above licenses to sell any PRODUCT for which a royalty has been paid under this Agreement includes the right of NITROMED, its AFFILIATES, and SUBLICENSEES to grant to the purchaser thereof the right to use and/or resell such purchased PRODUCT without payment of any further royalty hereunder. 5.4 Any license granted to NITROMED pursuant to paragraph 5.1 shall be subject to the Boston University Medical Center Patent Policy. Additionally, the license is subject to the following: (i) for UNIVERSITY and its affiliate, University Hospital, Inc., to retain a non-exclusive license for noncommercial research purposes only and if and to the extent applicable to the licensed invention, that the rights of the United States of America as set forth in Public Laws 96-517 and 98-620 (codified at 35 U.S.C. 200 ET SEQ.) are specifically reserved, and that NITROMED shall comply with the provisions of said laws and specifically with 35 U.S.C. 204, as amended from time to time. 5.5 UNIVERSITY agrees not to use or to acquire materials for use in any SPONSORED RESEARCH PROGRAM under terms that will prevent UNIVERSITY from -13- granting NITROMED exclusive rights to PATENT RIGHTS, INFORMATION and INVENTION as provided in this Section 5 without the prior written consent of NITROMED. 5.6 (a) Taking into account the complexity, and stage of development of the PRODUCT and the science related thereto, NITROMED shall select and use best efforts under the circumstances to research, develop and then commercialize such selected PRODUCT. The efforts of a SUBLICENSEE and/or an AFFILIATE and/or the RESEARCH PROGRAM shall be considered as efforts of NITROMED. (b) In the event that UNIVERSITY reasonably believes that NITROMED is not making best efforts under the circumstances to research, develop and then commercialize a selected PRODUCT by NITROMED pursuant to Paragraph 5.6(a) then UNIVERSITY shall provide written notice to NITROMED which specifies UNIVERSITY's basis for such belief and what additional efforts UNIVERSITY believes should be made by NITROMED. Upon receipt of such written notice, UNIVERSITY and NITROMED shall enter into good faith negotiations in order to reach mutual agreement as to what efforts by NITROMED shall satisfy the requirements of this Paragraph 5.6, and if such mutual agreement is not reached within ninety (90) days after receipt of such written notice, then the parties agree to submit to arbitration pursuant to Paragraph 14.2 to determine the efforts which should be exerted by NITROMED. Thereafter, NITROMED shall exert the efforts determined by the parties or in such arbitration. (c) If NITROMED fails to exert the efforts determined by the parties or in such arbitration, UNIVERSITY's sole and exclusive remedy for NITROMED's failure to meet such efforts is for the licenses granted hereunder to be converted from an exclusive right and license to a non-exclusive license without the right to sublicense to take effect sixty (60) days after prior written notice unless NITROMED cures such failure. Pursuant to Paragraph 13.5 existing -14- SUBLICENSEES can elect to obtain a direct license from UNIVERSITY. Notwithstanding the foregoing, NITROMED shall retain the right to grant sublicenses in conjunction with the granting of a license to all or a portion of NITROMED's technology (not acquired from University) where such sublicense grants rights used with or in, or for such NITROMED technology. 5.7 UNIVERSITY acknowledges that NITROMED is in the business of developing, manufacturing and selling of medical processes and products and nothing in this Agreement shall be construed as restricting such business or imposing on NITROMED the duty to market, and/or sell and exploit PRODUCT for which royalties are due hereunder to the exclusion of or in preference to any other product or process, provided that this Paragraph does not diminish NITROMED's obligations under Paragraph 5.6. 5.8 Subject to Section 5.6, NITROMED shall have sole discretion for making all decisions relating to the commercialization and marketing of PRODUCT 5.9 Within sixty (60) days after the end of each calendar year, NITROMED shall report in writing to UNIVERSITY on the progress of its efforts under Paragraph 5.6. SECTION 6: CONFIDENTIALITY. 6.1 During the term of this Agreement, it is contemplated that NITROMED will disclose and/or provide to UNIVERSITY and PRINCIPAL INVESTIGATOR (i) proprietary and confidential technology, inventions, technical information, business information, biological materials and the like which are owned or controlled by NITROMED or which NITROMED is obligated to maintain in confidence (collectively "NITROMED CONFIDENTIAL INFORMATION AND MATERIAL"). UNIVERSITY shall have the right to refuse to accept NITROMED CONFIDENTIAL INFORMATION AND MATERIAL. NITROMED shall mark -15- any written material as confidential. UNIVERSITY and PRINCIPAL INVESTIGATOR agree to make reasonable efforts to retain such NITROMED CONFIDENTIAL INFORMATION AND MATERIAL in confidence and not to disclose any such NITROMED CONFIDENTIAL INFORMATION AND MATERIAL to a third party without the prior written consent of NITROMED and to use such NITROMED CONFIDENTIAL INFORMATION AND MATERIAL only with respect to a SPONSORED RESEARCH PROGRAM. 6.2 The obligations of confidentiality will not apply to NITROMED CONFIDENTIAL INFORMATION AND MATERIAL which: (i) was known to UNIVERSITY or PRINCIPAL INVESTIGATOR or generally known to the public prior to its disclosure hereunder; or (ii) subsequently becomes known to the public by some means other than a breach of this Agreement, including publication and/or laying open to inspection of any patent applications or patents; (iii) is subsequently disclosed to UNIVERSITY or INVESTIGATOR by a third party having a lawful right to make such disclosure; (iv) is disclosed to obtain regulatory approval for PRODUCT, provided that UNIVERSITY takes all reasonable steps to restrict and maintain the confidentiality of the disclosure; (v) is required by law or BONA FIDE legal process to be disclosed, provided the UNIVERSITY takes all reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable notice to NITROMED; or (vi) is approved for release by the parties. -16- SECTION 7: PATENTS. 7.1 (a) Each INVESTIGATOR who shall make an INVENTION, solely or jointly, ("UNIVERSITY INVENTOR") shall promptly report such INVENTION to UNIVERSITY. Each UNIVERSITY INVENTOR shall assign all of his rights, title and interest in an INVENTION and PATENT RIGHTS relating thereto to UNIVERSITY pursuant to the patent policy of the UNIVERSITY. Each employee of NITROMED who makes an INVENTION jointly with an INVESTIGATOR, shall report such INVENTION to NITROMED and shall assign all his rights, title and interest in such INVENTION and PATENT RIGHTS relating thereto to NITROMED. INVENTIONS made jointly by one or more INVESTIGATORS and one or more NITROMED employees and PATENT RIGHTS relating thereto shall be jointly owned by UNIVERSITY and NITROMED. UNIVERSITY and NITROMED agree that for each PATENT RIGHT jointly owned by UNIVERSITY and NITROMED, NITROMED and UNIVERSITY each own a one-half undivided interest in such PATENT RIGHT in each country in which it is filed and UNIVERSITY's interest therein is subject to the rights granted to NITROMED under this Agreement. In the event any INVENTION results from collaboration with personnel who are not affiliated with either UNIVERSITY or NITROMED ("Unaffiliated Collaborator(s)"), UNIVERSITY shall attempt to obtain the relevant rights from the institution of such Unaffiliated Collaborators and include same in the aforesaid rights granted to NITROMED under Section 5 of this Agreement. (b) UNIVERSITY shall promptly advise NITROMED in writing of each INVENTION disclosed to UNIVERSITY. Representatives of UNIVERSITY and NITROMED shall then discuss whether a patent application or applications pertaining to such INVENTION should be filed and in which countries. The titles, serial numbers and other identifying data of -17- patent applications claiming an INVENTION filed after the EFFECTIVE DATE by mutual agreement of UNIVERSITY and NITROMED shall be listed in Appendix B and shall become PATENT RIGHTS. NITROMED shall file, prosecute and maintain patent applications and patents directed to INVENTIONS through patent counsel selected by NITROMED who shall consult with and keep UNIVERSITY advised with respect thereto. After the EFFECTIVE DATE of this Agreement, NITROMED shall bear the cost and expense for the filing, prosecution and maintenance of PATENT RIGHTS in the United States, European Patent Office, Canada, Japan and any other foreign countries designated by NITROMED. 7.2 With respect to any PATENT RIGHTS, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent issuing from such application shall be provided to UNIVERSITY sufficiently prior to the filing of such application, response or request to allow for review and comment by UNIVERSITY. UNIVERSITY shall have the right to take any action that in its judgment is necessary to preserve such PATENT RIGHTS. SECTION 8: ROYALTIES. 8.1 (A) On all sales of PRODUCTS anywhere in the world by NITROMED, its AFFILIATES or SUBLICENSEES, following the FIRST COMMERCIAL SALE in such country by NITROMED its AFFILIATES or SUBLICENSEES, NITROMED shall pay UNIVERSITY royalties in accordance with the following schedule, such undertaking and schedule having been agreed to for the purpose of reflecting and advancing the mutual convenience of the parties. For each PRODUCT sold or distributed by NITROMED or its -18- AFFILIATES and SUBLICENSEES, NITROMED shall pay to UNIVERSITY one of the following: (1) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are a diagnostic product or service) sold or distributed by NITROMED or its AFFILIATES in a country and (ii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCT (other than PRODUCTS which are a diagnostic product or service) sold or distributed by SUBLICENSEES in a country (iii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES in a country and (iv) [**] of the NET SALES PRICE of PRODUCT which are diagnostic products or diagnostic services sold or distributed by SUBLICENSEES in a country so long as in each case the PRODUCT, its manufacture, use or sale in the country in question shall be subject to a VALID CLAIM of any PATENT RIGHT which is licensed exclusively to NITROMED in such country, or (2) (i) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS (other than PRODUCTS which are diagnostic products or diagnostic services) sold or distributed by NITROMED or its AFFILIATES in a country and (ii) [**] of the NET SALES PRICE of PRODUCT (other than PRODUCTS which are diagnostic products or diagnostic services) sold or distributed by SUBLICENSEES in a country (iii) [**] percent ([**]%) of the NET SALES PRICE of PRODUCTS which are diagnostic products or diagnostic services sold or distributed by NITROMED or its AFFILIATES and (iv) [**] of the NET SALES PRICE of PRODUCT which are diagnostic products or diagnostic services sold or distributed by SUBLICENSEES in a country, whenever, in -19- each case, the PRODUCT, its manufacture, use or sale shall be subject to a VALID CLAIM of only such PATENT RIGHTS which are licensed nonexclusively to NITROMED in the country in question (the term non-exclusive license includes a license in which UNIVERSITY co-owns the applicable PATENT RIGHTS with a third party(ies) and NITROMED does not receive an exclusive license under this Agreement from all of the owners). (B) If a PRODUCT sold by NITROMED in a country is not subject to a VALID CLAIM of any PATENT RIGHT licensed to NITROMED herein but the manufacture or use of such PRODUCT incorporates or employs (i) any MATERIAL and/or (ii) any INVENTION or INFORMATION not generally known, not used or not in the public domain at the time of filing of a patent application with respect thereto, NITROMED shall pay UNIVERSITY royalties equal to [**] of the NET SALES PRICE of such PRODUCT sold by NITROMED or its AFFILIATES or [**] of the NET SALES PRICE of such PRODUCT sold by SUBLICENSEES in such country for a period of seven (7) years from FIRST COMMERCIAL SALE in such country; provided that such royalty rate shall be reduced by [**]% in the event that competitive sales of products employing similar technology amount to [**]% or more of NITROMED's sales of PRODUCTS in the market as evidenced by documentation provided by NITROMED to UNIVERSITY. The provisions, terms, and conditions of Paragraph 8.1(A) are subject to any future financing of the Center for Advanced Biomedical Research in which the funding is obtained, all or in part, with tax-exempt bonds. In the event that, at any time hereafter, (i) the UNIVERSITY enters into an agreement to receive tax-exempt bond financing ("Financing Agreement") covering the building in which the SPONSORED RESEARCH PROGRAM is conducted, and -20- (ii) the royalty rate stated herein is not competitive as defined below, the license, except any license of an identified INVENTION on which a patent application has been filed and tabulated in Appendix B prior to the date of the Financing Agreement, shall be deemed to be granted at the lowest royalty rate which is competitive at the time that the licensed INVENTION, INFORMATION, MATERIAL or PATENT RIGHT is disclosed to NITROMED by UNIVERSITY as evidenced by written disclosure. A royalty rate is "competitive" if it is either within the range that UNIVERSITY would charge in an arms length transaction with a licensee who was not a sponsor of research at UNIVERSITY or within the range of royalty rates which would generally be charged by a not-for-profit entity to a person who was not a sponsor of research at such not-for-profit entity. If the parties are unable to agree on a rate that is "competitive" within one hundred eighty (180) days after disclosure by the UNIVERSITY to NITROMED, then the parties agree to submit the matter to arbitration pursuant to Paragraph 14.2 to determine a competitive royalty rate. (C) In the event that a PRODUCT includes both component(s) on which royalties are payable pursuant to Paragraphs 8.1(A) and (B) hereof ("Licensed Component(s)") and a component which is diagnostically usable or therapeutically active alone or in a combination which does not require the Licensed Component(s) and such component is not subject to royalties under Paragraph 8.1(A) or (B) hereof ("Unlicensed Component(s)") (such PRODUCT being a "Combined Product"), then NET SALES PRICE shall be the amount which is normally received by NITROMED or its AFFILIATES from a sale of the Licensed Component(s) in an arm's length transaction with an unaffiliated third party. If the Licensed Component(s) are not sold separately, then NET SALES PRICE upon which a royalty is paid shall be the NET SALES PRICE of the Combined Product multiplied by a fraction, the numerator of which is the cost for -21- producing the Licensed Component(s) and the denominator of which is the cost for producing the Combined Product. 8.2 (a) In the event that royalties are to be paid by NITROMED to a party who is not an AFFILIATE of NITROMED for PRODUCT which infringes the patent rights of said party and also for which royalties are also due to UNIVERSITY pursuant to Section 8.1 (such royalties to such party are hereinafter "Other Royalties"), then the royalties to be paid to UNIVERSITY by NITROMED pursuant to Section 8.1 shall be reduced by [**] of the amount of such other Royalties, but in no event shall any royalties under Section 8.1 be reduced by more than [**] percent ([**]%). (b) In addition to Paragraph 8.2(a), in the event that a royalty paid to UNIVERSITY is a significant factor in the return realized by NITROMED so as to diminish NITROMED's capability to respond to competitive pressures in the market, as evidenced by documentation provided by NITROMED to UNIVERSITY, then the royalty paid to UNIVERSITY shall be reasonably reduced as to each affected PRODUCT for the period during which such market condition exists. Factors determining the size of a reasonable reduction will include profit margin on PRODUCT and on analogous products, prices of competitive products, and NITROMED's expenditures in PRODUCT development. In no event, however, shall the reduction in royalties of 8.2(a) and this 8.2(b) exceed, in the aggregate, [**] percent ([**]%). 8.3 NITROMED shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable to UNIVERSITY. Such books of account shall be kept at their principal place of business and, with all necessary supporting data, shall, for the three (3) years next following the end of the calendar year to which each shall -22- pertain be open for inspection by UNIVERSITY or its designee upon reasonable notice during normal business hours at UNIVERSITY's expense for the sole purpose of verifying royalty statements or compliance with this Agreement, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying royalties and shall be treated as NITROMED CONFIDENTIAL INFORMATION subject to the obligations of this Agreement. In the event that such information shall indicate that in any calendar year that the royalties which should have been paid by NITROMED are at least five percent (5%) greater than those which were actually paid by NITROMED, then NITROMED shall pay the cost of such inspection. 8.4 With each semi-annual payment, NITROMED shall deliver to UNIVERSITY a full and accurate accounting to include at least the following information: (a) Quantity of each PRODUCT subject to royalty sold (by country) by NITROMED, and its AFFILIATES and SUBLICENSEES; (b) Total receipts for each PRODUCT subject to royalty (by country); (c) Total royalties payable to UNIVERSITY, including the amounts claimed as deductions against royalties; (d) Royalties received from SUBLICENSEES. 8.5 In each year the amount of royalty due shall be calculated semi-annually as of June 30 and December 31 (each as being the last day of an "ACCOUNTING PERIOD") and shall be paid semi-annually within the sixty days next following such date, every such payment shall be supported by the accounting prescribed in Paragraph 8.4 and shall be made in United States currency. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the rate of exchange thereafter published -23- in the Wall Street Journal for the business day closest to the applicable ACCOUNTING PERIOD, as the case may be. 8.6 If the transfer of or the conversion into United States Dollar Equivalent of any remittance due hereunder is not lawful or possible in any country, such remittance shall be made by the deposit thereof in the currency of the country to the credit and account of UNIVERSITY or its nominee in any commercial bank or trust company located in that country, prompt notice of which shall be given to UNIVERSITY. UNIVERSITY shall be advised in writing in advance by NITROMED and provide to NITROMED a nominee, if so desired. 8.7 Any tax required to be withheld by NITROMED under the laws of any foreign country for the account of UNIVERSITY, shall be promptly paid by NITROMED for and on behalf of UNIVERSITY to the appropriate governmental authority, and NITROMED shall use its best efforts to furnish UNIVERSITY with proof of payment of such tax. Any such tax actually paid on UNIVERSITY's behalf shall be deducted from royalty payments due UNIVERSITY. 8.8 Only one royalty shall be due and payable for the manufacture, use and sale of a PRODUCT irrespective of the number of patents or claims thereof which cover the manufacture, use and sale of such PRODUCT. 8.9 [**] percent ([**]%) of the amount paid by NITROMED pursuant to Section 7 expended by NITROMED to secure or maintain any PATENT RIGHTS shall be fully creditable against royalties due under Section 8, but no royalty payment, after taking into consideration any deduction pursuant to Section 8.2, shall be reduced under this Paragraph 8.9 by more than [**]%. -24- SECTION 9: INFRINGEMENT 9.1 (a) If any of the PATENT RIGHTS under which NITROMED is the licensee is infringed by a third party, NITROMED shall have the right and option but not the obligation to bring an action for infringement, at its sole expense, against such third party in the name of UNIVERSITY and/or in the name of NITROMED, and to join UNIVERSITY as a party plaintiff if required. NITROMED shall promptly notify UNIVERSITY of any such infringement and shall keep UNIVERSITY informed as to the prosecution of any action for such infringement. No settlement, consent judgment or other voluntary final disposition of the suit which adversely affects PATENT RIGHTS may be entered into without the consent of UNIVERSITY, which consent shall not unreasonably be withheld. (b) In the event that NITROMED shall undertake the enforcement and/or defense of the PATENT RIGHTS by litigation, NITROMED may withhold up to [**] percent ([**]%) of the royalties otherwise thereafter due UNIVERSITY hereunder and apply the same toward reimbursement of its expenses, including reasonable attorneys' fees, in connection therewith. Any recovery of damages by NITROMED for any such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of NITROMED relating to the suit, and next toward reimbursement of UNIVERSITY for any royalties withheld and applied pursuant to this Section 9. The balance remaining from any such recovery shall be divided between NITROMED and UNIVERSITY, as follows (i) for that portion, if any, based on lost profits, UNIVERSITY shall recover the royalty UNIVERSITY would have received under this Agreement if such sales had been made by NITROMED; and (ii) for any other recovery, UNIVERSITY shall receive [**]percent ([**]%) of the remaining amount. 9.2 In the event that NITROMED elects not to pursue an action for infringement, upon written notice to UNIVERSITY by NITROMED that an unlicensed third party is an -25- infringer of a VALID CLAIM of PATENT RIGHTS licensed to NITROMED, UNIVERSITY shall have the right and option, but not the obligation at its cost and expense to initiate infringement litigation and to retain any recovered damages. 9.3 In the event that litigation against NITROMED is initiated by a third-party charging NITROMED with infringement of a patent of the third party as a result of the manufacture, use or sale by NITROMED of PRODUCT covered by PATENT RIGHTS, NITROMED shall promptly notify UNIVERSITY in writing thereof. NITROMED's costs as to any such defense shall be creditable against any and all payments due and payable to UNIVERSITY under Paragraph 8.1 of this Agreement but, subject to Paragraph 8.2(a) no royalty payment after taking into consideration any such credit under this Paragraph 9.3 shall be reduced by more than [**]%. 9.4 In the event of a judgment in any suit in which a court of competent jurisdiction rules that the manufacture, use or sale by NITROMED of PRODUCT covered by a PATENT RIGHT has infringed on a third-party's patent requiring NITROMED to pay damages or a royalty to said third party, or in the event of a settlement of such suit requiring damages or royalty payments to be made, payments due to UNIVERSITY under Paragraph 8.1 of this Agreement arising from the applicable PRODUCT shall be correspondingly reduced by the amounts due under the requirement of such judgment or under the terms of such settlement. However, subject to Paragraphs 8.2(a) the royalty payment after taking into consideration any such reduction under this Paragraph 9.4 shall not be reduced by more than [**]%. 9.5 In any infringement suit either party may institute to enforce the PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the request of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees -26- testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs of UNIVERSITY incurred in connection with rendering cooperation requested by NITROMED shall be paid by NITROMED. SECTION 10: WARRANTIES. 10.1 Each of UNIVERSITY and NITROMED warrants and represents to the other that it has the full right and authority to enter into this Agreement, and that it is not aware of any impediment which would inhibit its ability to perform the terms and conditions imposed on it by this Agreement. 10.2 UNIVERSITY warrants and represents that the named inventors have assigned the PATENT RIGHTS tabulated in Appendix B to UNIVERSITY, that it has not licensed or assigned any right or interest in or to INVENTIONS and PATENT RIGHTS to any third party; it has the right to grant the rights granted hereunder; that the granting of such rights does not require the consent of a third party; that there are and will be no outstanding agreements, assignments or encumbrances inconsistent with the provisions of this Agreement, and that all INVESTIGATORS performing SPONSORED RESEARCH PROGRAM will be obligated to assign to UNIVERSITY, the ownership of INVENTIONS and corresponding PATENT RIGHTS. SECTION 11: INDEMNIFICATION, INSURANCE, AND LIABILITY. 11.1 UNIVERSITY shall promptly notify NITROMED of any claim or threatened claim under this Paragraph 11.1, NITROMED shall defend, indemnify and hold harmless UNIVERSITY, and its trustees, officers, employees, agents, and students and their respective successors, heirs and assigns (the "Indemnitees"), against any and all liability, damage, loss or -27- expense (including reasonable attorneys' fees and expenses of litigation) that may be incurred by or imposed upon the indemnitees, or any of them, in connection with any third party, claim, suit, demand, action or judgment arising out of the following: (a) the design, production, manufacture, sale, use in commerce, lease, or promotion by NITROMED or by an AFFILIATE or SUBLICENSEES of NITROMED of any product, process or service relating to or developed pursuant to this Agreement; or (b) any other activities to be carried out pursuant to this Agreement. NITROMED's indemnity under (b) shall not apply to any liability, damage, loss or expense to the extent that it is attributable to the negligence or willful misconduct of the Indemnitees. NITROMED shall have full right and authority to control the defense, compromise, or settlement of any such claim and UNIVERSITY shall fully cooperate with all reasonable requests of NITROMED with respect thereto. NITROMED agrees at its own expense, to provide attorneys reasonably acceptable to the UNIVERSITY to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought. NITROMED shall have the right to control the defense, settlement or compromise of any such action. UNIVERSITY shall notify NITROMED promptly of any claim or threatened claim under this Paragraph 11.1 and shall fully cooperate with all reasonable requests of NITROMED with respect thereto. This Paragraph 11.1 shall survive expiration or termination of this agreement. -28- 11.2 UNIVERSITY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE RESEARCH OR ANY INVENTION(S) OR PRODUCT(S), WHETHER TANGIBLE, CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS AGREEMENT, OR THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE RESEARCH OR ANY SUCH INVENTION OR PRODUCT. 11.3 At such time as any product, process or service relating to, or developed pursuant to, this Agreement is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by NITROMED, its AFFILIATES or SUBLICENSEES, NITROMED shall at its sole expense, procure and maintain for itself (or, in the alternative for UNIVERSITY) policies of comprehensive general liability insurance in amounts not less than $2, 000, 000 per incident and $2, 000, 000 in the annual aggregate and naming the Indemnitees as additional insureds. Such comprehensive general liability insurance shall provide (i) product liability coverage and (ii) broad form contractual liability coverage for NITROMED's indemnification under this Agreement. If NITROMED elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250, 000 annual aggregate) such self-insurance program must be acceptable to UNIVERSITY's Risk Management Office. The minimum amounts of insurance coverage required under this section shall not be construed to create a limit of NITROMED's liability with respect to its indemnification hereunder. NITROMED shall provide UNIVERSITY with written evidence of such insurance upon request of UNIVERSITY. NITROMED shall provide UNIVERSITY with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if NITROMED does not obtain replacement insurance providing comparable -29- coverage within such fifteen (15) day period, UNIVERSITY shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice or any additional waiting periods. NITROMED shall maintain such comprehensive general liability insurance beyond the expiration or termination of this Agreement during the period that any product, process or service relating to, or developed pursuant to this Agreement is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by NITROMED, its AFFILIATES or licensees, and for a reasonable period of not less than fifteen (15) years after it has ceased commercial distribution or sale of any such product, process or service. SECTION 12: ASSIGNMENT; SUCCESSORS. 12.1 This Agreement shall not be assignable by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld), except that NITROMED without the consent of UNIVERSITY may assign this Agreement to an AFFILIATE or to a successor in interest or transferee of all or substantially all of the portion of the business to which this Agreement relates. 12.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of NITROMED and UNIVERSITY. Any such successor or assignee of a party's interest shall expressly assume in writing the performance of all the terms and conditions of this Agreement to be performed by said party and such Assignment shall not relieve the Assignor of any of its obligations under this Agreement. -30- SECTION 13: TERMINATION. 13.1 Except as otherwise specifically provided herein and unless sooner terminated pursuant to Paragraph 13.2 or 13.3 of this Agreement, this Agreement and the licenses and rights granted thereunder shall remain in full force and effect until the expiration of the last to expire PATENT RIGHT, at which time NITROMED shall have a fully paid-up license. 13.2 Except as qualified by Paragraph 13.7, NITROMED shall have the right to terminate any or all licenses under one or more PATENT RIGHTS in one or more countries upon sixty (60) days prior written notice. 13.3 Except as provided in Paragraph 5.6, upon material breach of any material provisions of this Agreement other than by reason of Force Majeure, by either party to this Agreement (including, but not limited to, the non-payment of royalties), in the event the breach is not cured within sixty (60) days after written notice to the breaching party by the other party, in addition to any other remedy it may have, the other party at its sole option may terminate this Agreement or any affected RESEARCH PROPOSAL or affected license hereunder, provided that such other party is not then in material breach of this Agreement. In the event a party's breach affects only a SPONSORED RESEARCH PROGRAM or license hereunder, the termination shall be limited to such affected RESEARCH PROPOSAL or license, and the parties' obligations with respect thereto, and such termination will not affect the rights and obligations of the parties under other RESEARCH PROPOSALS or licenses granted herein. 13.4 Upon any termination of this Agreement or any license under this Agreement NITROMED, at its option, shall be entitled, as a licensee under this Agreement, to finish any work-in-progress which is completed within six (6) months of such termination and to sell any completed inventory of a PRODUCT covered by this Agreement which remains on hand as of the date of the termination, so long as NITROMED pays to UNIVERSITY the royalties -31- applicable to said subsequent sales in accordance with the same terms and conditions as set forth in this Agreement. 13.5 In the event that this Agreement and/or the rights and licenses granted under this Agreement to NITROMED are terminated, any sublicense granted under this Agreement shall remain in full force and effect as a direct license between UNIVERSITY and the SUBLICENSEE under the terms and conditions of the sublicense agreement, subject to the SUBLICENSEE agreeing to be bound to UNIVERSITY under such terms and conditions within thirty (30) days after UNIVERSITY provides written notice to the SUBLICENSEE of the termination of NITROMED's rights and licenses under this Agreement. 13.6 The obligations of Sections 6 and 11 and of Par. 13.1, 13.4, 13.5, 13.6 and 13.8 of this Agreement shall survive any termination of this Agreement. 13.7 Unless otherwise agreed to in a RESEARCH PROPOSAL, NITROMED may terminate funding of any SPONSORED RESEARCH PROGRAM effective at any time on or after the first anniversary thereof by giving UNIVERSITY three (3) months' prior written notice of NITROMED's election to terminate. 13.8 In the event PRINCIPAL INVESTIGATOR is no longer available or able to continue direction of a SPONSORED RESEARCH PROGRAM, UNIVERSITY shall promptly notify NITROMED and may nominate a replacement; if UNIVERSITY does not nominate a replacement within sixty (60) days or if that replacement is unsatisfactory to NITROMED, NITROMED may immediately terminate funding of such SPONSORED RESEARCH PROGRAM. For a period of six (6) months, NITROMED shall continue funding of such SPONSORED RESEARCH PROGRAM in accordance with the RESEARCH PROPOSAL -32- therefor to the extent required to fund any non-terminable and non-reducible funded amounts thereunder. 13.9 Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. Except as otherwise provided in any RESEARCH PROPOSAL, upon any termination, UNIVERSITY shall be entitled, without limitating any rights of the UNIVERSITY provided elsewhere herein, to be compensated for all reasonable expenses and uncancellable commitments incurred as of the effective date of termination, not to exceed the total contract amount stated in the applicable RESEARCH PROPOSAL(S). SECTION 14: GENERAL PROVISIONS. 14.1 The relationship between UNIVERSITY and NITROMED is that of independent contractors. UNIVERSITY and NITROMED are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. UNIVERSITY shall have no power to bind or obligate NITROMED in any manner. Likewise, NITROMED shall have no power to bind or obligate UNIVERSITY in any manner. 14.2 Any matter or disagreement under Paragraph 5.6 or Paragraph 8.1 which this Agreement specifically specifies is to be resolved by arbitration shall be submitted to a mutually selected single arbitrator to so decide any such matter or disagreement. The arbitrator shall conduct the arbitration in accordance with the Rules of the American Arbitration Association, unless the parties agree otherwise. If the parties are unable to mutually select an arbitrator, the arbitrator shall be selected in accordance with the procedures of the American Arbitration Association. The decision and award rendered by the arbitrator shall be final and binding. -33- Judgment upon the award may be entered in any court having jurisdiction thereof. Any arbitration pursuant to this section shall be held in Boston, MA, or such other place as may be mutually agreed upon in writing by the parties. 14.3 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 14.4 This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Massachusetts without reference to its choice of law principles. 14.5 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 14.6 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 14.7 Notices. Any notices given pursuant to this Agreement shall be in writing and shall be deemed to have been given and delivered upon the earlier of (i) when received at the address set forth below, or (ii) three (3) business days after mailed by certified or registered mail postage prepaid and properly addressed, with return receipt requested, or (iii) on the day when sent by facsimile as confirmed by certified or registered mail. Notices shall be delivered to the respective parties as indicated: -34- To NitroMed: NitroMed, Inc. One Kendall Square Bldg. 100 Cambridge, Mass. 02139 Attn: Ms. Maria Marmarinos Copy to: Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein 6 Becker Farm Road Roseland, New Jersey 07068 Fax no. (201) 994-1744 Attn: Elliot M. Olstein, Esq. To University: Regarding a Sponsored Research Program: Office of Sponsored Programs Boston University School of Medicine 80 East Concord Street Boston, Mass. 02118 Attn: Anne DerHagopian Regarding Licensing: Office of Patent and Technology Administration Boston University School of Medicine 80 East Concord Street Boston, Mass 02118 Attn: Lawrence Gilbert 14.8 Neither party shall use the name of the other party or of any investigator in any advertising or promotional material without the prior written approval of the other. NITROMED may utilize the name of UNIVERSITY and/or PRINCIPAL INVESTIGATOR without prior written approval in connection with a disclosure in a financing or an offering of securities, provided, however, that NITROMED shall advise UNIVERSITY of such use. NITROMED may and UNIVERSITY shall, however, acknowledge NITROMED's support for the investigations being pursued under this Agreement. In any public statements or disclosures, the relationship of the parties shall be accurately and appropriately described. -35- 14.9 To the extent of any conflict in terms, the provisions of any RESEARCH PROPOSAL incorporated herein as part of Appendix A shall supersede the provisions of this Agreement. -36- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ Manuel Worcel By: /s/ Janis Roberts -------------------------- -------------------------------------- Name: Manuel Wocel Name: Janis Roberts ------------------------- ------------------------------------ Title: President & CEO Title: Executive Director of Financial Affairs ------------------------ --------------------------------------- By: /s/ Aram Chobanian -------------------------------------- Name: Aram V. Chobanian ------------------------------------ Title: Dean, School of Medicine ----------------------------------- Name: Richard Towle ------------------------------------ Title: Vice President, for Administrative ---------------------------------- Services -------- By: /s/ John E. Bagalay, Jr. ------------------------------------- Name: John E. Bagalay, Jr. ------------------------------------ Title: Assistant Treasurer ----------------------------------- -37- APPENDIX A to RESEARCH AND LICENSE AGREEMENT Dated June 1, 1993 between TRUSTEES OF BOSTON UNIVERSITY and NITROMED, INC. RESEARCH PROPOSAL PRINCIPAL INVESTIGATOR: Joseph Loscalzo, M.D. FIELD OF RESEARCH: Cardiovascular, gastrointestinal, and pulmonary research, and research relating to erectile dysfunction and ureteral relaxation, utilizing nitric oxide compounds, nitrosothiols, nitrosoproteins, other nitrosylated compounds and/or agonists and antagonists thereof, and other compounds which mediate nitric oxide. SPONSORED RESEARCH PROGRAM: The SPONSORED RESEARCH PROGRAM is described in Exhibit 1 attached to this RESEARCH PROPOSAL. TERM OF RESEARCH PROPOSAL: This RESEARCH PROPOSAL shall commence on January 1, 1994 ("COMMENCEMENT DATE") and shall continue in effect until the expiration of the "EQUIPMENT LEASE" as defined below, unless sooner terminated by either party as provided in Section 13 of the Research and License Agreement. FUNDING OF RESEARCH PROPOSAL: 1. ANNUAL RESEARCH GRANT (EXCLUSIVE OF LEASED EQUIPMENT FUNDING): The annual research grant to be provided by NITROMED for the first AGREEMENT YEAR (12-month period commencing on the COMMENCEMENT DATE) shall be in a total amount of [**] dollars ($[**]) as provided in the Budget attached to this RESEARCH PROPOSAL as Exhibit 2. Budgets for subsequent years shall be determined and approved by the parties in accordance with Section 2 of the Research and License Agreement and shall thereupon be attached and incorporated into Exhibit 2 hereto. 2. EQUIPMENT FUNDING: Funding for the equipment ("EQUIPMENT") listed in the Equipment List appended hereto as part of Exhibit 3 shall be provided by NITROMED under the terms of the Lease Agreement and BancBoston Leasing Co. Proposal Letter between the UNIVERSITY and BancBoston Leasing Co. attached hereto as part of Exhibit 3 and the Equipment Schedules which shall be executed between the UNIVERSITY and BancBoston Leasing Co. pursuant thereto ("EQUIPMENT LEASE") as follows: NITROMED shall be responsible for funding the UNIVERSITY's total costs of leasing the EQUIPMENT on the terms and conditions (including a 36-month term for each Equipment Schedule) set forth in the EQUIPMENT LEASE. NITROMED shall pay to the UNIVERSITY the amounts payable by the UNIVERSITY as lessee under the EQUIPMENT LEASE. A monthly payment from NITROMED to the UNIVERSITY shall be due and payable ten (10) days in advance of the first day of each month in which payment is required to be made by the UNIVERSITY as specified in the EQUIPMENT LEASE. The UNIVERSITY will provide NITROMED with a copy of each Equipment Schedule when executed under the EQUIPMENT LEASE, evidencing the date and amount of payment due from the UNIVERSITY to BancBoston Leasing Co. thereunder. Payments shall be made by wire transfer to State Street Bank and Trust Company, Trustees of Boston University Concentration Account #0729-820-1, Reference: NitroMed lease, ABA # 011-0000-28. In the event that this RESEARCH PROPOSAL, the SPONSORED RESEARCH PROGRAM or funding for the SPONSORED RESEARCH PROGRAM shall be terminated as provided in the Research and License Agreement by either party prior to the end of the EQUIPMENT LEASE, then, at the option of the UNIVERSITY, which shall be exercised by written notice to NITROMED within thirty (30) days after such termination, either (i) the UNIVERSITY shall fund the remainder of the EQUIPMENT LEASE and shall own the EQUIPMENT at the end of the LEASE, and NITROMED shall have no further obligation under this RESEARCH PROPOSAL with respect to the EQUIPMENT, or (ii) NITROMED shall fund the remainder of the EQUIPMENT LEASE in accordance with the terms of this RESEARCH PROPOSAL, and at the end of the LEASE, the UNIVERSITY shall transfer to NITROMED its title to the EQUIPMENT. Under this option, the UNIVERSITY, during the remainder of the LEASE term, shall retain possession of and may use the EQUIPMENT, shall use best efforts to maintain the EQUIPMENT in good working condition, and the UNIVERSITY shall relinquish possession to NITROMED, at its request, at the end of the LEASE term. THE UNIVERSITY HEREBY DISCLAIMS ALL WARRANTIES WHATSOEVER, EXPRESS OF IMPLIED, WITH RESPECT TO THE EQUIPMENT, WHICH WOULD BE TRANSFERRED UNDER THIS -39- OPTION "AS IS - WHERE IS" NITROMED would be solely responsible for the removal of the EQUIPMENT from the UNIVERSITY'S premises. Further, the UNIVERSITY may exercise option (1) above with respect to selected items of EQUIPMENT and option (ii) with respect to other selected items of EQUIPMENT. In the event that the UNIVERSITY so opts to allocate EQUIPMENT items between options (i) and (ii), then the costs of leasing the items of EQUIPMENT shall be allocated between options (1) and (ii), PRO RATA, based on the aggregate cost (at time of the lessor's purchase) of the items of EQUIPMENT allocated by the UNIVERSITY to each option, such values being as specified in the Equipment Schedules in Exhibit 3. If, as a result of any failure by NITROMED to make timely payment of EQUIPMENT funding hereunder, the UNIVERSITY defaults in any of its obligations under the EQUIPMENT LEASE, then NITROMED shall indemnify, hold harmless and defend the UNIVERSITY from any liability or expense resulting from any such default by the UNIVERSITY under the EQUIPMENT LEASE. In the event that the UNIVERSITY should default under the lease, and such default should not be caused by a default by NITROMED, then NITROMED shall have no obligation to make any payment which may become duo and payable under the LEASE as a result of such default by the UNIVERSITY. IN WITNESS WHEREOF, the parties have executed this RESEARCH PROPOSAL as of the COMMENCEMENT DATE set forth above. NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ Manuel Worcel By: /s/ Janis Roberts -------------------------- -------------------------------------- Name: Manuel Worcel, MD Name: Janis Roberts ------------------------- ------------------------------------ Title: President, CEO Title: Executive Director of Financial Affairs ------------------------ --------------------------------------- By: /s/ Aram V. Chobanian -------------------------------------- Aram V. Chobanian Dean, School of Medicine By: /s/ Richard Towle -------------------------------------- Richard Towle, Vice President for Administrative Services By: /s/Joseph Loscalzo -------------------------------------- Joseph Loscalzo, M.D. Principal Investigator -40- EXHIBIT 1 In the cardiovascular arena, we plan to: --evaluate the effects of [**]--evaluate the effects of [**]; and --evaluate the effects of [**]. In the gastrointestinal arena, we plan to: --evaluate the effects of [**]; and --evaluate the effects of [**]. In the pulmonary arena, we plan to: --evaluate the effects of [**]; and --evaluate the effects of [**]. -41- EXHIBIT 2 LOSCALZO-NITROMED BUDGET Cardiovascular Personnel Technician (1) [**] Postdoc (1) [**] Supplies [**] Animals [**] Total Direct Costs [**] Total Indirect Costs ([**]%) [**] TOTAL [**] Gastrointestinal Personnel Postdoc (1) [**] Technician (1) [**] Supplies [**] Animals (for hepatocytes) [**] Total Direct Costs [**] Total Indirect Costs ([**]%) [**] TOTAL [**] Pulmonary Personnel Technician (1) [**] Supplies [**] Animals [**] Total Direct Costs [**] Total Indirect Costs [**] TOTAL [**] GRAND TOTAL $[**] -42- EXHIBIT 3 EQUIPMENT LIST AND EQUIPMENT LEASE LOSCALZO PROJECT - CABR - ITEMIZED LIST OF PURCHASE ORDERS
VENDOR P.O. NUMBER DESCRIPTION AMOUNT DELIVERY - ------------------ ------------------------- ---------------- --------------------- MC113853XDB Fisher Scientific $ 2050.66 10 day delivery Circulating Bath MC113833XDB Grass Instrument $ 8875.00 60 day delivery Benchtop polygraph MC113844NDB Pie Medical Systems $ 27,133.00 overseas shipment* License and software MC113821XDB Carl Zeiss Inc. Microscopy $ 19,845.00 6 week delivery system MC113822XDB Applied Biosystems $ 11,447.50 2 week delivery Geneamp PCR system MC113823XDB Pharmacia Biotech Smart $ 89,054.00 3 week delivery system/Microtech MC113825XDB Perimed Inc. $ 19,500.00 2 week delivery PF4 Master MC113826XDB PO-NE-MAH Inc. $ 29,184.00 60 day delivery Eight channel digital system MC113726XDB PO-NE-MAH Inc. $ 25,179.00 60 day delivery Eight channel digital system MC113836XDB Cole-Parmer Co. $ 1,598.00 5 day delivery Digital fluid pump MC113838XDB Merck Research Lab $ 40,000.00 Immed. delivery** Cardiometrics Floamp MC113839XDB Gould Electronics $ 41,326.00 60 day delivery 8 channel thermal pen MC11384XDB Texas A & M Univ. $ 6,770.00 12 week delivery Velocimeter MC113841XDB Vista Electronics $ 6,550.00 120 day delivery Image shearing device MC113842XDB ALS Computer $ 8,102.45 1 week delivery ALS 486DX2 system MC113843XDB ALS Computer $ 17,008.00 1 week delivery Apple Quadra MC113837XDB CVIS $ 90,000.00 30 day delivery Insight system MC113824XDB Sony Electronics $ 26,500.00 2 week delivery Cinc Video System
*Vendor located in Holland exact charges and delivery time not available **J. Vita already using equipment Note: All purchase order amounts include estimated freight charges -43- BancBoston Leasing January 19, 1994 Mr. Martin J. Howard Vice President Financial Affairs Boston University 881 Commonwealth Avenue Boston, MA 02215 Dear Marty: BancBoston Leasing Inc., an affiliate of The First National Bank of Boston, is pleased to present the following outlined description of a proposed lease purchase structure: LESSEE: Trustees of Boston University Boston, MA 02215 LESSOR: BancBoston Leasing Inc. 100 Federal Street Boston, MA 02110 EQUIPMENT: Medical Research Equipment (Loscalzo Project) EQUIPMENT COST: Approximately $500,000 EQUIPMENT LOCATION: Lessee address (or as specified) DELIVERY AND ACCEPTANCE: The equipment will be delivered and accepted for lease no earlier than finalization of lease documentation and no later than December 31, 1994. MINIMUM TAKEDOWN: $25,000 of equipment cost. LEASE TERM: Three (3) years. LEASE PAYMENTS: Thirty-six (36) consecutive monthly payments payable monthly in advance, at a rate to be established at time of takedown, 200 basis points above our cost of funds. Based upon our present cost of funds of 4.23%, the rate would be 6.23%, resulting in a monthly factor of $30.37 per $1,000 of equipment cost. -44- TYPE OF LEASE: Net lease transaction whereby Lessee shall be responsible for the payment of taxes (other than Lessor's income taxes), insurance and maintenance and all other costs in connection with the equipment and its operation. Taxes are invoiced by the Lessor at the time they are due and payable. Lessee shall provide evidence of physical damage and liability insurance with endorsements in amount acceptable to the Lessor prior to the delivery of the equipment. DISPOSITION OF Upon expiration of the term of the lease, Lessor EQUIPMENT: shall transfer title to the equipment to the Lessee, provided that the total rent has been paid and the Lessee is not otherwise in default. COVENANTS: The credit approval and acceptance of the terms outlined in this proposal may be contingent upon covenants including various financial covenants required by the Lessor's credit committee. Any required covenants will be included in documentation mutually acceptable to Lessor and Lessee. COMMITMENT The credit approval and acceptance of the terms PERIOD: outlined in this proposal, if granted, shall remain in effect for the period specified under Delivery and Acceptance, but in no event, not longer than one (1) year from the date of this proposal and subject to no material adverse change in the financial condition of the Lessee. PROPOSAL This lease proposal outlined herein shall remain in EXPIRATION DATE: effect for fifteen (15) days from the date of this proposal. This proposal is not an agreement or commitment to provide a lease purchase. The Lessor's obligation to provide the proposed lease purchase is subject to an agreement between Lessor and Lessee and other material terms of the proposed lease purchase, the obtaining of all prior approvals by Lessor, including credit committee approval, and the execution of documentation mutually acceptable to Lessor and Lessee. If the above terms and conditions are acceptable, please acknowledge your acceptance below and return this letter. Thank you for the opportunity to present our proposal and we look forward to a long and mutually beneficial relationship. Sincerely, BANCBOSTON LEASING INC. /s/ Richard Dowd Richard P. Dowd Assistant Vice President -45- AWARD ACKNOWLEDGMENT This proposal is acceptable to us, and this financing is awarded to BancBoston Leasing Inc. By: /s/ Martin Howard ----------------------------------- Assistant Treasurer Date: 1/28/94 --------------------------------- cc: Elliot Klein -46- LEASE AGREEMENT NO. BU/90M1 This Lease Agreement is made as of the 30th day of November, 1990, between TRUSTEES OF BOSTON UNIVERSITY, a Massachusetts corporation, with its principal financial office located at 881 Commonwealth Avenue, Boston, Massachusetts 02215 (the "Lessee"), and BANCBOSTON LEASING INC., a Massachusetts corporation, with its principal office located at 100 Federal Street, Boston, Massachusetts 02110 (the "Lessor"). The parties hereto agree as follows: 1. Lease: Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Equipment (the "Equipment") described in Equipment Schedule(s) attached hereto. Any reference to "Lease" shall mean this Lease Agreement, the Equipment Schedule(s) and Rider(s) thereto, if any. 2. Definitions: (a) The "Installation Date" means the date determined in accordance with the applicable Equipment Schedule. (b) The "Commencement Date" means as to the Equipment designated on any Equipment Schedule where the Installation Date for such Equipment falls on the first day of the month, that date, or in any other case the first day of the month following the month in which such Installation Date falls. (c) The "Daily Rental" means 1/30th of the amount set forth as the monthly rental in the applicable Equipment Schedule. 3. Term of Lease: The term of this Lease, as to all Equipment designated on any Equipment Schedule, shall commence on the Installation Date for such Equipment, and shall continue for an initial period ending that number of months from the Commencement Date as is specified on the applicable Equipment Schedule (the "Initial Term"). 4. Rental: The monthly rental payable hereunder is as set forth in the Equipment Schedule(s). Rental shall begin to accrue on the Installation Date and shall be due and payable by Lessee monthly and in advance on the first day of each month. If the Installation Date does not fall on the first day of a month, the rental for that period of time from the Installation Date until the Commencement Date shall be an amount equal to the Daily Rental multiplied by the number of days from (and including) the Installation Date to (but not including) the Commencement Date and shall be due and payable on the Installation Date. In addition to the monthly rental set forth in the Equipment Schedule(s), Lessee shall pay to Lessor an amount equal to all taxes paid, payable or required to be collected by Lessor, however designated, which are levied or based on the rental, on the Lease or on the Equipment or on its purchase for lease hereunder, or on its use, -47- lease, operation, control or value (including, without limitation, state and local privilege or excise taxes based on gross revenue), any penalties or interest in connection therewith (if such penalties or interest arise by reason of a delay in payment attributable to Lessee and not to Lessor) or taxes or amounts in lieu thereof paid or payable by Lessor in respect of the foregoing, but excluding taxes based on Lessor's net income. Personal property taxes assessed on the Equipment during the term hereof shall be paid by Lessee. Lessee agrees to file, on behalf of Lessor, all required property tax returns and reports concerning the Equipment with all appropriate governmental agencies, and, within not more than 30 days after the due date of such filing to send Lessor confirmation of such filing. Notwithstanding the provisions of this Section, but subject to the next succeeding sentence, Lessee shall have no obligations with respect to the payment of taxes so long as Lessee maintains its status as a tax-exempt entity with respect to such taxes. Notwithstanding the preceding sentence, Lessee shall be responsible for any and all taxes which are imposed on this Lease or on the Equipment (a) without regard to Lessee's status as a tax-exempt entity or (b) by any state which does not recognize Lessee's tax-exempt status or the tax-exempt status of this Lease or the Equipment. 5. Installation, Use and Quiet Possession of Equipment: (a) Lessee shall be entitled to unlimited usage of the Equipment without extra charge by Lessor. (b) Lessee will at all times keep the Equipment in its sole possession and control. The Equipment shall not be moved from the location stated in the applicable Equipment Schedule without the prior written consent of Lessor (said consent not to be unreasonably withheld). (c) After prior notice to Lessor, Lessee may make, or cause to be made on its behalf, at its own expense, any improvement, modification or addition to the Equipment unless such modification or addition decreases the value of the Equipment and provided, however, that any such improvement, modification or addition is readily removable without causing damage to or impairment of the functional effectiveness of the Equipment. To the extent that such improvement, modification or addition is not so removable, it shall immediately become the property of Lessor and thereupon shall be considered Equipment for all purposes of this Lease Agreement. (d) So long as Lessee is not in default hereunder, Lessor shall not interfere with Lessee's use or possession of the Equipment during the term of this Lease. (e) Lessee shall, during the term of this Lease, at its expense, keep the Equipment in good working order and condition and make all necessary adjustments, repairs and replacements and shall not use or permit the Equipment to be used in any manner or for any purpose for which, in the opinion of the Manufacturer, the Equipment is not designed or reasonably suitable. (f) Upon the expiration of the Lease Term and provided that no Event of Default as defined in Section 9 below, has occurred or is continuing, Lessor shall transfer title to -48- the Equipment to Lessee "AS IS," "WITH ALL FAULTS," and WITH NO WARRANTIES WHATSOEVER (except as to title), EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES OF MEACHANTAB1LITY OR FITNESS FOR USE OR FOR PARTICULAR PURPOSE. Lessor shall deliver to Lessee a bill of sale and other documents as may be required to transfer title to the Equipment free and clear of any liens, claims, encumbrances restrictions or title defects arising through Lessor. 6. Leasehold Rights and Inspection: (a) The Equipment shall remain personalty regardless of the manner in which it may be installed or attached. Lessee shall, at Lessor's request, affix to the Equipment, tags, decals or plates furnished by Lessor, indicating Lessor's ownership and Lessee shall not permit their removal or concealment. (b) Lessee shall keep the Equipment free and clear of all liens and encumbrances except for liens or encumbrances arising through the actions or omissions of Lessor or any person or entity claiming through or under Lessor. Lessee shall not assign or otherwise encumber this Lease or any of its rights hereunder or sublease the Equipment without the prior written consent of Lessor (said consent not to be unreasonably withheld) except that Lessee may assign this Lease or sublease the Equipment to its parent or any subsidiary corporation or to a corporation which shall have acquired all or substantially all of the property of Lessee by merger, consolidation or purchase. No permitted assignment or sublease shall relieve Lessee of any of its obligations hereunder. (c) Lessor or its agents shall have free access to the Equipment at all reasonable times for the purpose of inspection and for any other purpose contemplated in this Lease. (d) Lessee shall immediately notify Lessor of all details concerning any damage to, or loss of, the Equipment arising out of any event or occurrence whatsoever, including but not limited to, the alleged or apparent improper manufacture, functioning or operation of the Equipment. 7. No Warranties By Lessor: Lessee represents that, at the Installation Date thereof. It shall have (a) thoroughly inspected the Equipment; (b) determined for itself that all items of Equipment are of a size, design, capacity and manufacture selected by it; and (c) satisfied itself that the Equipment is suitable for Lessee's purposes. LESSOR SUPPLIES THE EQUIPMENT AS IS AND NOT BEING THE MANUFACTURER OF THE EQUIPMENT, THE MANUFACTURER'S AGENT OR THE SELLER'S AGENT, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED AS TO THE EQUIPMENT'S MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, DESIGN, CONDITION, QUALITY, CAPACITY, MATERIAL OR WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE, it being agreed that all such risks, as between Lessor and Lessee, are to be borne by Lessee. Lessee agrees to look solely to the Manufacturer or to suppliers of the Equipment for any and all warranty claims. Any and all warranties and indemnities made by the Manufacturer -49- or the supplier of Lessor are) to the extent to which the same may be assignable, hereby assigned to Lessee for the term of the applicable Equipment Schedule. Lessee agrees that Lessor shall not be responsible for the delivery, installation, maintenance, operation or service of the Equipment or for delay or inadequacy of any or all of the foregoing. Lessor shall not be responsible for any direct or consequential loss or damage resulting from the installation, operation or use of the Equipment. 8. Indemnities; Payment of Taxes: 8.1 Lessee hereby agrees to indemnify, defend and hold harmless Lessor, its agents, employees, successors an assigns from and against any and all claims, actions, suits proceedings, costs, expenses, damages and liabilities whatsoever arising out of or in connection with the manufacture, ordering, selection, specifications, availability, delivery, titling, registration, rejection, installation, possession, maintenance, ownership, use, operation or return of the Equipment including, but not limited to, any claim or demand based upon any STRICT OR ABSOLUTE LIABILITY IN TORT and upon any infringement or alleged infringement or any patent, trademark, trade secret, license, copyright or otherwise, except to the extent any of the foregoing arises out of or in connection with any negligent or wrongful act or omission of Lessor, or any of its directors, officers, agents, employees, successors or assigns. All costs and expenses incurred by Lessor in connection with any of the foregoing (but subject to the foregoing exceptions) including, not limited to, reasonable legal fees, shall be paid by Lessee on demand. 8.2 Lessee hereby agrees to indemnify, defend and hold Lessor harmless against all Federal, state and local taxes, assessments, licenses, withholdings, levies, imposts, duties, assessments, excise taxes, registration fees and other governmental fees and charges whatsoever, which are imposed, assessed or levied on or with respect to the Equipment or its use or related in any way to this Lease Agreement ("Tax Assessments"), except for taxes on or measured by the net income of Lessor. Lessee shall file all returns, reports or other such documents required in connection with the Tax Assessments and shall provide Lessor with copies thereof. If, under local law or custom, Lessee is not authorized to make the filings required by a taxing authority, Lessee shall notify Lessor in writing and Lessor shall thereupon file such returns, reports or documents and upon Lessee's written request shall provide Lessee with copies thereof. Without limiting any of the foregoing, Lessee shall indemnify, defend and hold Lessor harmless from all penalties, fines, interest payments, claims and expenses including, but not limited to, reasonable legal fees, arising from any failure of Lessee to comply with the requirements of this Section 8.2 Notwithstanding anything in this Lease to the contrary, Lessee shall have no obligations under this Section 8.2 with respect to any Tax Assessments, including but not limited to any penalties, fines, interest payments, claims and expenses, to the extent that such Tax Assessments arise solely out of or in connection with any negligent or wrongful act or omission of Lessor, or any of its directors, officers, agents, employees, successors or assigns. 8.3 Notwithstanding anything in this Lease to the contrary, Lessor hereby agrees to indemnify, defend and hold harmless Lessee, its trustees, employees, successors and assigns from and against any and all claims, actions, suits proceedings, costs, expenses, damages and liabilities to the extent arising solely out of or in connection with the negligent or wrongful act or -50- omission of Lessor or any of its directors, officers, agents, employees, successors or assigns with respect to the Equipment or this Lease Agreement. 8.4 Notwithstanding anything to the contrary, Lessee's obligations under Section 8.2 above are subject to the last paragraph of Section 4 of the Lease, and Lessee's obligations under Section 8.1 and 8.2 above are subject to the following conditions: (a) Lessee shall have received timely written notice of and (b) Lessee shall have the right to control the defense, including but not limited to the settlement of any claim, demand, action, suit, proceeding, cost, expense, damage or liability pursuant to Sections 8.1 and 8.2 8.5 Notwithstanding anything to the contrary, Lessor's obligations under Section 8.3 above are subject to the following conditions: (a) Lessor shall have received timely written notice of and (b) Lessor shall have the right to control the defense, including but not limited to the settlement of any claim, demand, action, suit, proceeding, cost, expense damage or liability pursuant to Section 8.3. 8.6 The obligations and indemnities of Lessee and Lessor under this Section 8 for events occurring or arising during the Initial Term or any Extended Term shall continue in full force and effect, notwithstanding the expiration or other termination of this Lease Agreement. 9. Risk of Loss on Lessee: (a) Beginning on the Installation Date thereof and continuing until the end of the Initial Term. Lessee relieves Lessor of responsibility for all risks of physical damage to or loss or destruction of the Equipment, howsoever caused. During the term of this Lease as to any Equipment Schedule, Lessee shall, at its own expense, keep in effect all risk and public liability insurance policies covering the Equipment designated in each Equipment Schedule. The public liability insurance policy shall be in such amount as is reasonably acceptable to Lessor. The all risk insurance policy shall be for an amount not less than the replacement cost of the Equipment. Lessor, its direct or indirect successors and assigns and/or such other party as may be designated by any thereof to Lessee, who shall have an equity interest or security interest in this Lease Agreement. Equipment Schedule(s) or the Equipment, shall be named as additional insureds on such policies, which shall be written by an insurance company of recognized responsibility which is reasonably acceptable to Lessor. Evidence of such insurance coverage shall be furnished to Lessor no later than the Installation Date set forth in the Equipment Schedule(s) and, from time to time, thereafter as Lessor may request. Such policies shall provide that no less than ten days written notice shall be given Lessor prior to cancellation of such policies for any reason. (b) If any item of Equipment is rendered unusable as a result of any physical damage to, or destruction of, the Equipment or for any other reason, Lessee shall give to Lessor immediate notice thereof and this Lease shall continue in full force and effect without any abatement of rental unless and until it is terminated as provided herein. Lessee shall determine, within twenty (20) days after the date of occurrence of such damage or destruction, whether such item of Equipment can repaired. In the event Lessee determines that the item of Equipment cannot be repaired, Lessee at its expense shall prompt replace such item of Equipment and convey title to such replacement to Lessor free and clear of all liens and encumbrances and this Lease shall continue in full force and effect as though such damage or destruction had not -51- occurred. Subject to the rights of any insurer, Lessee shall have title to any item of Equipment that has been replaced. In the event Lessee determines that such item of Equipment can be repaired, Lessee shall cause such item of Equipment to be promptly repaired. All proceeds of insurance received by Lessor, the designated loss payee, or Lessee under the policy referred to in the preceding paragraph of this Section shall be given to Lessee following the receipt by Lessor of either evidence that the Equipment has been satisfactorily repaired or replaced or the Termination Value (as hereinafter defined) and so long as Lessee shall not be in default of its obligations hereunder. In lieu of repairing or replacing the item(s) of Equipment, Lessee shall have the right, upon notice to Lessor, to purchase any item(s) of Equipment and terminate the Equipment Schedule, in whole or in part as the case may be, as of the first day of the month following such notice in accordance with and subject to the conditions (other than the notice period) set forth in Section 13 of the Lease. 10. Events of Default and Remedies: The occurrence of any one of the following shall constitute an Event of Default hereunder: (a) Lessee fails to pay any installment of rent within seven (7) days the same becomes due and payable. (b) Lessee attempts to remove, sell, transfer, encumber, sublet or part with possession of the Equipment or any items thereof, except as expressly permitted herein. (c) Lessee shall fail to observe or perform any of the other obligations required to be observed or performed by Lessee hereunder and such failure shall continue uncured for thirty (30) days after written notice thereof to Lessee by Lessor or the then assignee hereof. (d) Lessee ceases doing business as a going concern, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts as they become due, files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a petition seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar arrangement under any present or future statute, law or regulation or files an answer admitting the material allegations of the petition filed against it in any such proceeding, consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of it or of all or any substantial part of its assets or properties, or if it or its shareholders shall take any action looking to its dissolution or liquidation. (e) Within 30 days after the commencement of any proceedings against Lessee seeking reorganization, arrangement, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceedings shall not have been dismissed, or if within 30 days after the appointment without Lessee s consent or acquiescence of any trustee, receiver or liquidator of it or of all or any substantial part of its assets and properties, such appointment shall not be vacated. Upon the occurrence of an Event of Default, Lessor may at its option do any of the following provided there is no duplication of recovery, (i) by notice to Lessee terminate this -52- Lease as to any or all Equipment Schedules; (ii) whether or not this Lease is terminated as to any or all Equipment Schedules, take possession of any or all of the Equipment listed on any or all Equipment Schedules, wherever situated, and for such purpose, enter upon any premises without liability for so doing or Lessor may cause Lessee and Lessee hereby agrees, to return said Equipment to Lessor as provided in this Lease; (iii) recover from Lessee, as liquidated damages for loss of a bargain and not as a penalty, an amount equal to the present value of all monies to be paid by Lessee during the remaining Initial Term or any successive period then in effect, calculated by discounting at the rate set forth on the applicable Equipment Schedule as the discount rate annum compounded monthly, which payment shall become immediately due and payable; and (iv) after reasonable written notice to Lessee, sell, dispose of, hold, use or lease the Equipment in a commercially reasonable manner, however, Lessor shall not be obligated to give preference to the sale, lease or other disposition of the Equipment over the sale, lease or other disposition of similar equipment owned or leased by Lessor. In the event that Lessee shall have first paid to Lessor or its assigns the liquidated damages referred to in (iii) above, the party having received such liquidated damages shall pay to Lessee, promptly after receipt thereof, all rentals or proceeds received from any sale, disposition or reletting of the Equipment during the balance of the Initial Term (after deduction of all expenses incurred in connection therewith) said amount never to exceed the amount of the liquidated damages paid by Lessee. Lessor shall use reasonable efforts in connection with any sale, disposition or retetting of the Equipment. Lessee shall in any event remain fully liable for reasonable damages as provided by law and for all costs and expenses incurred by Lessor or its assigns on account of such default including but not limited to all court costs and reasonably attorney's fees. Lessee hereby agrees that, in any event, it will be liable for any deficiency after any sale, lease or other disposition of the Equipment. The rights afforded Lessor hereunder shall not be deemed to be exclusive, but shall be in addition to any rights or remedies provided by law. 11. Net Lease: Except as otherwise specifically provided in this Lease, it is understood and agreed that this is a net lease, and that, as between Lessor and Lessee, Lessee shall be responsible for all costs and expenses of every nature whatsoever arising out of or in connection with or related to this Lease or the Equipment (including, but not limited to, transportation in and out, rigging, drayage, packing, installation and disconnect charges). Lessee hereby agrees that, in the event that Lessee fails to pay or perform any obligation under this Lease, Lessor may, at its option, pay or perform said obligation and any payment made or expense incurred by Lessor in connection therewith shall become additional rent which shall be due and payable by Lessee upon demand. 12. Assignment: Lessee agrees that Lessor may transfer or assign all or any part of Lessor's right, title and interest in, under or to the Equipment and this Lease and any or all sums due or to become due pursuant to any of the above, to any third party (the "Assignee") for any reason and that the Assignee may so re-assign and transfer. Lessee agrees that upon receipt of written notice from Lessor or Assignee of such assignment. Lessee shall perform all of its obligations hereunder for the benefit of Assignee and any successor assignee and, if so directed, shall pay all sums due or to become due hereunder directly to the Assignee or to any other party designated by the -53- Assignee. Lessee hereby covenants, represents and warrants as follows and agrees that the Assignee and any successor assignee shall be entitled to rely on and shall be considered a third party beneficiary of the following covenants, representations and warranties: (i) Lessee's obligations hereunder are absolute and unconditional and are not subject to any abatement, reduction, recoupment, defense, offset or counterclaim available to Lessee for any reason whatsoever including operation of law, defect in the Equipment, failure of Lessor or Assignee to perform any of its obligations hereunder or for any other cause or reason whatsoever, whether similar or dissimilar to the foregoing except that Lessee hereby expressly reserves all rights of independent recourse against Lessor or Assignee, or any other third Party for any loss, damage, or liability for which Lessor, Assignee or such other third party may be responsible; (ii) Lessee shall not look to Assignee or any successor assignee to perform any of Lessor's obligations hereunder; (iii) Lessee will not amend or modify this Agreement without the prior written consent of the Assignee and any successor assignee; and (iv) Lessee will send a copy to Assignee and any successor assignee of each notice which Lessee sends to Lessor. Upon receipt of notice of any such assignment, Lessee agrees to execute and deliver to Lessor such documentation as Assignee or any successor assignee may require, including but not limited to (i) an acknowledgment of, or consent to, assignment which may require Lessee to make certain representations or reaffirmations as to some of the basic terms and covenants contained in this Lease; and (ii) a Certificate of Delivery and Acceptance. Nothing contained in such documentation required by Assignee shall be in derogation of any of the rights granted to Lessee hereunder. Notwithstanding such assignment: (i) Lessor shall not be relieved of any of its obligations hereunder, and (ii) the rights of Lessee hereunder shall not be impaired. 13. Lessee Option to Terminate: Lessee shall have the option, upon four months prior written notice to Lessor, to terminate the above referenced Equipment Schedule(s) and take title to the Equipment on the first day of the month following expiration of the notice period (the "Termination Date") subject to the following conditions: (a) no Event of Default shall be continuing and no event which, but for the passing of time or the giving of notice or both, would have been an Event of Default, shall have occurred and be continuing on the Termination Date; (b) Lessor or the then assignee (if any) of said Schedule(s) shall receive the Termination Value (as defined herein), on the Termination Date. (c) In addition to the payment of the Termination Value, Lessee shall also pay to Lessor, upon demand, a dollar amount, if such amount is greater than zero, computed pursuant to the formula set forth below. L = (R-T) X TV X D -------------- 360 L = amount payable to Lessor for loss. -54- R = the effective fixed rate of interest quoted by the Treasury Division of The First National Bank of Boston ("Treasury") to Lessor on the Commencement Date applicable to the Equipment for funds in the amount of the Acquisition Cost of the Equipment and for a term equal to the Initial Term of lease for such Equipment. T = the effective fixed rate of interest quoted on the Termination Date by Treasury for funds in the outstanding amount of the Termination Value and maturing on the last day of the Initial Term of the lease for the Equipment. TV = the amount of the Termination Value for the Equipment applicable to the Termination Date. D = the number of days remaining from, but excluding, the Termination Date to, and including, the last day of the Initial Term of lease for the Equipment. In the event Lessee shall exercise the option aforesaid, Lessee shall pay to Lessor or the then assignee (if any) of said Schedule(s) on the Termination Date, a termination value ("Termination Value") as defined in Exhibit A which is attached to each Equipment Schedule, for the Termination Date. After the Termination Date and upon payment of the Termination Payment and the payment as set forth in subsection (c) above, if any, Lessee shall be released and discharged from all obligations with respect to said Equipment Schedule(s) which shall be required to be performed by Lessee after, but not before, the Termination Date, and title to the Equipment shall then pass to Lessee on an As-is, Where-is basis, free and clear of all liens and encumbrances arising by or through Lessor. Lessor shall deliver to Lessee a bill of sale and such other instruments as may be required to transfer and deliver to Lessee, good and marketable title to the Equipment, free and clear of all liens, claims, encumbrances, restrictions and title defects arising by or through Lessor. 14. Miscellaneous: (a) No consent or approval provided for herein shall be binding upon Lessor unless signed on its behalf by an officer of Lessor. This agreement shall be deemed to have been made in the Commonwealth of Massachusetts and shall be governed in all respects by the laws of such Commonwealth. (b) This Lease constitutes the entire agreement between Lessee and Lessor with respect to the Equipment, and no covenant, condition or other term or provision hereof may be waived or modified orally. (c) All notices to Lessor shall be in writing and shall be delivered in person or sent by registered or certified mail, postage prepaid, to the address of the Lessor as set forth herein or to such other address as such party shall have designated by proper notice. All notices -55- to Lessee shall be in writing and shall be delivered in person or sent by registered or certified mail, postage prepaid, to the address of the Lessee as set forth in the applicable Equipment Schedule or to such other address as Lessee shall have designated by proper notice. (d) This Lease shall be binding upon and inure to the benefit of Lessor and Lessee and their respective successors and assigns (including any subsequent assignee of Assignee). (e) No waiver of any of the terms and conditions hereof shall be effective unless in writing and signed by the party against whom such waiver is sought to be enforced. Any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. (f) Lessor is hereby authorized by Lessee to cause this Lease or other instruments, including Uniform Commercial Code Financing Statements, to be filed or recorded for the purpose of showing Lessor's interest in the Equipment and Lessee agrees to execute such Instruments. (g) In the event of any conflict between the terms and conditions of this Lease Agreement and the terms and conditions of any Equipment Schedule(s) or Rider(s) thereto, the terms and conditions of such Equipment Schedule(s) or Rider(s) shall prevail. (h) Each year during the term of this Lease, Lessee hereby agrees to deliver to Lessor or Assignee and any successor assignee a copy of Lessee's annual audited financial statements within a reasonable time after said statements are available. (i) The obligations which Lessee is required to perform during the term of this Lease shall survive the expiration or other termination of this Lease. (j) Lessor agrees that to the extent of the performance by the Initial User or any other permitted sublessee of Lessee's obligations hereunder, such obligations of Lessee shall be deemed performed and satisfied hereunder. Lessee: TRUSTEES OF BOSTON UNIVERSITY By: /s/ Kenneth G. Condon ----------------------------------- Title: Assistant Treasurer -------------------------------- Lessor: BANCBOSTON LEASING INC. By: /s/ ----------------------------------- Title: Vice President -------------------------------- -56- RIDER NO. 1 TO LEASE AGREEMENT NO. BU/90M1 This Rider No. 1 (the "Rider") is entered into between BancBoston Leasing Inc. ("Lessor") and Trustees of Boston University ("Lessee"), and is contemporaneous with and amends that certain Lease Agreement No. BU/90M1 dated as of November 30, 1990, including any riders thereto (together the "Lease Agreement") between Lessor and Lessee. It is the intention of Lessor and Lessee that, upon execution, this Rider shall constitute a part of the Lease Agreement. IN CONSIDERATION OF the mutual covenants and promises as hereinafter set forth, Lessor and Lessee hereby agree as follows: 1. The second sentence of Section 1 of the Lease Agreement is deleted, and the following is substituted therefor: "Any reference to "Lease" shall mean this Lease Agreement, all Riders thereto (if any), the relevant Equipment Schedule, and all Riders thereto (if any). Each Equipment Schedule and Riders thereto (if any) together with this Lease Agreement and Riders thereto (if any) shall constitute a separate Lease." 2. In the third line of Section 4 of the Lease Agreement after the word "month" the following is inserted: ", but no earlier than thirty (30) days after Lessee's receipt of a monthly invoice for such rental;" 3. In the first line of Section 5(d) of the Lease Agreement the words "Lessor shall not" are deleted, and the following is substituted therefor: "neither Lessor nor any person or entity claiming under or through Lessor shall" 4. Notwithstanding anything to the contrary in the Lease Agreement, if Lessee commits an Event of Default under Section 10(a) of the Lease Agreement with respect to any Equipment Schedule to the Lease Agreement, and if Lessee has not cured such Event of Default within fifteen (15) days after written notice thereof from Lessor, then all Equipment Schedules executed under the Lease Agreement shall be in default. 5. In the third line of Section 12 of the Lease Agreement after the word "reason" the following is inserted: "(provided, in each case, that the Assignee agrees that, by accepting such assignment or transfer, neither it nor any person or -57- entity claiming under or through it shall interfere with Lessee's use or possession of the Equipment so long as Lessee is not in default under the Lease)," 6. In the tenth line of Section 12 of the Lease Agreement before the word "Lessee's" the following is inserted: "provided that Lessee's right to the use or possession of the Equipment has not been impaired by Lessor or any person or entity claiming under or through Lessor," 7. All capitalized terms used in this Rider shall, unless otherwise defined, have the meanings set forth in the Lease Agreement. The terms and conditions of this Rider shall prevail where there may be conflicts or inconsistencies with the terms and conditions of the Lease Agreement. IN WITNESS WHEREOF, Lessor and Lessee, by their duly authorized representatives, have executed and delivered this Rider which is intended to take effect as a sealed instrument as of the date of the Lease Agreement. BANCBOSTON LEASING INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ By: /s/ Martin Howard ------------------------------- ------------------------------- Title: Assistant Vice President Title: Assistant Treasurer ---------------------------- ----------------------------- -58- INVESTIGATOR'S STATEMENT OF AGREEMENT The undersigned investigator, _______________________________________ ("Investigator") declares that he or she has read and is familiar with the provisions of the Research and License Agreement ("AGREEMENT") dated June 1, 1993 between NITROMED, INC. ("SPONSOR") and TRUSTEES OF BOSTON UNIVERSITY ("UNIVERSITY"), and hereby agrees with the UNIVERSITY to be bound by the terms and conditions thereof with respect to the Research Proposal of Dr. Joseph Loscalzo. Further, Investigator specifically acknowledges and agrees as follows: 1. MAINTAINING CONFIDENTIALITY OF NITROMED CONFIDENTIAL INFORMATION AND MATERIAL: Investigator shall comply with his or her obligations to maintain the confidentiality of NITROMED CONFIDENTIAL INFORMATION AND MATERIALS, disclosed or provided by NITROMED to Investigator or UNIVERSITY, as defined in Section 6 of the AGREEMENT. 2. SEEKING RESEARCH FUNDING FROM OTHER COMMERCIAL SPONSORS IN THE FIELD OF RESEARCH - NITROMED WRITTEN APPROVAL REQUIRED: Investigator shall comply with his or her obligations under Section 2.3 of the AGREEMENT which requires that the Investigator obtain the written consent of NITROMED prior to seeking or accepting any funding from a commercial sponsor in the Field of Research. The Investigator will consult with the Medical Campus Office of Sponsored Programs regarding such prior written consent, before applying for any such funding in the Field of Research, which is defined in the Research Proposal in Appendix A to the AGREEMENT, as follows: Cardiovascular, gastrointestinal, and pulmonary research, and research relating to erectile dysfunction and ureteral relaxation, utilizing nitric oxide compounds, nitrosothiols, nitrosoproteins, other nitrosylated compounds and/or agonists and antagonists thereof, and other compounds which mediate nitric oxide. 3. USING OR ACQUIRING MATERIALS FOR USE IN THE RESEARCH - MATERIALS MUST BE ACQUIRED ON TERMS CONSISTENT WITH NITROMED'S RIGHTS UNDER THE AGREEMENT: In accordance with Section 5.5 of the AGREEMENT, Investigator shall not use or acquire any biological or chemical materials for use in the sponsored research under terms that will prevent UNIVERSITY from granting to NITROMED exclusive rights in technology developed while using such materials in the sponsored research. Investigator will consult with the Medical Campus Office of Sponsored Programs regarding any agreement with a third party for transfer of materials to the Investigator for use in the sponsored research or in the Field of Research. 4. DISCLOSING ALL INVENTIONS, INFORMATION AND MATERIALS DEVELOPED IN THE FIELD OF RESEARCH DURING THE RESEARCH PROGRAM: Investigator acknowledges his or her obligation to disclose to the UNIVERSITY all inventions, information and materials as defined in the AGREEMENT developed in the Field of Research during the research program. Ownership of all such technology shall vest in the UNIVERSITY and be licensed to NITROMED in accordance with the terms of the AGREEMENT. Further, Investigator acknowledges that he or she has signed the Boston University Medical Center Patent Policy and Agreement, a signed -59- copy of which is attached hereto, pursuant to which Investigator shall share in net royalties received by the UNIVERSITY as provided therein. 5. RESTRICTIONS ON DISCLOSURE OF RESEARCH RESULTS: In order to protect NITROMED's rights in inventions, information and materials developed in the Field of Research, the Investigator will comply with the following provisions of the AGREEMENT: a. PUBLICATION DELAYS: Investigator agrees to comply with the requirements of Section 4.2 of the AGREEMENT. Investigator will ensure that he or she submits to NITROMED a copy of any material to be disclosed to a third party or submitted for publication at least 45 days prior to such publication, submission or disclosure, b. RESTRICTION ON TRANSFER OF BIOLOGICAL OR CHEMICAL MATERIALS: Investigator agrees to comply with the requirements of Section 4.1 of the AGREEMENT. Investigator will ensure that research materials are not transferred to any for-profit entity or person known to be an employee or consultant of such entity. Investigator will ensure that materials are not transferred to a non-profit entity or person affiliated therewith except under the terms of a signed Material Transfer Agreement ("MTA") in the form attached as Appendix C to the AGREEMENT or as otherwise approved by NITROMED and UNIVERSITY. Investigator will consult with the Medical Campus Office of Sponsored Research regarding any such MTA and will provide a copy thereof to that Office. /s/ Joseph Loscalzo Joseph Loscalzo - ------------------------------------- --------------------------------------- Signature of Investigator/Date Name of Investigator (typed) WITNESSED BY: /s/ Anne der Hagopian Anne der Hagopian - ------------------------------------- --------------------------------------- Signature of Witness/Date Name of Witness (typed) -60- BOSTON UNIVERSITY MEDICAL CENTER CAMPUS PATENT POLICY AND AGREEMENT PREAMBLE The patent policy outlined herein is the policy of the Boston University Medical Center, whose constituent members are Boston University School of Medicine, Goldman School of Graduate Dentistry and University Hospital. The Medical Center recognizes that patentable inventions may be made in the course of research sponsored by the Medical Center and/or by others through the Medical Center. It is the desire of the Medical Center to maximize the benefit to the individual who makes such a patentable invention, the Medical Center and the general public, and to stimulate initiative in the faculty, staff, and employees of the Medical Center. The Medical Center recognizes that this may best be accomplished through patenting and licensing such inventions in a manner consistent with the public interest and for such purpose the Medical Center hereby establishes the patent policy set forth herein. This policy supersedes the policy as issued March 1, 1963. 1. PATENT POLICY A. In order to protect the public good and the general character of the Medical Center and its members, and in order to fulfill obligations to research sponsors, the Medical Center shall claim on behalf of its constituent members equity in all discoveries and its right to acquire the title and control to such discoveries where the discoveries are made by faculty, staff, employees or students (including all types of trainees or postgraduate residents or fellows) working on or arising from programs supported in whole or in part by funds, space, personnel, or facilities provided by the Medical Center or any of its members. B. Where a discovery is made by an inventor outside of any program conducted by the Medical Center or any constituent member of the Medical Center with which the inventor is connected, and where the Medical Center or any constituent member did not provide or administer significant funds, space, personnel, or facilities for work leading to the discovery, the discovery shall remain the exclusive property of the inventor or his sponsor. The Medical Center and its constituent members shall not ordinarily consider provision of office, classroom, or library facilities as constituting significant use of Medical Center funds, space, personnel or facilities. C. When necessary, the Medical Center Committee on Inventions and Discoveries shall decide whether an invention or discovery should be classified under 1A or 1B. The decision of the Committee is appealable to the Director of the Medical Center, who shall consult with the President of Boston University and the President of University Hospital. The Director shall recommend final action to the Trustee Council, whose decision shall be final. 2. ROYALTIES Where the Medical Center claims equity in a discovery, the inventor will ordinarily receive at least 15 percent but not more than 30 percent of the net royalties accruing therefrom. The exact share shall be determined, promptly after the disclosure by the Deans of the Medical and Dental Schools and the Administrator of University Hospital. In determining the exact share, the Deans -61- and the Administrator shall take into account but not be limited to the state of development of the discovery, the ease of licensing and marketing, the scope of patent protection and the degree of novelty of the discovery. The Community Technology Foundation of Boston University, when it acts as agent for the administration of patents or discoveries made within the Medical Center, shall receive 20 percent of the net royalties (see Paragraph 4). The remaining royalties from and equities in the invention shall be divided among the constituent members of the Medical Center, including any shares to be allocated to the inventor's department or division, in proportions determined by the Deans of the Medical and Dental Schools and the Administrator of University Hospital. In case the Deans and the Administrator cannot reach a consensus, the Director of the Medical Center shall decide. 3. DISCLOSURES Because the securing of rights in discoveries and inventions depends on prompt and efficient patent application and administration, all faculty, staff, students, and employees of the Medical Center who make inventions or discoveries shall immediately disclose said inventions or discoveries to the Medical Center Patent Office, which, upon approval of the Medical Center Committee on Inventions and Discoveries, shall forward such disclosures of inventions and discoveries covered under Paragraph 1A to the Community Technology Foundation, Patent Administrator. This disclosure obligation shall apply to all inventions and discoveries whether they fall under Paragraph 1A or 1B above. 4. PATENT ADMINISTRATION Unless otherwise determined in specific instances by the Medical Center Committee on Inventions and Discoveries, the Community Technology Foundation of Boston University ordinarily shall be the agent of the Medical Center for the administration of inventions and discoveries covered under Paragraph 1A made within the Medical Center, subject to the terms herein. The Community Technology Foundation Patent Administrator shall present the disclosures to the Medical Center Committee on Inventions and Discoveries. The membership of that Committee shall consist of an equal number of representatives from each of Boston University and University Hospital, all designated by the Director of the Medical Center. The Chairman of the Committee shall be designated by the Director of the Medical Center after consultation with the President of Boston University and the President of University Hospital. It shall be the Committee's responsibility to determine whether an invention or discovery is worth further development, and how to proceed with the development, including such delegation to the Community Technology Foundation Patent Administrator of duties and authority with respect to the development as the Committee shall determine. Community Technology Foundation shall render a written semiannual report to the Director of the Medical Center and the Committee on the disposition and status of all inventions and discoveries submitted. If the Committee determined that Community Technology Foundation has not filed a patent application within one year after it has received a disclosure, the Committee, in consultation with the inventor, shall determine what other dispositions, if any, shall be made of the invention or its discovery and its development. -62- 5. COVERAGE This policy shall cover only discoveries and inventions that are patentable as the term is defined in the United States Code, as amended, or the laws of other countries where applications are filed. 6. TRUSTEE REVIEW Any disputes that arise under this policy shall be referred to the Director of the Medical Center, who, after consultation with the President of Boston University and the President of University Hospital, shall recommend final action to the Trustee Council of the Medical Center whose decision shall be final. 7. EMPLOYMENT AGREEMENT An appropriate form shall be signed by all faculty, staff, employees and students working at the Medical Center providing for specific acceptance of the terms of this policy. Rights and obligations under this agreement shall survive any termination of enrollment or employment at the Medical Center. Nothing herein contained is intended to grant or dispose of any right, title, and interest to any disclosure, idea, improvement, or invention, whether patentable or not, which has been supported or funded by outside parties who acquire rights to such disclosure, idea, improvement and invention. 8. ADOPTION The above policy is adopted by the Medical Center and its constituent members by vote of the Trustees of Boston University, Trustees of University Hospital and Trustee Council of the Medical Center. 9. EFFECTIVE DATE AND TERM This policy shall be effective as of the date first written below and shall continue in effect until termination by any of the members by written notice to the other members. The policy shall cover any and all inventions and discoveries which are disclosed or occur after said effective date and which are disclosed prior to said termination. DATE November 23, 1981 UNIVERSITY HOSPITAL, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ John F. Cogan, Jr. By: /s/ John R. Silber ---------------------------------- ------------------------------------ John F. Cogan, Jr. John R. Silber President President -63- PATENT AGREEMENT I affirm that I have received and have read the Boston University Patent Policy/Medical Center Campus. For and in consideration of the provisions by Boston University Medical Center of support in the form of funds, space, personnel, facilities, instruction, supervision or other assistance. I hereby accept and will abide by, and fully comply with the aforesaid Patent Policy as determinative of my rights and obligations in relation to any discoveries or patentable inventions. /s/ Joseph Loscalzo 2/18/94 - -------------------------------------------------------------------------------- SIGNATURE DATE Joseph Loscalzo - -------------------------------------------------------------------------------- NAME (please type or print) DEPARTMENT - -------------------------------------------------------------------------------- INSTITUTION Keep one copy for your files and return signed copy in enclosed envelope. -64- APPENDIX A TO RESEARCH AND LICENSE AGREEMENT DATED JUNE 1, 1993 BETWEEN TRUSTEES OF BOSTON UNIVERSITY AND NITROMED, INC. RESEARCH PROPOSAL PRINCIPAL INVESTIGATOR: Inigo Saenz de Tejada, M.D. FIELD OF RESEARCH: Research relating to erectile dysfunction and ureteral relaxation, utilizing nitric oxide compounds, nitrosothiols, nitrosoproteins, other nitrosylated compounds and/or agonists and antagonists thereof, and other compounds which mediate nitric oxide. SPONSORED RESEARCH PROGRAM: The SPONSORED RESEARCH PROGRAM is described on Exhibit 1 attached to this RESEARCH PROPOSAL. TERM OF RESEARCH PROPOSAL This RESEARCH PROPOSAL shall commence on June 1, 1993 ("COMMENCEMENT DATE") and shall continue in effect until May 31, 1994, unless sooner terminated by either party as provided in Section 13 of the Research and License Agreement. FUNDING OF RESEARCH PROPOSAL The annual research grant to be provided by NITROMED for the first AGREEMENT YEAR (12-month period commencing on the START DATE) shall be in a total amount of [**] dollars ($[**]) as provided in the Budget attached to this RESEARCH PROPOSAL as Exhibit 2. Budgets for subsequent years, if any, shall be determined and approved by the parties in accordance with Section 2 of the Research and License Agreement and shall thereupon be attached and incorporated into Exhibit 2 hereto. IN WITNESS WHEREOF, the parties have executed this RESEARCH PROPOSAL as of the COMMENCEMENT DATE of the SPONSORED RESEARCH PROGRAM set forth above. -65- NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ Manuel Worcel By: /s/ Janis Roberts -------------------------- -------------------------------- Name: Manuel Worcel Name: Janis Roberts ------------------------ ------------------------------ Title: President & CEO Title: Executive Director of Financial Affairs ----------------------- ----------------------------------------- /s/ Inigo Saenz De Tejada ------------------------------------ Inigo Saenz de Tejada, M.D. Principal Investigator -66- EXHIBIT 1 A) Design and evaluation for NO donors for the treatment of impotence. Because of the realization that nitric oxide exerts such an important role as a physiological mediator of penile erection, the possibility of using NO as a therapeutic agent for impotence is proposed. NO, a free radical, is too unstable and short lived to allow its use as a pharmacological agent, however, it can by stabilized by reaction with carrier molecules that prolong its half life and preserve its biological activity [Stamler et al. PNAS. 89: 7674-7677, 1992; Stamler et al. PNAS. 89: 444-448, 1992]. A group of molecules that contain reduced sulfhydryl functional groups subserve this role as NO carriers due to the rapid reaction of free thiol with oxides of nitrogen with the formation of S-nitrosothiols. These molecules are more stable than NO and are potent vasodilators [Stamler et. al; PNAS. 89: 7674-7677, 1992; Stamler et al. PNAS.89 444-448, 1992.] Utilizing this approach, in collaboration with Drs. Loscalzo and Stamler, we are currently developing NO donors for the purpose of treating impotence. Our overall goal is to identify molecules with biological activity that facilitate or induce relaxation of smooth muscle and that, in their molecule, have a free thiol group susceptible to S-nitrosylation. These molecules in addition to their own biological activity would also be NO donors with a potential for a synergism of action (relaxation) on penile smooth muscle. We have performed preliminary studies with two molecules: S-nitroso-captopril and S-nitroso-VIP. Rationale for S-nitroso-captopril. Captopril, an angiotensin converting enzyme inhibitor has been shown to improve endothelium-dependent relaxation in vascular disease. The converting enzyme not only catalyzes the formation of angiotensin II (a potent vasoconstrictor) from its precursor angiotensin I, but also participates in the inactivation of the potent endogenous vasodilator bradykinin. This substance has been shown to be a potent endothelium-dependent dilator of human corpus cavernosum smooth muscle. In addition, although the role of angiotensin II as a constrictor of corpus cavernosum remains elusive, pulsatile release of angiotensin I and II has been demonstrated in this tissue. Our preliminary studies show that captopril (I uM) causes a significant shift to the left of the concentration-dependent relaxation of trabecular smooth muscle by bradykinin. Captopril has a free thiol on its molecule susceptible to S-nitrosylation. Lozcalzo et al. [J Pharmacol Exp Ther. 249: 726-734, 1989.] and Shaffer et al. [J Pharmacol Exp Ther. 256: 704-709, 1991.], have demonstrated the potent vasodilator effects of S-nitroso-captopril in blood vessels. In addition, they have demonstrated that S-nitroso-captopril maintains its full activity as an angiotensin converting enzyme inhibitor. Preliminary studies in our laboratory have demonstrated that S-nitroso-captopril is also a potent dilator of human and rabbit corpus cavernosum tissue. Unlike the dilator effects of NO, S-nitroso-captopril causes a more sustained relaxation of corpus cavernosum smooth muscle which is probably due to the increased stability of NO in this compound. These potent NO dependent relaxant effects, together with the potentiation of endothelium-dependent relaxation described above, make S-nitroso-captopril, a potentially useful agent for the treatment of impotence. Experiments are herein proposed to continue the evaluation of S-nitroso-captopril as a potential drug for the treatment of impotence. Rationale for S-nitroso-VIP. Intracellular accumulation of either CAMP or cGMP lead to a reduction in intracellular calcium concentration, causing myosin dephosphorylation and relaxation. Strong evidence suggests that activation of cGMP-dependent protein kinase mechanisms is a critical step for the actions of both cyclic nucleotides. Also both, NO and VIP, can induce vascular smooth muscle relaxation through cyclic nucleotide-independent mechanisms, including hyperpolarization and the activation of ATP-sensitive K+ channels. The -67- combined actions of the two potent vasodilators, and their mediation via multiple pathways, offer the advantages of making relaxation failure less likely than if only one transmitter or mechanism were in place (Sami Said, Trends in Physiological Sciences). With this rationale and with the goal of combining the effects of VIP and NO we have designed a VIP-NO-donor. Because VIP does not have a free thiol susceptible to nitrosylation we have designed a VIP analog. (VIP-glycine-cystene-NH2) that in the added cysteine presents a free thiol functional group. Preliminary experiments show that VIP-G-C maintains the biological activity of VIP and that the free thiol in cysteine can be nitrosylated, making S-nitroso-VIP a NO donor. Experiments are proposed herein to continue the characterization of S-nitroso-VIP as a potential drug for the treatment of impotence. The following experiments are planned: 1) S-nitroso-captopril. Since the synthesis of this compound has been demonstrated, and its potent dilator effects on human and rabbit corpus cavernosum smooth muscle established, our next step with this compound will be to evaluate its effects in vivo in an animal model. Unfortunately, the rabbit animal model is not valid for this purpose, since rabbit corpus cavernosum responds very poorly to bradykinin. Thus, the possible synergism between the potentiation of bradykinin responses by captopril and the dilator effects of NO can not be evaluated in the rabbit. For this reason we plan to perform these experiments in the dog model. These experiments will be done in collaboration with Dr. Michael Stroky, in the Urology Research Laboratory at the Boston VA Medical Center. This laboratory is fully equipped for in vivo studies in animals. Dr. Siroky has published extensively on a dog model to examine the hemodynamics of penile erection. While the animal is under deep anesthesia, intracavernosal pressure, systemic blood pressure and blood flow to the penis will be monitored. S-nitroso-captopril (0.5 ml solutions of 10 TO THE POWER OF 6 - 10 TO THE POWER OF 3 M) will be delivered by intracavernosal injection while monitoring these parameters. The response to vehicle, captopril, and acidified NaNO2 will be studied as controls. 2) S-nitroso-VIP-G-C. Preliminary data shows that S-nitroso-VIP is a potent dilator of human and rabbit corpus cavernosum. Optimization of conditions for deprotection of the sulfhydryl group of cysteine (removal of the acetamidomethyl group) and nitrosylation of the peptide with a maximum yield are underway in the laboratory of Dr. Jonathan Stamler at the Brigham and Women's Hospital. The following experiments are planned. WHAT IS THE POTENCY, AS A DILATOR, OF VIP-G-C COMPARED TO VIP? Studies will be done on human and rabbit corpus cavernosum tissue in organ chambers. Tissues from the same animal or patient will be contracted (phenylephrine, 3-6 X 10 TO THE POWER OF -7 M) and exposed to cumulative concentrations of either VIP or VIP-GC. The duration of the effects will be assessed by measuring the time of maximal relaxation after the last maximum effective does is given. If VIP-G-C has a dilator potency comparable to VIP, subsequent studies will focus on the comparison of VIP-G-C to S-nitro-VIP-G-C. WHAT IS THE POTENCY, AS A DILATOR, OF S-NITOSO-VIP-G-C COMPARED TO VIP-G-C? In a similar protocol as that described above, the relative potency of the peptides will be compared in human and rabbit corpus cavernosum tissue. Potency of the peptides will be evaluated by measuring the maximal relaxation attained, defining the ED50 and ED max for each peptide, and determining -68- the duration of the effect by measuring the time of maximal relaxation after the last maximum effective dose is given. WHAT IS THE MECHANISM OF S-NITROSO-VIP-G-C INDUCED RELAXATION? Tissues and human corpus cavernosum smooth muscle cells (HCC-SMC) will be exposed to either VIP, VIP-G-C or S-nitroso-VIP-G-C and the accumulation of cyclic nucleotides measured. These experiments will be done in the presence and absence of phosphodiesterase inhibitors. DOES INTRACAVERNOSAL S-NITORSO-VIP-G-C ELICIT PENILE ERECTION IN VIVO? Once the in vitro characterization of the peptide has been completed the potency of this molecule to induce penile erection in vivo will be assessed. These experiments will be done in Dr. Siroky's laboratory with a similar protocol as that described for S-nitroso-captopril. The effects of vehicle, VIP, VIP-G-C and S-nitroso-VIP will be compared. The dog animal model is again chosen because it will allow comparison of the effects of S-nitro-captopril to those of S-nitroso-VIP-G.C. Evaluation of the effects of NO donors on ureteral contractility Rationale. A variety of diseased of the kidney and ureter make the endoiscopic exploration of the ureter (ureteroscopy) necessary. One of the most significant difficulties in performing this technique is overcoming the ureteral spasm that makes cannulation of the ureter very difficult. Overcoming this spasm by mechanical means (e.g. use of dilators) is frequently associated with considerable morbidity due to rupture of the ureter. For this reason, the development of pharmacological agents capable of relaxing the spastic smooth muscle, would represent a very useful tool as an adjunct therapy in ureteroscopy. We have developed a pressurized pig ureter in vitro model that allows the evaluation of the effects of pharmacological agents on ureteral smooth muscle tone. With this model, pharmacological agents can be delivered inside the ureteral lumen, which would be the route of delivery in vivo. Preliminary experiments with this model show that S-nitroso-N-acetyl-cysteine (10 TO THE POWER OF -4 - 10 TO THE POWER OF -3 M) inhibits ureteral contraction elicited by either electrical stimulation or norepinephrine. It is our plan to continue the characterization of NO donors in this model; the following molecules will be tested: 1) Continue the characterization of the effects of S-nitroso-N-acetyl-cysteine 2) Evaluation of the effects of S-nitroso-glutathione 3) Design and evaluation of more lypophilic NO donors (better penetration of the ureteral epithelium), to inhibit ureteral smooth muscle contraction. -69- EXHIBIT 2 TEJADA-NITROMED BUDGET NitroMed Budget - Tejada - ------------------------------------------------------------ ------------------ ------------------- ------------------ Boston University Portion: - ------------------------------------------------------------ ------------------ ------------------- ------------------ Budget A - ------------------------------------------------------------ ------------------ ------------------- ------------------ Salaries $[**] - ------------------------------------------------------------ ------------------ ------------------- ------------------ Fringe Benefits $[**] - ------------------------------------------------------------ ------------------ ------------------- ------------------ - ------------------------------------------------------------ ------------------ ------------------- ------------------ Supplies: - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Rabbits $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Other Supplies $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Equipment: $[**] $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Budget B Supplies and Other $[**] $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Tot.D.C. $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Indirect Costs @ [**]% $[**] $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Total BU Portion of Budget $[**] - ------------------------------------------------------------ ------------------ ------------------- ------------------ VA Subcontract - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Salaries $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Supplies $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Other $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Tot.D.C. $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Ind.Cost @ [**]% $[**] $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ - --------------------- -------------------------------------- ------------------ ------------------- ------------------ Total VA Budget Portion $[**] - --------------------- -------------------------------------- ------------------ ------------------- ------------------ - --------------------- -------------------------------------- ------------------ ------------------- ------------------ - ------------------------------------------------------------ ------------------ ------------------- ------------------ Total Budget All components $[**] - ------------------------------------------------------------ ------------------ ------------------- ------------------ - ------------------------------------------------------------ ------------------ ------------------- ------------------ - ------------------------------------------------------------ ------------------ ------------------- ------------------ - ------------------------------------------------------------ ------------------ ------------------- ------------------ adh 1/11/93 - ------------------------------------------------------------ ------------------ ------------------- ------------------

-70- INVESTIGATOR'S STATEMENT OF AGREEMENT The undersigned investigator, /s/ Inigo Saenz De Tejada ("Investigator") declares that he or she has read and is familiar with the provisions of the Research and License Agreement ("AGREEMENT") dated June 1, 1993 between NITROMED, INC. ("SPONSOR") and TRUSTEES OF BOSTON UNIVERSITY ("UNIVERSITY"), and hereby agrees with the UNIVERSITY to be bound by the terms and conditions thereof with respect to the Research Proposal of Dr. Inigo Saenz de Tejeda . Further, Investigator specifically acknowledges and agrees as follows: 1. MAINTAINING CONFIDENTIALITY OF NITROMED CONFIDENTIAL INFORMATION AND MATERIAL: Investigator shall comply with his or her obligations to maintain the confidentiality of NITROMED CONFIDENTIAL INFORMATION AND MATERIALS, disclosed or provided by NITROMED to Investigator or UNIVERSITY, as defined in Section 6 of the AGREEMENT. 2. SEEKING RESEARCH FUNDING FROM OTHER COMMERCIAL SPONSORS IN THE FIELD OF RESEARCH - NITROMED WRITTEN APPROVAL REQUIRED: Investigator shall comply with his or her obligations under Section 2.3 of the AGREEMENT which requires that the Investigator obtain the written consent of NITROMED prior to seeking or accepting any funding from a commercial sponsor in the Field of Research. The Investigator will consult with the Medical Campus Office of Sponsored Programs regarding such prior written consent, before applying for any such funding in the Field of Research, which is defined in the Research Proposal in Appendix A to the AGREEMENT, as follows: Research relating to erectile dysfunction and ureteral relaxation, utilizing nitric oxide compounds, nitrosothiols, nitrosoproteins, other nitrosylated compounds and/or agonists and antagonists thereof, and other compounds which mediate nitric oxide. 3. USING OR ACQUIRING MATERIALS FOR USE IN THE RESEARCH - MATERIALS MUST BE ACQUIRED ON TERMS CONSISTENT WITH NITROMED'S RIGHTS UNDER THE AGREEMENT: In accordance with Section 5.5 of the AGREEMENT, Investigator shall not use or acquire any biological or chemical materials for use in the sponsored research under terms that will prevent UNIVERSITY from granting to NITROMED exclusive rights in technology developed while using such materials in the sponsored research. Investigator will consult with the Medical Campus Office of Sponsored Programs regarding any agreement with a third party for transfer of materials to the Investigator for use in the sponsored research or in the Field of Research. 4. DISCLOSING ALL INVENTIONS, INFORMATION AND MATERIALS DEVELOPED IN THE FIELD OF RESEARCH DURING THE RESEARCH PROGRAM: Investigator acknowledges his or her obligation to disclose to the UNIVERSITY all inventions, information and materials as defined in the AGREEMENT developed in the Field of Research during the research program. Ownership of all such technology shall vest in the UNIVERSITY and be licensed to NITROMED in accordance with the terms of the AGREEMENT. Further, Investigator acknowledges that he or she has signed the Boston University Medical Center Patent Policy and Agreement, a signed copy of which is attached hereto, pursuant to which Investigator shall share in net royalties received by the UNIVERSITY as provided therein. -71- 5. RESTRICTIONS ON DISCLOSURE OF RESEARCH RESULTS: In order to protect NITROMED's rights in inventions, information and materials developed in the Field of Research, the Investigator will comply with the following provisions of the AGREEMENT: a. PUBLICATION DELAYS: Investigator agrees to comply with the requirements of Section 4.2 of the AGREEMENT. Investigator will ensure that he or she submits to NITROMED a copy of any material to be disclosed to a third party or submitted for publication at least [**] days prior to such publication, submission or disclosure, b. RESTRICTION ON TRANSFER OF BIOLOGICAL OR CHEMICAL MATERIALS: Investigator agrees to comply with the requirements of Section 4.1 of the AGREEMENT. Investigator will ensure that research materials are not transferred to any for-profit entity or person known to be an employee or consultant of such entity. Investigator will ensure that materials are not transferred to a non-profit entity or person affiliated therewith except under the terms of a signed Material Transfer Agreement ("MTA") in the form attached as Appendix C to the AGREEMENT or as otherwise approved by NITROMED and UNIVERSITY. Investigator will consult with the Medical Campus Office of Sponsored Research regarding any such MTA and will provide a copy thereof to that Office. /s/ Inigo Saenz De Tejada Inigo Saenz De Tejada - ------------------------------------ ----------------------------------- Signature of Investigator/Date Name of Investigator (typed) WITNESSED BY: /s/ Anne Der Hagopian Anne Der Hagopian - ------------------------------------ ----------------------------------- Signature of Witness/Date Name of Witness (typed) -72- BOSTON UNIVERSITY MEDICAL CENTER CAMPUS PATENT POLICY AND AGREEMENT PREAMBLE The patent policy outlined herein is the policy of the Boston University Medical Center, whose constituent members are Boston University School of Medicine, Goldman School of Graduate Dentistry and University Hospital. The Medical Center recognizes that patentable inventions may be made in the course of research sponsored by the Medical Center and/or by others through the Medical Center. It is the desire of the Medical Center to maximize the benefit to the individual who makes such a patentable invention, the Medical Center and the general public, and to stimulate initiative in the faculty, staff, and employees of the Medical Center. The Medical Center recognizes that this may best be accomplished through patenting and licensing such inventions in a manner consistent with the public interest and for such purpose the Medical Center hereby establishes the patent policy set forth herein. This policy supersedes the policy as issued March 1, 1963. 1. PATENT POLICY A. In order to protect the public good and the general character of the Medical Center and its members, and in order to fulfill obligations to research sponsors, the Medical Center shall claim on behalf of its constituent members equity in all discoveries and its right to acquire the title and control to such discoveries where the discoveries are made by faculty, staff, employees or students (including all types of trainees or postgraduate residents or fellows) working on or arising from programs supported in whole or in part by funds, space, personnel, or facilities provided by the Medical Center or any of its members. B. Where a discovery is made by an inventor outside of any program conducted by the Medical Center or any constituent member of the Medical Center with which the inventor is connected, and where the Medical Center or any constituent member did not provide or administer significant funds, space, personnel, or facilities for work leading to the discovery, the discovery shall remain the exclusive property of the inventor or his sponsor. The Medical Center and its constituent members shall not ordinarily consider provision of office, classroom, or library facilities as constituting significant use of Medical Center funds, space, personnel or facilities. C. When necessary, the Medical Center Committee on Inventions and Discoveries shall decide whether an invention or discovery should be classified under 1A or 1B. The decision of the Committee is appealable to the Director of the Medical Center, who shall consult with the President of Boston University and the President of University Hospital. The Director shall recommend final action to the Trustee Council, whose decision shall be final. 2. ROYALTIES Where the Medical Center claims equity in a discovery, the inventor will ordinarily receive at least 15 percent but not more than 30 percent of the net royalties accruing therefrom. The exact share shall be determined, promptly after the disclosure by the Deans of the Medical and Dental Schools and the Administrator of University Hospital. In determining the exact share, the Deans -73- and the Administrator shall take into account but not be limited to the state of development of the discovery, the ease of licensing and marketing, the scope of patent protection and the degree of novelty of the discovery. The Community Technology Foundation of Boston University, when it acts as agent for the administration of patents or discoveries made within the Medical Center, shall receive 20 percent of the net royalties (see Paragraph 4). The remaining royalties from and equities in the invention shall be divided among the constituent members of the Medical Center, including any shares to be allocated to the inventor's department or division, in proportions determined by the Deans of the Medical and Dental Schools and the Administrator of University Hospital. In case the Deans and the Administrator cannot reach a consensus, the Director of the Medical Center shall decide. 3. DISCLOSURES Because the securing of rights in discoveries and inventions depends on prompt and efficient patent application and administration, all faculty, staff, students, and employees of the Medical Center who make inventions or discoveries shall immediately disclose said inventions or discoveries to the Medical Center Patent Office, which, upon approval of the Medical Center Committee on Inventions and Discoveries, shall forward such disclosures of inventions and discoveries covered under Paragraph 1A to the Community Technology Foundation, Patent Administrator. This disclosure obligation shall apply to all inventions and discoveries whether they fall under Paragraph 1A or 1B above. 4. PATENT ADMINISTRATION Unless otherwise determined in specific instances by the Medical Center Committee on Inventions and Discoveries, the Community Technology Foundation of Boston University ordinarily shall be the agent of the Medical Center for the administration of inventions and discoveries covered under Paragraph 1A made within the Medical Center, subject to the terms herein. The Community Technology Foundation Patent Administrator shall present the disclosures to the Medical Center Committee on Inventions and Discoveries. The membership of that Committee shall consist of an equal number of representatives from each of Boston University and University Hospitals, all designated by the Director of the Medical Center. The Chairman of the Committee shall be designated by the Director of the Medical Center after consultation with the President of Boston University and the President of University Hospital. It shall be the Committee's responsibility to determine whether an invention or discovery is worth further development, and how to proceed with the development, including such delegation to the Community Technology Foundation Patent Administrator of duties and authority with respect to the development as the Committee shall determine. Community Technology Foundation shall render a written semiannual report to the Director of the Medical Center and the Committee on the disposition and status of all inventions and discoveries submitted. If the Committee determined that Community Technology Foundation has not filed a patent application within one year after it has received a disclosure, the Committee, in consultation with the inventor, shall determine what other dispositions, if any, shall be made of the invention or its discovery and its development. -74- 5. COVERAGE This policy shall cover only discoveries and inventions that are patentable as the term is defined in the United States Code, as amended, or the laws of other countries where applications are filed. 6. TRUSTEE REVIEW Any disputes that arise under this policy shall be referred to the Director of the Medical Center, who, after consultation with the President of Boston University and the President of University Hospital, shall recommend final action to the Trustee Council of the Medical Center whose decision shall be final. 7. EMPLOYMENT AGREEMENT An appropriate form shall be signed by all faculty, staff, employees and students working at the Medical Center providing for specific acceptance of the terms of this policy. Rights and obligations under this agreement shall survive any termination of enrollment or employment at the Medical Center. Nothing herein contained is intended to grant or dispose of any right, title, and interest to any disclosure, idea, improvement, or invention, whether patentable or not, which has been supported or funded by outside parties who acquire rights to such disclosure, idea, improvement and invention. 8. ADOPTION The above policy is adopted by the Medical Center and its constituent members by vote of the Trustees of Boston University, Trustees of University Hospital and Trustee Council of the Medical Center. 9. EFFECTIVE DATE AND TERM This policy shall be effective as of the date first written below and shall continue in effect until termination by any of the members by written notice to the other members. The policy shall cover any and all inventions and discoveries which are disclosed or occur after said effective date and which are disclosed prior to said termination. DATE November 23, 1981 UNIVERSITY HOSPITAL, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ John F. Cogan, Jr. By: /s/ John R. Silber ------------------------------ ----------------------------- John F. Cogan, Jr. John R. Silber President President -75- PATENT AGREEMENT I affirm that I have received and have read the Boston University Patent Policy/Medical Center Campus. For and in consideration of the provisions by Boston University Medical Center of support in the form of funds, space, personnel, facilities, instruction, supervision or other assistance. I hereby accept, and will abide by, and fully comply with the aforesaid Patent Policy as determinative of my rights and obligations in relation to any discoveries or patentable inventions. - -------------------------------------------------------------------------------- SIGNATURE DATE - -------------------------------------------------------------------------------- NAME (please type or print) DEPARTMENT - -------------------------------------------------------------------------------- INSTITUTION Keep one copy for your files and return signed copy in enclosed envelope. -76- MODIFICATION #1 TO APPENDIX A TO RESEARCH AND LICENSE AGREEMENT DATED JUNE 1, 1993 BETWEEN TRUSTEES OF BOSTON UNIVERSITY AND NITROMED, INC. RESEARCH PROPOSAL PRINCIPAL INVESTIGATOR: Inigo Saenz de Tejada, M.D. FIELD OF RESEARCH: Research relating to erectile dysfunction and ureteral relaxation, utilizing nitric oxide compounds, nitrosothiols, nitrosoproteins, other nitrosylated compounds and/or agonists and antagonists thereof, and other compounds which mediate nitric oxide. SPONSORED RESEARCH PROGRAM: The SPONSORED RESEARCH PROGRAM is described on Exhibit 1 attached to the original RESEARCH PROPOSAL. TERM OF RESEARCH PROPOSAL: This modification shall extend the termination date of the RESEARCH PROPOSAL through May 31, 1995, unless sooner terminated by either party as provided in Section 13 of the Research and License Agreement. FUNDING OF RESEARCH PROPOSAL: The research grant to be provided by NITROMED for the second AGREEMENT YEAR (12-month period commencing on 6/1/94) shall be in a total amount of [**] ($[**]), as provided in the Budget attached to this modification # 1 of the RESEARCH PROPOSAL as Exhibit 2. Budgets for subsequent years, if any, shall be determined and approved by the parties in accordance with Section 2 of the Research and License Agreement and shall thereupon be attached and incorporated into Exhibit 2 hereto. -77- IN WITNESS WHEREOF, the parties have executed this RESEARCH PROPOSAL as of the COMMENCEMENT DATE of the SPONSORED RESEARCH PROGRAM set forth above. NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By: /s/ Manuel Worcel By: /s/ Janis Roberts --------------------------------- -------------------------------- Name: Manuel Worcel Name: Janis Roberts Title: President & CEO Title: Exec. Dir. for Financial Affairs /s/ Inigo Saenz De Tejada ----------------------------- Inigo Saenz de Tejada, M.D. -78- TEJADA-NITROMED BUDGET Budget for Modification #1 to Appendix A Inigo Saenz de Tejada, M.D. Period covered: 6/1/94-6/30/95 Salaries Technician $[**] Fringe Benefits $[**] Supplies: $[**] Equipment: $[**] Other: $[**] Director Cost: $[**] Indirect Cost @ [**]% $[**] Total Budget [**] --------

The above budget is for research studies related to the design and characterization of nitric oxide donors for the treatment of impotence and ureteral spasm. An exception to this would be if additional experiments are required for the evaluation of new molecules, in vivo, at the VA Medical Center. -79- APPENDIX B 1. Boston University Disclosure Number: 93-20 Submitted to the Boston University Office of Patent and Technology Administration on June 23, 1993 Title: S-Nitrosylation of VIP, VIP Family of Peptides and Synthetic Analogs of These Peptides for the Treatment of Impotence Boston University Investigator: Dr. Inigo Saenz de Tejada -80- APPENDIX C Agreement dated ________________ by and among ________________________ (the "Institution") and _______________________ (the "Investigator") and Boston University ("University") with respect to the samples of a In consideration of the receipt from University by the Institution and the Investigator of the samples, the Institution and the Investigator agree to the following conditions: 1. Those samples, their progeny and derivatives thereof (the "Materials") remain the property of University. 2. The Investigator will use the Materials solely for academic noncommercial research conducted by the Investigator at the Institution in the research program described in Exhibit A hereto (the "Research Program"). Neither the Investigator nor the Institution will use the results of the Research Program, including inventions, directly or indirectly for profit-making purposes without the consent of University. 3. The Investigator will not give access to the Materials to any party not connected with the Research Program without written permission from University. 4. The Investigator and the Institution accept the Materials with the knowledge that they are provided without warranty of merchantability of fitness for a particular purpose or any other warranty, express or implied. The Institution agrees to defend and indemnify and hold harmless University and its employees and agents for all claims and damages (including legal fees) arising from the use, storage, or handling, of the Materials by the Institution and/or the Investigator. INSTITUTION: INVESTIGATOR: By: By: ------------------------------ ------------------------- BOSTON UNIVERSITY By: ------------------------------ -81- AMENDMENT TO RESEARCH AND LICENSE AGREEMENT WHEREAS, Trustees of Boston University, a Massachusetts not-for-profit corporation with offices at 715 Albany Street, Boston, Massachusetts 02118 (the "UNIVERSITY") and NitroMed, Inc., a Delaware corporation with its principal office at 12 Oak Park Drive, Bedford, Massachusetts 01730 ("NITROMED"), entered into a research and license agreement dated as of June 1, 1993, (the "Agreement") for certain RESEARCH PROGRAMS to be sponsored by NITROMED and performed by UNIVERSITY, which RESEARCH PROGRAMS are more particularly described therein; and WHEREAS, NITROMED desires to sponsor an additional RESEARCH PROGRAM at UNIVERSITY and UNIVERSITY desires to perform said additional RESEARCH PROGRAM; and WHEREAS, UNIVERSITY and NITROMED mutually desire to amend said Agreement to reflect the additional RESEARCH PROGRAM to be sponsored by NITROMED and to be performed by UNIVERSITY; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, UNIVERSITY and NITROMED hereby agree to amend the Agreement by: Adding the attached RESEARCH PROPOSAL to Appendix A of the Agreement, which shall be a duly authorized SPONSORED RESEARCH PROGRAM as that term is defined in the Agreement. All terms not expressly defined herein, shall have the definition set forth in the Agreement. Except as expressly provided herein or in said Agreement, said Agreement as originally executed is hereby ratified and confirmed. EXECUTED as a sealed instrument as of the 1st day of July, 1997. NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By:/s/Murray R. Matthews, Jr. By: /s/ Barbara A. Cole -------------------------------------- --------------------------- Murray R. Mathews, Jr. Barbara A. Cole, Executive Its Vice President Hereunto Authorized Title: Director for Financial Affairs RESEARCH PROPOSAL -82- NITROMED SPONSORED RESEARCH PROGRAM ON RSNOS AND PLATELET FUNCTION JOSEPH LOSCALZO, M.D., PH.D. WHITAKER CARDIOVASCULAR INSTITUTE BOSTON UNIVERSITY SCHOOL OF MEDICINE -83- SECTION 15: BACKGROUND Platelets play an important role in primary hemostasis and in the pathophysiology of thrombotic disorders. Nitric Oxide (NO) and S-nitrosothiols (RSNOs) are potent antiplatelet agents that exert their effects through a variety of mechanisms, including activation of guanylyl cyclase and modulation of nonspecific cation channels in the platelet plasma membrane. Our laboratory has played a central role in dissecting the role of NO and RSNOs in modulating platelet function and in developing approaches to the pharmacological inhibition of platelet activation utilizing RSNO-based approaches. In this proposal, we present planned experiments that focus on 1) developing a novel S-NO-based inhibitor of platelet adhesion and activation that can be used as an adjunct for thrombolytic therapy, and 2) dissecting the molecular mechanism by which RSNOs gain access to the cytosolic compartment of cells through a mechanism that involves [**]. SECTION 16: TERM OF RESEARCH PROGRAM The research program (the "Research Program") described herein shall be conducted during the period from July 1, 1997 through June 30, 2000. SECTION 17: RESEARCH PROPOSAL 17.1 We wish to develop a novel inhibitor of platelet adhesion and activation based on a [**]. SECTION 18: COMPENSATION In consideration of Boston University's agreement to undertake the Research Program described herein, NitroMed will pay University a total of $[**]. The program funds will be paid, in advance to Boston University in equal quarterly installments with the first payment due on July 1, 1997. The annual budget consists of: -84- Postdoctoral Fellow Salary and Fringe $[**]Supplies/Animal Costs $[**]Institutional Overhead $[**] Total $[**]We view these studies as of potentially great interest, both to the overall area of platelet biology, but also to the mission of NitroMed and to its focused interest in the effects of NO and RSNOs on platelet function. [**] -85- AMENDMENT TO RESEARCH AND LICENSE AGREEMENT WHEREAS, Trustees of Boston University of Massachusetts not-for-profit corporation with offices at 715 Albany Street, Boston, Massachusetts 02118 (the "UNIVERSITY") and NitroMed, Inc., a Delaware corporation with its principal office at 12 Oak Park Drive, Bedford, Massachusetts 01730 ("NITROMED "), entered into a research and license agreement dated as of June 1, 1993, (the "Agreement") for certain RESEARCH PROGRAMS to be sponsored by NITROMED and performed by UNIVERSITY, which RESEARCH PROGRAMS are more particularly described therein; and WHEREAS, NITROMED desires to sponsor an additional RESEARCH PROGRAM at UNIVERSITY and UNIVERSITY desires to perform said additional RESEARCH PROGRAM; and WHEREAS, UNIVERSITY and NITROMED mutually desire to amend said Agreement to reflect the additional RESEARCH PROGRAM to be sponsored by NITROMED and to be performed by UNIVERSITY; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledge, UNIVERSITY and NITROMED hereby agree to amend the Agreement by: Adding the attached RESEARCH PROPOSAL entitled "Evaluation of Antithrombotic Properties of Nitroso-Derivative of Recombinant Fragment of Von Willebrand Factor Using In Vivo and Ex Vivo Guinea Pig Model" to Appendix A of the Agreement, which shall be a duly authorized SPONSORED RESEARCH PROGRAM as that term is defined in the Agreement. All terms not expressly defined herein, shall have the definition set forth in the Agreement. Except as expressly provided herein or in said Agreement, said Agreement as originally executed is hereby ratified and confirmed. EXECUTED as a sealed instrument as of the 1st day of January, 1999. NITROMED, INC. TRUSTEES OF BOSTON UNIVERSITY By:/s/Murray R. Matthews, Jr. By: /s/ Barbara A. Cole ------------------------------- ---------------------------------- Murray R. Mathews, Jr. Barbara A. Cole, Executive Its Vice President Hereunto Title: Director for Financial Affairs Authorized -86- BOSTON UNIVERSITY 88 East Newton Street Joseph Loscalzo, M.D., Ph.D. SCHOOL OF MEDICINE Boston, MA 02118-2347 WADE PROFESSOR AND CHAIRMAN Tel: 617 638-7254 Department of Medicine BOSTON MEDICAL CENTER Fax: 617 638-8728 Boston University jloscalz@bu.edu School of Medicine March 26, 2003 700 Albany Street Boston Medical Center Boston, MA 02118-2544 Martin Feelisch, Ph.D. Tel: 617 638-4890 DIRECTOR 2017 South Kirkwood Drive Cardiovascular Institute Shreveport, Louisiana 71118

Dear Martin: I am pleased to offer you a position in the Section of Molecular Medicine of the Department of Medicine at Boston University School of Medicine. The details of this position are as follows: 1. You will be proposed for appointment as Professor of Medicine. 2. Your salary will be $[**] per annum with the standard benefits package. We expect that you will contribute to your salary support through grant resources. To this end, NitroMed, Inc., will provide $[**] per annum (with cost of living increases) for three years toward your salary. After year three, I expect that you will generate [**]% of your salary from grants. 3. NitroMed, Inc., has agreed to purchase up to $[**] of equipment you requested during your visit on February 5, 2003, as needed. 4. You will be given access for support for a postdoctoral fellow on the Cardiovascular Training Grant for up to three years. 5. You will be provided access to a graduate student through the Graduate Program in Molecular Medicine. 6. You will be given $[**] per annum for supplies for three years as additional support from NitroMed, Inc. 7. You will be given 1,500 sq. ft. of space in the Evans Biomedical Research Center through the Boston University School of Medicine. This space will be leased from Boston University by NitroMed, Inc., at $40 per sq. ft. for three years. 8. We expect that you will work up to [**] days per week on NitroMed, Inc. projects under the terms of the existing license agreement between NitroMed, Inc. and the Trustees of Boston University. In addition, you will be given a position on the Scientific Advisory Board of NitroMed, Inc. We trust this letter details all the major issues we discussed, and meets your projected needs adequately. We look forward with enthusiasm to your joining us and to many years of gratifying academic productivity with us. With best personal regards, we remain Sincerely, /s/ Joseph Loscalzo /s/ Aram Chobanian /s/ Michael Loberg - ------------------- ------------------ ------------------ Joseph Loscalzo, M.D., Ph.D. Aram Chobanian, M.D. Michael Loberg, Ph.D. Chairman, Department of Medicine Dean and Provost Chief Executive Officer BU School of Medicine NitroMed, Inc. I have read and accept the position as outlined above. /s/Martin Feelish May 5, 2003 - ----------------------------------------------- Martin Feelish, Ph.D. Date -87- EX-10.9 16 a2116973zex-10_9.txt EXHIBIT 10.9 EXHIBIT NO. 10.9 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. AGREEMENT This AGREEMENT is made and entered into April 26, 2001 by and between NitroMed, Inc., a Delaware corporation with its principal place of business at 12 Oak Park Drive, Bedford, Massachusetts, 01730 (the "Company") and FoxKiser, a law firm with its principal place of business at 750 17th Street, N.W., Suite 1100, Washington D.C. 20008 ("FoxKiser"). In consideration of mutual agreements and covenants set forth below, the Company and FoxKiser hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following terms shall have the following definitions: 1.1 AFFILIATE. "Affiliate" of a Party shall mean any company controlling, controlled by or under common control with such Party. For purposes of this Section 1.1, "control" shall mean (a) in the case of corporate entities, direct or indirect ownership of a least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership or a least fifty percent (50%) of the equity interest with power to direct the management and policies of such non-corporate entities. A company shall be considered an "Affiliate" for only so long as such ownership or control exists. 1.2 BIDIL PRODUCTS. "BiDil Products" shall mean the Company's therapeutic products consisting of a combination of hydralazine and isosorbide dinitrate (with or without one or more additional active ingredients) alone or in combination with any other active compounds or active ingredients. 1.3 FDA. "FDA" means the United States Food and Drug Administration. 1.4 FIRST COMMERCIAL SALE. "First Commercial Sale" means the first commercial sale of a BiDil Product by the Company, its Affiliates or its sublicensees. Sales for test marketing, clinical trial purposes or compassionate or similar use shall not be considered to constitute a First Commercial Sale. 1.5 NET SALES. "Net Sales" shall mean the gross amount received by the Company, its Affiliates and/or sublicensees from an unrelated third party on sales or other dispositions of BiDil Products in the Territory, less the following items: (a) trade, cash and quantity discounts, allowances and rebates actually allowed and taken directly with respect to such sales or disposition; (b) tariffs, duties, excises, value-added and sales taxes or other taxes imposed upon and paid with respect to such sales or dispositions (excluding national, state and local taxes based on income); (c) actual amounts repaid or credited by reason of rejections, defects, recalls and returns or because of rebates or retroactive price reductions; and (d) freight, postage, insurance and other transportation charges separately invoiced by shipping such BiDil Product. 1.6 PARTY. "Party" shall mean either the Company or FoxKiser, as applicable. "Parties" shall mean the Company and FoxKiser, collectively. 1.7 SERVICES. "Services" means those services provided by FoxKiser or its Affiliates to obtain written FDA approval of the first BiDil product. Subsequent to approval of the first BiDil product compensation for legal services provided by FoxKiser shall be governed by a separate agreement to be entered into between the Parties. 1.8 THIRD-PARTY ROYALTY. "Third-Party Royalty" means the aggregate royalty payable to the Company by any third party upon the sale of a BiDil Product by such third party pursuant to the terms of a license or other business arrangement between such third party and the Company, after deducting the portion of such royalty which the Company is required to pay to Professor Jay N. Cohn. 2. CONSIDERATION FOR SERVICES 2.1 FEES AND EXPENSES. For Services rendered hereunder, the Company shall pay to FoxKiser the following fees and expenses: (a) The Company shall pay FoxKiser its legal fees at its normal and customary rates and fees for consulting services provided [**]. (b) The Company agrees to reimburse FoxKiser for all reasonable and necessary costs and expenses incurred by FoxKiser in connection with providing the Services, including payments made to consultants, advisors or other third parties which are retained by FoxKiser with Nitromed's consent. 2.2 PAYMENT OF FEES AND EXPENSES. (a) For informational purposes only, FoxKiser will prepare and submit to the Company a quarterly statement of the fee amounts described in Section 2.1 (a) above. The Parties agree that the payment of such fees will be deferred by the Company and will be paid in full by the Company within forty-five (45) days after the date on which the Company has received written FDA approval of the first BiDil Product. (b) The Company will pay to FoxKiser the expense amounts describe in Section 2.1(b) above within thirty (30) days after receipt of such expenses. 2.3 ROYALTIES. In further consideration for Services provided, upon approval of any BiDil product, the Company agrees to pay to FoxKiser royalties on the sales of that BiDil product as follows: (a) In the event that the Company elects to commercialize and sell the BiDil Product independently, the Company shall pay to FoxKiser a royalty equal to [**] percent ([**]%) for the Company's Net Sales. (b) In the event that the Company elects to license to a third party the right to commercialize and sell any BiDil Product, the Company shall pay to FoxKiser a royalty equal to [**] percent ([**]%) of the Net Sales of that BiDil Product by such third party, subject to adjustment as described in Section 2.3(c) below. (c) The royalty payment set forth in Section 2.3(b) shall be subject to adjustment, based upon the good faith negotiation of the Parties, in the event that the Company enters into a license or other business arrangement with a third party on terms that limit the Third Party Royalty payable to the Company to less than [**] percent ([**]%). (d) The royalty payments due for a BiDil product shall end six months from the date of market introduction of a FDA-approved generic version of that product. 2.4 PAYMENT OF ROYALTIES. (a) All payments under Section 2.3 above shall be made within sixty (60) days after the end of each calendar quarter by wire transfer to such bank and account as FoxKiser may from time to time designate in writing. All such payments shall be made in U.S. Dollars. (b) All payments due under Section 2.3. above but not paid by the Company on the due date thereof shall bear interest at the U.S. prime rate of CitiBank N.A. Such interest shall accrue on the balance of unpaid amounts outstanding from the date on which portions of such amount become due and owing until payment thereof in full. 3. ROYALTY REPORTS 3.1 CONTENTS OF THE COMPANY'S REPORTS. The Company shall deliver to FoxKiser within sixty (60) days after the end of each calendar quarter, beginning with the calendar quarter in which the First Commercial Sale occurs, a written report describing, for the applicable quarter: (a) the gross sales of each BiDil Product by the Company, its Affiliates and sublicensees, together with the deductions therefrom and resulting Net Sales; and (b) the total royalty due on such Net Sales under Section 2.3. above. Each report shall be accompanied by full payment to FoxKiser of the royalties payable under Section 2.3 above. 3.2 ROYALTIES MISTAKENLY PAID ON RETURNED BIDIL PRODUCTS. If the Company pays a royalty on a BiDil Product which has been or is subsequently returned to the Company or its Affiliate or sublicensee, the amount of the royalty so paid shall be deemed a nonrefundable credit against royalties payable by the Company for subsequent calendar quarters. 3.3 THE COMPANY'S BOOKS AND RECORDS. The Company agrees to make and keep, and agrees to cause it Affiliates and sublicensees to make and keep, full and accurate books and records in sufficient detail to enable royalties payable hereunder to be determined. On thirty (30) days' prior written notice to the Company, FoxKiser and its certified public accountants, on one occasion during each calendar year, shall have reasonable access to such books and records of the Company and its Affiliates and sublicensees pertaining to activities under this Agreement and shall each have the right to make copies therefrom at FoxKiser's expense. FoxKiser and its certified public accountants shall each have such access at all reasonable times and from time to time during normal business hours. Prompt adjustment shall be made by the proper Party to compensate for any errors or omissions disclosed by such audit. FoxKiser agrees to hold confidential all information learned in the course of any examination of books and records hereunder except when it is necessary for FoxKiser to reveal such information in order to enforce its rights under this Agreement or except when compelled by law or when such information is publicly available without breach by FoxKiser. 3.4 THE COMPANY'S REPORTS CONCLUSIVELY CORRECT. In the absence of fraud, all reports and payments not disputed as to correctness by FoxKiser within three (3) years after receipt thereof shall thereafter conclusively be deemed correct for all purposes. 4. TERM AND TERMINATION 4.1 TERM OF AGREEMENT. Unless it is terminated earlier pursuant to this Article 4, this Agreement shall continue in full force and effect unless and until a renegotiation is triggered as set forth in Section 2.3 above. 4.2 TERMINATION FOR MATERIAL BREACH. Upon any material breach of this Agreement by either the Company, on one hand, or FoxKiser on the other hand (in such capacity, the "Breaching Party"), the other Party or Parties (in such capacity, the "Non-Breaching Party") may terminate this Agreement by providing sixty (60) days' written notice to the Breaching Party, specifying the material breach. The termination shall become effective at the end of the sixty (60) day period unless (a) the Breaching Party cures such breach during such sixty (60) day period, or (b) if such breach is not susceptible to cure within sixty (60) days of the receipt of written notice of the breach, the Breaching Party is diligently pursuing a cure (unless such breach, by its nature, is incurable, in which case the Agreement may be terminated immediately). Any dispute over whether a material breach has occurred shall be resolved by binding arbitration. 4.3 PAYMENT OBLIGATIONS CONTINUE. Upon termination of this Agreement, nothing shall be construed to release the Company from its obligations to pay FoxKiser any and all royalties or other amounts accrued but unpaid hereunder prior to the date of such termination. 5. MISCELLANEOUS 5.1 ASSIGNMENTS. This Agreement and any and all of the rights and obligations of any Party hereunder shall not be assigned, delegated, sold, transferred or otherwise disposed of, by operation of law or otherwise, without the prior written consent of the Company, on one hand, or FoxKiser, on the other hand, which consent shall not be unreasonably withheld; provided, however, that the Company may assign, delegate, sell, transfer or otherwise dispose of rights and obligations hereunder without such prior written consent to any purchaser of all or substantially all of the assets or stock of the Company, through merger, consolidation or otherwise, provided that in any such case such assignee or successor expressly assumes the obligations of the Company hereunder. This Agreement shall be binding upon, and inure to the benefit of, the Company and FoxKiser and their respective successors and assigns, to the extent such assignments are in accordance with this Section 5.1. 5.2 GOVERNING LAW. This Agreement shall be governed, interpreted and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to agreements made and to be fully performed therein. 5.3 WAIVER. A waiver of any breach of any provision of this Agreement shall not be construed as a continuing waiver of other breaches of the same or other provisions of this Agreement. 5.4 NOTICES. (a) Each notice required or permitted to be sent under this Agreement shall be given by facsimile transmission or by registered or recorded delivery letter to the Parties, to the attention of Allan Fox of FoxKiser and Michael Loberg of NitroMed, at the addresses indicated on the first page here. (b) Any properly addressed notice if given or made by registered or recorded delivery letter shall be deemed to have been received on the earlier of the date actually received and the date five (5) business days after the same was posted (and in proving such it shall be sufficient to prove that the envelope containing the same was properly addressed and posted as aforesaid) and if given or made by facsimile transmission shall be deemed to have been received at the time of dispatch, unless such date of deemed receipt is not a business day, in which case the date of deemed receipt shall be the next succeeding business day. 5.5 ENTIRE UNDERSTANDING. This Agreement between the Parties entered into as of the date hereof embody the entire understanding between the Parties relating to the subject matter hereof, whether written or oral, and there are not prior representations, warranties or agreements between the Parties not contained in this Agreement. 5.6 AMENDMENTS. Any amendment or modification of any provision of this Agreement must be in writing, dated and signed by each of the Parties hereto. 5.7 HEADINGS. Any headings contained herein are for directory purposes only, do not constitute a part of this Agreement, and shall not be employed in interpreting this Agreement. 5.8 COUNTERPARTS. This Agreement may be executed in any number of counterparts and each such counterpart shall be deemed to be an original. 5.9 DISPUTE RESOLUTION. All disputes under this agreement, including disagreements with respect to the calculation of royalties, shall be resolved by binding arbitration. IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first written above. NITROMED, INC. By: /s/ MICHAEL LOBERG ---------------------------- Name: Michael Loberg Title: President FOXKISER By: /s/ ALLAN M. FOX --------------------------- Name: Allan M. Fox Title: Partner EX-10.10 17 a2116973zex-10_10.txt EXHIBIT 10.10 ' EXHIBIT NO. 10.10 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. AGREEMENT THIS AGREEMENT, effective March 13, 1995, is made by and between NitroMed, Inc., One Kendall Square, Building 200, Cambridge, MA 02139 ("NitroMed") and John D. Folts, Ph.D., 2537 Chamberlain Avenue, Madison, WI 53705 ("Folts"). 1. In consideration of the mutual promises contained herein and for other good and valuable consideration, Folts has assigned his entire right, title and interest in and to the U.S. patent application entitled "Use of Nitric Oxide Adducts to Prevent Thrombosis on Artificial and Vascular Surfaces" having Serial No. 08/123,331 which was filed on September 17, 1993 and in and to the subject matter disclosed therein and to all divisional, continuing, substitute, renewal, reissue, extension and all other applications for Letters Patent which have been or shall be filed in the United States and all other countries on any of said improvements, and in and to all original and reissued patents which have been or shall be issued in the United States and all other countries on said applications (the "Patent Rights"). 2. Folts represents and warrants to NitroMed that he had an unencumbered ownership interest in and to the Patent Rights as well as the unencumbered right to assign his right, title and interest in and to the Patent Rights. 3. The term "Product" as used herein means any article, composition, apparatus, substance, chemical, material, method or service which is covered by the Patent Rights. 4. The term "Net Sales Price" means the total amount received by NitroMed from sale of Product, less transportation charges and insurance, sales taxes, use taxes, excise taxes, value added taxes, customs duties or other imports, normal and customary quantity and cash discounts, and allowances and credit on account of rejection or return of Product. 5. The term "Sublicensee" shall mean any non-Affiliate third party licensed by NitroMed to make, have made, import, use or sell any Product under the Patent Rights. The term "Affiliate" means any company or other legal entity other than NitroMed in whatever country organized, controlling, controlled by or under commoncontrol with NitroMed. The term "control" means possession of the power to direct or cause the direction of the management and policies whether through the ownership of voting securities, by contract or otherwise. 6. From and after the effective date of this Agreement, NitroMed shall pay (i) [**]percent ([**]%) of Net Sales Price by NitroMed and its Affiliates and (ii) [**] percent ([**]%) of Net Sales Price by its Sublicensees of Product for so long as pending or issued Patent Rights are in force. Such payments shall be made at the beginning of each calendar quarter for sales which occurred in the preceding quarter. 7. This Agreement constitutes the entire understanding between the parties with respect to the subject matter contained herein and any amendment or change shall not be binding unless in writing and signed by the parties hereto. In addition, this Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts, other than those provisions governing conflicts of law. Accordingly, the parties have executed this Agreement by their authorized representatives. NITROMED, INC. JOHN D. FOLTS, Ph.D. By: /s/Marcel Worcel /s/John D. Folts ----------------- ----------------- Title: President and Chief Executive Officer John D. Folts, Ph.D. -2- AMENDMENT TO AGREEMENT BETWEEN JOHN D. FOLTS AND NITROMED, INC. This Amendment is effective as of November 22, 1996 by and between NitroMed, Inc., a Delaware corporation, having offices at 801 Albany Street, Boston, Massachusetts 02118 ("NitroMed") and John D. Folts, Ph.D., 2537 Chamberlain Avenue, Madison, Wisconsin 53705 ("Folts"). WHEREAS, NitroMed and Folts entered into an Agreement effective as of March 13, 1995 (the "Agreement"); and WHEREAS, NitroMed and Folts desire to amend such Agreement. NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: 1. All initially capitalized terms in this Amendment shall have the same meaning as in the AGREEMENT of March 13, 1995. 2. Section 6 of the AGREEMENT is amended and rewritten in its entirety to read as follows: From and after the effective date of this Amendment, NitroMed shall pay (i) [**] percent ([**]%) of the Net Sales Price of Product sold or distributed by NitroMed and its Affiliates and (ii) [**] percent ([**]%) of royalties received by NitroMed from a Sublicensee for sale or distribution of a Product by such Sublicensee, in each case for so long as pending or issued Patent Rights are in force which cover such Product. Such payments shall be made at the beginning of each calendar quarter for sales which occurred in the preceding quarter. 3. The AGREEMENT is hereby amended effective as of the date first above written in accordance with Paragraph 7 thereof. Except as amended herein or previously amended, the terms and conditions of the AGREEMENT remain in full force and effect as originally written. IN WITNESS WHEREOF, the parties have executed this Agreement as of the Date set forth above. NITROMED, INC. JOHN D. FOLTS, Ph.D. By: /s/Marcel Worcel /s/John D. Folts ---------------------------------- -------------------------- Manuel Worcel, M.D. Title: President and Chief Executive Officer Title: Professor of Medicine -2- AMENDMENT TO AGREEMENT BETWEEN JOHN D. FOLTS AND NITROMED, INC. This Amendment is effective as of December 2, 1998 by and between NitroMed, Inc., a Delaware corporation, having offices at 12 Oak Park Drive, Bedford, Massachusetts 01730 ("NitroMed") and John D. Folts, Ph.D., 2537 Chamberlain Avenue, Madison, Wisconsin 53705 ("Folts"). WHEREAS, NitroMed and Folts entered into an Agreement effective as of March 13, 1995 and amended as of November 22, 1996 (the "AGREEMENT"); and WHEREAS, NitroMed and Folts desire to amend such Agreement, NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: 1. All initially capitalized terms in this Amendment shall have the same meaning as in the AGREEMENT of March 13, 1995. 2. Section 1 of the AGREEMENT is amended and rewritten in its entirety to read as follows: In consideration of the mutual promises contained herein and for good and valuable consideration, Folts has assigned his entire right, title and interest in and to the U.S. patent applications entitled "Use of Nitric Oxide Adducts to Prevent Thrombosis on Artificial and Vascular Surfaces" having Serial No. 08/123,331, which was filed on September 15, 1993, "Localized Use of Nitric Oxide Adducts to Prevent Internal Tissue Damage" having serial number 08/438,418, which was filed on May 10, 1995, and "Localized Use of Nitric Oxide Adducts to Prevent Internal Tissue Damage" having Serial No. 08/460,465, which was filed on June 2, 1995, and in and to the subject matter disclosed therein and to all divisional, continuing substitute, renewal, reissue, extension and all other applications for Letters Patent which have been or shall be filed in the United States and all other countries on any of said applications, and in and to all original and reissued patents which have been or shall be issued in the United States and all other countries on said applications (the "Patent Rights"). 3. The AGREEMENT is hereby amended effective as of the date first above written in accordance with Paragraph 7 thereof. Except as amended herein or previously amended, the terms and conditions of the AGREEMENT remain in full force and effect as originally written. IN WITNESS WHEREOF, the parties have executed this Agreement by their authorized representatives. NITROMED, INC. JOHN D. FOLTS, Ph.D. By: /s/ MANUEL WORCEL, M.D. By: /s/ JOHN D. FOLTS, Ph.D. ----------------------------- ------------------------ Manuel Worcel, M.D. John D. Folts, Ph.D. President -2- EX-10.12 18 a2116973zex-10_12.txt EXHIBIT 10.12 EXHIBIT 10.12 [NITROMED LETTERHEAD] July 14, 1997 Michael D. Loberg, Ph.D. 1770 Dolington Road New Town, PA 18940 Dear Michael: We would like to formally offer you the position of Chief Executive Officer of NitroMed. I know you share with us the enthusiasm for building an excellent and successful company. I should add that the employees of the Company, the scientific founder, and the board of directors are very excited about your joining the Company. The terms of the offer arc described below: Start Date: On or before September 1, 1997 Reporting to: Board of Directors Base Salary: $245,000, to be reviewed annually and adjusted by the Board of Directors to reflect performance. Performance Bonus: Annual bonus based upon performance and the achievement of milestones mutually agreed upon by you and the Board of Directors in an amount up to 35% of base salary. Stock: Options granted under the Company's stock option plan of 350,000 -- 5% of the outstanding shares of the Company on a fully diluted basis. These options would vest at 20% per year over four years, with the initial 20% vesting to occur on your start date and subsequent vesting on each of the next four anniversaries thereof. The exercise price of these options will be the fair market value as set by the Board of Directors on the day you commence employment. The Company commits to directionally correcting this position following the next round of financing. In the event that the Company is sold or is a party to a merger in which the stockholders of the Company do not collectively own a majority of the stock of the surviving entity [ a "sale of the Company"], your non-vested options will become 50% vested. Additionally, if your employment with the Company is terminated for reasons other than cause within 12 months after a sale of the Company, the remainder of your non-vested options will become 100% vested. Severance: Should your employment with the Company be terminated for reasons other than cause, you will receive six months' base salary as termination payment. Agreements: As a condition of employment, you will be required to sign the Company's invention, non-disclosure and non-compete agreements. Moving Costs: The Company will reimburse you up to $100,000 for all reasonable expenses incurred in the sale of your current house, removal of your household goods, and expenses incurred in the purchase of a home in the Boston area. This offer is open through July 22, 1997 and is subject to a satisfactory pre-employment physical exam including drug screen and review by your attorneys. I am personally very much looking forward to working with you and having you as part of the NitroMed team. Sincerely /s/ Mark Leschly - ----------------- Mark Leschly Director Agreed and Accepted by: /s/ Michel D. Loberg ----------------------------- Michael D. Loberg, Ph.D. EX-10.13 19 a2116973zex-10_13.txt EXHIBIT 10.13 EXHIBIT 10.13 [NITROMED LETTERHEAD] NitroMed, Inc. Maria I Marmarinos One Kendall Square EXECUTIVE VICE PRESIDENT Building 100 Phone: 617-374-9074 Cambridge, MA 02139 Facsimile: 617-374-9173 July 29, 1993 Manuel Worcel, M.D. 46 Pomeroy Road Madison, New Jersey 07940 Dear Dr. Worcel: We would like to formally offer you the position of President and C.E.O. of NitroMed. I know you share with us the enthusiasm of building a company around the work of Joe Loscalzo and Jonathan Stamler. As C.E.O. you would be responsible for all aspects of the Company and its operations. You will report to the Board of Directors. The terms of the offer are described below: Base Salary: $190,000 per annum paid in 24 equal payments. Performance Bonus: Cash bonus based upon performance of 0-20% of base salary paid at year end. For the first year 10% will be guaranteed. In the event your employment terminates due to a sale of the Company prior to July 1 of any year, you will receive 50% of the bonus you would have received for that year. In the event your employment terminates due to a sale of the Company after July 1 of any year, you will receive the entire bonus that you would have received for that year. Stock: You will be offered options to purchase 325,000 shares of common stock of the Company. The exercise price of these options will be set by the Board of Directors and is expected to be $.01/share. These options will vest over four years in equal installments at the anniversary of your joining the Company. These options must be exercised within 90 days after any termination of your employment unless termination is for cause. Vesting of these options will be accelerated if the Company is sold and as a result you will not be employed after the acquisition. Group Benefits: You will receive comprehensive group health, disability, accident and life insurance benefits in line with the attached plan of Guardian or such other comparable benefits and protection as the Company is able to reasonably obtain from another plan. You will be entitled to participate in and enjoy the benefits of a retirement and pension plan or plans as and when instituted by the Company for the benefit of its employees generally. You will also be entitled to any other benefits as may be deemed by the Board of Directors to be appropriate to the position held by you as CEO and to the discharge of your duties. Leave: You will be entitled to illness and vacation days consistent with the standard policies to be developed for the Company's executive employees and any such additional leave benefits which the Board of Directors may deem appropriate. Agreements: As a condition of employment, you will be required to sign customary invention, non-disclosure and non-compete agreements. Relocation Costs: The Company will reimburse you for all reasonable expenses incurred in the sale of your current house; the purchase of a home in the Boston area; the removal, storage, insuring, moving and unpacking of your house-hold goods and automobiles, house hunting expenses, and rental of temporary living quarters. Severance Compensation: If your employment is terminated by the Company without cause, you will be entitled to receive up to six months continued base salary payments. This offer is open through July 30th, and is subject to a satisfactory pre-employment physical exam, including drug screen and Bishops Report and to my final reference checks, which I hope to complete by next week. We would like to move forward as soon as possible and would like to suggest an early start date. I personally very much look forward to working with you. Sincerely /s/ John W. Littlechild - ------------------------- John W. Littlechild President Agreed and Accepted by: /s/ Manuel Worcel, MD -------------------------- Manuel Worcel, M.D. EX-10.14 20 a2116973zex-10_14.txt EXHIBIT 10.14 EXHIBIT 10.14 [NITROMED LETTERHEAD] NitroMed, Inc. Manuel Worcel, M.D. One Kendall Square PRESIDENT Building 100 CHIEF EXECUTIVE OFFICET Cambridge, MA 02139 Phone: 617-374-9074 Facsimile: 617-374-9173 November 4, 1993 L. Gordon Letts, Ph.D. 14 Pond Brook Road Newtown, CT 06470 Dear Dr. Letts: We would like to formally offer you the position of Vice President of Research of NitroMed. I know you share with us the enthusiasm in the mission of the Company, which is to develop Nitric Oxide based drugs. As Vice President of Research, you will be responsible for the definition, follow-up and implementation of NitroMed's Drug Discovery programs, as well as the selection, recruitment and supervision of the members of the Research Team. You will report to the Chief Executive Officer. Base Salary: $150,000 per annum paid in 24 equal payments. Performance Bonus: Cash bonus based upon performance of 20% of base salary paid at year end. Stock: You will be offered options to purchase 125,000 shares of common stock of the Company. The exercise price of these options will be set by the Board of Directors. These options will vest over four years in equal installments, with the initial installment vested at the anniversary of your joining the company. Group Benefits: You will receive comprehensive group health, disability, accident and life insurance benefits in line with the attached plan of Guardian, or such other comparable benefits and protection as the Company is able to reasonably obtain from another plan. You will be entitled to participate in and enjoy the benefits of a retirement and pension plan or plans as and when instituted by the Company for the benefit of its employees generally. L. Gordon Letts, Ph.D. November 4, 1993 Page 2 Leave: You will be entitled to illness and vacation days consistent with the standard policies to be developed for the Company's executive employees. Agreements: As a condition of employment, you will be required to sign customary invention, non-disclosure and non-compete agreements. Relocation Costs: The Company will reimburse you for all reasonable expenses incurred in the sale of your current house; the purchase of a home in the Boston area; the removal, storage, insuring, moving and unpacking of your household goods and automobiles, house hunting expenses, and rental of temporary living quarters. Severance Compensation: If your employment is terminated by the Company without cause, you will be entitled to receive continued base salary payments until you obtain new employment, up to a maximum of six months. This offer is open to November 15, 1993, and is subject to my final reference checks, which I hope to complete by next week. We would like to move forward as soon as possible, and would like to suggest an early start date. I personally very much look forward to working with you. Sincerely, /s/ Manuel Worcel, M.D. - ------------------------- Manuel Worcel, M.D. President and Chief Executive Officer Agreed and accepted by; /s/ L. Gordon Letts, Ph.D. ----------------------------- L. Gordon Letts, Ph.D. EX-10.15 21 a2116973zex-10_15.txt EXHIBIT 10.15 EXHIBIT 10.15 [NITROMED LETTERHEAD] Michael D. Loberg, Ph.D. CHIEF EXECUTIVE OFFICER mloberg@nitromed.com April 22, 1999 Mr. Joseph Grimm 174 Marlborough Street Boston, Massachusetts 02116 Dear Joe: The Management and Board of NitroMed have enjoyed meeting you and are enthusiastic to have you join our senior management team. As such, we would like to formally offer you the position of Senior Vice President, Business Development and Chief Financial Officer, reporting to me as Chief Executive Officer. The terms of the offer are described below: Start Date: April 19, 1999 Base Salary: $180,000 to be reviewed annually and adjusted by the Board's Compensation Committee to reflect performance. Performance Bonus: Beginning in 1999 an annual bonus based upon performance and the achievement of milestones mutually agreed upon by you, me and the Board of Directors in an amount up to 22% of base salary in accordance with the NitroMed Incentive Compensation Plan (copy attached). Stock: Options granted under the Company's Stock Option Plan of 100,000 shares of the Company's Common Stock. These options will vest in equal installments over a four year period, beginning on the first anniversary of your employment in accordance with the NitroMed Stock Option Plan (copy attached). The exercise price of these options will be the fair market value as set by the Board of Directors on the day the Board approves your option grant. The most recent price is $0.72 per share. Restricted Stock in the amount of 25,000 shares of the Company's Common Stock. These shares will be sold to you at the fair market value as set by the Board of Directors, currently $0.72 per share. The restriction will be lifted when the NitroMed shares become publicly traded or upon a "change of control". Your departure from the Company prior to either of these events will cause the Restricted Stock to be repurchased by the Company at the then current fair market value. A "change of control" means a sale of all or substantially all of the assets of the Company, or a merger or consolidation of NitroMed which results in the voting securities of NitroMed outstanding immediately prior thereto ceasing to represent at least 50% of the combined voting power of the surviving entity. Severance: Should your employment with the Company be terminated by the Company for reasons other than cause, you will receive six months base salary as termination payment and your options vested as of the termination date will be exercisable for a 90 day period. If the termination by the Company is within one year subsequent to a change of control, then the termination payment will be extended to one year's salary and the vesting of all options will accelerate. Termination will include actual termination by the Company as well as constructive dismissal (defined to include a reduction in responsibility, a reduction in compensation benefits or a relocation outside a 50-mile radius from NitroMed's facility at the time of termination). Agreements: As a condition of employment, you will be required to sign the Company's invention, non-disclosure, and non-compete agreements. We trust that these terms are satisfactory and look forward to having you work with us to reach our corporate goals, and in the process provide a high return to our shareholders and employees. Much work has been done to bring NitroMed to the point where its platform technology is now being tested in the clinic. Much is still to be done if efforts in R&D and Clinical Development are to truly flower. The NitroMed team welcomes with enthusiasm and optimism your participation in this exciting effort. Together we will manage the assets, negotiate the ventures and build value. If the above employment offer is acceptable please sign below and return one copy to me for our files. Sincerely, /s/ Michael D. Loberg --------------------- Michael D. Loberg Agreed and Accepted: /s/ Joseph Grimm - -------------------- Joseph Grimm EX-10.16 22 a2116973zex-10_16.txt EXHIBIT 10.16 EXHIBIT 10.16 FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT THIS FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated this 22nd day of May 2001, is entered into by and among NITROMED, INC., a Delaware corporation (the "Corporation"), those Stockholders of the Corporation listed on SCHEDULE 1 hereto (hereinafter referred to collectively as the "Investors"), those individuals listed on SCHEDULE 2 hereto (the "Management Holders"), and The Brigham and Women's Hospital, Inc. ("BWH"). It is expressly agreed among the parties that (i) BWH shall have no rights, liabilities or responsibilities whatsoever under Sections 2.2, 2.4 through 2.14, 3.1 through 3.4, 3.6 and 5.1 through 5.5 hereof and (ii) the Management Holders shall have no rights, liabilities or responsibilities whatsoever under Sections 2, 3.1 through 3.4, 3.6 and 5 hereof. W I T N E S S E T H: WHEREAS, The Corporation has previously entered into a Third Amended and Restated Stockholders' Agreement dated as of May 17, 1999, as amended from time to time, (the "Old Stockholders' Agreement") with holders of the Corporation's Series A Convertible Preferred Stock (the "Series A Investors"), holders of the Corporation's Series B Convertible Preferred Stock (the "Series B Investors"), holders of the Corporation's Series C Convertible Preferred Stock (the "Series C Investors"), holders of the Corporation's Series D Convertible Preferred Stock (the "Series D Investors"), the individuals listed on Schedule 2 thereto and, with respect to certain provisions, BWH; and WHEREAS, the Corporation has authorized a new series of Preferred Stock to be designated "Series E Convertible Preferred Stock," par value $.01 per share ("Series E Preferred Stock"); and WHEREAS, the Corporation is entering into a Series E Convertible Preferred Stock Purchase Agreement dated the date hereof in connection with which the Corporation has agreed to sell shares of its Series E Preferred Stock to certain investors (the "Series E Investors"), and the Corporation desires to grant to the Series E Investors certain registration, preemptive and other rights with respect to such Series E Preferred Stock; and WHEREAS, the Corporation, the Series A Investors, the Series B Investors, the Series C Investors, the Series D Investors, the Management Holders and BWH believe it to be in their mutual best interests that the Old Stockholders' Agreement be amended and restated in its entirety in order to accommodate the creation of the Series E Preferred Stock and the rights to be granted to the Series E Investors. NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and undertakings of the Corporation and the Investors hereunder, the parties hereto do hereby agree as follows: SECTION 1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings: BOARD shall mean the Board of Directors of the Corporation. BUDGET shall have the meaning set forth in Section 2.8 hereof. BU WARRANT shall mean collectively (i) the Series B Preferred Stock Purchase Warrant, to purchase 412,500 Series B Preferred Shares, issued on April 11, 1996 by the Corporation to Trustees of Boston University; (ii) the Series B Preferred Stock Purchase Warrant, to purchase 41,250 Series B Preferred Shares, issued on September 30, 1996 by the Corporation to Trustees of Boston University; and (iii) the Series B Preferred Stock Purchase Warrant, to purchase 41,250 Series B Preferred Shares, issued on April 7, 1997 by the Corporation to Trustees of Boston University. BWH shall mean The Brigham and Women's Hospital, Inc. BWH SECURITIES shall have the meaning set forth in Section 2.3(a) hereof. CERTIFICATE shall mean the Fifth Restated Certificate of Incorporation of the Corporation. COMMISSION shall mean the U.S. Securities and Exchange Commission. COMMON STOCK shall mean the Common Stock, par value $.01 per share, of the Corporation. ENVIRONMENTAL LAWS shall mean all applicable federal, state, foreign and local laws, ordinances, rules and regulations that regulate, fix liability for, or otherwise relate to, the handling, use (including use in industrial processes, in construction, as building materials, or otherwise), storage and disposal of hazardous and toxic wastes and substances, and to the discharge, leakage, presence, migration, threatened release or release (whether by disposal, a discharge into any water source or system or into the air, or otherwise) of any pollutant or effluent or otherwise related to pollution or the protection of human health, the environment or wildlife. Without limiting the preceding sentence, the term "Environmental Laws" shall specifically include the following federal and state laws, as amended: FEDERAL Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 ET SEQ.; Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 ET SEQ.; Federal Water Pollution Control Act, 33 U.S.C. 1251 ET SEQ.; and - 2 - Clean Air Act, 42 U.S.C. 7401 ET SEQ. STATE MASSACHUSETTS ENVIRONMENTAL STATUTES Massachusetts Clean Waters Act, Mass. Gen. L. Ch. 21, Section 26, ET SEQ., and regulations thereto; Massachusetts Solid Waste Disposal Laws, Mass. Gen. L. Ch. 16, Section 18, ET SEQ., and Ch. 111, Section 105A, and regulations thereto; Massachusetts Oil and Hazardous Materials Release Prevention and Response Act, Mass. Gen. L., Ch. 21E, Section 1, ET SEQ., and regulations thereto; Massachusetts Solid Waste Facilities Law, Mass. Gen. L., Ch. 21H, Section 1, ET SEQ., and regulations thereto; Massachusetts Toxic Use Reduction Act, Mass. Gen. L., Ch. 211, Section 1, ET SEQ., and regulations thereto; Massachusetts Litter Control Laws, Mass. Gen. L. Ch. 111, Section 150A, ET SEQ., and regulations thereto; Massachusetts Wetlands Protection Laws, Mass. Gen. L., Ch. 130, Section 105, ET SEQ., and regulations thereto; Massachusetts Environmental Air Pollution Control Law, Mass. Gen. L., Ch. 101, Section 2B, ET SEQ., and regulations thereto; Massachusetts Environmental Policy Act, Mass. Gen. L. 30, Section 61, ET SEQ., and regulations thereto; and Massachusetts Hazardous Waste Laws, Mass. Gen. L. Ch. 21C, Section 1, ET SEQ., and regulations thereto. EQUITY PERCENTAGE shall mean, as to any Investor, that percentage figure which expresses the ratio that (a) the number of shares of issued and outstanding Common Stock then owned by such Investor bears to (b) the aggregate number of shares of issued and outstanding Common - 3 - Stock then owned by all Investors. For purposes solely of the computation set forth in clauses (a) and (b) above, all issued and outstanding securities held by the Investors that are convertible into or exercisable or exchangeable for shares of Common Stock (including any issued and issuable shares of Preferred Stock) or for any such convertible, exercisable or exchangeable securities, shall be treated as having been so converted, exercised or exchanged at the rate or price at which such securities are convertible, exercisable or exchangeable for shares of Common Stock in effect at the time in question (which, for purposes of Section 2.3 of this Agreement, shall be at the time of delivery by the Corporation of the notice of the Offer contemplated by Section 2.3(b)), whether or not such securities are at such time immediately convertible, exercisable or exchangeable. EQUITY PERCENTAGE SECURITIES shall have the meaning set forth in Section 2.3(a) hereof. EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended. EXCHANGE ACT REGISTRATION STATEMENT shall have the meaning set forth in Section 2.5 hereof. EXCESS SECURITIES shall have the meaning set forth in Section 2.3(d) hereof. EXCESS SECURITIES NOTICE shall have the meaning set forth in Section 2.3(d) hereof. EXCESS SECURITIES PERIOD shall have the meaning set forth in Section 2.3(d) hereof. EXCLUDED FORMS shall have the meaning given such term in Section 3.5 hereof. EXCLUDED SECURITIES shall mean, collectively: (i) the Reserved Shares; (ii) Common Stock issued or issuable to officers, directors or employees of or consultants or independent contractors to the Corporation, pursuant to any written agreement, plan or arrangement, including pursuant to any options granted under the 1993 Equity Incentive Plan of the Corporation (the "1993 Equity Incentive Plan"), to purchase, or rights to subscribe for, such Common Stock, that is set forth on Schedule 5.2 of the Series E Stock Purchase Agreement or that has been approved in form and in substance by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), and which, as a condition precedent to the issuance of such shares, provides for the vesting of such shares and subjects such shares to restrictions on transfers and rights of first offer in favor of the Corporation that have been approved by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), (collectively, the "Required Terms"), unless any of such Required Terms are waived by holders at least a majority of the voting power of the Series Preferred Shares then outstanding (determined as set forth in Section A.6(a) of the Certificate); PROVIDED, HOWEVER, that the - 4 - maximum number of shares of Common Stock hereafter issuable pursuant to the 1993 Equity Incentive Plan and all such agreements, plans and arrangements shall not exceed 2,288,200 shares (subject to adjustment as required to comply with any anti-dilution rights set forth in any such agreement, plan or arrangement); (iii) Common Stock issued as a stock dividend payable in shares of Common Stock, or capital stock of any class issuable upon any subdivision, recombination, split-up or reverse stock split of all the outstanding shares of such class of capital stock of the Corporation; (iv) any securities issued pursuant to the acquisition by the Corporation of any other corporation, partnership, joint venture, trust or other entity by any merger, stock acquisition, reorganization, purchase of substantially all assets or otherwise in which the Corporation, or its stockholders of record immediately prior to the effective date of such transaction, directly or indirectly, own at least a majority of the voting power of the acquired entity or the resulting entity after such transaction; and (v) any shares of Common Stock, Preferred Stock or any other security convertible into or exercisable or exchangeable for Common Stock or Preferred Stock issued to banks or leasing companies in order to obtain financing or to secure leases of equipment; and (vi) a maximum of 516,364 shares of Common Stock (subject to adjustment) issued or issuable upon the exercise of the 1994 Bridge Warrants, 1995 Bridge Warrants, 1996 Bridge Warrants and the 1994 Capital Support Warrants; GROUP shall mean: (i) as to an Investor that is a limited partnership: (A) any and all of the venture capital limited partnerships now existing or hereafter formed that are affiliated with or under common control with one or more of the general partners or one or more general partners of the general partner of such Investor and any predecessor or successor thereto, (B) any limited partner of such Investor, and (C) in the case of an HCV Fund, the HCV Group; (ii) as to any Investor that is a trust, any grantor or beneficiary thereof, or any other trust, corporate entity or partnership under common control with such trust; and (iii) as to any Investor, any other Investor. HAZARDOUS MATERIALS shall include without limitation, any flammable explosives, petroleum products, petroleum byproducts, radioactive materials, hazardous wastes, hazardous substances, toxic substances or other similar materials regulated by Environmental Laws. HCV FUND shall mean any of HCV I, HCV II, HCV III, HCV IV, HCV V or HCV VI. HCV GROUP shall mean, collectively, (i) any HCV Fund, (ii) any venture capital limited partnership now existing or hereafter formed which is affiliated with or under common control with one or more general partners of any general partner of an HCV Fund; (iii) any limited partners or affiliates of an HCV Fund; and (iv) any successors or assigns of any of the foregoing persons. - 5 - HCV I shall mean HealthCare Ventures I, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV I under this Agreement. HCV II shall mean HealthCare Ventures II, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV II under this Agreement. HCV III shall mean HealthCare Ventures III, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV III under this Agreement. HCV IV shall mean HealthCare Ventures IV, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV IV under this Agreement. HCV V shall mean HealthCare Ventures V, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV V under this Agreement. HCV VI shall mean HealthCare Ventures VI, L.P., a Delaware limited partnership, including any successor thereto or any assignee of the interest, in whole or in part, of HCV VI under this Agreement. INCENTIVE SHARES shall mean a maximum of 2,288,200 shares of Common Stock duly reserved for issuance in connection with options available under the 1993 Equity Incentive Plan. INITIAL PUBLIC OFFERING shall mean a firm commitment underwritten public offering of Common Stock of the Corporation registered under the Securities Act, pursuant to which (a) Common Stock is offered to the public at a price of at least $14.4074 per share (subject to adjustment to reflect stock splits, stock dividends, stock combinations and like occurrences), and (b) the net proceeds to the Corporation are at least $15,000,000. INVESTORS shall mean severally, but not jointly and severally (i) each of the persons listed on Schedule 1 hereto and (ii) Trustees of Boston University at such time as Trustees of Boston University shall have exercised the BU Warrants and received shares of the Corporation's Series B Preferred Stock. MAJOR INVESTOR shall mean each Investor that holds at least 100,000 Series Preferred Shares. MANAGEMENT HOLDERS shall mean the individuals listed on Schedule 2 hereto. NOTICE OF ACCEPTANCE shall have the meaning set forth in Section 2.3(c) hereof. OFFER shall have the meaning set forth in Section 2.3(b) hereof. - 6 - OFFERED SECURITIES shall mean, except for Excluded Securities, (i) any shares of Common Stock, Preferred Stock or any other equity security of the Corporation, (ii) any debt security or capitalized lease with any equity feature with respect to the Corporation, or (iii) any option, warrant or other right to subscribe for, purchase or otherwise acquire any such equity security, debt security or capitalized lease. OTHER SHARES shall have the meaning set forth in Section 3.5(e) hereof. PREFERRED STOCK shall mean the Preferred Stock, par value $.01 per share, of the Corporation. PREFERRED STOCKHOLDERS shall mean, collectively, all holders of shares of Preferred Stock of the Corporation. PROPERTY shall include, without limitation, land, buildings and laboratory facilities owned or leased by the Corporation or as to which the Corporation now has any duties, responsibilities (for clean-up, remedy or otherwise) or liabilities under any Environmental Laws, or as to which the Corporation or any subsidiary of the Corporation may have such duties, responsibilities or liabilities because of past acts or omissions of the Corporation or any such subsidiary or their predecessors, or because the Corporation or any such subsidiary or their predecessors in the past was such an owner or operator of, or bore some other relationship with, such land, buildings and/or laboratory facilities. REFUSED SECURITIES shall have the meaning set forth in Section 2.3(f) hereof. RESERVED SHARES shall collectively mean the shares of Common Stock reserved by the Corporation for issuance upon the conversion of the Series Preferred Shares or upon exercise of the Incentive Shares. RESTRICTED SECURITIES shall mean: (i) any of the Series Preferred Shares and the Common Stock issued or issuable upon the conversion of the Series Preferred Shares, all shares of Common Stock issued or issuable in respect thereof by way of stock splits, stock dividends, stock combinations, recapitalizations or like occurrences, and any other shares of Common Stock or other securities of the Corporation which may be issued hereafter to any of the Investors or any member of their Group which are convertible into or exercisable or exchangeable for shares of Common Stock (including, without limitation, other classes or series of Convertible Preferred Stock, warrants, options or other rights to purchase Common Stock or convertible debentures or other convertible debt Securities) and the Common Stock issued or issuable upon such conversion or exercise of such other securities, which have not been sold (a) in connection with an effective registration statement filed pursuant to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by the Commission under the Securities Act; and (ii) solely for the purpose of Sections 3.5, 3.7, 3.8, 3.9, 3.10 and 4 hereof, any shares of Common Stock issued to BWH or to the Management Holders, and all shares of Common Stock issued or issuable in respect thereof by way of stock splits, stock dividends, stock combinations, recapitalizations or like occurrences, which have not been sold (a) in connection with an effective registration - 7 - statement filed pursuant to the Securities Act, or (b) pursuant to Rule 144 or Rule 144A promulgated by the Commission under the Securities Act. RESTRICTED SHARES shall mean the shares of Common Stock issued or issuable upon the conversion or exchange of the Restricted Securities or otherwise constituting a portion of the Restricted Securities. SECURITIES ACT shall mean the Securities Act of 1933, as amended. SERIES A PREFERRED SHARES shall mean shares of Series A Preferred Stock issued or issuable pursuant to the Series A Stock Purchase Agreement. SERIES A PREFERRED STOCK shall mean Series A Convertible Preferred Stock, par value $.01 per share, of the Corporation. SERIES A STOCK PURCHASE AGREEMENT shall mean the Convertible Preferred Stock Purchase Agreement, dated December 3, 1993, among the Corporation and the Series A Investors listed on Schedule 1 thereto. SERIES B PREFERRED SHARES shall mean shares of Series B Preferred Stock issued or issuable pursuant to (i) the Series B Stock Purchase Agreements and (ii) the BU Warrant. SERIES B PREFERRED STOCK shall mean Series B Convertible Preferred Stock, par value $.01 per share, of the Corporation. SERIES B STOCK PURCHASE AGREEMENTS shall mean (i) the Series B Convertible Preferred Stock Purchase Agreement dated June 20, 1995 among the Corporation and the Series B Investors listed on Schedule 1 thereto and (ii) the Series B Convertible Preferred Stock Purchase Agreement dated April 4, 1997 between the Corporation and the Series B Investors listed on Schedule 1 thereto. SERIES C PREFERRED SHARES shall mean shares of Series C Preferred Stock issued or issuable pursuant to the Series C Stock Purchase Agreement. SERIES C PREFERRED STOCK shall mean Series C Convertible Preferred Stock, par value $.01 per share, of the Corporation. SERIES C STOCK PURCHASE AGREEMENT shall mean the Series C Convertible Preferred Stock Purchase Agreement, dated December 31, 1997, among the Corporation and the Series C Investors listed on Schedule I thereto. SERIES D PREFERRED SHARES shall mean shares of Series D Preferred Stock issued or issuable pursuant to the Series D Stock Purchase Agreement. SERIES D PREFERRED STOCK shall mean Series D Convertible Preferred Stock, par value $.01 per share, of the Corporation. - 8 - SERIES D STOCK PURCHASE AGREEMENT shall mean the Series D Convertible Preferred Stock Purchase Agreement, dated May 17, 1999, among the Corporation and the Series D Investors listed on Schedule I thereto. SERIES E PREFERRED SHARES shall mean shares of Series E Preferred Stock issued or issuable pursuant to the Series E Stock Purchase Agreement. SERIES E PREFERRED STOCK shall mean Series E Convertible Preferred Stock, par value $.01 per share, of the Corporation. SERIES E STOCK PURCHASE AGREEMENT shall mean the Series E Convertible Preferred Stock Purchase Agreement, dated May 22, 2001, as it may be amended from time to time, among the Corporation and the Series E Investors listed on Schedule 1 thereto. SERIES PREFERRED SHARES shall mean collectively the Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares, Series D Preferred Shares and Series E Preferred Shares. STOCKHOLDERS shall mean all holders of capital stock of the Corporation. TARGET MONTH shall have the meaning set forth in Section 2.7(a) hereof. 30-DAY PERIOD shall have the meaning set forth in Section 2.3(b) hereof. TRANSFER shall include any disposition of any Restricted Securities or of any interest therein which would constitute a sale thereof within the meaning of the Securities Act. 1994 BRIDGE WARRANTS shall mean (i) the Common Stock Purchase Warrants issued on or after July 27, 1994, to the persons or entities listed on the signature page to the Credit Agreement (the "July Lenders"), in connection with the execution and delivery of the Credit Agreement, dated July 27, 1994, among the Corporation and the July Lenders and (ii) the Common Stock Purchase Warrants issued on or after December 20, 1994, to the persons or entities listed on the signature page to the Credit Agreement (the "December Lenders"), in connection with the execution and delivery of the Credit Agreement dated December 20, 1994, among the Corporation and the December Lenders. 1995 BRIDGE WARRANTS shall mean the Common Stock Purchase Warrants to be issued on or after June 20, 1995, to the persons or entities listed on the signature page to the Credit Agreement (the "June 1995 Lenders"), in connection with the execution and delivery of the Credit Agreement, dated June 20, 1995, among the Corporation and the June 1995 Lenders. 1996 BRIDGE WARRANTS shall mean (i) the Common Stock Purchase Warrants to be issued on or after January 10, 1996, and on or before June 30, 1996, in connection with the execution and delivery of one or more Credit Agreements, dated on or after January 10, 1996, but on or before June 30, 1996, among the Corporation and the parties signatory thereto and (ii) the Common Stock Purchase Warrants to be issued on or after September 30, 1996, and on or before February 28, 1997, in connection with the execution and delivery of one or more Credit - 9 - Agreements, dated on or after September 30, 1996, but on or before February 28, 1997, among the Corporation and the parties signatory thereto. 1994 CAPITAL SUPPORT WARRANTS shall mean the Common Stock Purchase Warrants issued to certain Investors in connection with the provision of a letter by each such Investor to the Company's independent accountants committing to fund the Company's cash flow requirements (up to a fixed amount) for the period ending December 31, 1994. SECTION 2. CERTAIN COVENANTS OF THE CORPORATION. 2.1 MEETINGS OF THE BOARD OF DIRECTORS. The Corporation shall call, and use its best efforts to have, regular meetings of the Board not less often than quarterly. The Corporation shall pay all reasonable and appropriately documented travel expenses and other out-of-pocket expenses incurred by directors who are not employed by the Corporation in connection with attendance at meetings to transact the business of the Corporation or attendance at meetings of the Board or any committee thereof. 2.2 RESERVATION OF SHARES OF COMMON STOCK AND PREFERRED STOCK. The Corporation shall at all times have authorized and reserved out of its authorized but unissued shares of Common Stock, a sufficient number of shares of Common Stock to provide for the conversion of the Series Preferred Shares. Neither the issuance of the Series Preferred Shares nor the shares of Common Stock issuable upon the conversion of the Series Preferred Shares shall be subject to a preemptive right of any other Stockholder. 2.3 RIGHT OF FIRST REFUSAL. (a) The Corporation shall not issue, sell or exchange, agree to issue, sell or exchange, or reserve or set aside for issuance, sale or exchange, any Offered Securities unless in each case the Corporation shall have first offered to sell to the Investors all of such Offered Securities, less only such number of shares, in any venture capital round of financing, that shall be offered to BWH (on the same terms, including but not limited to the price per share, that such Offered Securities are offered to all other Investors) in order to enable BWH to maintain its percentage ownership in the Corporation that exists immediately prior to such venture capital round of financing (the "BWH Securities"), on the terms set forth herein (as to all Investors, collectively, and in the aggregate, the "Equity Percentage Securities"). Each Investor shall be entitled to purchase up to its Equity Percentage of the Equity Percentage Securities. Each Investor may delegate its rights and obligations with respect to such Offer to one or more members of its Group, which members shall thereafter be deemed to be "Investors" for the purpose of applying this Section 2.3 to such Offer. (b) The Corporation shall deliver to each Investor written notice of the offer to sell to such Investor its Equity Percentage of the Equity Percentage Securities, and to BWH written notice of the offer to sell to BWH the BWH Securities, specifying the price and terms and conditions of the offer (each, an "Offer"). The Offer by its terms shall remain open and irrevocable for a period of 30 days from the date of its delivery to such Investor or BWH, as - 10 - the case may be (the "30-Day Period"), subject to extension solely with respect to the Investors to include the Excess Securities Period (as such term is hereinafter defined). (c) Each Investor and BWH shall evidence its intention to accept its Offer by delivering a written notice signed by the Investor or BWH, as the case may be, setting forth the number of shares of the Equity Percentage Securities or the BWH Securities that the Investor or BWH, respectively, elects to purchase (the "Notice of Acceptance"). The Notice of Acceptance must be delivered to the Corporation prior to the end of the 30-Day Period. (d) If any Investor fails to exercise its right hereunder to purchase all of its Equity Percentage of the Equity Percentage Securities, or if BWH fails to exercise its right to purchase all of the BWH Securities, the Corporation shall so notify the other Investors in a written notice (the "Excess Securities Notice") . The Excess Securities Notice shall be given by the Corporation promptly after it learns of the intentions of (i) all Investors with respect to the purchase by each such Investor of less than all of its Equity Percentage of the Equity Percentage Securities, or (ii) of BWH to purchase less than all of the BWH Securities, but in no event later than ten (10) days after the expiration of the 30-Day Period. The Investors who or which have agreed to purchase their Equity Percentage of the Equity Percentage Securities shall have the right to purchase the portion of the Equity Percentage Securities not purchased by such Investor and the portion of the BWH Securities not purchased by BWH (the "Excess Securities"), on a PRO RATA basis (as to each Investor, calculated with respect to a percentage figure which expresses the ratio that the number of shares of issued and outstanding Common Stock, on a fully diluted basis, then owned by such Investor who or which has agreed to purchase its Equity Percentage of the Offered Securities bears to the aggregate number of shares of issued and outstanding Common Stock then owned by all Investors, on a fully diluted basis, who or which have agreed to purchase their Equity Percentage of the Offered Securities), by giving notice within ten (10) days after receipt of the Excess Securities Notice from the Corporation. The twenty (20) day period during which (i) the Corporation must give the Excess Securities Notice to the other Investors, and (ii) each of the other Investors must give the Corporation notice of its intention to purchase all or any portion of its PRO RATA share of the its Excess Securities, is hereinafter referred to as the "Excess Securities Period." (e) If the Investors and BWH tender their Notices of Acceptance prior to the end of the 30-Day Period indicating their intention to purchase all of the Offered Securities or, if prior to the termination of the Excess Securities Period, the Investors tender Excess Securities Notices to purchase all of the Excess Securities, the Corporation shall schedule a closing of the sale of all such Offered Securities. Upon the closing of the sale of the Offered Securities to be purchased by the Investors, and subject to the closing of the BWH Securities to be purchased by BWH, each Investor shall (i) purchase from the Corporation that portion of the Equity Percentage Securities and the Excess Securities for which it tendered a Notice of Acceptance and an Excess Securities Notice, if applicable, upon the terms Specified in the Offer, and (ii) execute and deliver an agreement further restricting transfer of such Equity Percentage Securities substantially as set forth in Section 3.1, 3.2 and 3.3 of this Agreement. In addition, with respect to the Offered Securities being purchased by the Investors, the Corporation shall provide each such Investor with the rights and benefits set forth in this Agreement. Upon the closing of the sale of the BWH Securities to be purchased by BWH, BWH shall (i) purchase - 11 - from the Corporation that portion of the BWH Securities for which it tendered a Notice of Acceptance upon the terms specified in the Offer, and (ii) execute and deliver an agreement further restricting transfer of such BWH Securities substantially as set forth in Section 6 of the Stock Restriction Agreement dated as of the date hereof between the Corporation and BWH. The obligation of the Investors and BWH to purchase such Offered Securities is further conditioned upon the preparation of a purchase agreement embodying the terms of the Offer, which shall be reasonably satisfactory in form and substance to such Investors, BWH and counsel for each of the Investors and BWH. (f) If the Investors and BWH do not tender their Notices of Acceptance prior to the end of the 30-Day Period, or if prior to the termination of the Excess Securities Period, the Investors tender Excess Securities Notices to purchase less than all of the Excess Securities, the Corporation shall have ninety (90) days from the expiration of the 30-Day Period, or the Excess Securities Period, if applicable, to sell the Offered Securities (including the Excess Securities) refused by the Investors (the "Refused Securities") to any other person or persons, but only upon terms and conditions which are in all material respects (including, without limitation, price and interest rate) no more favorable to such other person or persons, and no less favorable to the Corporation, than those set forth in the Offer. Upon and subject to the closing of the sale of all of the Refused Securities (which shall include full payment to the Corporation), each Investor and BWH, as the case may be, shall (i) purchase from the Corporation those Offered Securities (including, with respect to the Investors, the Excess Securities) for which it tendered a Notice of Acceptance and an Excess Securities Notice, if applicable, upon the terms specified in the Offer, and (ii) execute and deliver an agreement restricting transfer of such Offered Securities (including the Excess Securities) substantially as set forth in Sections 3.1, 3.2 and 3.3 of this Agreement. In addition, with respect to the Offered Securities being purchased by the Investors, the Corporation shall provide each such Investor with the rights and benefits set forth in this Agreement. The Corporation agrees, as a condition precedent to accepting payment for and making delivery of any Refused Securities to any executive officer, employee, consultant or independent contractor of or to the Corporation, or to any other person, to have each and every such person execute and deliver a Stock Restriction Agreement substantially in the form attached hereto as EXHIBIT A, or as may be modified or amended from time to time with the prior approval of the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6 of Article III of the Certificate (including in such calculation, any outstanding Restricted Shares held by such holders), to the extent such purchaser has not already executed such Agreement. The obligation of the Investors and BWH, as the case may be, to purchase such Offered Securities (including, with respect to the Investors, the Excess Securities) is further conditioned upon the preparation of a purchase agreement embodying the terms of the Offer, which shall be reasonably satisfactory in form and substance to such Investors, BWH and counsel for each of the Investors and BWH. Notwithstanding the foregoing, it shall not be a condition to the acquisition of shares of Preferred Stock pursuant to this Section 2.3 by such directors, officers, employees, consultants or independent contractors of the Corporation that such shares of Preferred Stock be subject to the restrictions imposed by a Stock Restriction Agreement (other than the restrictions imposed by or arising out of federal and state securities laws). - 12 - (g) In each case, any Offered Securities not purchased either by the Investors, BWH or by any other person in accordance with this Section 2.3 may not be sold or otherwise disposed of until they are again offered to the Investors under the procedures specified in Paragraphs (a), (b), (c), (d), (e) and (f) hereof. (h) Each Investor and BWH may, by prior written consent, waive its rights under this Section 2.3. Such a waiver shall be deemed a limited waiver and shall only apply to the extent specifically set forth in the written consent of such Investor or BWH. 2.4 NEGATIVE COVENANTS. (a) SUPERMAJORITY APPROVALS. The Corporation shall not, directly or indirectly, take any of the actions specified in Article III, Section A.6(c) of the Certificate without the prior written consent or vote of the Investors holding at least sixty five percent (65%) of the then outstanding Series Preferred Shares held by Investors, determined in accordance with Section A.6(a) of the Certificate. (b) STOCK AND OPTION AGREEMENTS. Without the prior written consent or vote of the Investors holding a majority of the then outstanding Series Preferred Shares held by Investors, determined in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such Investors), the Corporation shall not (i) issue any shares of Common Stock or options, warrants or other rights to acquire Common Stock or other securities of the Corporation to any employee, officer, director, consultant, independent contractor or other person or entity except for Excluded Securities, (ii) grant any stock options with a per share exercise price that is less than the fair market value of such shares of stock, or (iii) make any restricted stock awards at a per share purchase price that is less than the fair market value of the restricted stock, such fair market value in the foregoing Subsection (ii) and in this subsection (iii) to be determined by the Board of Directors. (c) REGISTRATION RIGHTS. The Corporation shall not hereafter grant to any persons any rights to register or qualify stock of the Corporation under federal or state securities laws, unless it shall have first obtained the written consent of Investors holding a majority of the then outstanding Series Preferred Shares held by Investors, determined in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders). 2.5 FILING OF REPORTS UNDER THE EXCHANGE ACT. (a) The Corporation shall give prompt notice to the holders of Series Preferred Shares of (i) the filing of any registration statement (an "Exchange Act Registration Statement") pursuant to the Exchange Act, relating to any class of equity securities of the Corporation, (ii) the effectiveness of such Exchange Act Registration Statement, and (iii) the number of shares of such class of equity Securities outstanding, as reported in such Exchange Act Registration Statement, in order to enable the holders of Series Preferred Shares to comply with any reporting requirements under the Exchange Act or the Securities Act. Upon the written - 13 - request of a majority in interest of the holders of Series Preferred Shares, the Corporation shall, at any time after the Corporation has registered any shares of Common Stock under the Securities Act, file an Exchange Act Registration Statement relating to any class of equity securities of the Corporation then held by the holders of Series Preferred Shares or issuable upon conversion or exercise of any class of debt or equity securities or warrants or options of the Corporation then held by the Investors, whether or not the class of equity securities with respect to which such request is made shall be held by the number of persons which would require the filing of a registration statement under Section 12(g)(1) of the Exchange Act. (b) If the Corporation shall have filed an Exchange Act Registration Statement or a registration statement (including an offering circular under Regulation A promulgated under the Securities Act) pursuant to the requirements of the Securities Act, which shall have become effective (and in any event, at all times following the initial public offering of any of the securities of the Corporation), then the Corporation shall comply with all of the reporting requirements of the Exchange Act (whether or not it shall be required to do so) and shall comply with all other public information reporting requirements of the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any of the Restricted Securities by any holder of Restricted Securities (including any such exemption pursuant to Rule 144 or Rule 144A thereof, as amended from time to time, or any Successor rule thereto or otherwise). The Corporation shall cooperate with each holder of Restricted Securities in supplying such information as may be necessary for such holder of Restricted Securities to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act (under Rule 144 or Rule 144A thereunder or otherwise) for the sale of any of the Restricted Securities by any holder of Restricted Securities. 2.6 ACCESS TO RECORDS. Until such time that the Corporation has a class of its equity securities registered under the Exchange Act and is required to file reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act, the Corporation shall afford to each Major Investor and such Major Investor's employees, counsel and other authorized representatives, free and full access, at all reasonable times and for reasonable periods of time, to all of the books, records and properties of the Corporation and to all officers and employees of the Corporation. 2.7 FINANCIAL REPORTS. Until such time that the Corporation has a class of its equity securities registered under the Exchange Act and is required to file reports thereunder pursuant to Sections 13 or 15(d) of the Exchange Act, except with respect to the obligation set forth in Section 2.7(e)(i) hereunder which shall survive such time, the Corporation shall furnish each Major Investor with the financial information described below: (a) Within 20 days after the last day of each month (the "Target Month") (or such other calendar period as is approved by the Board), financial statements, including a balance sheet as of the last day of such Target Month, a statement of income (or monthly operating expenses) for such month, together with a cumulative statement of income from the first day of the current year to the last day of such Target Month, which statements shall be prepared from the books and records of the Corporation, a cash flow analysis, together with cumulative cash flow analyses from the first day of the current year to the last day of such - 14 - month, and a comparison between the actual monthly operating expenses and the projected figures for such month and the comparable figures for the prior year, subject to the provisions of Section 2.9 hereof. (b) Upon receipt of a request from any of the Major Investors prior to the end of a quarterly accounting period, the Corporation shall deliver to each of the Major Investors, within 45 days after the end of such quarterly accounting period, unaudited financial statements for such quarterly accounting period, certified by the Chief Financial Officer or the Treasurer of the Corporation, as presenting fairly the financial condition and results of operations of the Corporation and as having been prepared on a basis consistent with the accounting Principles reflected in the Corporation's annual audited financial statements, accompanied by a report, Signed by the Chief Financial Officer or the Treasurer of the Corporation, summarizing the operating and financial highlights of the Corporation for such quarterly accounting period, which report shall include (i) a comparison between the actual quarterly operating and financial results, the Budget (as defined in Section 2.8 hereof) and the results of the similar quarterly accounting period for the prior fiscal year of the Corporation, together with an explanation of material variances from the Budget and such similar quarterly accounting period, as the case may be, and (ii) a narrative analysis of operations and trends in the business of the Corporation during such quarterly accounting period. (c) Within 90 days after the end of each fiscal year of the Corporation, audited financial statements of the Corporation, which shall include an income statement and a statement of cash flow for such fiscal year and a balance sheet as of the last day thereof, each prepared in accordance with generally accepted accounting principles consistently applied, and accompanied by the report of such independent certified public accountants as shall have been approved by the Board. (d) If for any period the Corporation shall have any subsidiary or subsidiaries whose accounts are consolidated with those of the Corporation, then the financial statements delivered for such period pursuant to paragraphs (a), (b) and (c) of this Section 2.7 shall be the consolidated and consolidating financial statements of the Corporation for all such consolidated subsidiaries. (e) Promptly upon becoming available: (i) copies of all financial statements, reports, press releases, notices, proxy statements and other documents sent by the Corporation to its Stockholders or released to the public and copies of all regular and periodic reports, if any, filed by the Corporation with the Commission or any securities exchange or self-regulatory organization; and (ii) any other financial or other information available to management of the Corporation that any of the Major Investors shall have reasonably requested on a timely basis. 2.8 BUDGET AND OPERATING FORECAST. Until such time that the Corporation has a class of its equity securities registered under the Exchange Act and is required to file reports - 15 - thereunder pursuant to Sections 13 or 15(d) of the Exchange Act, the Corporation shall prepare and submit to the Board and each of the Major Investors an operating plan with monthly and quarterly breakdowns (the "Budget") for each fiscal year at least 45 days prior to the beginning of each fiscal year of the Corporation. The Budget shall be deemed accepted as the Budget for such fiscal year only when it has been approved by the Board. The Budget shall be reviewed by the Corporation periodically and all changes therein, and all material deviations therefrom, shall be reviewed by the Board on at least a quarterly basis. 2.9 SYSTEM OF ACCOUNTING. The Corporation shall maintain, and cause each of its subsidiaries, when and if any shall exist, to maintain, its books of accounts, related records and system of accounting in accordance with good business practices and generally accepted accounting principles, and shall cause the matters contained therein to be appropriately and accurately reflected in the financial reports (which shall be prepared in accordance with generally accepted accounting principles) furnished pursuant to this Agreement. 2.10 RESTRICTION ON TRANSFER RIGHTS. The rights granted to each Major Investor pursuant to Sections 2.6 through 2.8 hereof shall not be transferred or assigned by any Investor to, and shall not inure to the benefit of, any successor, transferee or assignee of any Investor, which is engaged in any line of business directly competitive with the Corporation. 2.11 CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS FOR KEY EMPLOYEES. The Corporation shall cause each person who is presently an employee of or a consultant or independent contractor to the Corporation or who becomes an employee of or a consultant to the Corporation subsequent to the date hereof and who shall have or be proposed to have access to confidential or proprietary information of the Corporation to execute a confidentiality and non-competition agreement in form and substance attached hereto or otherwise approved by the Board prior to the commencement of such person's employment by the Corporation in such capacity. 2.12 STOCK RESTRICTION AGREEMENT FOR DIRECTORS, OFFICERS EMPLOYEES AND CONSULTANTS WHO ARE OR BECOME STOCKHOLDERS. The Corporation shall cause each of its directors, officers, employees, consultants or independent contractors who own any shares of capital stock of the Corporation, or exercises any options, warrants or other rights to purchase any shares of such capital stock, or who may own in the future any such shares, or options, warrants or other rights to purchase such shares, to execute a Stock Restriction Agreement substantially in the form attached hereto as EXHIBIT A, and as may be modified and amended from time to time with the approval of the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, determined in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), prior and as a condition to the acquisition of such shares, or options, warrants or rights, by such person. Notwithstanding the foregoing, it shall not be a condition to the acquisition of shares of Preferred Stock pursuant to Section 2.3 hereof by such directors, officers, employees, consultants or independent contractors of the Corporation that such shares of Preferred Stock be subject to the restrictions imposed by a Stock Restriction Agreement (other than the restrictions imposed by or arising out of federal and state securities laws) - 16 - 2.13 MARKETING AND PROMOTIONAL MATERIAL. Each of the Investors will have the right to review and approve, in advance of publication, distribution or dissemination, any reference to such Investor or any entity affiliated with such Investor (other than the Corporation), contained in any document, instrument, report or filing or in any advertising, marketing, promotional and similar materials. 2.14 ENVIRONMENTAL MATTERS. The Corporation shall promptly advise the Investors in writing of any pending or threatened claim, demand or action by any governmental authority or third party relating to any Hazardous Materials affecting the Property or of any failure to materially comply with the Environmental Laws, in each case of which it has knowledge. The Corporation shall not discharge, place, release, spill or dispose of any Hazardous Materials or any other pollutants or effluents upon the Property or elsewhere (including, but not limited to, underground injection of such substances), and the Corporation shall not discharge into the air any emission which would require a permit under the Clean Air Act or its state counterparts or any other Environmental Laws, except in compliance with the Environmental Laws. The Stockholders of the Corporation shall have no control over, or authority with respect to, the waste disposal operations of the Corporation. The Corporation hereby indemnifies, defends and holds harmless the Investors from and against any and all manner of actions, causes of action, suits, debts, accounts, controversies, judgments, claims, demands, losses or liabilities of any nature (including reasonable attorneys' fees) directly or indirectly arising out of or attributable to (a) any misrepresentation or breach of the representations and covenants set forth in Section 5.17 of the Series E Stock Purchase Agreement, or (b) the use, generation, storage, release, threatened release, discharge, disposal or presence of Hazardous Materials on, under or about the Property by any person during the period that the Corporation was the legal or equitable owner of the Property or which occurred prior to such time and was otherwise actually known by, or should have been known by, the Corporation. The obligation of the Corporation to indemnify the Investors shall specifically cover and include, without limitation, all fines and penalties imposed by federal, state or local authorities, costs of removing or neutralizing the Hazardous Materials, injury to the property adjoining the Property, injury to persons living or working on or about the Property or adjoining or otherwise affecting property, and all other indirect or consequential damages incurred by the Investors. 2.15 TERMINATION OF COVENANTS. The covenants set forth in this Section 2 (other than Sections 2.5, 2.11, 2.13 and the indemnities provided in Section 2.14) shall terminate upon the closing of an Initial Public Offering. SECTION 3. TRANSFER OF SECURITIES; REGISTRATION RIGHTS. 3.1 RESTRICTION ON TRANSFER. The Restricted Securities shall not be transferable, except upon the conditions specified in this Section 3, which conditions are intended solely to ensure compliance with the provisions of the Securities Act in respect of the Transfer thereof. 3.2 RESTRICTIVE LEGEND. Each certificate evidencing any Restricted Securities and each certificate evidencing any such securities issued to subsequent transferees of any - 17 - Restricted Securities shall (unless otherwise permitted by the provisions of Section 3.3 or 3.10 hereof) be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAW OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN A STOCKHOLDERS' AGREEMENT AMONG NITROMED, INC. AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF NITROMED, INC. 3.3 NOTICE OF TRANSFER. By acceptance of any Restricted Securities, the holder thereof agrees to give prior written notice to the Corporation of such holder's intention to effect any Transfer and to comply in all other respects with the provisions of this Section 3.3. Each such notice shall describe the manner and circumstances of the proposed Transfer and shall be accompanied by: (a) the written opinion of counsel for the holder of such Restricted Securities, or, at such holder's option, a representation letter of such holder, addressed to the Corporation (which opinion and counsel, or representation letter, as the case may be, shall be reasonably acceptable to the Corporation), as to whether, in the case of a written opinion, in the opinion of such counsel, such proposed Transfer involves a transaction requiring registration of such Restricted Securities under the Securities Act and applicable state securities laws or an exemption thereunder is available, or, in the case of a representation letter, such letter sets forth a factual basis for concluding that such proposed transfer involves a transaction requiring registration of such Restricted Securities under the Securities Act and applicable State Securities laws or that an exemption thereunder is available, or (b) if such registration is required and if the provisions of Section 3.4 hereof are applicable, a written request addressed to the Corporation by the holder of such Restricted Securities, describing in detail the proposed method of disposition and requesting the Corporation to effect the registration of such Restricted Shares pursuant to the terms and provisions of Section 3.4 hereof; PROVIDED, HOWEVER, that (y) in the case of a transfer by a holder to a member of such holder's Group, no such opinion of counsel or representation letter of the holder shall be necessary, provided that the transferee agrees in writing to be subject to Sections 3.1, 3.2, 3.3 and 3.10 hereof to the same extent as if such transferee were originally a - 18 - signatory to this Agreement, and (z) in the case of any holder of Restricted Securities that is a partnership, no such opinion of counsel or representation letters of the holder shall be necessary for a transfer by such holder to a partner of such holder, or a retired partner of such holder who retires after the date hereof, or the estate of any such partner or retired partner if, with respect to such transfer by a partnership, (i) such transfer is made in accordance with the partnership agreement of such partnership, and (ii) the transferee agrees in writing to be subject to the terms of Sections 3.1, 3.2, 3.3 and 3.10 hereof to the same extent as if such transferee were originally a signatory to this Agreement. If in such opinion of counsel or as reasonably concluded from the facts set forth in the representation letter of the holder (which opinion and counsel, or representation letter, as the case may be, shall be reasonably acceptable to the Corporation), the proposed transfer may be effected without registration under the Securities Act and any applicable state securities laws or "blue sky" laws, then the holder of Restricted Securities shall thereupon be entitled to effect such transfer in accordance with the terms of the notice delivered by it to the Corporation. Each certificate or other instrument evidencing the securities issued upon such Transfer (and each certificate or other instrument evidencing any such securities not Transferred) shall bear the legend set forth in Section 3.2 hereof unless: (a) in such opinion of such counsel or as can be concluded from the representation letter of such holder (which opinion and counsel or representation letter shall be reasonably acceptable to the Corporation) the registration of future Transfers is not required by the applicable provisions of the Securities Act and state securities laws, or (b) the Corporation shall have waived the requirement of such legend; PROVIDED, HOWEVER, that such legend shall not be required on any certificate or other instrument evidencing the securities issued upon such Transfer in the event such Transfer shall be made in compliance with the requirements of Rule 144 (as amended from time to time or any similar or successor rule) promulgated under the Securities Act. The holder of Restricted Securities shall not effect any Transfer until such opinion of counsel or representation letter of such holder has been given to and reasonably accepted by the Corporation (unless waived by the Corporation) or until registration of the Restricted Shares involved in the above- mentioned request has become effective under the Securities Act. In the event that an opinion of counsel is required by the registrar or transfer agent of the Corporation to effect a transfer of Restricted Securities in the future, the Corporation shall seek and obtain such opinion from its counsel, and the holder of such Restricted Securities shall provide such reasonable assistance as is requested by the Corporation (other than the furnishing of an opinion of counsel) to satisfy the requirements of the registrar or transfer agent to effectuate such transfer. 3.4 REQUIRED REGISTRATION. If, at any time following the earlier of (a) December 31, 2003, or (b) the closing of an Initial Public Offering, the Corporation shall be requested (i) by Investors holding at least 40% of the aggregate outstanding Restricted Securities held by all Investors (based on the underlying Common Stock for which the Restricted Securities are convertible or exercisable) to effect the registration under the Securities Act of Restricted Shares, or (ii) after the first registration pursuant to this Section 3.4, by one or more of the Investors holding Restricted Securities to effect the registration under the Securities Act of Restricted Shares having a proposed aggregate offering price equal to or greater than $1,000,000, then the Corporation shall promptly give written notice of such proposed registration to all holders of Restricted Securities, and thereupon the Corporation shall promptly use its best efforts to effect the registration under the Securities Act of the Restricted Shares that the Corporation has been requested to register for disposition as described in the request of such holders of - 19 - Restricted Securities and in any response received from any of the holders of Restricted Securities within 30 days after the giving of the written notice by the Corporation; PROVIDED, HOWEVER, that the Corporation shall not be obligated to effect any registration under the Securities Act except in accordance with the following provisions and Section 3.6: (a) Subject to Section 3.6, the Corporation shall not be obligated to file and cause to become effective more than two (2) registration statements in which Restricted Shares are registered under the Securities Act pursuant to this Section 3.4, if all of the Restricted Shares offered pursuant to such registration statements are sold thereunder upon the price and terms offered. (b) Notwithstanding the foregoing, the Corporation may include in each such registration requested pursuant to this Section 3.4 any authorized but unissued shares of Common Stock (or authorized treasury shares) for sale by the Corporation or any issued and outstanding shares of Common Stock for sale by others; PROVIDED, HOWEVER, that, if the number of shares of Common Stock so included pursuant to this clause (b) exceeds the number of Restricted Shares requested by the holders of Restricted Shares requesting such registration, then such registration shall be deemed to be a registration in accordance with and pursuant to Section 3.5; and PROVIDED FURTHER, HOWEVER, that the inclusion of such previously authorized but unissued shares by the Corporation or issued and outstanding shares of Common Stock by others in such registration does not adversely affect, in the sole opinion of the holders of Restricted Securities requesting such registration, the ability of the holders of Restricted Securities requesting such registration to market the entire number of Restricted Shares requested by them. 3.5 PIGGYBACK REGISTRATION. (a) Each time that the Corporation proposes for any reason to register any of its securities under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or similar or successor forms or pursuant to a transaction under Rule 145 of the Securities Act (collectively, "Excluded Forms"), the Corporation shall promptly give written notice of such proposed registration to all holders of Restricted Securities, which shall offer such holders the right to request inclusion of any Restricted Shares in the proposed registration. (b) Each holder of Restricted Securities shall have 30 days from the receipt of such notice to deliver to the Corporation a written request specifying the number of Restricted Shares such holder intends to sell and the holder's intended method of disposition. (c) In the event that the proposed registration by the Corporation is, in whole or in part, an underwritten public offering of securities of the Corporation, any request under Section 3.5(b) may specify that the Restricted Shares be included in the underwriting (i) on the same terms and conditions as the shares of Common Stock, if any, otherwise being sold through underwriters under such registration, or (ii) on terms and conditions comparable to those normally applicable to offerings of common stock in reasonably similar circumstances in the event that no shares of Common Stock other than Restricted Shares are being sold through underwriters under such registration. - 20 - (d) Upon receipt of a written request pursuant to Section 3.5(b), the Corporation shall promptly use its best efforts to cause all such Restricted Shares to be registered under the Securities Act, to the extent required to permit sale or disposition as set forth in the written request. (e) Notwithstanding the foregoing, if the managing underwriter of any such proposed registration determines and advises in writing that the inclusion of all Restricted Shares proposed to be included in the underwritten public offering, together with any other issued and outstanding shares of Common Stock proposed to be included therein by holders other than the holders of Restricted Securities (such other shares hereinafter Collectively referred to as the "Other Shares"), would interfere with the successful marketing of the Corporation's securities, then the total number of such securities proposed to be included in such underwritten public offering shall be reduced, (i) first by the shares requested to be included in such registration by the holders of Other Shares, and (ii) second, if necessary, (A) one-half (1/2) by the securities proposed to be issued by the Corporation, and (B) one-half (1/2) by the Restricted Shares proposed to be included in such registration by the holders thereof, on a PRO RATA basis, based upon the number of Restricted Shares sought to be registered by each such holder. The shares of Common Stock that are excluded from the underwritten public offering pursuant to the preceding sentence shall be withheld from the market by the holders thereof for a period, not to exceed 180 days from the closing of such underwritten public offering, that the managing underwriter reasonably determines as necessary in order to effect such underwritten public offering. 3.6 REGISTRATIONS ON FORM S-2 AND S-3. At such time as the Corporation shall have qualified for the use of Form S-2 or Form S-3 (or any successor form promulgated under the Securities Act), the holders of Restricted Securities shall have the right to request in writing up to two (2) registrations on Form S-2 or Form S-3 in any twelve-month period. Each such request by a holder shall: (a) specify the number of Restricted Shares which the holder intends to sell or dispose of, (b) state the intended method by which the holder intends to sell or dispose of such Restricted Shares, and (c) request registration of Restricted Shares having a proposed aggregate offering price of at least $500,000. Upon receipt of a request pursuant to this Section 3.6, the Corporation shall provide written notice to all other holders of Restricted Securities of such request and the provisions of Section 3.5 shall govern the inclusion of additional Restricted Securities in such registration. The Corporation shall use its best efforts to effect such registration or registrations on Form S-2 or Form S-3. 3.7 PREPARATION AND FILING. If and whenever the Corporation is under an obligation pursuant to the provision of this Section 3 to use its best efforts to effect the registration of any Restricted Shares, the Corporation shall, as expeditiously as practicable: (a) prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective in accordance with Section 3.7(b) hereof; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as - 21 - may be necessary to keep such registration statement effective until the earlier of (i) the sale of all Restricted Shares covered thereby or (ii) nine months, and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Restricted Shares covered by such registration statement; (c) furnish to each holder whose Restricted Shares are being registered pursuant to this Section 3 such number of copies of any summary prospectus or other prospectus, including a Preliminary Prospectus, in conformity with the requirements of the Securities Act, and such other documents as such holder may reasonably request in order to facilitate the public sale or other disposition of such Restricted Shares; (d) use its best efforts to register or qualify the Restricted Shares covered by such registration statement under the securities or blue sky laws of such jurisdictions as each holder whose Restricted Shares are being registered pursuant to this Section 3 shall reasonably request and do any and all other acts or things which may be necessary or advisable to enable such holder to consummate the public sale or other disposition in such jurisdictions of such Restricted Shares; PROVIDED, HOWEVER, that the Corporation shall not be required to consent to general service of process for all purposes in any jurisdiction where it is not then subject to process, qualify to do business as a foreign corporation where it would not be otherwise required to qualify or submit to liability for state or local taxes where it is not otherwise liable for such taxes; (e) at any time when a prospectus covered by such registration statement and relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in Section 3.7(b) hereof, notify each holder whose Restricted Shares are being registered pursuant to this Section 3 of the happening of any event as a result of which the prospectus included in such registration, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and, at the request of such holder, prepare, file and furnish to such holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (f) if the Corporation has delivered preliminary or final prospectuses to the holders of Restricted Shares that are being registered pursuant to this Section 3 and after having done so the prospectus is amended to comply with the requirements of the Securities Act, the Corporation shall promptly notify such holders and, if requested, such holders shall immediately cease making offers of Restricted Shares and return all prospectuses to the Corporation. The Corporation shall promptly provide such holders with revised prospectuses and, following receipt of the revised prospectuses, such holders shall be free to resume making offers of the Restricted Shares; and (g) furnish, at the request of any holder whose Restricted Shares are being registered pursuant to this Section 3, on the date that such Restricted Shares are delivered - 22 - to the underwriters for sale in connection with a registration pursuant to this Section 3, if such securities are being sold through underwriters, or, on the date that the registration statement with respect to such securities becomes effective, if such securities are not being sold through underwriters, (i) an opinion, dated such date, of the counsel representing the Corporation for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holder or holders making such request, and (ii) a letter dated such date, from the independent certified public accountants of the Corporation, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the holder or holders making such request. 3.8 EXPENSES. The Corporation shall pay all expenses incurred by the Corporation in complying with this Section 3, including, without limitation, all registration and filing fees (including all expenses incident to filing with the National Association of Securities Dealers, Inc.), fees and expenses of complying with the securities and blue sky laws of all such jurisdictions in which the Restricted Shares are proposed to be offered and sold, printing expenses and fees and disbursements of counsel (including with respect to each registration effected pursuant to Sections 3.4, 3.5 and 3.6, the reasonable fees and disbursements of counsel for the Investors, as selling Stockholder(s) thereunder that are being registered pursuant to this Section 3); PROVIDED, HOWEVER, that all underwriting discounts and selling commissions applicable to the Restricted Shares covered by registrations effected pursuant to Section 3.4, 3.5 or 3.6 hereof shall be borne by the seller or sellers thereof, in proportion to the number of Restricted Shares sold by each such seller or sellers. 3.9 INDEMNIFICATION. (a) In the event of any registration of any Restricted Shares under the Securities Act pursuant to this Section 3 or registration or qualification of any Restricted Shares pursuant to Section 3.7(d) hereof, the Corporation shall indemnify and hold harmless the seller of such shares, each underwriter of such shares, if any, each broker or any other person acting on behalf of such seller and each other person, if any, who controls any of the foregoing persons, within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing persons may become subject under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such Restricted Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or any document incident to registration or qualification of any Restricted Shares pursuant to Section 3.7(d) hereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or any violation by the Corporation of the Securities Act or the Exchange Act or any state securities or blue sky laws applicable to the Corporation and relating to action or inaction required of the Corporation in connection with such registration or qualification under the Securities Act or the Exchange Act - 23 - or such state securities or blue sky laws. The Corporation shall reimburse on demand such seller, underwriter, broker or other person acting on behalf of such seller and each such controlling person for any legal or any other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Corporation shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, preliminary or final prospectus or amendment or supplement thereto or any document incident to registration or qualification of any Restricted Shares pursuant to Section 3.7(d) hereof, in reliance upon and in conformity with written information furnished to the Corporation by such seller, underwriter, broker, other person or controlling person specifically for use in the preparation thereof. (b) Before Restricted Shares held by any prospective seller shall be included in any registration pursuant to this Section 3, such prospective seller shall have agreed to indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph (a)) the Corporation, each director of the Corporation, each officer of the Corporation who signs such registration statement and any person who controls the Corporation within the meaning of the Securities Act or the Exchange Act, with respect to any untrue statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, if such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Corporation through an instrument duly executed by such seller specifically for use in the preparation of such registration statement, preliminary prospectus, final prospectus or amendment or supplement; PROVIDED, HOWEVER, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each prospective seller, to an amount equal to the net proceeds actually received by such prospective seller from the sale of Restricted Shares effected pursuant to such registration and PROVIDED FURTHER, that no prospective seller shall be required to make any representations or warranties to the Corporation or the underwriters (other than representations and warranties regarding such prospective seller, its title to the Restricted Shares to be sold and its intended method of distribution thereof), or to undertake any indemnification obligations to the Corporation or to the underwriters with respect thereto, except as otherwise provided by this Section 3(b). (c) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in Section 3.9(a) or (b) hereof, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 3.9, give written notice to the latter of the commencement of such action. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and, after notice to such indemnified party from the indemnifying party of its election to assume the defense thereof, the indemnifying party shall be responsible for any legal or other expenses subsequently incurred by it in connection with the defense thereof; PROVIDED, HOWEVER, that, if any indemnified party shall have reasonably concluded that there may be one or more legal defenses available to such indemnified party which are different from or additional to those available to the indemnifying party, or that such claim or litigation involves or - 24 - could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 3.9, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, and such indemnifying party shall reimburse such indemnified party and any person controlling such indemnified party for the fees and expenses of counsel retained by the indemnified party which are reasonably related to the matters covered by the indemnity agreement provided in this Section 3.9. The indemnifying party shall not make any settlement of any claims indemnified against hereunder without the written consent of the indemnified party or parties, which consent shall not be unreasonably withheld. (d) In order to provide for just and equitable contribution to joint liability under the Securities Act or the Exchange Act in any case in which either (i) any holder of Restricted Shares exercising rights under this Agreement, or any controlling person of any such holder, makes a claim for indemnification pursuant to this Section 3.9, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 3.9 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any such holder or any such controlling person in circumstances for which indemnification is provided under this Section 3.9; then, in each such case, the Corporation and such holder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject as is appropriate to reflect the relative fault of the Corporation and such holder in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, it being understood that the parties acknowledge that the overriding equitable consideration to be given effect in connection with this provision is the ability of one party or the other to correct the statement or omission which resulted in such losses, claims, damages or liabilities, and that it would not be just and equitable if contribution pursuant hereto were to be determined by PRO RATA allocation or by any other method of allocation which does not take into consideration the foregoing equitable considerations. Notwithstanding the foregoing, (i) no such holder will be required to contribute any amount in excess of the proceeds to it of all Restricted Shares sold by it pursuant to such registration statement, and (ii) no person or entity guilty of fraudulent misrepresentation, within the meaning of Section 11(f) of the Securities Act, shall be entitled to contribution from any person or entity who is not guilty of such fraudulent misrepresentation. (e) The Corporation shall use its best efforts to ensure that indemnification provisions adopted in any underwriting agreement are no more restrictive than as set forth herein. Notwithstanding any of the foregoing, if, in connection with an underwritten public offering of any Restricted Shares, the Corporation, the holders of such Restricted Shares and the underwriters enter into an underwriting or purchase agreement relating to such offering which contains provisions covering indemnification among the parties, then the indemnification provision of this Section 3.9 shall be deemed inoperative for purposes of such offering. 3.10 REMOVAL OF LEGENDS, ETC. Notwithstanding the foregoing provisions of this Section 3, the restrictions imposed by this Section 3 upon the transferability of any Restricted Securities shall cease and terminate when (a) any such Restricted Securities are sold or otherwise disposed of in accordance with the intended method of disposition by the seller or - 25 - sellers thereof set forth in a registration statement or such other method contemplated by Section 3.3 hereof that does not require that the securities transferred bear the legend set forth in Section 3.2 hereof, including a Transfer pursuant to Rule 144 or a successor rule thereof (as amended from time to time), or (b) the holder of Restricted Securities has met the requirements for transfer of such Restricted Securities pursuant to Subparagraph (k) of Rule 144 or a successor rule thereof (as amended from time to time) promulgated by the Commission under the Securities Act. Whenever the restrictions imposed by this Section 3 have terminated, a holder of a certificate for Restricted Securities as to which such restrictions have terminated shall be entitled to receive from the Corporation, without expense, a new certificate not bearing the restrictive legend set forth in Section 3.2 hereof and not containing any other reference to the restrictions imposed by this Section 3. 3.11 GRANTS OF REGISTRATION RIGHTS. The Corporation shall not grant registration rights to any holder of securities of the Corporation (other than the rights granted pursuant to this Agreement) without the prior written consent of the holders of a majority in voting power of the Series Preferred Shares and the Common Stock issued upon the conversion thereof. Any registration rights so granted shall in any case be no more favorable than those granted hereby. SECTION 4. SECURITIES ACT REGISTRATION STATEMENTS. Except for securities of the Corporation registered on Excluded Forms, the Corporation shall not file any registration statement under the Securities Act covering any securities unless it shall first have given each holder of Restricted Securities written notice thereof. The Corporation further covenants that each holder of Restricted Securities shall have the right, at any time when it may be deemed to be a controlling person of the Corporation, within the meaning of the Securities Act, to participate in the preparation of such registration statement and to request the insertion therein of material furnished to the Corporation in writing which in such holder's judgment should be included. In connection with any registration statement referred to in this Section 4, the Corporation shall indemnify, to the extent permitted by law, each holder of Restricted Securities, its officers, partners and directors and each person, if any, who controls any such holder within the meaning of the Securities Act or the Exchange Act in the same manner and to the same extent as the Corporation is required to indemnify a seller of Restricted Shares in Section 3.9 hereof. If, in connection with any such registration statement, any holder of Restricted Securities shall furnish written information to the Corporation expressly for use in the registration statement, then such holder shall indemnify the Corporation, each director of the Corporation, each officer of the Corporation who signs such registration statement and each person, if any, who controls the Corporation within the meaning of the Securities Act to the same extent as a seller of Restricted Shares is required to indemnify such persons in Section 3.9 hereof. SECTION 5. ELECTION OF DIRECTORS. 5.1 VOTING FOR DIRECTORS. At each annual meeting of the stockholders of the Corporation and at each special meeting of the stockholders of the Corporation called for the purposes of electing directors of the Corporation, and at any time at which stockholders of the Corporation shall have the right to, or shall, vote for the election of directors, then, in each such event, each Investor holding Series Preferred Shares shall vote all Series Preferred Shares and - 26 - any other shares of voting stock of the Corporation then owned or controlled as to voting rights) by it, whether by purchase, exercise of rights, warrants or options, stock dividends or otherwise: (a) to fix and maintain the number of directors on the Board of Directors of the Corporation at not more than seven (7); (b) pursuant to Paragraph A.6(b)(i) of Article III of the Certificate, to elect to the Board: (i) one (1) director designated by HCV III, HCV IV and HCV V, who shall initially be John W. Littlechild; (ii) one (1) director designated by HCV VI, who shall initially be Robert S. Cohen; (iii) one (1) director designated by Rho Management Trust II; (iv) one (1) director designated by Rho Ventures IV (QP), L.P. ("Rho Management"), who shall initially be Mark Leschly; (v) one (1) director designated by Johnson & Johnson Development Corporation, who shall initially be Roger Guidi; and (c) to elect two (2) directors designated by the Company, one of which shall be the Chief Executive Officer, and one of which shall initially be Zola Horovitz. 5.2 COOPERATION OF THE CORPORATION. The Corporation shall use its best efforts to effectuate the purposes of this Section 5, including promoting the adoption of any necessary amendment of the By-laws of the Corporation and the Certificate. 5.3 NOTICES. The Corporation shall provide the Investors with at least twenty (20) days' prior notice in writing of any intended mailing of notice to the stockholders of the Corporation for a meeting at which directors are to be elected. The Investors shall notify the Corporation in writing at least three (3) days prior to such mailing of the persons designated by them pursuant to Paragraph A.6(b) (i) of Article III of the Certificate and Section 5.1 above as nominees for election to the Board. In the absence of any notice from the applicable Investors, the director(s) then serving and previously designated by such applicable Investors shall be renominated. 5.4 REMOVAL. Except as otherwise provided in this Section 5, no Investor shall vote to remove any member of the Board designated in accordance with the foregoing provisions of this Section 5 unless the party who designated such director (the "Designating Party") shall so vote or otherwise consent, and, if the Designating Party shall so vote or otherwise consent, then the non-designating Investors shall likewise so vote. Any vacancy on the Board created by the resignation, removal, incapacity or death of any person designated under Section 5.1 shall be filled by another person designated by the original Designating Party. Each Investor shall vote all voting Series Preferred Shares of the Corporation and all other shares - 27 - of voting stock of the Corporation owned or controlled by such Investor in accordance with each such new designation, and no such vacancy shall be filled in the absence of a new designation by the original Designating Party. 5.5 ADDITIONAL RIGHTS. The member of the Board designated by Rho Management shall have the right to be a member of the Compensation Committee or similar committee created by the Board. In the event that Rho Management does not elect to designate a member of the Board, it shall be entitled to receive notices of all Board meetings and have an observer attend all meetings of the Board and committees thereof. 5.6 DURATION OF SECTION. This Section 5 and the rights and obligations of the parties hereunder shall automatically terminate on the first to occur of December 31, 2007 or the closing of an Initial Public Offering (the "Expiration Date"). Prior to such termination the rights and obligations of any Investor under this Section 5 shall terminate upon the date on which such Investor no longer owns any Restricted Securities, whereupon the obligations of the remaining Investors to vote in favor of the designee of such Investor shall also terminate. SECTION 6. REMEDIES. In case any one or more of the covenants and/or agreements set forth in this Agreement shall have been breached by any party hereto, the party or parties entitled to the benefit of such covenants or agreements may proceed to protect and enforce its or their rights, either by suit in equity and/or action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement. Notwithstanding the generality of the foregoing, in the event that the Corporation breaches any of its covenants and/or agreements set forth herein, the Investors shall have the additional remedy, in their sole discretion upon the election by a majority in voting power thereof, provided that such breach has not been cured by the 60th day after receipt of notice from an Investor of such breach by the Corporation, to exercise immediately their right of redemption set forth in Article III, Section A.5 of the Certificate, as provided therein with respect to all, but not less than all, of their shares, irrespective of whether such right of redemption otherwise is mature. With respect to a breach of which the Corporation is aware or reasonably should be aware, such 60 day period within which the Corporation shall have the right to cure such breach shall be deemed to have commenced on the tenth day after the occurrence of such breach, irrespective of notice of such breach from an Investor, if the Corporation shall not have notified the Investors of such breach by such date. The rights, powers and remedies of the parties under this Agreement are cumulative and not exclusive of any other right, power or remedy which such parties may have under any other agreement or law. No single or partial assertion or exercise of any right, power or remedy of a party hereunder shall preclude any other or further assertion or exercise thereof. SECTION 7. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein, this Agreement shall bind and inure to the benefit of the Corporation, BWH, each of the Investors, the Management Holders and the respective successors and assigns of the Corporation, BWH, each of the Investors and the Management Holders. Subject to the requirements of Section 3 hereof, this Agreement and the rights and duties of the Investors set forth herein may be freely assigned, in whole or in part, by each Investor. Rights under Section 3 may be transferred only to an Investor or to a person or entity which acquires at least 100,000 Restricted - 28 - Shares, and, in either case, any such transferee shall, as a condition to such transfer, deliver to the Corporation a written instrument by which such transferee identifies itself, gives the Corporation notice of the transfer of such rights, identifies the securities of the Corporation owned or acquired by it and agrees to be bound by the obligations imposed hereunder to the same extent as if such transferee were an Investor hereunder. A transferee to whom rights are transferred pursuant to this Section 7 will be thereafter deemed to be an Investor for the purpose of the execution of such transferred rights and may not again transfer such rights to any other person or entity, other than as provided in this Section 7. Neither this Agreement nor any of the rights or duties of the Corporation or BWH set forth herein shall be assigned by the Corporation or BWH, as the case may be, in whole or in part, without having first received the written consent of the Investors holding sixty-six and two-thirds percent (66 2/3%) in voting power of the outstanding Series Preferred Shares, determined in accordance with Section A.6(a) of the certificate (including, in such calculation, any outstanding Restricted Shares by such Investors). SECTION 8. DURATION OF AGREEMENT. The rights and obligations of the Corporation, BWH, each Investor and each Management Holder set forth herein shall survive indefinitely, unless and until, by their respective terms, they are no longer applicable. SECTION 9. ENTIRE AGREEMENT. This Agreement, together with the other writings referred to herein or delivered pursuant hereto which form a part hereof, contains the entire agreement among the parties with respect to the subject matter hereof and amends, restates and supersedes all prior and contemporaneous arrangements or understandings with respect thereto; PROVIDED, HOWEVER, that the provisions of the Research and License Agreement effective August 1, 1992, as amended November 22, 1996, between the Corporation and BWH (other than Section 8.9 thereof which is superseded in its entirety by this Agreement and the Stock Restriction Agreement dated December 3, 1993 between the Corporation and BWH) shall continue in full force and effect. SECTION 10. NOTICES. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular mail, addressed or telecopied, as the case may be, to such party at the address or telecopier number, as the case may be, set forth below or such other address or telecopier number, as the case may be, as may hereafter be designated in writing by the addressee to the addressor listing all parties: (i) If to the Corporation, to: NitroMed, Inc. 12 Oak Park Drive Bedford, MA 01730 Attention: Chief Executive Officer Telecopier: (617) 275-2282 - 29 - with a copy to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Steven D. Singer, Esq. Telecopier: (617) 526-5000 (ii) If to the Investors, as set forth on Schedule 1. with a copy to: Law Office of Gregory F.W. Todd 888 Seventh Avenue, Suite 4500 New York, NY 10019 Attention: Gregory F.W. Todd, Esq. Telecopier: (212) 246-5454 (iii) If to BWH, to: The Brigham and Women's Hospital 75 Francis Street Boston, MA 02115 Attention: Dr. Vandana D. Yajnick with a copy to: Brigham and Women's Medical Center, Inc. 10 Vining Street Boston, MA 02115 Attention: Office of General Counsel (iv) If to the Management Holders, as set forth on Schedule 2. All such notices, requests, consents and communications shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of mailing, on the third business day following the date of such mailing, (c) in the case of overnight mail, on the first business day following the date of such mailing, and (d) in the case of facsimile transmission, when confirmed by facsimile machine report. SECTION 11. CHANGES. The terms and provisions of this Agreement may not be modified or amended, or any of the provisions hereof waived, temporarily or permanently, except pursuant to the written consent of the Corporation and the holders of at least sixty-five percent (65%) in voting power of the Series Preferred Shares then outstanding, determined in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders); PROVIDED THAT no such amendment may - 30 - reduce or materially adversely affect the rights of BWH or the Management Holders without the consent of BWH or Management Holders holding a majority in voting power of all Restricted Shares held by all Management Holders.. SECTION 12. ADDITIONAL INVESTORS. Persons or entities that, after the date hereof, purchase Series E Preferred Shares pursuant to the Series E Stock Purchase Agreement and become "Investors" thereunder may, with the prior written approval of the Corporation (but without the need for approval by any other party to this Agreement), become parties to this Agreement by executing and delivering a counterpart signature page hereto, whereupon they shall be deemed "Investors" and "Series E Investors" for all purposes of this Agreement. SECTION 13. COUNTERPARTS. This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. SECTION 14. HEADINGS. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. SECTION 15. NOUNS AND PRONOUNS. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice-versa. SECTION 16. SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 17. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, excluding the conflict of law doctrines of Delaware or any other jurisdiction to the contrary. SECTION 18. EFFECTIVENESS. Notwithstanding any other provision of this Agreement, this Agreement shall not be effective until the Closing (as such term is defined in the Series D Stock Purchase Agreement). SECTION 19. TERMINATION OF AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT. Notwithstanding anything to the contrary contained in the Old Stockholders' Agreement, the Old Stockholders' Agreement is hereby terminated in its entirety and superseded by the terms and conditions of this Agreement. [Remainder of Page Left Intentionally Blank] - 31 - IN WITNESS WHEREOF the parties hereto have executed this Fourth Amended and Restated Stockholders' Agreement on the date first above written. NITROMED, INC. By: /s/ Michael D. Loberg ----------------------------------------- Title: Chief Executive Officer HEALTHCARE VENTURES III, L.P. By: HealthCare Partners III, L.P., as General Partner By: /s/ John Littlechild ----------------------------------------- Title: General Partner HEALTHCARE VENTURES IV, L. P. By: HealthCare Partners IV, L. P., as General Partner By: /s/ John Littlechild ----------------------------------------- Title: General Partner HEALTHCARE VENTURES V, L. P. By: HealthCare Partners V, L. P., as General Partner By: /s/ John Littlechild ----------------------------------------- Title: General Partner HEALTHCARE VENTURES VI, L.P. By: HealthCare Partners VI, L.P., as General Partner By: /s/ John Littlechild ----------------------------------------- Title: General Partner - 32 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] RHO MANAGEMENT TRUST II By: Rho Management Company, Inc., as Investment Adviser By: /s/ Mark Leschly ----------------------------------------- Title: Managing Director RHO VENTURES IV, L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Mark Leschly ----------------------------------------- Title: Managing Director RHO VENTURES IV GmbH & CO. BETEILIGUNGS KG By: Rho Capital Partners Verwaltungs GmbH, as General Partner By: /s/ Mark Leschly ----------------------------------------- Title: Managing Director RHO VENTURES IV (QP), L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Mark Leschly ---------------------------------------- Title: Managing Director - 33 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] ATLAS VENTURE FUND II, L.P. By: Atlas Venture Associates II, L.P., as General Partner By: /s/ illegible ----------------------------------------- Title: General Partner M & G EQUITIES, INC. By: /s/ Michael Karfunkel ----------------------------------------- Title: President HUDSON TRUST By: /s/ Scott M. Ciccone ----------------------------------------- Title: Trustee THE GOLDMAN SACHS GROUP, INC. By: /s/ Eric M. Mindich ----------------------------------------- Name: Eric M. Mindich Title: Vice President *THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ Brian N. Hicks ----------------------------------------- Name: Brian N. Hicks Title: Director, Corporate Sponsored Research and Licensing - ---------- * Except with respect to Sections 2.2, 2.4 through 2.14, 3.1 through 3.4, 3.6 and 5.1 through 5.5. of the Agreement, under which BWH has no rights, liabilities or responsibilities. - 34 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] B.U.N.P. By: /s/ illegible ----------------------------------------- Name: Title: Partner-B.U.N.P. JOHNSON AND JOHNSON DEVELOPMENT CORPORATION By: /s/ Roger J. Guidi ----------------------------------------- Name: Roger J. Guidi Title: Vice President CURRAN PARTNERS L.P. By: /s/ John P. Curran ----------------------------------------- Name: John P. Curran Title: General Partner DELAWARE CHARTER AND TRUST JOHN P. CURRAN IRA By: /s/ John P. Curran ----------------------------------------- Name: John P. Curran Title: Self Directed IRA SENTRON MEDICAL, INC. By: ----------------------------------------- Name: Title: - 35 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] LOMBARD ODIER & CIE By: /s/ Alexandre Meyer /s/ Fernando Perez Diaz ----------------------------------------------- Name: Alexandre Meyer Fernando Perez Diaz Title: Vice President Assistant Manager BANK JULUIS BAER & CO. LTD. By: /s/ illegible --------------------------------------------- Name: Title: Vice President AETNA LIFE INSURANCE COMPANY By: --------------------------------------------- Name: Title: MYTHEN TREUHAND & VERWALTUNGS AG By: /s/ Alex Fancelli --------------------------------------------- Title: Alex Fancelli CEO BANK SARASIN & CO. By: --------------------------------------------- Name: Title: GZB BANK (SCHWEIZ) AG By: --------------------------------------------- Name: Title: - 36 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] --------------------------------------------- Heinrich Hasler CC/M NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay ------------------------------------------ Name: Title: CC NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay ------------------------------------------ Name: Title: CC/Q PARTNERS, L.P. By: /s/ David R. Ramsay ------------------------------------------ Name: Title: DC 1998 NFA TRUST By: /s/ Lee Casty ------------------------------------------ Name: Lee Casty Title: Trustee /s/ James M. Casty --------------------------------------------- James M. Casty /s/ Lawrence Abrams --------------------------------------------- Lawrence Abrams - 37 - [Signature Page to Fourth Amended and Restated Stockholders' Agreement] /s/ Robert Granovsky --------------------------------------------- Robert Granovsky /s/ Manuel Worcel --------------------------------------------- **Manuel Worcel /s/ Michael D. Loberg --------------------------------------------- **Michael D. Loberg /s/ Joseph M. Grimm --------------------------------------------- **Joseph M. Grimm /s/ L. Gordon Letts --------------------------------------------- **L. Gordon Letts - ---------- ** Except with respect to Sections 2, 3.1 through 3.4, 3.6 and 5 hereof, under which the signatory has no rights, liabilities or responsibilities. - 38 - SCHEDULE 1 HealthCare Ventures III, L.P. HealthCare Ventures IV, L.P. HealthCare Ventures V, L.P. HealthCare Ventures VI, L.P. 44 Nassau Street, Second Floor Princeton, NJ 08543 Attn: Jeffrey Steinberg Atlas Venture Fund II, L.P. 222 Berkeley Street Boston, MA 02116 Attn: Jean-Francois Formela Rho Management Trust II Rho Ventures IV, L.P. Rho Ventures IV GmbH & Co. Beteiligungs KG Rho Ventures IV (QP), L.P. c/o Rho Management Co., Inc. 152 W. 57th Street, 23rd Floor New York, NY 10019 Attn: Chief Financial Officer Hudson Trust 47 Hulfish Street Princeton, NJ 08542 Attn: Thomas O'Dougherty Lawrence Abrams 24 Central Park South New York, NY 10019 M&G Equities, Inc. c/o American Stock Transfer & Trust Co. 40 Wall Street New York, NY 10005 Attn: Michael Karfunkel The Brigham and Women's Hospital, Inc. 75 Francis Street Boston, MA 02115 Attn: Vandana D. Yajnick, Ph.D. - 39 - Johnson & Johnson Development Corporation One Johnson & Johnson Plaza New Brunswick, NJ 08933 Attn: Roger Guidi Aetna Life Insurance Company 151 Farmington Avenue, RC21 Hartford, CT 06156-9000 Attn: David M. Clarke IG6U Private Equity Group The Goldman Sachs Group, Inc. 85 Broad Street, 12th Floor New York, NY 10004 B.U.N.P c/o Boston University Community Technology Fund 108 Bay State Road Boston, MA 02215 Attn: Matthew Burns or Matthew Crowley Curran Partners L.P. 237 Park Avenue New York, NY 10017 Attn: John P. Curran Delaware Charter and Trust John P. Curran IRA c/o Curran Capital Management 237 Park Avenue New York, NY 10017 Attn: John P. Curran Sentron Medical, Inc. 4445 Lake Forest Drive, Suite 600 Cincinnati, OH 45242 Attn: Dennis B. Costello Group Director, Venture Projects Lombard Odier & Cie Toedistr.36 8002 Zurich Switzerland Attn: Alexandre Meyer - 40 - Bank Juluis Baer & Co. Ltd. Bahnhofstr. 36 8001 Zurich Switzerland Attn: Claudio Studer Mythen Treuhand & Verwaltungs AG Splugenstrasse 9 8002 Zurich Switzerland Attn: Alex Fancelli Robert Granovsky c/o The Goldman Sachs Group One New York Plaza 50th Floor New York, NY 10004 Bank Sarasin & Co. Elisabethenstrasse 62 CH-4002 Basel Switzerland GZB Bank (Schweiz) AG Talacker 42 Zurich, Ch-8022 Switzerland Heinrich Hasler Nidelbadstr 90 Zurich, 8038 Switzerland CC/M NitroMed Holdings, L.P. CC NitroMed Holdings, L.P. CC/Q Partners, L.P. c/o Care Capital LLC Princeton Overlook One 100 Overlook Center & Route 1 Princeton, NJ 08540 DC 1998 NFA Trust c/o IFX Corporation Venture American Securities 707 Skokie Boulevard, Suite 580 Northbrook, IL 60062 - 41 - James M. Casty 6185 Northwest Way Boca Raton, FL 33496 - 42 - SCHEDULE 2 Manuel Worcel c/o NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 Michael D. Loberg c/o NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 Joseph M. Grimm c/o NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 L. Gordon Letts c/o NitroMed, Inc. 12 Oak Park Drive Bedford, Massachusetts 01730 - 43 - EXHIBIT A Form of Stock Restriction Agreement - 44 - AMENDMENT NO. 1 AND WAIVER TO FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT This Amendment No. 1 and Waiver dated November 20, 2001 (the "Amendment") to the Fourth Amended and Restated Stockholders' Agreement dated May 22, 2001 (the "Agreement") by and among NitroMed, Inc., a Delaware corporation (the "Corporation"), the stockholders of the Corporation listed on SCHEDULE 1 thereto (the "Investors"), the individuals listed on SCHEDULE 2 thereto and The Brigham and Women's Hospital, Inc., is entered into by the Corporation and the undersigned Investors representing at least 65% in voting power of the outstanding Series Preferred Shares. Except as set forth below, the Agreement shall remain in full force and effect. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Agreement. WHEREAS, the Corporation intends to issue and sell 250,000 shares of Series F Junior Convertible Preferred Stock, $.01 par value per share, of the Corporation ("Series F Preferred Stock") to Boston Scientific Corporation, a Delaware corporation ("Boston Scientific"), pursuant to a Series F Junior Convertible Preferred Stock Purchase Agreement dated the date hereof; and WHEREAS, the Corporation and the undersigned Investors desire to amend the Agreement such that, among other things, Boston Scientific shall be made a party thereto. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AMENDMENTS TO THE AGREEMENT. Acting in accordance with Section 11 of the Agreement, the Agreement is hereby amended as follows: (a) SCHEDULE 1 of the Agreement is hereby amended and restated in its entirety, as set forth on EXHIBIT A attached hereto, pursuant to which Boston Scientific is added to SCHEDULE 1 of the Agreement and thereby is deemed an "Investor" as such term is defined in the Agreement, subject to all of the terms, conditions, benefits, rights, limitations and restrictions applicable to Investors set forth therein. (b) Section 1 is hereby amended to: (i) restate the definition of "Excluded Securities" to read in its entirety as follows: EXCLUDED SECURITIES shall mean, collectively: (i) the Reserved Shares; (ii) Common Stock issued or issuable to officers, directors or employees of or consultants or independent contractors to the Corporation, pursuant to any written agreement, plan or arrangement, including pursuant to any options granted under the 1993 Equity Incentive Plan of the Corporation (the "1993 Equity Incentive Plan"), to purchase, or rights to subscribe for, such Common Stock, that is set forth on Schedule 5.2 of the Series F Stock Purchase Agreement or that has been approved in form and in substance by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), and which, as a condition precedent to the issuance of such shares, provides for the vesting of such shares and subjects such shares to restrictions on transfers and rights of first offer in favor of the Corporation that have been approved by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), (collectively, the "Required Terms"), unless any of such Required Terms are waived by holders at least a majority of the voting power of the Series Preferred Shares then outstanding (determined as set forth in Section A.6(a) of the Certificate); PROVIDED, HOWEVER, that the maximum number of shares of Common Stock hereafter issuable pursuant to the 1993 Equity Incentive Plan and all such agreements, plans and arrangements shall not exceed 2,288,200 shares (subject to adjustment as required to comply with any anti-dilution rights set forth in any such agreement, plan or arrangement); (iii) Common Stock issued as a stock dividend payable in shares of Common Stock, or capital stock of any class issuable upon any subdivision, recombination, split-up or reverse stock split of all the outstanding shares of such class of capital stock of the Corporation; (iv) any securities issued pursuant to the acquisition by the Corporation of any other corporation, partnership, joint venture, trust or other entity by any merger, stock acquisition, reorganization, purchase of substantially all assets or otherwise in which the Corporation, or its stockholders of record immediately prior to the effective date of such transaction, directly or indirectly, own at least a majority of the voting power of the acquired entity or the resulting entity after such transaction; and (v) any shares of Common Stock, Preferred Stock or any other security convertible into or exercisable or exchangeable for Common Stock or Preferred Stock issued to banks or leasing companies in order to obtain financing or to secure leases of equipment; and (vi) a maximum of 516,364 shares of Common Stock (subject to adjustment) issued or issuable upon the exercise of the 1994 Bridge Warrants, - 2 - 1995 Bridge Warrants, 1996 Bridge Warrants and the 1994 Capital Support Warrants. (ii) restate the definition of "Series Preferred Shares" to read in its entirety as follows: SERIES PREFERRED SHARES shall mean collectively the Series A Preferred Shares, Series B Preferred Shares, Series C Preferred Shares, Series D Preferred Shares, Series E Preferred Shares and Series F Preferred Shares. (iii) add the following definitions: SERIES F INVESTOR shall mean the holder of the Corporation's Series F Preferred Stock. SERIES F PREFERRED SHARES shall mean shares of Series F Preferred Stock issued or issuable pursuant to the Series F Stock Purchase Agreement. SERIES F PREFERRED STOCK shall mean Series F Junior Convertible Preferred Stock, par value $.01 per share, of the Corporation. SERIES F STOCK PURCHASE AGREEMENT shall mean the Series F Junior Convertible Preferred Stock Purchase Agreement dated as of November 20, 2001, as it may be amended from time to time, between the Corporation and the Series F Investor. (c) Section 12 shall be deleted in its entirety and a new Section 12 shall be inserted in lieu thereof which shall read as follows: SECTION 12. ADDITIONAL INVESTORS. Any person or entity that, on or after the date hereof, purchases Series F Preferred Shares pursuant to the Series F Stock Purchase Agreement and becomes an "Investor" thereunder may, with the prior written approval of the Corporation (but without the need for approval by any other party to this Agreement), become a party to this Agreement by executing and delivering a counterpart signature page hereto, whereupon such person or entity shall be deemed an "Investor" and "Series F Investor" for all purposes of this Agreement. 2. WAIVER. Acting in accordance with Section 11 of the Agreement, the undersigned hereby waive the Investors' rights of first refusal and of prior notice under Section 2.3 of the Agreement with respect to the issuance by the Corporation of the Series F Preferred Stock to Boston Scientific and the shares of Common Stock issuable upon conversion of such shares of Series F Preferred Stock. 3. The Agreement, as supplemented and modified by this Amendment, together with the other writings referred to in the Agreement or delivered pursuant thereto which form a part thereof, contains the entire agreement among the parties with respect to the subject matter - 3 - thereof and amends, restates and supersedes all prior and contemporaneous arrangements or understandings with respect thereto. 4. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the other documents entered into in connection with the Agreement, shall mean and be a reference to the Agreement, as amended hereby. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 5. This Amendment shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws. 6. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. [The remainder of this page has intentionally been left blank.] - 4 - IN WITNESS WHEREOF, The Corporation and each of the parties set forth on the foregoing signature pages have caused this Amendment No. 1 and Waiver to Fourth Amended and Restated Stockholders' Agreement to be executed as of the date first above written. NITROMED, INC. By: /s/ Michael D. Loberg ---------------------------------------------- Name: Michael D. Loberg Title: CEO HEALTHCARE VENTURES III, L.P. By: HealthCare Partners III, L.P., as General Partner By: /s/ Jeffrey Steinberg ---------------------------------------------- Title: General Partner HEALTHCARE VENTURES IV, L. P. By: HealthCare Partners IV, L. P., as General Partner By: /s/ Jeffrey Steinberg ---------------------------------------------- Title: General Partner HEALTHCARE VENTURES V, L. P. By: HealthCare Partners V, L. P., as General Partner By: /s/ Jeffrey Steinberg ---------------------------------------------- Title: General Partner [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] HEALTHCARE VENTURES VI, L.P. By: HealthCare Partners VI, L.P., as General Partner By: /s/ Jeffrey Steinberg ----------------------------------------------- Title: General Partner RHO MANAGEMENT TRUST II By: Rho Management Company, Inc., as Investment Adviser By: ----------------------------------------------- Title: RHO VENTURES IV, L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: ----------------------------------------------- Title: RHO VENTURES IV GmbH & CO. BETEILIGUNGS KG By: Rho Capital Partners Verwaltungs GmbH, as General Partner By: ----------------------------------------------- Title: - 6 - [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] RHO VENTURES IV (QP), L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Mark Leschly ----------------------------------------------- Title: Managing Member ATLAS VENTURE FUND II, L.P. By: Atlas Venture Associates II, L.P., as General Partner By: /s/ illegible ----------------------------------------------- Title: General Partner M & G EQUITIES, INC. By: ----------------------------------------------- Title: President HUDSON TRUST By: /s/ Scott M. Ciccone ----------------------------------------------- Title: Trustee THE GOLDMAN SACHS GROUP, INC. By: /s/ Eric M. Mindich ----------------------------------------------- Name: Eric M. Mindich Title: Vice President, The Goldman Sachs Group Inc. - 7 - [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] *THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ Brian N. Hicks ----------------------------------------------- Name: Brian N. Hicks Title: Corporate Sponsored Research and Licensing B.U.N.P. By: /s/ illegible ----------------------------------------------- Name: Title: Partner- B.U.N.P. JOHNSON AND JOHNSON DEVELOPMENT CORPORATION By: /s/ Roger J. Guidi ----------------------------------------------- Name: Roger J. Guidi Title: Vice President CURRAN PARTNERS L.P. By: /s/ John P. Curran ----------------------------------------------- Name: John P. Curran Title: General Partner DELAWARE CHARTER AND TRUST JOHN P. CURRAN IRA By: /s/ John P. Curran ----------------------------------------------- Name: John P. Curran Title: Self Directed IRA - ---------- * Except with respect to Sections 2.2, 2.4 through 2.14, 3.1 through 3.4, 3.6 and 5.1 through 5.5 of the Agreement, under which BWH has no rights, liabilities or responsibilities. - 8 - [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] SENTRON MEDICAL, INC. By: /s/ Vincent M. Paglino ----------------------------------------------- Name: Vincent M. Paglino Title: Vice President LOMBARD ODIER & CIE By: /s/ Tania Plage /s/Fernando Perez Diaz ----------------------------------------------- Name: Tania Plage Fernando Perez Diaz Title: Assistant Vice Assistant Manager President BANK JULUIS BAER & CO. LTD. By: /s/ Tobias Kaeser /s/ Robert Kessler ----------------------------------------------- Name: Tobias Kaeser Robert Kessler Title: VP Vice President AETNA LIFE INSURANCE COMPANY By: /s/ David M. Clarke ----------------------------------------------- Name: David M. Clarke Title: Investment Manager MYTHEN TREUHAND & VERWALTUNGS AG By: /s/ Alex Fancelli ----------------------------------------------- Title: Alex Fancelli/CEO BANK SARASIN & CO. By: ----------------------------------------------- Name: Title: - 9 - [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] GZB BANK (SCHWEIZ) AG By: ----------------------------------------------- Name: Title: -------------------------------------------------- Heinrich Hasler CC/M NITROMED HOLDINGS, L.P. By: ---------------------------------------------- Name: Title: CC NITROMED HOLDINGS, L.P. By: ----------------------------------------------- Name: Title: CC/Q PARTNERS, L.P. By: ----------------------------------------------- Name: Title: DC 1998 NFA TRUST By: /s/ Lee Casty ----------------------------------------------- Name: Lee Casty Title: Trustee - 10 - [Signature Page to Amendment No. 1 and waiver to Fourth Amended and Restated Stockholder's Agreement] /s/ James M. Casty -------------------------------------------------- James M. Casty /s/ Lawrence Abrams -------------------------------------------------- Lawrence Abrams -------------------------------------------------- Robert Granovsky /s/ Manuel Worcel -------------------------------------------------- **Manuel Worcel /s/ Michael D. Loberg -------------------------------------------------- **Michael D. Loberg /s/ Joseph M. Grimm -------------------------------------------------- **Joseph M. Grimm /s/ L. Gordon Letts -------------------------------------------------- **L. Gordon Letts - ---------- ** Except with respect to Sections 2, 3.1 through 3.4, 3.6 and 5 hereof, under which the signatory has no rights, liabilities or responsibilities. - 11 - EXHIBIT A SCHEDULE 1 HealthCare Ventures III, L.P. HealthCare Ventures IV, L.P. HealthCare Ventures V, L.P. HealthCare Ventures VI, L.P. 44 Nassau Street, Second Floor Princeton, NJ 08543 Attn: Jeffrey Steinberg Atlas Venture Fund II, L.P. 222 Berkeley Street Boston, MA 02116 Attn: Jean-Francois Formela Rho Management Trust II Rho Ventures IV, L.P. Rho Ventures IV GmbH & Co. Beteiligungs KG Rho Ventures IV (QP), L.P. c/o Rho Management Co., Inc. 152 W. 57th Street, 23rd Floor New York, NY 10019 Attn: Chief Financial Officer Hudson Trust 47 Hulfish Street Princeton, NJ 08542 Attn: Thomas O'Dougherty Lawrence Abrams 24 Central Park South New York, NY 10019 M&G Equities, Inc. c/o American Stock Transfer & Trust Co. 40 Wall Street New York, NY 10005 Attn: Michael Karfunkel The Brigham and Women's Hospital, Inc. 75 Francis Street Boston, MA 02115 Attn: Vandana D. Yajnick, Ph.D. Johnson & Johnson Development Corporation One Johnson & Johnson Plaza New Brunswick, NJ 08933 Attn: Roger Guidi Aetna Life Insurance Company 151 Farmington Avenue, RC21 Hartford, CT 06156-9000 Attn: David M. Clarke IG6U Private Equity Group The Goldman Sachs Group, Inc. 85 Broad Street, 12th Floor New York, NY 10004 B.U.N.P c/o Boston University Community Technology Fund 108 Bay State Road Boston, MA 02215 Attn: Matthew Burns or Matthew Crowley Curran Partners L.P. 237 Park Avenue New York, NY 10017 Attn: John P. Curran Delaware Charter and Trust John P. Curran IRA c/o Curran Capital Management 237 Park Avenue New York, NY 10017 Attn: John P. Curran Sentron Medical, Inc. 4445 Lake Forest Drive, Suite 600 Cincinnati, OH 45242 Attn: Dennis B. Costello Group Director, Venture Projects Lombard Odier & Cie Toedistr.36 8002 Zurich Switzerland Attn: Alexandre Meyer - 13 - Bank Julius Baer & Co. Ltd. Bahnhofstr. 36 8001 Zurich Switzerland Attn: Claudio Studer Mythen Treuhand & Verwaltungs AG Splugenstrasse 9 8002 Zurich Switzerland Attn: Alex Fancelli Robert Granovsky c/o The Goldman Sachs Group One New York Plaza 50th Floor New York, NY 10004 Bank Sarasin & Co. Elisabethenstrasse 62 CH-4002 Basel Switzerland GZB Bank (Schweiz) AG Talacker 42 Zurich, Ch-8022 Switzerland Heinrich Hasler Nidelbadstr 90 Zurich, 8038 Switzerland CC/M NitroMed Holdings, L.P. CC NitroMed Holdings, L.P. CC/Q Partners, L.P. c/o Care Capital LLC Princeton Overlook One 100 Overlook Center & Route 1 Princeton, NJ 08540 DC 1998 NFA Trust c/o IFX Corporation Venture American Securities 707 Skokie Boulevard, Suite 580 Northbrook, IL 60062 - 14 - James M. Casty 6185 Northwest Way Boca Raton, FL 33496 Boston Scientific Corporation One Boston Scientific Place Natick, MA 01760-1537 - 15 - AMENDMENT NO. 2 TO FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT This Amendment No. 2 dated May 12, 2003 (the "Amendment") to the Fourth Amended and Restated Stockholders' Agreement dated May 22, 2001, as amended on November 20, 2001 (the "Agreement"), by and among NitroMed, Inc., a Delaware corporation (the "Corporation"), the stockholders of the Corporation listed on SCHEDULE 1 thereto (the "Investors"), the individuals listed on SCHEDULE 2 thereto and The Brigham and Women's Hospital, Inc., is entered into by the Corporation and the undersigned Investors representing at least 65% in voting power of the outstanding Series Preferred Shares. Except as set forth below, the Agreement shall remain in full force and effect. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Agreement. WHEREAS, the Corporation and the undersigned Investors desire to amend the Agreement such that each Investor holding Series Preferred Shares shall not be obligated to vote to elect to the Board a director designated by Johnson & Johnson Development Corporation; and WHEREAS, the Corporation and the undersigned Investors desire to further amend the Agreement such that each Investor holding Series Preferred Shares shall be obligated to vote to elect to the Board an additional director designated by the Corporation and approved by at least a majority of the directors on the Board of Directors of the Corporation, including the director designated by HCV III, HCV IV and HCV V and the director designated by Rho Ventures IV (QP), L.P. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AMENDMENTS TO THE AGREEMENT. Acting in accordance with Section 11 of the Agreement, the Agreement is hereby amended as follows: (a) Section 1 is hereby amended to restate paragraph (ii) of the definition of "EXCLUDED SECURITIES" to read in its entirety as follows: "(ii) Common Stock issued or issuable to officers, directors or employees of or consultants or independent contractors to the Corporation, pursuant to any written agreement, plan or arrangement, including pursuant to any options granted under the 1993 Equity Incentive Plan of the Corporation (the "1993 Equity Incentive Plan") or the 2003 Stock Incentive Plan of the Corporation (the "2003 Stock Incentive Plan"), to purchase, or rights to subscribe for, such Common Stock that has been approved in form and in substance by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), and which, as a condition precedent to the issuance of such shares, provides for the vesting of such shares and subjects such shares to restrictions on transfers and rights of first offer in favor of the Corporation that have been approved by the holders of a majority of the combined voting power of the Series Preferred Shares then outstanding, calculated in accordance with Section A.6(a) of Article III of the Certificate (including, in such calculation, any outstanding Restricted Shares held by such holders), (collectively, the "Required Terms"), unless any of such Required Terms are waived by holders at least a majority of the voting power of the Series Preferred Shares then outstanding (determined as set forth in Section A.6(a) of the Certificate); PROVIDED, HOWEVER, that the maximum number of shares of Common Stock hereafter issuable pursuant to the 1993 Equity Incentive Plan, the 2003 Stock Incentive Plan and all such agreements, plans and arrangements shall not exceed 3,088,200 shares (subject to adjustment as required to comply with any anti-dilution rights set forth in any such agreement, plan or arrangement);" (b) Section 5.1(b)(v) shall be deleted in its entirety. (c) Section 5.1(c) shall be deleted in its entirety and a new Section 5.1(c) shall be inserted in lieu thereof which shall read as follows: "(c) to elect three (3) directors designated by the Corporation, one of which shall be the Chief Executive Officer, one of which shall initially be Zola Horovitz, and one of which shall be subject to approval by at least a majority of the directors on the Board of Directors of the Corporation, including the approval of the director designated by HCV III, HCV IV and HCV V and the director designated by Rho Ventures IV (QP), L.P." 2. The Agreement, as supplemented and modified by this Amendment, together with the other writings referred to in the Agreement or delivered pursuant thereto which form a part thereof, contains the entire agreement among the parties with respect to the subject matter thereof and amends, restates and supersedes all prior and contemporaneous arrangements or understandings with respect thereto. 3. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the other documents entered into in connection with the Agreement, shall mean and be a reference to the Agreement, as amended hereby. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 4. This Amendment shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws. 5. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. [The remainder of this page has intentionally been blank.] - 2 - IN WITNESS WHEREOF, The Corporation and each of the parties set forth on the foregoing signature pages have caused this Amendment No. 2 to Fourth Amended and Restated Stockholders' Agreement to be executed as of the date first above written. NITROMED, INC. By: /s/ Michael D. Loberg ----------------------------------------- Name: Michael D. Loberg Title: CEO HEALTHCARE VENTURES III, L.P. By: HealthCare Partners III, L.P., as General Partner By: /s/ Jeffrey Steinberg ----------------------------------------- Title: General Partner HEALTHCARE VENTURES IV, L.P. By: HealthCare Partners IV, L.P., as General Partner By: /s/ Jeffrey Steinberg ----------------------------------------- Title: General Partner HEALTHCARE VENTURES V, L.P. By: HealthCare Partners V, L.P., as General Partner By: /s/ Jeffrey Steinberg ----------------------------------------- Title: General Partner [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] HEALTHCARE VENTURES VI, L.P. By: HealthCare Partners VI, L.P., as General Partner By /s/ Jeffrey Steinberg ----------------------------------------- Title: General Partner RHO MANAGEMENT TRUST II By: Rho Capital Partners, Inc., as Investment Adviser By: /s/ Mark Leschly ----------------------------------------- Title: Managing Partner RHO VENTURES IV, L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Mark Leschly ----------------------------------------- Title: Managing Member RHO VENTURES IV GmbH & CO. BETEILIGUNGS KG By: Rho Capital Partners Verwaltungs GmbH, as General Partner By: /s/ Mark Leschly ----------------------------------------- Title: Managing Director - 4 - [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] RHO VENTURES IV (QP), L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Mark Leschly ----------------------------------------- Title: Managing Member ATLAS VENTURE FUND II, L.P. By: Atlas Venture Associates II, L.P., as General Partner By: /s/ illegible ----------------------------------------- Title: General Partner M & G EQUITIES, INC. By: ----------------------------------------- Title: President HUDSON TRUST By: /s/ Scott M. Ciccone ----------------------------------------- Title: Trustee THE GOLDMAN SACHS GROUP, INC. By: ----------------------------------------- Name: Title: - 5 - [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] *THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ Brian N. Hicks ----------------------------------------- Name: Brian N. Hicks Title: Director, Corporate Sponsored Research and Licensing B.U.N.P. By: ----------------------------------------- Name: Title: JOHNSON AND JOHNSON DEVELOPMENT CORPORATION By: /s/ Roger J. Guidi ------------------------------------ Name: Roger J. Guidi Title: Vice President CURRAN PARTNERS L.P. By: ----------------------------------------- Name: John P. Curran Title: General Partner DELAWARE CHARTER AND TRUST JOHN P. CURRAN IRA By: ----------------------------------------- Name: John P. Curran Title: Self Directed IRA - ---------- * Except with respect to Section 5.1 of the Agreement, under which BWH has no rights, liabilities or responsibilities. - 6 - [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] SENTRON MEDICAL, INC. By: /s/ Clifford C. Mentrup ----------------------------------------- Name: Clifford C. Mentrup Title: General Counsel LOMBARD ODIER & CIE By: /s/ Alexandre Meyer /s/ Tania Plage ----------------------------------------------- Name: Alexandre Meyer Tania Plage Title: Senior Vice President Assistant Vice President BANK JULUIS BAER & CO. LTD. By: ----------------------------------------- Name: Title: AETNA LIFE INSURANCE COMPANY By: ----------------------------------------- Name: Title: MYTHEN TREUHAND & VERWALTUNGS AG By: ----------------------------------------- Title: BANK SARASIN & CO. By: ----------------------------------------- Name: Title: - 7 - [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] GZB BANK (SCHWEIZ) AG By: /s/ Ursula Vollenweider ----------------------------------------- Name: Title: -------------------------------------------- Heinrich Hasler CC/M NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay ----------------------------------------- Name: Title: CC NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay ----------------------------------------- Name: Title: CC/Q PARTNERS, L.P. By: /s/ David R. Ramsay ----------------------------------------- Name: Title: DC 1998 NFA TRUST By: /s/ Lee Casty ----------------------------------------- Name: Lee Casty Title: Trustee BOSTON SCIENTIFIC CORPORATION By: ----------------------------------------- Name: Title: - 8 - [Signature Page to Amendment No.2 to Fourth Amended and Restated Stockholder's Agreement] /s/ James M. Casty -------------------------------------------- James M. Casty /s/ Lawrence Abrams -------------------------------------------- Lawrence Abrams /s/ Robert Granovsky -------------------------------------------- Robert Granovsky /s/ Manuel Sorcel -------------------------------------------- **Manuel Worcel /s/ Michael D. Loberg -------------------------------------------- **Michael D. Loberg /s/ Joseph M. Grimm -------------------------------------------- **Joseph M. Grimm -------------------------------------------- **L. Gordon Letts - ---------- ** Except with respect to Section 5 hereof, under which the signatory has no rights, liabilities or responsibilities. - 9 - AMENDMENT NO. 3 TO FOURTH AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT This Amendment No. 3 dated July 31, 2003 (the "Amendment") to the Fourth Amended and Restated Stockholders' Agreement dated May 22, 2001, as amended on November 20, 2001 and May 12, 2003 (the "Agreement") by and among NitroMed, Inc., a Delaware corporation (the "Corporation"), the stockholders of the Corporation listed on SCHEDULE 1 thereto (the "Investors"), the individuals listed on SCHEDULE 2 thereto and The Brigham and Women's Hospital, Inc., is entered into by the Corporation and the undersigned Investors representing at least 65% in voting power of the outstanding Series Preferred Shares. Except as set forth below, the Agreement shall remain in full force and effect. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Agreement. WHEREAS, the Corporation intends to issue and sell up to an additional 2,776,351 shares of Series E Convertible Preferred Stock, $.01 par value per share, of the Corporation ("Series E Preferred Stock") to certain purchasers, including certain Investors and new investors (the "New Investors") pursuant to the Series E Convertible Preferred Stock Purchase Agreement dated May 22, 2001 by and between the Corporation and the Investors named on Schedule 1 attached thereto, as amended on June 15, 2001 and August 1, 2003 (the "Purchase Agreement"); and WHEREAS, the Corporation and the undersigned Investors desire to amend the Agreement such that the New Investors shall be made a party thereto. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AMENDMENTS TO THE AGREEMENT. Acting in accordance with Section 11 of the Agreement, the Agreement is hereby amended as follows: (a) SCHEDULE 1 of the Agreement is hereby amended and restated in its entirety, as set forth on EXHIBIT A attached hereto, pursuant to which the New Investors are added to Schedule 1 of the Agreement and each is thereby deemed an "Investor" as such term is defined in the Agreement, subject to all of the terms, conditions, benefits, rights, limitations and restrictions applicable to Investors set forth therein. (b) A new Section 20 shall be added to the Agreement which shall read as follows: SECTION 20. ADDITIONAL SERIES E INVESTORS. Any person or entity that, on or after the date hereof, purchases Series E Preferred Shares pursuant to the Series E Stock Purchase Agreement and becomes an "Investor" thereunder may, with the prior written approval of the Corporation (but without the need for approval by any other party to this Agreement), become a party to this Agreement by executing and delivering a counterpart signature page hereto, whereupon such person or entity shall be deemed an "Investor" and "Series E Investor" for all purposes of this Agreement. 2. The Agreement, as supplemented and modified by this Amendment, together with the other writings referred to in the Agreement or delivered pursuant thereto which form a part thereof, contains the entire agreement among the parties with respect to the subject matter thereof and amends, restates and supersedes all prior and contemporaneous arrangements or understandings with respect thereto. 4. Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the other documents entered into in connection with the Agreement, shall mean and be a reference to the Agreement, as amended hereby. Except as specifically amended above, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. 5. This Amendment shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to its principles of conflicts of laws. 6. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. [The remainder of this page has intentionally been left blank.] - 2 - IN WITNESS WHEREOF, The Corporation and each of the parties set forth on the foregoing signature pages have caused this Amendment No. 3 to Fourth Amended and Restated Stockholders' Agreement to be executed as of the date first above written. NITROMED, INC. By: /s/ Joseph Grimm --------------------------------------- Name: Joseph Grimm Title: CFO HEALTHCARE VENTURES III, L.P. By: HealthCare Partners III, L.P., as General Partner By: /s/ Jeffrey Steinberg --------------------------------------- Title: General Partner HEALTHCARE VENTURES IV, L. P. By: HealthCare Partners IV, L. P., as General Partner By: s/s Jeffrey Steinberg --------------------------------------- Title: General Partner HEALTHCARE VENTURES V, L. P. By: HealthCare Partners V, L. P., as General Partner By: /s/ Jeffrey Steinberg --------------------------------------- Title: General Partner [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] HEALTHCARE VENTURES VI, L.P. By: HealthCare Partners VI, L.P., as General Partner By: /s/ Jeffrey Steinberg ----------------------------------------- Title: General Partner RHO MANAGEMENT TRUST II By: Rho Management Company, Inc., as Investment Adviser By: /s/ Joshua Ruch ---------------------------------------- Title: CEO RHO VENTURES IV, L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Joshua Ruch ----------------------------------------- Title: Managing Member RHO VENTURES IV GmbH & CO. BETEILIGUNGS KG By: Rho Capital Partners Verwaltungs GmbH, as General Partner By: /s/ Joshua Ruch ---------------------------------------- Title: Managing Director - 4 - [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] RHO VENTURES IV (QP), L.P. By: Rho Management Ventures IV, L.L.C., as General Partner By: /s/ Joshua Ruch -------------------------------------- Title: Managing Member ATLAS VENTURE FUND II, L.P. By: Atlas Venture Associates II, L.P., as General Partner By: -------------------------------------- Title: General Partner M & G EQUITIES, INC. By: -------------------------------------- Title: President HUDSON TRUST By: --------------------------------------- Title: THE GOLDMAN SACHS GROUP, INC. By: --------------------------------------- Name: Title: - 5 - [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] *THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: --------------------------------------- Name: Title: B.U.N.P. By: --------------------------------------- Name: Title: JOHNSON AND JOHNSON DEVELOPMENT CORPORATION By: --------------------------------------- Name: Title: CURRAN PARTNERS L.P. By: --------------------------------------- Name: John P. Curran Title: General Partner DELAWARE CHARTER AND TRUST JOHN P. CURRAN IRA By: --------------------------------------- Name: John P. Curran Title: Self Directed IRA - ---------- * Except with respect to Sections 2.2, 2.4 through 2.14, 3.1 through 3.4, 3.6 and 5.1 through 5.5 of the Agreement, under which BWH has no rights, liabilities or responsibilities. - 6 - [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] SENTRON MEDICAL, INC. By: --------------------------------------- Name: Title: LOMBARD ODIER & CIE By: --------------------------------------- Name: Title: BANK JULUIS BAER & CO. LTD. By: --------------------------------------- Name: Title: AETNA LIFE INSURANCE COMPANY By: --------------------------------------- Name: Title: MYTHEN TREUHAND & VERWALTUNGS AG By: --------------------------------------- Title: BANK SARASIN & CO. By: --------------------------------------- Name: Title: - 7 - [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] GZB BANK (SCHWEIZ) AG By: --------------------------------------- Name: Title: ------------------------------------------ Heinrich Hasler CC/M NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay --------------------------------------- Name: Title: CC NITROMED HOLDINGS, L.P. By: /s/ David R. Ramsay --------------------------------------- Name: Title: CC/Q PARTNERS, L.P. By: /s/ David R. Ramsay --------------------------------------- Name: Title: DC 1998 NFA TRUST By: --------------------------------------- Name: Lee Casty Title: Trustee - 8 - [Signature Page to Amendment No. 3 to Fourth Amended and Restated Stockholder's Agreement] ------------------------------------ James M. Casty ------------------------------------ Lawrence Abrams ------------------------------------ Robert Granovsky ------------------------------------ **Manuel Worcel /s/ Michael D. Loberg ------------------------------------ **Michael D. Loberg /s/ Joseph M. Grimm ------------------------------------ **Joseph M. Grimm ------------------------------------ **L. Gordon Letts - ---------- ** Except with respect to Sections 2, 3.1 through 3.4, 3.6 and 5 hereof, under which the signatory has no rights, liabilities or responsibilities. - 9 - EXHIBIT A SCHEDULE 1 HealthCare Ventures III, L.P. HealthCare Ventures IV, L.P. HealthCare Ventures V, L.P. HealthCare Ventures VI, L.P. 44 Nassau Street, Second Floor Princeton, NJ 08543 Attn: Jeffrey Steinberg Atlas Venture Fund II, L.P. 222 Berkeley Street Boston, MA 02116 Attn: Jean-Francois Formela Rho Management Trust II Rho Ventures IV, L.P. Rho Ventures IV GmbH & Co. Beteiligungs KG Rho Ventures IV (QP), L.P. c/o Rho Management Co., Inc. 152 W. 57th Street, 23rd Floor New York, NY 10019 Attn: Chief Financial Officer Hudson Trust 47 Hulfish Street Princeton, NJ 08542 Attn: Thomas O'Dougherty Lawrence Abrams 24 Central Park South New York, NY 10019 M&G Equities, Inc. c/o American Stock Transfer & Trust Co. 40 Wall Street New York, NY 10005 Attn: Michael Karfunkel The Brigham and Women's Hospital, Inc. 75 Francis Street Boston, MA 02115 Attn: Vandana D. Yajnick, Ph.D. Johnson & Johnson Development Corporation One Johnson & Johnson Plaza New Brunswick, NJ 08933 Attn: Roger Guidi Aetna Life Insurance Company 151 Farmington Avenue, RC21 Hartford, CT 06156-9000 Attn: David M. Clarke IG6U Private Equity Group The Goldman Sachs Group, Inc. 85 Broad Street, 12th Floor New York, NY 10004 B.U.N.P c/o Boston University Community Technology Fund 108 Bay State Road Boston, MA 02215 Attn: Matthew Burns or Matthew Crowley Curran Partners L.P. 237 Park Avenue New York, NY 10017 Attn: John P. Curran Delaware Charter and Trust John P. Curran IRA c/o Curran Capital Management 237 Park Avenue New York, NY 10017 Attn: John P. Curran Sentron Medical, Inc. 4445 Lake Forest Drive, Suite 600 Cincinnati, OH 45242 Attn: Dennis B. Costello Group Director, Venture Projects Lombard Odier & Cie Toedistr.36 8002 Zurich Switzerland Attn: Alexandre Meyer - 11 - Bank Julius Baer & Co. Ltd. Bahnhofstr. 36 8001 Zurich Switzerland Attn: Claudio Studer Mythen Treuhand & Verwaltungs AG Splugenstrasse 9 8002 Zurich Switzerland Attn: Alex Fancelli Robert Granovsky c/o The Goldman Sachs Group One New York Plaza 50th Floor New York, NY 10004 Bank Sarasin & Co. Elisabethenstrasse 62 CH-4002 Basel Switzerland GZB Bank (Schweiz) AG Talacker 42 Zurich, Ch-8022 Switzerland Heinrich Hasler Nidelbadstr 90 Zurich, 8038 Switzerland CC/M NitroMed Holdings, L.P. CC NitroMed Holdings, L.P. CC/Q Partners, L.P. Care Capital Investments II, L.P. c/o Care Capital LLC Princeton Overlook One 100 Overlook Center & Route 1 Princeton, NJ 08540 DC 1998 NFA Trust c/o IFX Corporation Venture American Securities 707 Skokie Boulevard, Suite 580 Northbrook, IL 60062 - 12 - James M. Casty 6185 Northwest Way Boca Raton, FL 33496 Boston Scientific Corporation One Boston Scientific Place Natick, MA 01760-1537 - 13 - EX-10.17 23 a2116973zex-10_17.txt EXHIBIT 10.17 Exhibit 10.17 NitroMed, Inc. Schedule of Warrantholders
EXERCISE ISSUED TO DATE SHARES (1) PRICE ------------- ---------- ---------- -------- Aetna Life Insurance Co. 12/17/1997 163 0.08 Aetna Life Insurance Co. 12/17/1997 546 0.08 Aetna Life Insurance Co. 12/17/1997 274 0.08 Aetna Life Insurance Co. 12/17/1997 409 0.08 Aetna Life Insurance Co. 12/17/1997 409 0.08 Aetna Life Insurance Co. 12/17/1997 349 0.08 Aetna Life Insurance Co. 12/17/1997 291 0.08 Aetna Life Insurance Co. 12/17/1997 415 0.08 Aetna Life Insurance Co. 12/17/1997 582 0.08 Atlas Venture Fund II, L.P. 7/27/1994 7,811 0.08 Atlas Venture Fund II, L.P. 7/27/1994 2,343 0.08 Atlas Venture Fund II, L.P. 9/19/1994 3,905 0.08 Atlas Venture Fund II, L.P. 10/11/1994 5,859 0.08 Atlas Venture Fund II, L.P. 10/28/1994 5,859 0.08 Atlas Venture Fund II, L.P. 12/20/1994 8,332 0.08 Atlas Venture Fund II, L.P. 1/13/1995 4,999 0.08 Atlas Venture Fund II, L.P. 2/17/1995 4,166 0.08 Atlas Venture Fund II, L.P. 3/13/1995 5,940 0.08 Atlas Venture Fund II, L.P. 6/20/1995 7,812 0.08 Atlas Venture Fund II, L.P. 7/13/1995 3,906 0.08 Atlas Venture Fund II, L.P. 8/11/1995 3,906 0.08 Atlas Venture Fund II, L.P. 9/27/1995 3,906 0.08 Atlas Venture Fund II, L.P. 10/27/1995 3,906 0.08 Atlas Venture Fund II, L.P. 1/10/1996 7,542 0.08 Atlas Venture Fund II, L.P. 2/7/1996 7,543 0.08 Atlas Venture Fund II, L.P. 6/11/1996 15,388 0.08 Atlas Venture Fund II, L.P. 2/10/1997 6,250 0.08 Hudson Trust 1/10/1996 225 0.08 Hudson Trust 2/7/1996 221 0.08 Hudson Trust 6/11/1996 318 0.08 Hudson Trust 9/30/1996 111 0.08 Hudson Trust 10/17/1996 111 0.08 Hudson Trust 11/14/1996 111 0.08 Hudson Trust 12/17/1996 111 0.08 Hudson Trust 2/10/1997 111 0.08 M&G Equities, Inc. 7/27/1994 158 0.08 M&G Equities, Inc. 7/27/1994 47 0.08 M&G Equities, Inc. 9/19/1994 72 0.08 M&G Equities, Inc. 10/21/1994 119 0.08 M&G Equities, Inc. 11/23/1994 119 0.08 M&G Equities, Inc. 6/20/1995 520 0.08 M&G Equities, Inc. 7/13/1995 260 0.08 M&G Equities, Inc. 8/11/1995 260 0.08 M&G Equities, Inc. 9/27/1995 260 0.08 M&G Equities, Inc. 10/27/1995 260 0.08 M&G Equities, Inc. 1/10/1996 2,582 0.08 M&G Equities, Inc. 2/7/1996 2,560 0.08 M&G Equities, Inc. 6/11/1996 4,140 0.08 M&G Equities, Inc. 9/30/1996 150 0.08 M&G Equities, Inc. 10/17/1996 150 0.08 M&G Equities, Inc. 11/14/1996 150 0.08 M&G Equities, Inc. 2/10/1997 1,250 0.08 Rho Management Trust II 8/22/2001 1,222 0.01 Rho Management Trust II 8/22/2001 1,222 0.01 Rho Management Trust II 8/22/2001 1,222 0.01 Rho Management Trust II 8/22/2001 1,222 0.01
NitroMed, Inc. Schedule of Warrantholders
EXERCISE ISSUED TO DATE SHARES (1) PRICE ------------- ---------- ---------- -------- Rho Management Trust II 8/22/2001 569 0.01 Rho Management Trust II 8/22/2001 1,897 0.01 Rho Management Trust II 8/22/2001 953 0.01 Rho Management Trust II 8/22/2001 1,423 0.01 Rho Management Trust II 8/22/2001 1,423 0.01 Rho Management Trust II 8/22/2001 366 0.01 Rho Management Trust II 8/22/2001 305 0.01 Rho Management Trust II 8/22/2001 435 0.01 Rho Management Trust II 8/22/2001 611 0.01 Rho Management Trust II 8/22/2001 1,212 0.01 Rho Management Trust II 8/22/2001 1,734 0.01 Rho Management Trust II 8/22/2001 867 0.01 Rho Management Trust II 8/22/2001 867 0.01 Rho Management Trust II 8/22/2001 867 0.01 Rho Management Trust II 8/22/2001 867 0.01 Rho Management Trust II 8/22/2001 1,190 0.01 Rho Management Trust II 8/22/2001 1,222 0.01 Rho Management Trust II 8/22/2001 2,464 0.01 TOTAL: 151,347
(1) Warrants issued prior to the Company's 8 for 1 reverse stock split on April 4, 1997 reflect post-split amounts. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT Warrant No. __ Number of Shares: ________ (subject to adjustment) Date of Issuance: ______ NITROMED, INC. COMMON STOCK PURCHASE WARRANT (Void after __________) NitroMed, Inc., a Delaware corporation (the "Company"), for value received, hereby certifies and agrees that ________________ or its registered assigns (the "Registered Holder"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time or from time to time on or after the date of issuance and on or before _________ at not later than 5:00 p.m. (Boston, Massachusetts time), ______ shares of Common Stock, $.01 par value per share, of the Company, at a purchase price of $.01 per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the "Warrant Shares" and the "Exercise Price," respectively. The term "Warrant" as used herein shall include this Warrant and any other warrants delivered in substitution or exchange therefor, as provided herein. 1. EXERCISE. (a) This Warrant may be exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the Notice of Exercise form appended hereto duly executed by such Registered Holder or by such Registered Holder's duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Exercise Price payable in respect of the number of shares of Warrant Shares purchased upon such exercise. (b) Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in subsection 1(a) above. At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates. (c) As soon as practicable after the exercise of this Warrant in full or in part, and in any event within 10 days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates for the number of full Warrant Shares to which such Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which such Registered Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in subsection 1(a) above. (d) Notwithstanding anything to the contrary contained in the first paragraph of this Warrant, Section 1(a) or this Section 1(d), the Registered Holder shall have the right to exercise this Warrant to receive shares of Common Stock equal to the value (as determined below) of this Warrant by surrender of this Warrant at the Company's office, together with the Notice of Exercise in substantially the form attached hereto (the "Notice of Exercise"), without any payment by wire transfer, cash, check or cancellation of indebtedness, in which event the Company shall issue to the Registered Holder a number of shares of Common Stock computed using the following formula: X = Y(A-B) ------ A Where: X = The number of shares of Common Stock to be issued to the Registered Holder. Y = The number of shares of Common Stock under this Warrant. A = The fair market value of one share of Common Stock. B = Exercise Price. As used herein, the fair market value of the Common Stock shall mean, with respect to each share of Common Stock, the average of the closing prices of the Company's Common Stock sold on all securities exchanges on which the Common Stock may at the time be listed (including, for this purpose, the Nasdaq National Market), or, if at any time the Common Stock is not so listed, the average of the representative bid and asked prices quoted in the Nasdaq System as of 4:00 p.m., New York City time, or, if at any time the Common Stock is not quoted in the Nasdaq System, the average of the highest bid and lowest asked price in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case on the day on which the Notice of Exercise is -2- received or if no sales of the Common Stock have occurred on such date, on the next preceding date on which there were such sales. If at any time the Common Stock is not listed on any securities exchange or quoted in the Nasdaq System or the over-the-counter market, the fair market value of the Common Stock shall be the highest price per share which the Company could obtain from a willing buyer (who is not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by the Board of Directors of the Company, unless (i) the Company shall become subject to a merger, acquisition or other consolidation pursuant to which the Company is not the surviving party, in which case the fair market value of the Common Stock shall be deemed to be the value received by the holders of the Company's Common Stock for each share of Common Stock pursuant to the Company's acquisition; or (ii) the Registered Holder shall purchase such shares in conjunction with the initial underwritten public offering of the Company's Common Stock pursuant to a registration statement filed under the Securities Act of 1933, in which case, the fair market value of the shares of Common Stock subject to this Warrant shall be the price at which all registered shares of Common Stock are sold to the public in such offering. 2. ADJUSTMENTS. The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows: (a) STOCK DIVIDEND, SPLIT OR SUBDIVISION OF SHARES. If the number of shares of Common Stock outstanding at any time after the date hereof is increased or deemed increased by a stock dividend payable in shares of Common Stock or other securities convertible into or exchangeable for shares of Common Stock ("Equivalents") or by a subdivision or split-up of shares of Common Stock or Equivalents (other than a change in par value, from par value to no par value or from no par value to par value), then, following the effective date fixed for the determination of holders of Common Stock or Equivalents entitled to receive such stock dividend, subdivision or split-up, the Exercise Price shall be appropriately decreased (but in no event shall the Exercise Price be decreased below the par value of the Common Stock issuable upon exercise of this Warrant) and the number of shares of Common Stock issuable on exercise of each Warrant shall be increased in proportion to such increase in outstanding shares (on a fully diluted basis). (b) COMBINATION OF SHARES. If, at any time after the date hereof, the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock (other than a change in par value, from par value to no par value or from no par value to par value), then, following the effective date for such combination, the Exercise Price shall be appropriately increased and the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares. (c) REORGANIZATIONS, CONSOLIDATIONS, ETC. In the event, at any time after the date hereof, of any capital reorganization, or any reclassification of the capital stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Company with or into another person (other than consolidation or merger in which the Company is the continuing corporation and which does not result in any change in the powers, designations, preferences and rights, or the qualifications, -3- limitations or restrictions, if any, of the capital stock of the Company as amended from time to time) or of the sale or other disposition of all or substantially all the properties and assets of the Company in its entirety to any other person (any such transaction, an "Extraordinary Transaction"), then this Warrant shall be exercisable for the kind and number of shares of stock or other securities or property of the Company, or of the corporation resulting from or surviving such Extraordinary Transaction, that a holder of the number of shares of Common Stock deliverable (immediately prior to the effectiveness of the Extraordinary Transaction) upon exercise of this Warrant would have been entitled to receive upon such Extraordinary Transaction. The provisions of this Section 2(c) shall similarly apply to successive Extraordinary Transactions. (d) OTHER SITUATIONS. If a state of facts shall occur that, without being specifically controlled by the provisions of this Section 2, would not fairly protect the exercise rights of this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of the Company shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such exercise rights. (e) SUBSEQUENT SALE OF STOCK. If the Company shall, at any time or from time to time after the date of issuance of this Warrant, issue any shares of Common Stock or other securities convertible into, or exchangeable or exercisable for, shares of Common Stock, in each case other than Excluded Stock (as defined in the Restated Certificate of Incorporation of the Company as amended from time to time) for a consideration per share less than the applicable Exercise Price in effect immediately prior to the issuance of such Common Stock, or other securities, the Exercise Price in effect immediately prior to each such issuance shall automatically (except as otherwise provided in this Section 2(e)) be lowered to a price equal to the consideration per share received by the Company upon such issuance. This Warrant shall thereafter be exercisable for that number of shares of Common Stock which shall be computed by multiplying the number of shares of Common Stock previously issuable under this Warrant by the quotient of the Exercise Price in effect immediately prior to such sale divided by the Exercise Price, as adjusted hereby. For the purposes of any adjustment of the Exercise Price pursuant to this Section 2(e), the calculation of the consideration received by the Company shall be as provided in Section 2(h) below. (f) CALCULATIONS. All calculations under this Section shall be made to the nearest one-hundredth of a cent ($.0001) or to the nearest one-hundredth of a share, as the case may be. (g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment pursuant to this Section 2, the Company at its own expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Registered Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Exercise -4- Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. (h) CALCULATING CONSIDERATION RECEIVED FOR NEW STOCK. (i) In the case of the issuance of Common Stock in whole or in part for cash, the consideration shall be deemed to be the amount of cash paid therefor after deducting therefrom any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof, plus the value of any property other than cash received by the Company, determined as provided in paragraph (ii) below. (ii) In the case of the issuance of Common Stock for a consideration in whole or in part in property other than cash, the value of the such property or consideration other than cash shall be deemed to be the fair market value of such property as determined in good faith by the Board of Directors of the Company, irrespective of any accounting treatment. (iii) In the case of the issuance of Common Stock for consideration in whole or in part other than cash or property, the value of such consideration shall be deemed to be the aggregate par value of such Common Stock (or the aggregate stated value if such Common Stock has no par value), less the value of any other consideration received by the Company, determined as provided in paragraphs (i) and (ii) above. (iv) In the case of the issuance of options or other rights to purchase or subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or other rights to subscribe for such convertible or exchangeable securities: (A) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in paragraphs (i), (ii) and (iii) above), if any, received by the Company upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby (the consideration in each case to be determined in the manner provided in paragraphs (i), (ii) and (iii) above); (B) the aggregate maximum number of shares of Common Stock deliverable upon conversion of, or in exchange for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration received by the Company for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional -5- consideration, if any, to be received by the Company upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in paragraphs (i), (ii) and (iii) above; (C) if there is any change in the exercise price of, or number of shares deliverable upon exercise of, any such options or rights or upon the conversion or exchange of any such convertible or exchangeable securities (other than a change resulting from the antidilution provisions thereof), then the Exercise Price shall automatically be readjusted in proportion to such change; and (D) upon the expiration of any such options or rights or the termination of any such rights to convert or exchange such convertible or exchangeable securities, the Exercise Price shall be automatically readjusted to the Exercise Price that would have obtained had such options, rights or convertible or exchangeable securities not been issued. 3. FRACTIONAL SHARES. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall make an adjustment therefor in cash on the basis of the fair market value for each share of the Company's Common Stock, determined in accordance with Section 1(d) hereof. 4. REQUIREMENTS FOR TRANSFER. (a) WARRANT REGISTER. The Company will maintain a register (the "Warrant Register") containing the names and addresses of the Registered Holder or Registered Holders. Any Holder of this Warrant or any portion thereof may change its address as shown on the Warrant Register by written notice to the Company requesting such change, and the Company shall promptly make such change. Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary, PROVIDED, HOWEVER, that if and when this Warrant is properly assigned in blank, the Company may, but shall not be obligated to, treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. This Warrant shall be transferable, including as to an Investor as defined in the Stockholders' Agreement, dated as of December 3, 1993, by and among the Company and the other signatories thereto, as amended (the "Stockholders' Agreement"), among members of such Investor's Group (as defined in Section 1 of the Stockholders' Agreement), subject to the provisions of Section 3 of the Stockholders' Agreement; provided, however, that the notice described in Section 3.3 of the Stockholders' Agreement may also be accompanied by, and a Transfer (as defined in the Stockholders' Agreement) of this Warrant may be effected in the event that the Registered Holder delivers to the Company (unless waived by the Company), a representation letter of the Registered Holder, in lieu of an opinion of counsel, reasonably satisfactory to the Company setting forth facts which establish the basis to conclude that the sale or transfer is exempt from the registration requirements of the Act (a "Representation Letter"); and provided further that no such Representation Letter shall be required in the event of a Transfer described in Sections 3.3(y) and (z) of the Stockholders' Agreement. -6- (b) WARRANT AGENT. The Company may, by written notice to the Registered Holder, appoint an agent (with its principal place of business in Boston, Massachusetts or New York, New York) for the purpose of maintaining the Warrant Register referred to in Section 4(a) above, issuing the Common Stock or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant or any or all of the foregoing. Thereafter, any such registration, issuance, exchange, or replacement, as the case may be, may be made at the office of such agent. (c) RESTRICTIONS ON TRANSFER. The Registered Holder of this Warrant by acceptance hereof agrees that the transfer of this Warrant and the Warrant Shares are subject to the provisions of Section 3 of the Stockholders' Agreement which include restrictions on transfer of the Warrant Shares solely for the purpose of compliance with securities laws, and any transferee hereof shall, by acceptance of this Warrant or the shares of Common Stock issued pursuant to this Warrant, agree to by bound by Section 3 of the Stockholders' Agreement. Subject to the provisions of Section 3 of the Stockholders' Agreement and this Section 4, this Warrant and all rights hereunder are transferable, in whole or in part, upon the surrender of this Warrant with a properly executed assignment (in substantially the form attached hereto) at the principal office of the Company. (d) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for exchange, properly endorsed on the Assignment attached hereto and subject to the provisions of this Warrant and Section 3 of the Stockholders' Agreement and with the limitations on assignments and transfers as contained in this Section 4, the Company at its expense shall issue to or on the order of the Registered Holder a new warrant or warrants of like tenor, in the name of the Registered Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 5. NO IMPAIRMENT. The Company will not, by amendment of its charter or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times carry out all such terms and take all such action as may be reasonably necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 6. LIQUIDATING DIVIDENDS. If the Company pays a dividend or makes a distribution on the Common Stock payable otherwise than in cash out of earnings or earned surplus (determined in accordance with generally accepted accounting principles) except for a stock dividend payable in shares of Common Stock (a "Liquidating Dividend"), then the Company will pay or distribute to the Registered Holder of this Warrant, upon the exercise hereof, in addition to the Warrant Shares purchased upon such exercise, the Liquidating Dividend which would have been paid to such Registered Holder if he had been the owner of record of such Warrant Shares immediately prior to the date on which a record is taken for such Liquidating Dividend or, if no record is taken, the date as of which the record holders of Common Stock entitled to such dividends or distribution are to be determined. -7- 7. NOTICES OF RECORD DATE, ETC. In case: (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or (b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company; or (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at least twenty (20) days prior to the record date or effective date for the event specified in such notice. 8. RESERVATION OF STOCK. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant. 9. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 10. MAILING OF NOTICES, ETC. All notices and other communications from the Company to the Registered Holder of this Warrant shall be mailed by first-class certified or registered mail, postage prepaid, to the address furnished to the Company in writing by the last Registered Holder of this Warrant who shall have furnished an address to the Company in writing. All notices and other communications from the Registered Holder of this Warrant or in connection herewith to the Company shall be mailed by first-class certified or registered mail, postage prepaid, to the Company at its principal office set forth below. If the Company should at any time change the location of its principal office to a place other than as set forth below, it shall give prompt written notice to the Registered Holder of this Warrant and thereafter all references -8- in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. 11. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company. 12. CHANGE OR WAIVER. Any term of this Warrant may be changed or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. 13. HEADINGS. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 14. GOVERNING LAW. This Warrant will be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. 15. CERTIFICATE. Upon request by the Registered Holder of this Warrant, the Company shall promptly deliver to such holder a certificate executed by its President or Chief Financial officer setting forth the total number of outstanding shares of capital stock, convertible debt instruments and options, rights, warrants or other agreements relating to the purchase of such capital stock or convertible debt instruments, together with its calculation of the number of shares remaining available for issuance upon exercise of this Warrant, and a certificate of the accuracy of the statements set forth therein. 16. INJUNCTIVE RELIEF. The parties agree that any breach of this Warrant by the Company is likely to cause the Registered Holder irreparable damage and, therefore, in the event of any such breach, the Company agrees that the Registered Holder shall be entitled, in addition to such other remedies which may be available, to specific performance and other injunctive relief. NITROMED, INC. By: ------------------------------------ President and Chief Executive Officer [Corporate Seal] ATTEST: - -------------------- Secretary -9- NOTICE OF EXERCISE FORM To: Dated: ------------------------------- --------------------------- The undersigned, pursuant to the provisions set forth in the attached Warrant (No. __), hereby irrevocably elects to purchase ________ shares of the Common Stock covered by such Warrant and herewith makes payment of $__________, representing the full purchase price for such shares at the price per share provided for in such Warrant. Signature: -------------------------- Address: -------------------------- -------------------------- -10- ASSIGNMENT FORM FOR VALUE RECEIVED, hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. __) with respect to the number of shares of Common Stock covered thereby set forth below, unto:
Name of Assignee Address No. of Shares - ---------------- ------- -------------
Dated: Signature: ----------------------- ------------------------------------- Dated: Witness: ----------------------- ------------------------------------- -11- EX-10.18 24 a2116973zex-10_18.txt EXHIBIT 10.18 EXHIBIT 10.18 LEASE 1. IDENTIFICATIONS This LEASE made as of the 29th of May, 1997, by and between William J. Callahan, (the "Landlord"), having an address c/o P.O. Box 269 Bedford, MA 01730 and NitroMed, Inc., (the "Tenant"), a Delaware Corporation having an address at 801 Albany Street, Boston, MA 02118. 2. LEASE: THE PREMISES In consideration of the Basic Rent, Additional Rent and other payments and covenants of the Tenant hereinafter set forth, and upon the following terms and conditions, the Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord that certain parcel of land containing 3.665 +/- acres of land shown as Lot 16 on Exhibit A attached hereto (the "Property"), known as 12 Oak Park Drive in Bedford, MA together with the two-story building of approximately 40,000 gross square feet of space and all parking facilities located thereon (the "Building", and together with the Property the "Premises"). The Landlord, at his own cost and expense, reserves the rights, subject to prior consent of Tenant which shall not be unreasonably withheld or delayed, to relocate and to install, maintain, repair, replace and grant easements for utility lines, pipes and conduits across the Property for the benefit of other properties, all without any material interference with or any material interruption of the use and enjoyment of or access to the Premises by the Tenant as contemplated hereby. 3. INITIAL CONSTRUCTION BY TENANT Landlord shall deliver occupancy of the Premises with building systems and roof in good operating order and, as to the roof, watertight and otherwise in "as is" condition. All work necessary to prepare the Premises for occupancy by Tenant shall be performed by Tenant, at its own expense, and Landlord shall have no responsibility therefor. Plans and specifications for all such work shall be submitted to Landlord and are subject to approval by Landlord prior to commencement of any such work, which approval shall not be unreasonably withheld or delayed. In the event of disapproval, Landlord shall give written notice of the same to Tenant which shall specify all of Landlord's objections and Tenant shall, as soon as possible thereafter, submit new plans and specifications for approval corrected so as to satisfy all such objections, provided, however, that Landlord shall be deemed to have approved any plans and specifications submitted by Tenant if Landlord does not give notice of its objections thereto within ten (10) days following receipt of such plans and specifications. Landlord shall not be a party to nor incur any liability as a result of any contract to perform any of Tenant's work. Tenant's work shall be done by contractors, subcontractors and other laborers previously approved by Landlord, which approval shall not be unreasonably withheld or delayed. Tenant shall not commence utilization of the Premises for the permitted Use unless and until it shall have delivered to Landlord, a certificate of use and occupancy from the local building department duly authorizing such utilization pursuant to the Massachusetts State Building Code. If Tenant undertakes any such work in the Premises (being under no obligation to do so), Tenant shall proceed with such work, deliver such certificate and commence utilization of the Premises for the permitted Use with commercially reasonably diligence. 3.1 ENTRY BY TENANT PRIOR TO TERM COMMENCEMENT DATE Tenant may enter the Demised Premises prior to the Term Commencement Date to undertake such work as is to be performed by Tenant pursuant to this Lease in order to prepare the Premises for Tenant's occupancy. Such entry shall be deemed to be pursuant to a license from Landlord to Tenant and shall be at the risk of Tenant. 2 4. TERM The Term of this Lease shall commence on May 29, 1997 (the "Term Commencement Date") and shall expire, unless earlier terminated in accordance with the terms hereof, at midnight on the last day of May 31, 2004. 5. USE OF THE PREMISES: LICENSES AND PERMITS The Tenant shall use the Premises only for offices, testing laboratory, research laboratory or any other lawful use, to the extent from now and hereafter time to time permitted under applicable laws, by-laws ordinances, codes, rules, regulations, orders and other lawful requirements of governmental bodies having jurisdiction. The Tenant, its subtenants, licensees, invitees and any other users of the Premises shall apply in their own names for and obtain at their own expense any and all licenses, permits and other approvals which may be required from such governmental bodies in connection with any particular use of the Premises during the Term. 6. BASIC RENT: ADDITIONAL RENT During the Term, the Tenant shall pay Basic Rent to the Landlord at a rate equal to five hundred eighty thousand dollars, $580,000 per year, except modified as follows: May 1997 - No Base Rent; June 1997 - $40,000; July 1997 - $40,000; August 1997 - $40,000; September - $40,000. Basic Rent shall be payable in advance on the first day of each month in equal installments (except in the case of a partial month at the beginning of the Term, in which event the Tenant shall pay the appropriate pro rata proportion of such installment) to the Landlord at the address set forth above or such other address as the Landlord may thereafter specify by notice to the Tenant, without counterclaim, set off, deduction or defense and except as otherwise expressly provided herein, without abatement. 3 Basic Rent shall be net of all costs and expenses related to the Premises except as expressly otherwise provided herein. The Tenant agrees to pay to the Landlord upon demand as Additional Rent, in the same manner as Basic Rent, any and all charges, costs, expenses, and obligations (except for those items which are Landlord's obligation under this Lease) as the Landlord may from time to time actually incur in good faith with regard to the maintenance of the Premises, in accordance with the terms and provisions of this Lease. The Landlord shall, in each case, at the time of demand for payment, provide the Tenant with evidence of payment of or liability for such other charges, costs, expenses and obligations. 7. TAXES The Tenant shall pay or cause to be paid to the Landlord (or, where appropriate, directly to the authority by which the same are assessed or imposed, with evidence of such payment to the Landlord) as Additional Rent not later than ten (10) days prior to the date the same are due or twenty-one (21) days after written notice and delivery of a copy of the actual tax bill thereof to the Tenant, whichever is later, all taxes and excises upon the personal property and equipment of the Tenant located at the Premises or the Property and all real estate taxes, betterments and special assessments (which the Landlord agrees shall be paid over the longest period allowed by law) or amounts in lieu or in the nature thereof and any water rents or sewer use charges (and the entire amount of any interest, penalties and costs attributable to delayed payment thereof where such delay is the fault of the Tenant) which may now or hereafter be levied, assessed or imposed by the United States of America, The Commonwealth of Massachusetts, the Town of Bedford or any other authority, or become a lien, upon all or any part of the Property, the Building, the Premises, the use or occupation thereof, or upon the Landlord and the Tenant in respect thereof, or upon the basis of rentals thereof or therefrom (except for the Landlord's income, estate, gift or 4 transfer taxes), or upon the estate hereby created or upon the Landlord by reason of ownership of the reversion, provided that Tenant shall only be liable for the foregoing to the extent the same accrue during the term of this lease. All payments by the Tenant on account of Taxes shall be applied prorata in connection with any tax bills received by Landlord covering periods which are not within the Term. Landlord shall provide Tenant with a municipal lien certificate which confirms that real estate taxes are current by April 11, 1997. The Tenant shall, upon written notice from the Landlord that the same is required by any Mortgagee (as defined in Paragraph 21 hereof), prepay to the Mortgagee monthly as Additional Rent, in the same manner as Basic Rent, one-twelfth (1/12) of the total of all such amounts as the Landlord may from time to time reasonably estimate will be payable annually by the Tenant under this Paragraph 7, which prepayments the Landlord agrees shall be applied, without interest to such amounts as actually become payable. As soon as any such amounts so payable are actually determined, appropriate adjustment of any overpayments and underpayments shall be made. The Tenant shall have the right in its own name or in the name of the Landlord to contest or review by legal proceedings or otherwise any such tax, levy, charge or assessment. In such event the Tenant shall either pay such tax, levy, charges or assessment (under protest, if necessary) or shall, if requested, deposit with the Landlord in trust an amount sufficient to cover the contested item together with any interest, penalties or costs as the Landlord may reasonably require. The Tenant shall defend, indemnify and save the Landlord harmless from and against and shall pay as Additional Rent (i) any such tax, levy, charge or assessment that may be determined to be due and (ii) any and all costs or expenses the Landlord may incur in connection with any such proceedings. When any such contested item shall have been settled or paid, the 5 balance of any sums deposited with the Landlord in trust shall be repaid to the Tenant. The Tenant shall be entitled to share in any refund or abatement, net of such costs and expenses, which may be made of any tax, levy, charge or assessment in the same proportion that the same was paid by the Tenant or with the Tenant's funds. 8. INSURANCE: WAIVERS OF SUBROGATION The Tenant shall, at its own cost and expense, obtain and throughout the Term shall maintain, insurance from companies qualified to do business in Massachusetts and reasonably acceptable to the Landlord, for the benefit as additional insureds of the Landlord and any Mortgagees, the existence of which Tenant has received written notice from Landlord as their respective interests may appear, as follows: (i) comprehensive general liability insurance against claims for bodily injury, death or -property damage occurring to, or on the Premises, in limits of $1,000,000 for bodily injury or death and $500,000 for property damage or in such higher or lower limits as may result from the operation of clause (iv) below: (ii) boiler and machinery insurance on any steam boilers, pressure vessels and pressure piping, rotating electrical machines, and miscellaneous electrical apparatus, engines, pumps, and compressors, fans and blowers, with so-called "standard blanket coverage" (15 HP and over) to a limit of $1,000,000; (iii) insurance against lost rentals for a period of one year and against loss or damage to the improvements, and any other buildings, structures and improvements from time to time constituting a part of the Premises, such as may result from fire and such other casualties as are normally covered by an "extended coverage" endorsement, in an amount equal to the greater of 6 (a) the replacement costs of the improvements constituting part of the Premises, or (b) an amount sufficient to preclude any claim on the part of the insurer for co-insurance under the terms of applicable policies. The term "replacement costs" shall mean the actual costs of restoration (excluding foundation and excavation costs) as nearly as practicable to a condition functionally equivalent and of equal value as immediately prior to the casualty, and shall be redetermined by such insurer every two years and (iv) at the written request of the Landlord, such other commercially customary insurance coverages and such additional commercially customary coverage amounts as any Mortgagee may reasonably require and as a prudent and reasonable owner would from time to time carry on similar premises in view of any new risks arising or changes of conditions (e.g., inflation) occurring during the Term. At the commencement of the Term and thereafter not less than ten (10) days prior to the expiration dates of the policies theretofore in effect, certificates of the foregoing required insurance policies, issued by the insurers, shall be delivered to the Landlord. Neither the Landlord nor the Tenant shall be liable to the other for any loss or damage to the Premises or other property or injury to or death of persons occurring on the Premises or in any manner growing out of or connected with the Tenant's use and occupation of the Premises or the condition thereof, whether or not caused by the negligence or other fault of the Landlord, the Tenant or their respective agents, employees, subtenants, licensees, invitees or assignees; provided, however, that this release (i) shall apply only to the extent that such loss or damage to the Premises or other property or injury to or death of persons is covered by insurance which protects the Landlord, or the Tenant or both of them as the case may be; (ii) shall not be construed to impose any other or greater liability upon either the Landlord or the Tenant than 7 would have existed in the absence hereof; and (iii) shall be in effect only so long as the applicable insurance policy contains a clause to the effect that this release shall not affect the right of the insureds to recover under such policies, which clauses shall be obtained by the parties hereto whenever available at reasonable expense. 9. UTILITIES The Tenant shall, at its own cost and expense, arrange and pay for all services and utilities provided to the Premises during the Term, including without limitation, water, electricity, fuel, steam, heat, air conditioning, sewer service, telephone service, security and fire protection, cleaning and trash removal, and snow and ice removal. 10. REPAIRS Notwithstanding anything to the contrary herein, from and after the commencement of the Term, the Landlord shall, at its own cost and expense, make all repairs necessary to keep the structural support elements (which term shall include the footings and foundations, floor slab, exterior walls, structural columns, planking beams and girders of the Building) in structurally good condition, order and repair, excepting any damage resulting from any acts and any omissions of the Tenant or its agents, contractors and employees. The party from time to time having the responsibility for repair of any portion of the Premises shall have (and, to the extent necessary to effectuate this paragraph the Landlord hereby assigns to the Tenant) the benefit of all warranties and guarantees from manufacturers, suppliers and subcontractors whose products or services are or may be incorporated into the Premises. Subject to the terms and provisions of the immediately following paragraph, the Tenant shall, at its own cost and expense, make all other repairs, structural and non-structural, exterior and interior, necessary to keep the Premises, including the sidewalks, curbs, and driveways 8 adjoining the Premises and all electrical, mechanical, sprinklers, plumbing, heating, air conditioning and other building systems serving the Premises in as good condition, order and repair as the same are at the commencement of the Term or thereafter may be put, excepting only repairs which are the obligation of the Landlord hereunder and damage resulting from any acts and omissions of the Landlord or its agents, contractors and employees, from reasonable wear and use and from fire or other casualty and eminent domain takings, and shall keep and maintain all portions of the Premises and the sidewalks and driveways adjoining the same in a clean and orderly condition, free of accumulation of dirt, rubbish, snow and ice. 11. COMPLIANCE WITH LAWS AND REGULATIONS The Tenant agrees that its obligations to make payment of the Basic Rent, Additional Rent and all other charges on its part to be paid, and to perform all of the covenants and agreements on its part to be performed during the Term hereunder shall not be affected by any present or future law, by-law, ordinance, code, rule, regulation, order or other lawful requirement regulating or affecting the use which may be made of the Premises or the Property. During the Term the Tenant shall comply, at its own cost and expense, with: all applicable laws, by-laws, ordinances, codes, rules, regulations, orders and other lawful requirements of the governmental bodies having jurisdiction whether or not foreseeable, and whether or not they involve any changes in governmental policy, which are applicable to the Premises, the fixtures and equipment therein, or the Tenant's particular use thereof; the order, rules and regulations of the National Board of Fire Underwriters, or any other body hereafter constituted exercising similar functions, which may be applicable to the Premises, the fixtures and equipment therein or the use thereof; and the requirements of all policies of public liability, 9 fire and all other types of insurance at any time in force with respect to the Premises, the Building or the Property and the fixtures and equipment therein and thereon. 12. ALTERATIONS BY TENANT Tenant shall have the right to erect a building sign indicating the name and logo of Tenant which is consistent with the size and quality of other building signs within Oak Park. Tenant will obtain approval for any such sign from Landlord, approval not to be unreasonably withheld or delayed. The Tenant shall make no alterations, additions or improvements in or to the Premises without first submitting to the Landlord plans and specifications therefore in such detail as the Landlord may reasonably require and obtaining the Landlord's prior written consent. The Landlord agrees that its consent shall not be unreasonably withheld or delayed for interior, nonstructural alterations, additions and improvements consistent with the use of the Premises as contemplated hereby; any such consent to interior, nonstructural alterations, additions and improvements, if the Landlord so advises the Tenant at the time of such consent, may be conditioned upon the Tenant's being obligated to remove the same at the expiration or termination of this Lease and to restore the Premises to their condition prior to such alterations, additions and improvements. Upon completion of any such alterations, additions or improvements, Tenant shall deliver "as built" plans to Landlord. The Tenant shall promptly pay when due the entire cost of any work undertaken such that the Premises shall at all times be free of mechanics and materialmen's liens or claims. All work undertaken by the Tenant shall be accomplished in accordance with all applicable laws and in a good workmanlike manner, using first class materials. Notwithstanding the foregoing, Landlord's consent shall not be required for 10 nonstructural alterations which do not affect the base building HVAC, electrical, and plumbing systems having a cost of up to $20,000. 13. LANDLORD'S ACCESS The Tenant agrees to permit the Landlord and any Mortgagees and their authorized representatives to enter the Premises at all reasonable times during usual business hours after at least 24 hours prior oral notice and accompanied by Tenant's representative for the purposes of inspecting the same, exercising such other rights as it or they may have hereunder or under any mortgage and at any time without notice in the event of emergency. In no event, however, shall the exercise of such rights of access unreasonably interfere with Tenant's business operations. 14. INDEMNITIES The Tenant agrees to protect, defend (with counsel reasonably approved by the Landlord), indemnify and save the Landlord harmless from and against any and all claims (except structural defects which are not caused by Tenant) and other than claims arising from any omission, fault, negligence or other misconduct of the Landlord or its agents or employees in or on the Premises, the Building or the Property) arising: (i) from the conduct or management of or from any work or thing whatsoever done in or on the Premises during the Term; and from any condition existing in the Premises, or any injury to or death of persons or damage to property occurring during the Term, or resulting from an occurrence during the Term, in or on the Premises, and (ii) at any time after the date hereof, and without regard to the expiration or termination of the Term, from any breach or default on the part of the Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant to the terms of this Lease or from any negligent act or omission on the part of the Tenant or any of its agents, employees, subtenants, licensees, invitees, or assignees. The Tenant further agrees to indemnify 11 the Landlord from and against all costs, expenses, and other liabilities incurred in connection with any such indemnified claim or action or proceeding brought thereon, any and all of which, if reasonably suffered, paid or incurred by the Landlord, the Tenant shall repay upon demand to the Landlord as Additional Rent. 15. CASUALTY DAMAGE Except as provided below, in the event of partial or total destruction of the Premises and any other buildings, structures and improvements from time to time constituting a part of the Premises during the Term by fire or other casualty, the Landlord shall as promptly as practicable after receipt of any insurance proceeds available as a result of such casualty, repair, reconstruct or replace the portions of the Premises destroyed as nearly as possible to their condition prior to such destruction, except that in no event shall the Landlord be obligated to expend more for such repair, reconstruction or replacement than the amounts of any such insurance proceeds actually received. During the period of such repair, reconstruction and replacement there shall be an equitable abatement of Basic Rent and Additional Rent hereunder in proportion to the nature and extent of the destruction but only as and to the extend such abatement is covered by lost rentals insurance for the benefit of the Landlord as required by Paragraph 8 hereof or otherwise. If (i) the Premises and any other buildings, structures and improvements from time to time constituting part of the Premises are so extensively destroyed by fire or other casualty that the Premises and any other buildings, structures and improvements from time to time constituting part of the Premises are not susceptible of repair, reconstruction or replacement within nine (9) months from the date work commences thereon, or (ii) if such destruction resulted from causes or risks not required to be insured against by the Tenant hereunder, (or any Mortgagee refuses to make such proceeds available) the Tenant may terminate this Lease by 12 giving written notice to the Landlord within thirty (30) days after the date of such destruction unless, as to a termination within (ii) of this paragraph within thirty (30) days after such notice to the Landlord, the Landlord gives notice to the Tenant that the Landlord will make the necessary additional funds available for such repair, reconstruction or replacement. There shall be an equitable abatement of Basic Rent and Additional Rent hereunder from the date of the casualty but only as and to the extent such abatement is covered by lost rentals insurance for the benefit of the Landlord as required by Paragraph 8 hereof. Further, in the event Landlord commences repair, reconstruction and replacement in accordance with the terms of this Paragraph 15 but fails to complete same within nine (9) months thereafter, Tenant shall have the right to terminate this Lease immediately upon notice to Landlord and upon receipt of such notice, the security deposit shall be returned to Tenant and neither party shall have any further obligations. 16. CONDEMNATION If all or substantially all of the Premises shall be taken or appropriated by any public authority, or if more than twenty percent (20%) of the floor area of the Building or of the parking areas shall be so taken or appropriated and either the Landlord or the Tenant, within sixty (60) days after it first receives notice of such taking, gives written notice to the other to such effect, this Lease shall terminate as of the date the Tenant must surrender possession or, if later, the date the Tenant actually surrenders possession, and the Basic Rent and Additional Rent reserved shall be apportioned and paid to and as of such date. The Landlord hereby reserves, and the Tenant hereby assigns to the Landlord, any and all claims to the entirety of any damages or other compensation by way of damages which may be awarded in connection with any such taking or appropriation except for Tenant rights to recover by separate award, Tenant improvements and relocation expenses. 13 If any part of the Premises is taken or appropriated by public authority as aforesaid and neither the Landlord nor the Tenant terminates this Lease as set forth above, the Landlord shall promptly and diligently, secure and close so much of the improvements and any other buildings, structures and other improvements constituting a part of the Premises as remain and shall, to the extent possible, replace any part so taken or appropriated by a suitable structure or addition of similar size and design to the improvements so taken or appropriated, except that in no event shall the Landlord be obligated to expend more for such replacement than the amount of any damages, compensation or award which the Landlord may actually receive as damages in respect of such improvements as they existed immediately prior to such taking or appropriation; in such event there shall be an equitable abatement of Basic Rent, in proportion to the reduced fair rental value of the Premises, from and after the date the Tenant must surrender possession or, if later, the date the Tenant actually surrenders possession. 17. LANDLORD'S COVENANT OF QUIET ENJOYMENT The Landlord covenants that the Tenant, upon paying the Basic Rent and Additional Rent and performing and observing all of the other covenants and provisions hereof, may peacefully and quietly hold and enjoy the Premises for the Term as aforesaid, subject, however, to all of the terms and provisions of this Lease. 18. TENANT'S OBLIGATION TO QUIT The Tenant shall, upon expiration of the Term or other termination of this Lease, leave and peaceably and quietly surrender and deliver to Landlord the Premises and all improvements, building equipment and fixtures thereon and any replacements or renewals thereof in as good condition, order and repair as the same are required to be kept by the Tenant pursuant to Paragraph 10 hereof, normal wear and tear, damage by fire or other casualty or taking by 14 eminent domain excepted, however, that the Tenant may first remove any trade fixtures, equipment and other personal property of the Tenant and shall first remove any other alterations, additions and improvements which the landlord has required be removed pursuant to the terms of Paragraph 12 hereof or, at the option of the Landlord, which were made without the consent (if required) of the Landlord pursuant to the terms of Paragraph 12 hereof, restoring the Premises in each case to as nearly as reasonably possible their condition prior to the installation of such fixtures or the undertaking of such alternations, additions or improvements, as the case may be, giving effect, however, to the overall condition of the balance of the Premises as required at the time of such restoration. 19. TRANSFERS OF TENANT'S INTEREST The Tenant shall not assign or sublease or otherwise encumber all or any part of its interest in this Lease, the Premises, or the estate hereby created, nor shall it grant any licenses, concessions or the like, without in each case first obtaining the proper written consent of the Landlord, which consent shall not be unreasonably withheld or delayed. Notwithstanding the foregoing provided the Tenant delivers to the Landlord prior written notice and a copy of the appropriate legal documentation and financial information, no consent of Landlord shall be required for any assignment of the Tenant's interest to any successor to the Tenant by reason of any merger, consolidation or sale of all or a substantial portion of its stock or assets or for any sublease or assignment of such interest to any entity controlled by Tenant. In addition, no consent of Landlord shall be required for any assignment of this Lease or subletting of all or any portion of the Premises to any entity under common ownership or control as Tenant provided that such entity, at the time of such assignment or subletting, has a net worth equal to or greater than the net worth of Tenant as of the date hereof. 15 Any attempted sublease or assignment without the required consent of the Landlord shall be void. In all events the Tenant originally named herein shall remain primarily liable for, and any sublessee or assignee shall in writing assume, the obligations of the Tenant under this Lease, and the Landlord may condition any required consent to any sublease or assignment upon the Tenant's agreeing to pay to the Landlord fifty percent (50%) of the amount by which any NET rentals and other amounts from time to time payable to or for the benefit of the Tenant thereunder exceed the Basic Rent and Additional Rent from time to time payable hereunder, after the payment of brokerage commissions, legal costs, and tenant improvement expenses incurred in connection therewith. (And, in the case of a sublease on a gross rent basis, net of that portion of the rent that would constitute Additional Rent hereunder). 20. TRANSFERS OF LANDLORD'S INTEREST The Landlord shall have the right from time to time to sell or mortgage its interest in the Property, the Building and the Premises, to assign its interest in this Lease, or to assign from time to time the whole or any portion of the Basic Rent, Additional Rent or other sums and charges at any time paid or payable hereunder by the Tenant to the Landlord, to any Mortgagees or other transferees designated by the Landlord in duly recorded instruments, and in any such case the Tenant shall pay the Basic Rent, Additional Rent and such other sums and charges so assigned, subject to the terms of the Lease, upon demand to such Mortgagees and other transferees at the addresses mentioned in and in accordance with the terms of such instruments provided the Tenant has been notified in writing of such transfer and provided with such addresses. 21. MORTGAGEES' RIGHTS Subject to the following sentence, the Tenant hereby agrees that this Lease is and shall be subject and subordinate to any mortgage (and to any amendments, extensions, increases, 16 refinancing or restructuring thereof) of the Property, the Building or the Premises, whether or not such mortgage is filed subsequent to the execution, delivery or the recording of this Lease or any notice hereof (the holder from time to time of any such mortgage being in this Lease sometimes called the "Mortgagee"). The foregoing subordination shall be as to any mortgage filed prior or subsequent to the execution and delivery hereof but only if the Mortgagee agrees in writing pursuant to a commercially customary subordination, non-disturbance and attornment which provides that, for so long as there exists no default under this Lease by the Tenant not cured within applicable periods of notice and grace, the Mortgagee will be bound by the terms of this Lease and will not, in foreclosing against or taking possession of the Premises or otherwise exercising its rights under such mortgage, disturb the Tenant's possession of the Premises hereunder or words of similar import, and which recognizes the security deposit paid hereunder. The Tenant hereby agrees to execute, acknowledge and deliver in recordable form such instruments confirming and evidencing the foregoing subordination as the Landlord or any such Mortgagee may from time to time reasonably require. Provided that the Tenant has been provided with notice of such mortgage and appropriate addresses to which notice should be sent, no notice from the Tenant of any default by the Landlord in its obligations shall be valid, and the Tenant shall not attempt to terminate this Lease, withhold Basic Rent or Additional Rent or exercise any other remedy which may arise by reason of any such default, unless the Tenant first gives such notice to all Mortgagees and provides such Mortgagees with reasonable time after such notice to cure such default (such reasonable time shall not add more than 30 days to Landlord's cure period). The Tenant shall and does hereby agree, upon default by the Landlord under any mortgage, to attorn to and recognize the Mortgagee or anyone else claiming under such mortgage, including a purchaser at 17 a foreclosure sale and, at its request as successor to the interest of the Landlord under this Lease, to execute, acknowledge and deliver in recordable form such evidence of this attornment, which shall nevertheless be self-operative and automatically effective so long as such mortgagee or successor agrees to be bound by the terms of this Lease and to recognize the tenancy created hereunder, as the Mortgagee or such successor may request and to make payments of Basic Rent and Additional Rent hereunder directly to the Mortgagee or any such successor, as the case may be, upon request. Any such payments by Tenant to such party shall absolve Tenant from any claim or further liability by another party related to such payments. Any Mortgagee may, at any time, by giving written notice to, and without further consent from the Tenant, subordinate its mortgage to this Lease, and thereupon the interest of the Tenant under this Lease shall automatically be deemed to be prior to the lien of such mortgage without regard to the relative dates of execution, delivery or recording thereof or otherwise. 22. TENANT'S DEFAULT LANDLORD'S REMEDIES If the Tenant shall default in the payment of any Basic Rent or Additional Rent and such default shall continue for ten (10) days after written notice from the Landlord; or if the Tenant shall default in the performance or observance of any of the other covenants contained in this Lease and on the Tenant's part to be performed or observed and shall fail, within thirty (30) days after written notice form the Landlord of such default, to cure such default or if such default is not susceptible of cure within said thirty (30) day period, promptly to make provision for such cure and thereafter to pursue such cure diligently to completion; or if the estate hereby created shall be taken on execution, or by other process of law; or if the Tenant shall be involved in financial difficulties as evidenced: 18 (1) by its commencement of a voluntary case under Title 11 of the United States Code as from time to time in effect, or by its authorizing, by appropriate proceeding of trustees or other governing body the commencement of such voluntary case, (2) by its filing an answer or other pleading admitting or failing to deny the material allegations of a petition filed against it commencing an involuntary case under said Title 11, or seeking, consenting to or acquiescing in the relief therein provided, or by its failing to controvert timely the material allegations of any such petition, (3) by the entry of an order for relief in any involuntary case commenced under said Title 11, (4) by its seeking relief as a debtor under any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors, or by its consenting to or acquiescing in such relief, (5) by the entry of an order by a court of competent jurisdiction (i) fording it to be bankrupt or insolvent, (ii) ordering or approving its liquidation, reorganization or any modification or alteration of the right of its creditors, or (iii) assuming custody of, or appointing a receiver or other custodian for, all or a substantial part of its property, or 19 (6) by its making an assignment for the benefit of, or entering into a composition with, its creditors, or appointing or consenting to the appointment of a receiver or other custodian for all or a substantial part of its property; then and in any of said cases, the Landlord may, to the extent permitted by law, immediately or at any time thereafter and with reasonable demand and notice, terminate this Lease and enter into and upon the Premises, or any part thereof in the name of the whole, and repossess the same as of the Landlord's former estate, and expel the Tenant and those claiming through or under the Tenant and remove its effects without being deemed guilty of any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of rent or preceding breach of covenant. No termination or repossession provided for in this Paragraph 22 shall relieve the Tenant under this Lease of its liabilities and obligations under this Lease, all of which shall survive any such termination or repossession. In the event of any such termination or repossession, the Tenant shall pay to the Landlord either (i) in advance on the first day of each month, for what would have been the entire balance of the Term, one-twelfth (1/12) (and a pro rata portion thereof for any fraction of a month) of the Basic Rent, Additional Rent and all other amounts for which the Tenant is obligated hereunder, less, in each case, the actual net receipts by the Landlord by reason of any reletting of the Premises after deducting the Landlord's reasonable expenses in connection with such reletting, including, without limitation, removal, storage and repair costs and reasonable brokers' and attorneys' fees, or (ii) at the option of the Landlord exercisable by the Landlord's giving notice to the Tenant within thirty (30) days after any such termination, the present value (computed at a capitalization rate based upon the so-called corporate "Base Rate" then in effect at The First National Bank of Boston) of the amount by 20 which the payments of Basic Rent and the Additional Rent reasonably estimated to be payable for the balance of the Term after the date of the exercise of said option would exceed the payments reasonably estimated to be the fair rental value of the Premises on the terms and conditions of this Lease over such period, determined as of such date. Landlord shall use reasonable efforts to relet the Premises for the reasonable rental value thereof and to collect the rent under such reletting but Landlord shall not be liable for failure to relet the Premises or in the event that the Premises are relet for failure to collect the rent under such reletting. Without thereby affecting any other right or remedy of the Landlord hereunder, the Landlord may, at its option, cure for the Tenant's account any default by the Tenant hereunder which remains uncured after the expiration of any applicable cure period provided hereunder, and the cost to the Landlord of such cure shall be deemed to be Additional Rent and shall be paid to the Landlord by the Tenant with the installment of Basic Rent next accruing. 23. REMEDIES CUMULATIVE; WAIVERS; ATTORNEY'S FEES The specific remedies to which the Landlord or the Tenant may resort under the terms of this Lease are cumulative and are not intended to be exclusive of any other remedies or means of redress to which the Landlord or the Tenant may be lawfully entitled under any provision of this Lease or otherwise. The failure of the Landlord or the Tenant to insist in any one or more cases upon the strict performance of any of the covenants of this Lease, or to exercise any option herein contained, shall not be construed as a waiver or relinquishment for the future of such covenant or option. A receipt by the Landlord, or payment by the Tenant, of Basic Rent or Additional Rent with knowledge of the breach of any covenant hereof shall not be deemed a waiver of such breach, and no waiver, change, modification or discharge by the Landlord or the Tenant of any provision in this Lease shall be deemed to have been made or shall be effective 21 unless expressed in writing and signed by an authorized representative of the Landlord or the Tenant as appropriate. In addition to the other remedies in this Lease provided, the Landlord or the Tenant shall be entitled to the restraint by injunction of the covenants, conditions or provisions. Notwithstanding anything to the contrary herein, in all cases where attorney fees are incurred in the enforcement of rights by Landlord or Tenant under this Lease the prevailing party shall be entitled to receive reimbursement from the other party of its reasonable attorney fees. 24. EXTENSION OF TERM The Tenant shall have the right, as its sole option, by in each instance giving notice thereof to the Landlord at least nine (9) months prior to the expiration of the then existing Term, to extend the Term of this Lease for two (2) additional successive periods of five (5) years each (commencing upon the expiration of the initial Term) on the same terms and conditions, except Basic Rent, as herein set forth except that it is understood and agreed that such extensions shall be exercisable only if at the time of exercise in each case there exists no default on the part of the Tenant under this Lease which has not been cured within the time provided for cure hereunder. The failure to give such notice in a timely fashion shall be deemed an irrevocable election on the part of the Tenant not to exercise such extension option. The Basic Rent during each such extended period shall be the fair market net rental for the Premises under the terms and conditions of this Lease for a period of five years determined as of the commencement of such extended period. Tenant shall notify Landlord not sooner than nine (9) months prior to the expiration of the then existing Term of its desire to enter into negotiations to determine Basic Rent for the extended period. If the Landlord and the Tenant are unable to agree upon the Basic Rent for such extended period at least eight (8) months prior to its 22 commencement, the Basic Rent for such period shall be determined by appraisal as hereinafter provided. Within ten (10) days after the date for commencement of appraisal proceedings pursuant to the provisions of this Paragraph 24, the Landlord and the Tenant shall each simultaneously give writing notice to the other setting forth its "best offer" for such annual rate of Basic Rent and designating an Appraiser (as that term is herein after defined). The two Appraisers so designated shall, within ten (10) days after their designation, select a third Appraiser and give notice to both the landlord and the Tenant identifying the third Appraiser. The three Appraisers shall within thirty (30) days after the selection of the third Appraiser report to the Landlord and the Tenant in writing, informing them of the annual rate of Basic Rent determined by them, or by a majority of them, to be payable by the Tenant to the Landlord for the Premises during such 5-year extended period. The Appraiser's report shall be accompanied by an explanation of the method used to arrive at the value or values assigned and the pertinent data (or a summary thereof) considered by the Appraisers in reaching their decision. All expenses of the appraisal process (including Appraisers' fees) shall be payable by the party whose "best offer" set forth in the notice as above provided varied the most from the annual rate of Basic Rent established in the Appraisers' report. The Appraisers shall advise the party(ies) which is responsible for the expenses. An "Appraiser" shall be a person who has an MAI (Member of the Appraisal Institute) designation, is independent of the Landlord and the Tenant, and has at least eight (8) years' experience in appraising commercial and industrial real estate in the metropolitan Boston area. Notwithstanding the foregoing procedure, in no event will the Basic Rent be less than $580,000 per year. 23 25. BROKERAGE Landlord shall be responsible for the brokerage fees in connection with this transaction including Winchester, Avalon and Meredith & Grew. Tenant represents that its broker is The Winchester Companies, Inc. & Avalon Partners. Landlord represents its broker is Meredith & Grew, Inc. 26. NOTICES Any notices, approvals, specifications or consents required or permitted hereunder shall be in writing and mailed, postage prepaid, by registered or certified mail, return receipt requested, if to the Landlord or to the Tenant at the address set forth herein for each or after the Term Commencement Date, to the Tenant at the Premises, with a copy to Katharine E. Bachman, Esq., Hale & Dorr, LLP, 60 State Street, Boston, MA 02109, and if to any Mortgagee at such address as it may specify by such notice to the Landlord and the Tenant, or at such other address as any of them may from time to time specify by like notice to the others. Any such notice shall be deemed given when received or, if earlier, when postal records indicate delivery was first attempted. 27. RECORDING The Landlord and the Tenant hereby agree, each at the request of the other or of any Mortgagee, promptly to execute, acknowledge and deliver in recordable from short form a notice of lease containing the date of commencement of the Term and such other information as may from time to time be necessary under the applicable statutes for the protection of any interest of the Landlord, the Tenant or any Mortgagee in the Premises of this Lease. Either party may record such short form Notice of Lease with the appropriate Registry of Deeds. 24 28. ESTOPPEL CERTIFICATES The Landlord and the Tenant hereby agree from time to time, each within ten (10) days' prior written notice from the other or any Mortgagee, to execute, acknowledge and deliver, without charge, to the other party, the Mortgagee or any other person designated by the other party, a statement in writing certifying: that this Lease is unmodified and in full force and effect (or if there have been modifications, identifying the same by the date thereof and specifying the nature thereof); that to the knowledge of such party there exist no defaults (or if there be any defaults, specifying the same); the amount of the Basic Rent, the dates to which the Basic Rent, Additional Rent and other sums and charges payable hereunder have been paid; and that such party to its knowledge has no claims against the other party hereunder except for the continuing obligations under this Lease (or if such party has any such claims, specifying the same). 29. BIND AND INURE: LIMITED LIABILITY OF LANDLORD All of the covenants, agreements, stipulations, provisions, conditions and obligations herein expressed and se forth shall be considered as running with the land and shall extend to, bind and insure to the benefit of the Landlord and the Tenant, which terms as used in this Lease shall include their respective successors and assigns where the context hereof so admits. The Landlord shall not have any individual or personal liability for the fulfillment of the covenants, agreements and obligations of the Landlord hereunder, the Tenant's recourse and the Landlord's liability hereunder being limited to the Property and the Building. The term "Landlord" as used in this Lease shall refer only to the owner or owners from time to time of the Property or the Building, it being understood that no such owner shall have any liability hereunder for matters arising from and after the date such owner ceases to have any interest in the Property or the Building. 25 In no event shall either party be liable to the other party for any special, consequential or indirect damages suffered by either party or any other person or entity by reason of a default by either party under any provisions of this Lease. 30. CAPTIONS The captions for the numbered Paragraphs of this Lease are provided for reference only, and they do not constitute a part of this agreement or any indication of the intentions of the parties hereto. 31. INTEGRATION The parties acknowledge that all prior written and oral agreements between them and all prior representations made by either party to the other have been incorporated in this instrument or otherwise satisfied prior to the execution hereof. 32. HAZARDOUS, TOXIC SUBSTANCES Tenant shall not cause or authorize any hazardous or toxic wastes, hazardous or toxic substances or hazardous or toxic materials (collectively, "Hazardous Materials") to be used, generated, stored or disposed of on, transported to or from, the Premises (collectively, "Hazardous Materials Activities") except in material compliance (at Tenant's expense) with all applicable Regulations, as hereinafter defined. Landlord shall not be liable to Tenant for any loss, cost, expense, claims, damage or liability arising out of any Hazardous Materials Activities by Tenant, Tenant's employees, agents, contractors, licensees, or invitees. Tenant shall indemnify, defend with counsel reasonably acceptable to Landlord, and hold Landlord harmless from and against any and all loss, cost, expense, claims, damage and liability arising out of all Hazardous Materials Activities on the Premises caused by or arising out of any act or omission 26 of Tenant, Tenant's employees, agents, contractors, licensees or invitees. For purposes hereof, Hazardous Materials shall include but not limited to substances defined as "hazardous substances", "toxic substances", or "hazardous wastes" in the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended; the federal Hazardous Materials Transportation Act, as amended; and the federal Resource Conservation and Recovery Act, as amended ("RCRA"); those substances defined as "hazardous wastes" in the Massachusetts Hazardous Waste Facility ing Act, as amended (Massachusetts General Laws Chapter 21D): those substances defined as "hazardous materials" or "oil" in Massachusetts General Laws Chapter 21E, as amended; and as such substances are defined in any regulations adopted and publications promulgated pursuant to any of said laws (collectively, "Regulations"). If Tenant's activities violate any Regulations, Tenant shall cease such activities immediately upon notice from Landlord. Tenant shall immediately notify Landlord both by telephone and in writing of any spill, discharge, release or exposure of Hazardous Materials in the Premises in violation of law or of any condition in the Premises constituting an "imminent hazard" under any Regulations. After notice to Tenant, Landlord may disclose any spill, discharge, release, or exposure or any violation of any Regulations to any governmental agency with jurisdiction. Notwithstanding the foregoing, Tenant shall have no obligation or liability for any loss, cost, expense, claims, damage or liability with respect to any spill, discharge, release or exposure of Hazardous Materials or of any violation of any Regulations with respect to Hazardous Materials or of any Hazardous Materials Activities occurring at or migrating to or from the Premises prior to Tenant's entry upon the Premises, nor as to any Hazardous Materials which migrate onto the Premises from other property, whether prior to or during the Term, and Landlord shall indemnify and hold Tenant harmless from and against any loss, cost, expense or costs of defense in any 27 enforcement actions and costs of clean-up and remediation arising as a result of any such spill, discharge, release, exposure, violation or other Hazardous Materials Activities. Tenant shall promptly provide all reasonable information regarding the use, generation, storage, transportation or disposal of Hazardous Substances that is requested by Landlord. If Tenant fails to fulfill any duty imposed under this Paragraph, within a reasonable time, Landlord may do so; and in such case, Tenant shall cooperate with Landlord in order to prepare all documents Landlord reasonably deems necessary or appropriate to determine the applicability of the Regulations to the Premises and Tenant's use thereof, and for compliance therewith, and Tenant shall execute all documents promptly upon Landlord's request. No such action by Landlord and no attempt made by Landlord to mitigate damages under any Regulation shall constitute a waiver of any of Tenant's obligations under this paragraph. 33. FINANCIAL STATEMENTS Tenant shall deliver to Landlord with reasonable promptness, but in no event later than 135 days after the close of each fiscal year, financial reports of Tenant prepared in accordance with generally accepted accounting principles. Such financial reports shall be its audited statements if available, or shall be certified by a corporate officer. Also, if requested by Landlord, Tenant shall provide to Landlord its most recent quarterly financial reports. Any financial reports provided to Landlord under this Section 33 shall be considered confidential information and shall only be disclosed by Landlord in connection with obtaining or attempting to obtain financing or a sale of the Premises. Landlord shall require the party to whom the information is disclosed to agree to keep such financial reports confidential. 28 34. SEVERABILITY: CHOICE OF LAW, If any provision of this Lease shall be declared to be void or unenforceable either by law or by a court of competent jurisdiction, the validity or enforceability of remaining provisions shall not thereby be affected. 35. SECURITY DEPOSIT At the time of the execution hereof, Tenant shall pay to Landlord a security deposit in the amount of $100,000 which may be an irrevocable letter of credit drawn on Bank and in a form reasonably satisfactory to the Landlord. The Landlord may apply the deposit from time to time to cure any default of Tenant hereunder not cured after applicable notice and grace periods. Tenant shall have no right to require the Landlord to so apply said security deposit, nor shall Tenant be entitled to credit the same against rents or other sums payable hereunder. If and to the extent that the Landlord makes such use of the security deposit, or any part thereof, the sum so applied by Landlord shall be restored to the security deposit by Tenant upon ten (10) days written notice from Landlord, and failure to pay to Landlord the amount to be so restored shall be a default hereunder giving rise to all of the Landlord's rights and remedies applicable to a default in the payment of rent. The Security Deposit, if any, or any balance thereof after Application of the Security Deposit to uncured defaults of Tenant, shall be returned to Tenant within 30 days after expiration of the Lease Term or termination of the same and after delivery of possession of the entire Premises to Landlord. This Lease is made under, and shall be construed in accordance with, the laws of the Commonwealth of Massachusetts. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed in duplicate under seal as of the date first above written. 29 LANDLORD: By: /s/ William J. Callahan ------------------------ William J. Callahan TENANT: NitroMed, Inc. By: /s/ Manuel Worcel, M.D ------------------------------ President & CEO 30 BEDFORD EXHIBIT A A certain parcel of land shown as Lot 16 on a plan of land entitled "Land Court Plan of Land in Bedford, Mass." dated March 18, 1983 by Joseph W. Moore Co., filed with Middlesex South Registry District of the Land Court as Plan Number 11345J bounded and described as follows: Northerly by Oak Park Drive, 90.00 feet; Northwesterly by Lot 11 on Land Court Plan 11345H, 424.48 feet; Southwesterly by Lot 15 on the Plan first mentioned above, 94.55 feet; Southerly by Land now or formerly of R & W Realty Trust a total of 405.21 feet; Southeasterly by Lot 2 on Land Court Plan 11345C, 240.00 feet; Northeasterly by Lot 9 on Land Court Plan 11345 H, 269.16 feet; and Easterly by said Lot 9, 123.58 feet. Being a portion of the premises described in Middlesex South Registry District of the Land Court Certificate of Title 167179, in Registration Book 966, Page 29. NONDISTURBANCE AND ATTORNMENT AGREEMENT This is a Nondisturbance and Attornment Agreement dated this 30th day of April, 1997 by and between William J. Callahan, Jr. and Joan/ Callahan, Trustees of WJCC Realty Trust under declaration of trust dated January 31, 1983, registered with the Middlesex South Registry of District of the Land Court as Document No. 635483 ("Ground Lessor") and NitroMed, Inc., a Delaware corporation ("Tenant"). WITNESSETH WHEREAS, Ground Lessor is the owner in fee simple of certain premises located at 12 Oak Park Drive, Bedford, Middlesex County, Massachusetts, more particularly described in Exhibit A attached hereto ("Demised Premises"); and WHEREAS, under a lease dated January 31, 1983 between Ground Lessor and William J. Callahan ("Landlord"), a notice of which is filed for registration with said Registry District as Document No. 648251, Ground Lessor did lease, let and demise the Demised Premises to Landlord; and WHEREAS, under a lease dated as of May 29, 1997 ("Sublease"), Landlord did lease, let and demise to Tenant, subject to said Ground Lease, the Demised Premises; and WHEREAS, the parties hereto desire to establish additional rights of quiet and peaceful possession for the benefit of Tenant under the said Sublease and further to define the terms, covenants and conditions precedent for such additional rights. NOW, THEREFORE, in consideration of the respective demises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each to the other in hand paid, it is hereby mutually covenanted and agreed as follows: 1. That Ground Lessor consents to and approves the Sublease. 2. That in the event of the event of the cancellation or termination of the said Ground Lease or of the surrender thereof, whether voluntary, involuntary or by operation of law, prior to the expiration of the said Sublease, and subject to the observance and performance by Tenant of all of the terms, covenants and conditions of the said Sublease on the part of Tenant to be observed and performed, Ground Lessor does hereby warrant as follows: (a) The quiet and peaceful possession of Tenant under the said Sublease. (b) That the Sublease shall continue in full force and effect and Ground Lessor shall recognize the Sublease and Tenant's rights thereunder and will thereby establish direct privity of estate and contract as between Ground Lessor and Tenant, with the same force and effect and with the same relative priority in time and right as though the Sublease were originally made directly from Ground Lessor in favor of Tenant. (c) To assume all of the obligations on the part of Landlord under the Sublease. But in no event shall the person who is at any time Ground Lessor, or any trustee, shareholder or beneficiary of any trust who is at any time Ground Lessor, be personally liable for the performance of any obligations, expressed or implied in such Sublease, and Tenant shall look solely to the interest of Ground Lessor at the time of the breach of any obligation in the premises leased to Landlord in the Ground Lease for satisfaction of the obligations of Landlord to Tenant under the Sublease. Only the person who is at the time Ground Lessor shall have any liability for breaches of obligations for which Ground Lessor is at the time liable under the terms of the Sublease. 3. That in the event of the cancellation or termination of the said Ground Lease or of the surrender thereof, whether voluntary, involuntary or by operation of law, prior to the expiration date of the said Sublease, including any extensions and renewals of said Sublease, Tenant hereby covenants and agrees to make full and complete attornment to Ground Lessor for the balance of the term of the Sublease, including any extensions and renewals thereof, now provided thereunder, upon the same terms, covenants and conditions as provided in the Sublease, so as to establish direct privity of estate and contract as between Ground Lessor and Tenant and with the same force and effect and relative priority in time and right as though the Sublease were originally made directly from Ground Lessor to Tenant, and Tenant will thereafter make all rent payments directly to Ground Lessor. 4. That the terms, covenants and conditions hereof shall inure to the benefit of and be binding upon the respective parties hereto, their respective heirs, executors, administrators, successors, transferees and designees. 2 IN WITNESS WHEREOF, the parties hereto have caused this writing to be signed, sealed and delivered in their respective names and behalf, and, if a corporation, by its officers duly authorized, the day and year first above written. GROUND LESSOR: /s/ William J. Callahan, Jr. --------------------------------------------- William J. Callahan, Jr., as Trustee aforesaid /s/ Joan M. Callahan --------------------------------------------- Joan M Callahan, as Trustee aforesaid TENANT: NITROMED, INC. By: /s/ Manuel Worcel, M.D ------------------------------------- Name: Manuel Worcel, M.D Its: President and Chief Executive COMMONWEALTH OF MASSACHUSETTS Middlesex, ss. April 30, 1997 Then personally appeared the above named William J. Callahan, Jr. and Joan M. Callahan as Trustee aforesaid, and acknowledged the foregoing to be their free act and deed before me. /s/ illegible --------------------------------------------- Notary Public My commission expires: September 11, 1998 3 COMMONWEALTH OF MASSACHUSETTS Suffolk, ss. April 30, 1997 Then personally appeared the above named Manuel Worcel M.D. the President of NitroMed, Inc., and acknowledged the foregoing to be the free act and deed of NitroMed, Inc., before me. /s/ Judith Maloney Boyle --------------------------------------------- Notary Public My commission expires: May 15, 2003 4 SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT AGREEMENT (MORTGAGE) This SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT AGREEMENT ("Agreement") is made as of August 7, 1997, by and among FLEET NATIONAL BANK, as Trustee, of the Hartford Life Insurance Company and Hartford Life and Accident Insurance Company, Commercial and Multifamily Mortgage Pass-Through Certificates, Series 1996-1 with a place of business at 777 Main Street, Hartford, Connecticut 06115, Attention: Corporate Trust Administration-MSN 238 ("Lender"), WILLIAM J. CALLAHAN, an individual and WILLIAM J. CALLAHAN, JR. AND JOAN M. CALLAHAN, TRUSTEES OF THE WJCC REALTY TRUST, having an address of c/o P.O. Box 269, Bedford, Massachusetts ("Landlord"), and NITROMED, INC., a Delaware corporation with a place of business as stated in the Lease, defined below ("Tenant"). A. Tenant has entered into a certain lease dated May 29,1997 (as amended to date, the "Lease") with William J. Callahan covering certain premises (the "Premises") at the property located at 12 Oak Park Drive, Bedford, Massachusetts as further described in EXHIBIT A attached hereto and incorporated herein by reference (the "Property"). B. Hartford Life Insurance Company, upon certain terms and conditions, made a loan to Landlord (the "Loan") secured in part by a mortgage of the Property (the "Mortgage") and in part by other security instruments (the Mortgage and such other security instruments, collectively, the "Loan Documents"). C. Hartford Life Insurance Company transferred its interest in the Mortgage to Fleet National Bank, as Trustee, of the Hartford Life Insurance Company and Hartford Life and Accident Insurance Company, Commercial and Multifamily Mortgage Pass-Through Certificates, Series 1996-1. For purposes of this Agreement Fleet National Bank shall hereinafter be referred to as the Lender. D. The parties desire to set forth their agreement. NOW, THEREFORE, in consideration of the premises and of other good and valuable consideration, the receipt and adequacy whereof is hereby acknowledged, the parties hereby covenant and agree as follows: 1. SUBORDINATION. The Lease and all rights created thereby are and shall be subject and subordinate to the Loan Documents and to any and all renewals, modifications, consolidations, replacements, and extensions thereof and all advancements made thereunder, to the full extent of all sums due to Lender. The Loan Documents shall take priority over the Lease and shall be entitled to the same rights and privileges, both at law and in equity, as the Loan Documents would have had if they had been executed, delivered, and recorded prior to the execution, delivery, or recording of the Lease. 2. NON-DISTURBANCE. If Lender succeeds to the interest of Landlord under the Lease, Lender shall not disturb Tenant's possession of the Premises or its rights under the Lease, and the Lease shall continue as a lease between Tenant and Lender. Lender shall not join Tenant in summary or foreclosure proceedings, provided the Lease is then in full force and effect and Tenant is not in default thereunder. 3. ATTORNMENT. Tenant agrees that, following foreclosure or any deed in lieu of foreclosure, it will attorn to, and recognize as its landlord, Lender or any purchaser at a foreclosure sale and their respective successors and assigns for the unexpired balance of the term of the Lease (and any extensions, if exercised) upon the same terms and conditions as are set forth in the Lease. This agreement shall be effective without further written agreement, but, on request of Lender, Tenant agrees to execute and deliver an agreement of attornment of similar import to this Agreement. Tenant agrees that foreclosure of the Mortgage will not be a constructive eviction of Tenant. Tenant shall not join, appear, or petition to become a party in any foreclosure action. 4. LIABILITY OF LENDER. If Lender succeeds to the interest of Landlord under the Lease, Lender shall assume and perform (but only while the owner of the Property) all of Landlord's obligations under the Lease, except that Lender shall not be: (a) liable for any action or omission of any prior landlord, including the present Landlord; (b) liable for the return of any security deposit not actually received by Lender; (c) subject to any offsets or defenses which Tenant might have against any prior landlord, including the present Landlord; (d) bound by any rent or additional rent which Tenant might have paid for more than the then current month to any prior landlord, including the present Landlord; or (e) bound by any assignment, surrender, termination, cancellation, amendment, or modification of the Lease made without its express written consent. 5. NOTICE AND RIGHT TO CURE. Tenant agrees to give Lender at the time given to Landlord a copy of any notice of default served upon Landlord. If Landlord fails to cure such default within the time provided for in the Lease, Lender shall have the right, but not the obligation, to cure such default within a reasonable time (but in no event less than 30 days), or if such default cannot be cured within such reasonable time, then such additional time as may be necessary to cure such default, provided Lender has commenced and is diligently pursuing the remedies necessary to cure such default (including, without limitation, commencement of foreclosure proceedings if necessary to effect such cure). In such event, the Lease shall not be terminated or the rights of Landlord under the Lease forfeited or adversely affected during such reasonable time or while Lender diligently pursues such remedies. 6. ASSIGNMENT OF LEASE. Tenant acknowledges that the Lease is being assigned to Lender under the Loan Documents. The interest of Landlord in the Lease is being assigned to Lender, but Lender assumes no duty, liability, or obligation whatever under the Lease. All rent 2 payments under the Lease shall continue to be paid to Landlord in accordance with the terms of the Lease unless and until Lender directs Tenant otherwise in writing. Upon receipt of such direction from Lender, Tenant agrees to pay all rent payments to Lender, and Landlord agrees to indemnify Tenant for any rent payments made to Lender at Lender's direction. Under the provisions of the assignment, Tenant understands that, without the consent of Lender, the Lease cannot be amended or terminated (either directly or by the exercise of any option which could lead to termination) and consent cannot be given to the release of any party having liability thereon. 7. AMENDMENTS. No modification, amendment, waiver, or release of any provisions of this Agreement or of any right, obligation, claim, or cause of action arising hereunder shall be valid or binding for any purpose whatsoever unless in writing and duly executed by the party against which the same is sought to be asserted. 8. NOTICES. All notices, directions, demands, requests, permissions, approvals, consents, elections or other communications permitted or required to be given hereunder (singly, a "notice" or collectively, "notices") shall be in writing, shall be effective for all purposes if hand delivered or sent by expedited prepaid delivery service (either commercial or United States Postal Service) with proof of delivery, and shall be deemed given on the date of actual receipt by the entity to which it is directed, notwithstanding any further direction to the attention of any individual or department; provided that where provision is made for the attention of any individual or department, the notice shall be effective only if the envelope or other wrapper in which it is sent is addressed in accordance with such provision. Notices shall be addressed to any party hereto at its address first above written. Any address or name specified above may be changed by a notice given in accordance with this Section. The inability to deliver because of a changed address of which no notice was given, rejection, or other refusal to accept any notice shall be deemed to be the receipt of the notice as of the date of such inability to deliver, rejection, or refusal to accept. 9. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first above written. [Signatures of the parties appear on the following page] 3 Witnessed by: Lender: FLEET NATIONAL BANK, as Trustee, as Trustee, of the Hartford Life Insurance Company and Hartford Life and Accident Insurance Company, Commercial and Multifamily Mortgage Pass-Through Certificates, Series 1996-1 By: Hartford Life Insurance Company a Connecticut corporation Master Servicer By: /s/ William W. Malchodi, Jr. - -------------------------- Its Vice President and Director of Taxes By: /s/ J. Richard Garrett - -------------------------- Its Vice President and Assistant Treasurer Borrower: WILLIAM J. CALLAHAN, an Individual /s/ William J. Callahan - -------------------------- ---------------------------------------- - -------------------------- WILLIAM J. CALLAHAN, JR., TRUSTEE OF THE WJCC TRUST /s/ William J. Callahan Jr. Trustee - -------------------------- ---------------------------------------- - -------------------------- JOAN M. CALLAHAN, TRUSTEE OF THE WJCC TRUST /s/ Joan M. Callahan Trustee - -------------------------- ---------------------------------------- - -------------------------- Tenant: NITROMED, INC. By: /s/ Manuel Worcel, M.D - -------------------------- ---------------------------------------- Its President - -------------------------- 4 STATE OF CONNECTICUT ) ) SS. HARTFORD COUNTY OF HARTFORD ) Before me, the undersigned, this 7th day of August, 1997, personally appeared William B. Malchodi, Jr., known to me to be a Vice President and Director of Taxes of Hartford Life Insurance Company, Master Servicer for FLEET NATIONAL BANK, as Trustee, of the Hartford Life Insurance Company and Hartford Life and Accident Insurance Company, Commercial and Multifamily Mortgage Pass-Through Certificates, Series 1996-1, and that he as such officer, signer and sealer of the foregoing instrument, acknowledged the execution of the same to be his free act and deed individually and as such officer, and the free act and deed of said corporation. In Witness Whereof, I hereunto set my hand. /s/ Janice R. Shea -------------------------------------- Notary Public My commission expires: August 31, 1997 STATE OF CONNECTICUT ) ) SS. HARTFORD COUNTY OF HARTFORD ) Before me, the undersigned, this 7th day of August, 1997, personally appeared J. Richard Garrett known to me to be a Vice President and Assistant Treasurer of Hartford Life Insurance Company, Master Servicer for FLEET NATIONAL BANK, as Trustee, of the Hartford Life Insurance Company and Hartford Life and Accident Insurance Company, Commercial and Multifamily Mortgage Pass-Through Certificates, Series 1996-1, and that he as such officer, signer and sealer of the foregoing instrument, acknowledged the execution of the same to be his free act and deed individually and as such officer, and the free act and deed of said corporation. In Witness Whereof, I hereunto set my hand. /s/ Janice R. Shea -------------------------------------- Notary Public My commission expires: August 31, 1997 5 COMMONWEALTH OF MASSACHUSETTS ) ) SS. _____________ COUNTY OF MIDDLESEX ) Before me, the undersigned, this 30th day of June, 1997, personally appeared William J. Callahan, an individual, signer and sealer of the foregoing instrument, who acknowledged the execution of the same to be his free act and deed. In Witness Whereof, I hereunto set my hand. /s/ Daniel F. (illegible) --------------------------------------- Notary Public My Commission Expires: Sept. 11, 1998 COMMONWEALTH OF MASSACHUSETTS ) ) SS. _____________ COUNTY OF MIDDLESEX ) Before me, the undersigned, this 30 day of June, 1997, personally appeared William J. Callahan, Jr., Trustee of the WJCC Realty Trust, and that he as such Trustee, signer and sealer of the foregoing instrument, acknowledged the execution of the same to be his free act and deed as such Trustee and the free act and deed of said Trust. In Witness Whereof, I hereunto set my hand. /s/ Daniel F. (illegible) --------------------------------------- Notary Public My Commission Expires: Sept. 11, 1998 COMMONWEALTH OF MASSACHUSETTS ) ) SS. _____________ COUNTY OF MIDDLESEX ) Before me, the undersigned, this 30 day of June, 1997, personally appeared Joan M. Callahan, Jr., Trustee of the WJCC Realty Trust, and that he as such Trustee, signer and sealer of the foregoing instrument, acknowledged the execution of the same to be his free act and deed as such Trustee and the free act and deed of said Trust. In Witness Whereof, I hereunto set my hand. /s/ Daniel F. (illegible) --------------------------------------- Notary Public My Commission Expires: Sept. 11, 1998 6 STATE OF MASSACHUSETTS ) ) SS. _____________ COUNTY OF SUFFOLK ) Before me, the undersigned, this 5th day of June, 1997, personally appeared Manuel Worcel, known to me to be the President of NITROMED, INC., a corporation, and that he/she as such officer, signer and sealer of the foregoing instrument, acknowledged the execution of the same to be his/her free act and deed individually and as such officer, and the free act and deed of said corporation. In Witness Whereof, I hereunto set my hand. /s/ Judith Maloney Boyle --------------------------------------- Notary Public My Commission Expires: May 15, 2003 7 EX-21.1 25 a2116973zex-21_1.txt EXHIBIT 21.1 EXHIBIT 21.1
SUBSIDIARY JURISDICTION OF INCORPORATION ~~NitroMed Securities Corp. Massachusetts~~
EX-23.1 26 a2116973zex-23_1.txt EXHIBIT 23.1 EXHIBIT 23.1 Consent of Independent Auditors We consent to the reference to our firm under the captions "Experts" and "Selected Financial Data" and to the use of our report dated March 6, 2003, in the Registration Statement (Form S-1) and related Prospectus of NitroMed, Inc. for the registration of $100,000,000 of its Common Stock. /s/ Ernst & Young LLP Boston, Massachusetts August 15, 2003 GRAPHIC 28 g177129.jpg G177129.JPG begin 644 g177129.jpg M_]C_X``02D9)1@`!`0$!K@&N``#__@`[1$E32S`Q.#I;,#-"3U,Y+C`S0D]3 M,C(U.2Y/5510551=3DE44D]-141?-$-?1E!/7TQ/1T\N15!3_]L`0P`'!08& M!@4'!@8&"`@'"0L2#`L*"@L7$!$-$AL7'!P:%QH9'2$J)!T?*"`9&B4R)2@L M+2\P+QTC-#@T+C'_V@`,`P$``A$#$0`_`&1J5*UKA-BVZ$]-FO)9 MCLIYEK4=@*Y2`2;!;-474/$K3]J6Y'CJ">_O\*!5WU/)D$M0.9AGIS_;5^%`WCGFT?RM9E#% M`P259S.C1K^4;+[Q7U`KF<$R-:V=R`V@%6/BK.?0#K0^N_$,3PI,VZSIR2OG MY""4\WB`<`=:&3BW'5<[JUK5XJ.37QBNW!/$25)VENS^A$UO[GY5Y_EA;?Z" M5_=3^-;5OUY'A/EV&]/B.*'*7&_=./#8T/,5,5WAF+CMBK.1L?PF?X8Z_G*N MD.-/N#LNVS2$(4\>93:R=CGKC.Q!Z5B8K3_$K3UU6VQ(4NWR5?9D8Y"? M`+&WSQ5Y0I*TA22"DC((Z$4A=JU/)CJ#4\F0Q^MC*Q^-�W$&X6=#:X[WMU ML4`/9W%GW!^P?LGRZ5.\/RA>!AJ6EU(+NJT7&Y*MS#P%N@$\Z@K9QWO/ MF!T'GFBGQ&OHL6F9+K3W9S)`[&/MD\QZGT&32K7>5',R+;Y.[#ROI,GO^R/F M*7G=]/7>KQR,(LU4K::=A M,DH)OS[T2Z6?2&HKRZTU;+'.D%WZJPPH((QG/.1RXQOUJ]V_@+KJ4IP26[=" M"0.4O2>8+^'(#]^*;A"4I2$I`"0,`#H*^J,LHR%*E_D\ZP_TC9?^*Y_X5I7' M@+KF+V?LZ+=.YL\W82>7D^/.$]?+PINJEHKM2%)O-@4\VD=MR'W1W*'449/RB;"EUFWWMF,>;WH[[@Z8ZHS_S;^E` M;3\LPKDJ(YLU(.`?!?=\^GRI:0'4:A;]%*VP!X7BQ]CHJPXC&=JV+7<9%LE= MLS[P.RVST4*L5]L4H*DSXD5:X;8"WE(W#63C*AW#/?TWJKN-D':CMKG[-+9ND!?:17@!(9)V6GO'DH;X/\*9^))8F1FI49U+K#J0 MM"TG(4#WTB&D)WLTU4-U>&WP.4'H%]WSIFN"M_*D2-/2%YY`7XV3W9]]/S.? M4T!EXWX#IR3U8P5E,*IH\PR=WWET7$XT7,R=1L6]+I+4-@%2`K8+5N7 MYTO^IRIUMQ\$Y[08/@.ZBOK]QQS5U^4M:E*$E:02;DIE M'YQ=/;P5*'U4M9R`<[YM*CO-**>T;R1D;?$5QM'3/9;HJ(M9#4@8`/3F[OXU MEUU`#VG"71RKP/M#O]1^ZNW;1(6GGHI-;,:1L\9S;DX>J,.F.)%]@LH] MCN+=PAI&`T_[X'K]8?.BE8N*5AFH"+D%VY_OYP5MD^2@-O4"DDCR'XR^=AYQ MI7BA1%66W:PELI")K(D`?;!Y5?@:)@D9PFZ1\30U/UF8'>H[_P!)\XLF/+92 M_%?;>95]5;:@I)]16:E!TSK!UI879;L_%=R%*9"^7)\T]%??19L?%N0TE#5[ MMP>P?>?C'E./ZAV)]14B<7L[)4EV1)AQP.#Q[(GZHM3=[T_<+6M"5&0RI".; MH%X]T^AQ25:CMLB%+>9?;+4AE90M/>E0.#]].G8M26:_,]I;9K;JL94T3RN) M^*3O0+X\Z<;B7Q%S9&&[BA2ECP<3@'Y@@_.K/.CPJ40-W4[Q8G,=0JGP_P!2 M+B/L7%;3;_*"Q+96G*7$'90QYC<>=9>+_#Z+91'U+ISZ33\\@I0@$B,HC(&? MU3W9Z';PH?VN2;7=ASJ(8=]Q8[O(^E,CPLN,6]66X:-O"4O,+;5V2'%9YFS] M9`SX'<8Z9\J&PX'X>1T3E2#-`)ON9D[W'KW[I52E3;B5IR"D@@BC)HVXF+J" MS7!ISD1[0V2K;ZBB`K.?(FA_JVPNZ?U#<;,\KG5$>*`O;WD]4GU20:[NGEYM MD4D[(.#Z&HJ-`[T1MEM!+X^3AW_*VXESEZC0FZ3E(]KGK*G5(3A/,3C./X4V MEI@HMMKB6]LY1&90T#X\HQFDLT/)+EI4T%D+CNG'D#N/OS3B:0N[5[T]"GMN ME];2'XK'8V^!%80&M0:?`)`4ZC<_J.#_']],!^4!I1S4&CQ/B,%R;;%EX! M()4IHC"P!WXV5Z&EBT=,]FG.P'%82_[S?AS#\1^ZK3MNW$-0A[+F`?NW\+\C MUY*H.(4VM2%C"DD@CP->`$]U,]HO1>DM=6F3;[S%0BYQ"HL/QSV;O9JWR<;+ MPK/U@>M5'6/`+4EI^GT\^B]1_P"CP&GD^A.%?$'THK'8F@K-J8#!*Z,\D$4H M.M:EQMTZV37H%PB/19;*N5;+J"E23\*P M!M1[JDM#A8J87R1.Q,-BKY;=4P7RD/*5$>Z9)V]%#IZU=I>I[E=;&;5<)"9\ M7W5,NN^\MDCO2H=1.UR(*NG' M2/;[HFP:KMZ4\EP94TZI.OPS7";I%1](58^F1G`6//H M#Y[]]5C\HG3*KKIJ/>F&TJ=MJB'=MRTO`)]%`'U-%#@X8@D-T^&4POR/=BAI MHC42[;<;=>XSA#>W:I'VD'9:2._O]0*:MM:7&TK2#]]_.-@-L?=*I4`\H"CN6C]4^>-QZ"@Q>1Y8M+:+?$4[*D:C M(]]ZJV7_`$W8M11TQ[W:XTUM)RD.HR4_`]1Z&@IK3@$RH.3-(S"VX5E7L4I7 MN!/<$+QD8_:S\=J8*I3*PVN(T2,:CT?J'3#_`&-ZM;L9.,3#=?3#]P><982Z"DK!<4 MH;\HZCUJPVYQQ6IM/06`HO2KE'3[J>8A`<25''P'RS6C$83&;4XO"3C))^R* MN?`>U/WS6TG4KK&(-M9+3*E)!':*V&,]"$Y.W3/G0XVXW^P3-;*:>F=<^9R* M'&_2R]4Z#F-1&"[<81$J,E*JKFK+7(T[J22QR+;=A25)`/4I"MOFG'SHEK39=8Q&@MJ3%2U)<0.B^[/<-^8>E"S2DCD2[;7-E()6V M#W@]1Z?QKI=,0U"BB(),3]'Y'V([_A.\A04D*2001D$=#7M+U9.).H;3$9AA M,63'9:#3:74$$`=-P=]MJSR>*FJ'72MGV)A&`.0,\WKDG-7\2RR0.PZG%86M MZW1^KPJ`&2<#QI>E\3=7*QRS(R/ZL9._SS5:NNH[O/"C01&;!F/&X`(_W[7FF[0THF>W+D`92Q%4%J.^.HV'J:!FLM1C45 MQ$YR!$A(;!">S2.@P/2A1P4T6BX7`Z@N$=1B0U@Q@K8./`]?,)V\LGRIA:8A;8+%VI.7R8+ MYC7^E*U;E;X5T@O0+A%:DQ7D\KC3J>9*A\*VJE&64E5XE\.I&D)JIL,*>LC[ MF&EDY4R3T0O[\'O^-4]AOH,=:=27&CS(ZXTMAI]AP86VZ@*2H>8/6@EK+A,_ M&=DW+3J@\PI1<,$C"VQUP@_:'7`V/=O2\L9U"W-GUK."4V/JKEHRULWGA+"M M;Z$+3(B.(':;@*YEQ\:]9B#;:M]J,`,G855SF^B)S8Y1GNV&:NVG.'NH;QR.-03&CJP>W MD^X"#C<#J=CX4'$2;-">W;8QBE=;J52&8IVVQYFB3H#AQ+OJVI\]"HUJ"@`_:^5$K2W#&SV9WVFN'`4P'"_P#FV7_M(_Z15_/6I4IR/A"\I5_5 ~~-----END PRIVACY-ENHANCED MESSAGE-----~~