8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2003

GUILFORD PHARMACEUTICALS INC.

(Exact name of registrant as specified in its
charter)

Delaware	0-23736	52-1841960
(State or other jurisdiction of	(Commission File	(I.R.S. Employer
incorporation or organization)	Number)	Identification No.)

6611 Tributary Street
Baltimore, Maryland	21224
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (410) 631-6300

(Former name or former address, if changed since last report)

Exhibit Index is on page 3.

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.          Acquisition or Disposition of Assets

     On October 28, 2003, the Company acquired the rights to AGGRASTAT® Injection (“AGGRASTAT®”), from Merck and Co., Inc. (“Merck”), in the United States and its territories, for a purchase price of $84 million, plus royalties on net sales of AGGRASTAT®, pursuant to an Asset Transfer and License Agreement (the “Asset Agreement”). From the closing until December 31, 2006, the Company does not pay royalties on net sales less than $40 million. On net sales above $40 million prior to December 31, 2006, and beginning on January 1, 2007, on all net sales of AGGRASTAT®, the Company pays royalties ranging from 5% to 20%, based upon the Company’s achievement of certain net sales thresholds. In connection with the acquisition of AGGRASTAT®, the Company entered into an agreement with Merck through 2014, to supply the Company with its requirements of AGGRASTAT® (the “Supply Agreement”). Additionally, until June 28, 2004, Merck has agreed to provide the Company with certain services related to the transition of AGGRASTAT® from Merck to the Company pursuant to a transition services agreement (the “Transition Agreement”). AGGRASTAT®, a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome (ACS) including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction (MI).

     In order to finance the acquisition, the Company used $42.0 million of working capital and entered into a $42.0 million revenue interest financing arrangement with Paul Royalty Fund, L.P. and certain of its affiliated entities (collectively, “PRF”) pursuant to a revenue interest assignment agreement (the “Revenue Agreement”). Under the Company’s arrangement with PRF, from October 28, 2003, through December 31, 2006, PRF is entitled to receive 10% of the Company’s GLIADEL® and AGGRASTAT® net sales up to $75 million, and 2.5% of those annual net sales in excess of $75 million, and from January 1, 2007, through December 31, 2012 (the end of the term of the financing arrangement with PRF), these percentages are 17.5% and 3.5%, respectively. If combined GLIADEL® and AGGRASTAT® annual net sales are less than $48.3 million, $60.2 million, or $80.6 million in 2004, 2005, and 2006, respectively, then PRF will receive the higher of the minimum payments for such years described below or 12.5% of combined GLIADEL® and AGGRASTAT® net sales. If combined GLIADEL® and AGGRASTAT® annual net sales are less than $75 million in any of 2007 through 2012, then PRF will receive the higher of the minimum payments for such years described below, or 22.5% of combined GLIADEL® and AGGRASTAT® net sales. During each year of the term of the arrangement with PRF, PRF will be entitled to receive a portion of revenues from products that the Company may acquire in the future, or of AQUAVAN® Injection and GPI 1485 (each product candidates of the Company), in the case that the Company's calculated annual obligation(s) to make royalty payments under the Revenue Agreement (based upon the combined net sales of GLIADEL® and AGGRASTAT®) are less than $6.4 million for 2004, $7.6 million for 2005, $8.3 million for 2006, $15.3 million for 2007, $15.5 million for 2008, $15.8 million for 2009, $16.0 million for 2010, or $15.9 million for 2011 and 2012, respectively.

     The Company will pay PRF minimum payments of $5.0 million in 2004, $6.3 million in 2005, $7.5 million in 2006, $10.0 million in each of 2007-2009 and $12.5 million in each of 2010-2012. PRF is also entitled to receive portions of amounts payable to the Company on the resolution of future intellectual property

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disputes involving GLIADEL or AGGRASTAT and on the sale of ex-US marketing rights to GLIADEL. In addition to its revenue interest in the Company’s products or future products, as the case may be, PRF received five-year warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $9.15 per share.

     Also in connection with the Company’s arrangement with PRF, the Company has pledged cash and cash equivalents, such as marketable securities, to PRF, initially in the amount of $11.25 million (such pledged amount to be in the amount of the next eight quarters of minimum payments to PRF) as additional evidence of its liquidity. The Company may maintain this pledged account at its discretion; however, if the Company does not, it will be required to maintain at least $20 million of net working capital during the term of the agreement. If the Company does not maintain the pledged account or it does not have $20 million of net working capital, then PRF may exercise a right to require the Company to repurchase its revenue interest at a purchase price that reflects a return to PRF (but is reduced by amounts previously paid to PRF). Regardless of the reason for which PRF may be entitled to require the Company to repurchase its revenue interest (in addition to the liquidity events discussed above, PRF may also require it to repurchase its revenue interest if (1) the Company fails to make its minimum payments to them, (2) the Company sells GLIADEL® and AGGRASTAT® (with PRF having partial rights to make the Company repurchase its interest in the event of the sale of one, but not both products), (3) upon the occurrence of a bankruptcy or similar event, or (4) upon a change of control of the Company), the repurchase amount may never exceed three and a half times PRF’s initial investment, or $147 million.

     The Asset Agreement, Supply Agreement, Transition Agreement and Revenue Agreement are attached hereto as Exhibits 2.01, 2.02, 2.03 and 2.04, respectively. A copy of the press release announcing the acquisition is attached hereto as Exhibit 99.1.

Item 7.	Financial Statements, Pro Forma Financial Information and Exhibits
	(a)	Financial statements of businesses acquired.
		The financial statements required by Rule 3-05 of Regulation S-X will be filed by amendment not later than 60 days after the date that this report is filed.
	(b)	Pro forma financial information.
		The pro forma financial information required by Article 11 of Regulation S-X will be filed by amendment not later than 60 days after the date that this report is filed.

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(c)	Exhibits
2.01	Asset Transfer and License Agreement between the Company and Merck & Co., Inc., dated as of October 28, 2003.*
2.02	Supply Agreement between the Company and Merck Sharp Dohme (Ireland) Limited, dated as of October 28, 2003.*
2.03	Transition Services Agreement between the Company and Merck & Co., Inc., dated as of October 28, 2003.
2.04	Revenue Interest Assignment Agreement by among the Company, Artery, LLC, GPI Holdings, Inc., Paul Royalty Fund, L.P., and Paul Royalty Fund Holdings II, dated as of October 28, 2003.*
99.1	Press Release of Guilford Pharmaceuticals Inc. issued October 29, 2003.

*       Confidential treatment has been requested for a portion of this exhibit.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GUILFORD PHARMACEUTICALS INC.
Dated:  November 12, 2003	By: /s/ ANDREW R. JORDAN Andrew R. Jordan Executive Vice President, Chief Financial Officer and Treasurer

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INDEX TO EXHIBITS

Exhibit
Number	Exhibit Description
2.01	Asset Transfer and License Agreement between the Company and Merck & Co., Inc., dated as of October 28, 2003.*
2.02	Supply Agreement between the Company and Merck Sharp Dohme (Ireland) Limited, dated as of October 28, 2003.*
2.03	Transition Services Agreement between the Company and Merck & Co., Inc., dated as of October 28, 2003.
2.04	Revenue Interest Assignment Agreement by among the Company, Artery, LLC, GPI Holdings, Inc., Paul Royalty Fund, L.P., and Paul Royalty Fund Holdings II, dated as of October 28, 2003.*
99.1	Press Release of Guilford Pharmaceuticals Inc. issued October 29, 2003.

*         Confidential treatment has been requested for a portion of this exhibit.

-6- EX-2.01 3 w91648exv2w01.txt EXHIBIT 2.01 EXHIBIT 2.01 ASSET TRANSFER AND LICENSE AGREEMENT (AGGRASTAT(R)) Between MERCK & CO., INC., a New Jersey corporation with an address at One Merck Drive, Whitehouse Station, New Jersey 08889, and GUILFORD PHARMACEUTICALS INC. a Delaware corporation with an address at 6611 Tributary Street Baltimore, Maryland 21224 EXECUTION COPY ASSET TRANSFER AND LICENSE AGREEMENT ASSET TRANSFER AND LICENSE AGREEMENT made effective this 28th day of October, 2003, by and between MERCK & CO., INC., a New Jersey corporation with an address at One Merck Drive, Whitehouse Station, New Jersey 08889, ("Merck") and GUILFORD PHARMACEUTICALS INC. a Delaware corporation with an address at 6611 Tributary Street Baltimore, Maryland 21224 ("Guilford") RECITALS: WHEREAS, Merck desires to sell, convey, assign and transfer the Acquired Assets (as defined in Section 1.1 hereof) to Guilford (or its designee, Artery LLC) in accordance with the terms and conditions hereof and Guilford desires to acquire and purchase (or to cause its designee, Artery LLC, to acquire and purchase) the Acquired Assets in accordance with the terms and conditions hereof; and WHEREAS, Guilford's willingness to enter into this Agreement is conditioned on Merck's entering into the Supply Agreement (as defined herein) and the Transition Services Agreement (as defined herein) contemporaneously with this Agreement. EXECUTION COPY NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and conditions set forth herein and intending to be legally bound hereby, hereby covenant and agree as follows: 1 DEFINITIONS The following terms as used in this Agreement shall have the meanings set forth below: 1.1 "ACQUIRED ASSETS" means all right, title and interest in and to (a) the Trademark, together with the goodwill of the business symbolized by the Trademark and any registrations or applications for registration of the Trademark, (b) the Assigned Patents, (c) the NDA, (d) the IND, (e) the Documentation, (f) the Marketing Materials, (g) the Logo, (h) the Clinical Data and Materials, and (i) the Acquired Domain Name. 1.2 "ACQUIRED DOMAIN NAME" means the domain name "aggrastat.us." 1.3 "AFFILIATE" of a Person means (i) any corporation or business entity of which fifty (50%) percent or more of the voting stock or other equity interest is owned directly or indirectly by such Person; or (ii) any corporation or business entity which directly or indirectly owns fifty (50%) percent or more of the voting stock or other equity interest of such Person; or (iii) any corporation or business entity under the direct or indirect control of a Person described in clause (i) or (ii), or (iv) any corporation or business entity under common control with a Person described in clause (i) or (ii). 1.4 "AGREEMENT" or "THIS AGREEMENT" means this Asset Transfer and License Agreement, including all Schedules hereto. 1.5 "API" shall have the meaning given such term in the Supply Agreement. 2 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 1.6 "APPLICABLE FOREIGN LAWS" means, with respect to any Foreign Patent held by Merck in any country outside the Territory, all applicable provisions of the generally applicable statutes, laws, rules and regulations of that country. 1.7 "APPLICABLE LAWS" means, collectively, Applicable US Laws and Applicable Foreign Laws. 1.8 "APPLICABLE US LAWS" shall mean all applicable provisions of the United States federal, state, territorial or local constitutions, statutes, laws, rules, regulations and orders of all Governmental Authorities and all applicable orders, rules and decrees of United States courts and arbitrators. 1.9 "ARTERY LLC" means Artery LLC, a limited liability company organized and existing under the laws of the State of Delaware. 1.10 "ASSIGNED PATENTS" means those United States patents, patent applications and statutory invention registrations, specifically described in Schedule 1.10 which, for the purpose of this Agreement, will be deemed to include any reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof. 1.11 "ASSUMED LIABILITIES" means, exclusively, all claims and complaints (including, without limitation, all damages, losses, expenses, adverse reactions, recalls, product and packaging complaints and other liabilities) made or brought after the Effective Date and arising out of the sale, purchase, consumption or use of the Product in the Territory; provided that if each of the sale, purchase, consumption or use of the Product out of which any such claim or complaint arises shall have occurred prior to the Effective Date, such claim or complaint shall not constitute an Assumed Liability. Notwithstanding the foregoing, Assumed Liabilities shall not include any claim or complaint arising from any Product that can be shown, 3 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. by reference to lot numbers or other documentary evidence, to have been sold by Merck on or prior to the Effective Date except to the extent that (A) such claim is based in whole or in part on the failure of Guilford to give Required Information or the giving by Guilford of Required Information inaccurately or improperly or in a misleading fashion after the Effective Date or (B) such claim is based in whole or in part on the failure of Merck to give Required Information or the giving by Merck of Required Information inaccurately or improperly or in a misleading fashion on or prior to the Effective Date if and only if the Required Information that was or should have been given by Merck is different from the information or warning that would have been Required Information under the same circumstances immediately prior to the Effective Date. For purposes of this Section 1.11, "Required Information" means any information or warning with respect to which the failure to give it to any Person, or the giving of it to any Person inaccurately or incompletely or in a misleading fashion, results under Applicable Law in a valid claim or complaint against the manufacturer and/or seller of the Product. Without limiting the foregoing, "Assumed Liabilities" does not include any claims or complaints which have given rise to litigation (or some other form of dispute resolution) prior to the Effective Date or as to which Merck has Recorded Information as of the Effective Date that litigation (or some other form of dispute resolution) has been threatened; and provided further that Assumed Liabilities shall not include liabilities for defective Manufacture of the Product by Merck prior to the Effective Date. 1.12 "CLINICAL DATA AND MATERIALS" means the items described in Schedule 1.12. 1.13 "CONFIDENTIAL INFORMATION" shall mean any and all confidential or proprietary information, trade secrets, know-how and data, whether oral, written or graphical, 4 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. disclosed or provided (prior to, on or after the Effective Date) by one party or its Affiliates, employees, attorneys, financial advisors, lenders or agents to the other party or its Affiliates, employees, attorneys, financial advisors, lenders or agents (including any analysis, materials, product or conclusions drawn or derived therefrom) or which may be derived from or related to any visits by personnel of one party to the location of the other or may be otherwise known to one party through its visits or contacts with the other. 1.14 "CONTRACTS" means the contracts listed in Schedule 1.14. 1.15 "COPYRIGHT LICENSE" shall have the meaning set forth in Section 2.4. 1.16 "COVERED INDICATION" means any platelet-mediated cardiovascular indication for the Product, existing prior to, on or after the Effective Date, including without limitation coronary artery disease, cerebrovascular disease and peripheral vascular disease. 1.17 "DOCUMENTATION" means the items described in Schedule C hereto. 1.18 "DOMAIN NAMES" means, collectively, the domain names "aggrastat.com," "aggrastat.info," "aggrastat.biz," "agrastat.info" and "agrastat.biz" and the "DOMAIN NAME LICENSE" means the mutual licenses granted in Section 2.17. 1.19 "DUPONT AGREEMENT" means the Termination and License Agreement by and between Merck, Merck and Company, Incorporated (a Delaware corporation), and DuPont Pharmaceuticals Company dated as of March 7, 2000. A copy of the DuPont Agreement has been provided to Guilford. 1.20 "EFFECTIVE DATE" means the date of this Agreement. 1.21 "EXCLUDED ASSETS" means all assets, property, rights and interests of Merck and its Affiliates other than the Acquired Assets and any copyrights licensed under the Copyright License, including, without limitation, all patents other than the 5 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Assigned Patents (including without limitation the Related Patents, other than to the extent of the Related Patent License), information, data, Marks (other than the Trademark and the Logo), copyrights, trade names, good will, intellectual property and proprietary rights, new drug applications and their equivalents, investigational new drug applications and their equivalents, NDC numbers and their equivalents, product registrations and other assets of Merck or its Affiliates not transferred as Acquired Assets hereunder. 1.22 "EXCLUDED LIABILITIES" means all liabilities and obligations of Merck or its Affiliates other than Assumed Liabilities. 1.23 "FDA" means the United States Food and Drug Administration. 1.24 "FINAL ORDER" has the meaning set forth in Section 2.8. 1.25 "FULLY ALLOCATED COST" shall have the meaning set forth in the Supply Agreement. 1.26 "GENENTECH AGREEMENT" means the Research Agreement by and between Merck and Genentech, Inc. dated as of January 10, 2000. A copy of the Genentech Agreement has been provided to Guilford. 1.27 "GOVERNMENTAL AUTHORITY" shall mean any foreign or domestic federal, territorial, state or local governmental authority, quasi-governmental authority or court, and any regulatory, administrative or other agency, or any political or other subdivision, department or branch, of any of the foregoing. 1.28 "GUILFORD CONFIDENTIAL INFORMATION" shall mean (A) Confidential Information disclosed by Guilford or its Affiliates, employees, attorneys, financial advisors, lenders or agents to Merck or its Affiliates, employees, attorneys, financial advisors, lenders or agents, and (B) all Confidential Information and material contained in the Acquired Assets other than Manufacturing Information (including, 6 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. without limitation, the CMC section of the NDA), and (C) the terms and conditions of this Agreement and the other Transaction Documents set forth on Schedule 10. 1.29 "HEADQUARTER SALES" shall mean the gross amounts invoiced by Merck on all direct sales of Product (including, but not limited to, hospital sales and sales to governmental entities, wholesalers, retailers and medical institutions), in the Territory during the applicable measurement period by Merck in arm's length sales to independent third parties in the trade, as per invoices, net of returns. 1.30 "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1974, as amended, 15 U.S.C. 18A. 1.31 "IND" means the investigational new drug application for the Product described in Schedule B including any amendments or supplements thereto, reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining to the foregoing in the possession or control of Merck or its Affiliates as of the Effective Date. including any and all information, data, know-how, formulations, assays, good will or intellectual property contained in the IND. 1.32 "JOINT CONFIDENTIAL INFORMATION" shall mean all Manufacturing Information (including, without limitation, the CMC section of the NDA) contained in the Acquired Assets. 1.33 "LIENS AND ENCUMBRANCES" means, with respect to the Acquired Assets, any mortgage, lien, license, pledge, charge, security interest or encumbrance of any kind, including, without limitation, the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. 7 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 1.34 "LOGO" means the graphic pattern associated with the Trademark as set forth in Schedule 1.34. 1.35 "MANUFACTURE/MANUFACTURING/MANUFACTURED" shall have the meaning set forth in the Supply Agreement. 1.36 "MANUFACTURING INFORMATION" means all data, information, specifications or certifications related to or useful in the Manufacture of the Product. 1.37 "MARK" means a trademark, service mark, name, logo, design or trade dress. 1.38 "MARKETING MATERIALS" means the materials listed in Schedule 1.38. 1.39 "MERCK CONFIDENTIAL INFORMATION" shall mean (A) Confidential Information disclosed by Merck or its Affiliates, employees, attorneys, financial advisors, lenders or agents to Guilford or its Affiliates, employees, attorneys, financial advisors, lenders or agents other than Guilford Confidential Information and Joint Confidential Information and (B) the terms and conditions of this Agreement and the other Transaction Documents set forth on Schedule 10. 1.40 "MSD IRELAND" means Merck Sharpe & Dohme (Ireland) Limited, a corporation organized and existing under the laws of Bermuda. 1.41 "NET SALES" means the gross amounts invoiced by Guilford or its successors or assigns on all sales of Product (including, but not limited to, hospital sales and sales to governmental entities, wholesalers, retailers, medical institutions and product sold through Merck pursuant to the Transition Services Agreement) during the applicable Calendar Year, less returns, allowances, chargebacks, GPO administrative fees, rebates and discounts actually paid to unaffiliated customers in arm's length transactions in the ordinary course of business. 1.42 "NEW DRUG APPLICATION" and "NDA" means, collectively, the two new drug applications for the Product described in Schedule B including any amendments 8 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. or supplements thereto, reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining to the foregoing in the possession or control of Merck or its Affiliates as of the Effective Date, including any and all information, data, know-how, formulations, assays, good will or intellectual property contained in the NDA. 1.43 "NON-COVERED INDICATION" means any indication or claim for the Product other than a Covered Indication. 1.44 "PATENT LICENSE" means the license granted to Merck in Section 2.13. 1.45 "PATENT RIGHTS" means patents and patent applications owned by or licensed to Merck, which claim, cover or relate to the Product. 1.46 "PCI CLAIM" means a claim or indication for percutaneous coronary intervention. 1.47 "PCI CLINICAL RESEARCH" shall have the meaning set forth in Section 9.13. 1.48 "PCI DATA" means the results, information and data generated from PCI Clinical Research and included in the NDA and/or the IND. 1.49 "PERSON" means an individual, a corporation, a partnership, an association, a trust, or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. 1.50 "PROCESS PATENTS" means those United States patents and patent applications listed on Schedule 1.50. 1.51 "PRODUCT" means: (a) the chemical compound tirofiban hydrochloride, and (b) the formulated solutions for intravenous injection or infusion containing tirofiban hyrdrochloride as marketed by Merck in the Territory prior to the Effective Date under the trademark AGGRASTAT(R), and 9 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) any formulation of tirofiban hydrochloride, or any derivative thereof (including but not limited to any stereoisomers, either separated or combined, any hydrates, any salts, any solvates and any crystal forms) as monotherapy or in combination with any other substance, that is distributed, marketed or sold in the Territory after the Effective Date. 1.52 "QUALITY AGREEMENT" means the Quality Agreement to be entered into by and between Merck and Guilford within thirty (30) days after the Effective Date, as such agreement may be amended, supplemented or otherwise modified. 1.53 "REBATE" shall mean any discount, rebate, charge, cost, refund or credit required under any contract or by operation of law, including without limitation any rebate payable to a managed care organization pursuant to an agreement and any rebate or payment required under Federal law pursuant to the "Best Price" provisions of the Social Security Act, 42 U.S.C. Section 1398r-8 and related provisions. 1.54 "RECORDED INFORMATION" means information or data that is physically recorded or stored in a readable or retrievable form, including, without limitation, any information or data recorded in or on any writing, microfiche, computer disk, or electronic or optical storage media. 1.55 "RELATED PATENTS" means those United States patents specifically described in Schedule 1.55, consisting of "LICENSED RELATED PATENTS" and "NON-LICENSED RELATED PATENTS" as set forth in Schedule 1.55. 1.56 "RELATED PATENTS LICENSE" means the license granted to Guilford (or its designee, Artery LLC) in Section 2.26. 1.57 "RETURNED PRODUCT" means (A) any Product sold by Merck before the Effective Date and returned to Guilford or to Merck within the time allowed for returns 10 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. under Merck's standard terms and conditions, and (B) any Product sold after the Effective Date by Guilford (including without limitation Product sold through Merck pursuant to the Transition Services Agreement) and returned to Guilford or to Merck within the time allowed for return under Merck's standard terms and conditions. 1.58 "RPR AGREEMENT" means, collectively, the Supplies Agreement dated June 19, 1998 by and between Merck and Rhone-Poulenc-Rorer Pharmaceuticals, Inc. and the Supplies Agreement dated September 22, 1999 by and between Merck and Rhone-Poulenc-Rorer Pharmaceuticals, Inc. A copy of the RPR Agreement has been provided to Guilford. 1.59 "SECURITIES LAWS" means the United States Securities Act of 1933, as amended, the United States Securities Exchange Act of 1934, as amended, and any other similar law or regulation of a Governmental Authority in the Territory, or any successor to any such laws or regulations, together with any generally applicable rules, regulations or listing standards of any national or international securities exchange or The NASDAQ Stock Market. 1.60 "SERIOUS" means, with respect to any experience or reaction, one which is fatal or life threatening, results in persistent or significant disability, requires inpatient hospitalization or prolongation of existing inpatient hospitalization, is a congenital anomaly, cancer, or the result of an overdose, or is another important medical event (even if not life-threatening, resulting in death, or requiring hospitalization) if, based upon appropriate medical judgments, such medical event may jeopardize the patient's or subject's health or may require medical or surgical intervention to prevent one of the other outcomes listed previously. 11 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 1.61 "SUPPLIED PRODUCT" shall have the meaning given such term in the Supply Agreement. 1.62 "SUPPLY AGREEMENT" means the Supply Agreement by and between MSD Ireland and Guilford executed contemporaneously herewith. 1.63 "TACTICS" means the clinical trial that compared the cost of the application of the Product in early invasive treatment versus early conservative treatment of acute coronary syndrome. 1.64 "TARGET" means the head-to-head clinical trial that compared the Product to ReoPro, with the intended purpose of showing that the Product was non-inferior to ReoPro in a PCI setting such that a PCI Claim could be obtained for the Product. 1.65 "TARGET MATERIALS" means the Recorded Information described in Schedule 1.65. 1.66 "TERRITORY" means the United States of America and its territories and possessions, including without limitation the Commonwealth of Puerto Rico, Guam and the U.S. Virgin Islands. 1.67 "TRADEMARK" means the United States trademark and trademark registration for the Product as set forth in Schedule A and all amendments thereto, but does not include the names "Merck," "Merck, Sharp & Dohme," "MSD," "MMD" or any other Marks belonging to Merck. 1.68 "TRANSACTION DOCUMENTS" means this Agreement, the Supply Agreement, the Transition Services Agreement, the Quality Agreement, any agreements or documents prepared or executed pursuant to the transactions contemplated by such agreements, any exhibits or attachments to any of the foregoing and any other written agreement signed by Merck and Guilford that is expressly identified 12 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. as a Transaction Document, as any of the foregoing may be amended, supplemented or otherwise modified from time to time. 1.69 "TRANSITION PERIOD" shall have the meaning given such term in the Transition Services Agreement. 1.70 "TRANSITION SERVICES AGREEMENT" means the Transition Services Agreement between Merck and Guilford executed contemporaneously herewith as such agreement may be amended, supplemented or otherwise modified. 1.71 "UNEXPECTED" means, with respect to any condition or development, one which is not listed in the then-current FDA-approved labeling for the Product, and includes those experiences or reactions that show a significant increase in incidence or severity over what appears on the labeling for the Product, or in NDA trials, or that reflect or suggest a failure of the Product to achieve claimed activity. 2 AGREEMENTS OF PARTIES 2.1 PURCHASE AND SALE OF ACQUIRED ASSETS. On and subject to the terms and conditions set forth in Section 2.3 and elsewhere in this Agreement, Merck agrees to sell, convey, assign and transfer to Guilford (or its designee, Artery LLC) and Guilford agrees to acquire and purchase (or to cause its designee, Artery LLC, to acquire and purchase) on the Effective Date, the Acquired Assets; provided, however, that any information, data, know-how, formulas, assays, good will, or intellectual property contained in the IND or the NDA as of the Effective Date shall be used by Guilford or Artery LLC, as the case may be, and their respective successors and assigns, only for the purpose of (i) researching, developing, making, having made and commercializing the Product for (x) 13 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Covered Indications or (y) Non-Covered Indications for which Guilford has obtained first Marketing Authorization in accordance with Section 2.15, and (ii) any other activities performed by Guilford or its Affiliates prior to obtaining Marketing Authorization for a Non-Covered Indication that are reasonably and necessarily aimed at obtaining such Marketing Authorization and after obtaining Marketing Authorization to support commercialization in the Territory for such Non-Covered Indication. 2.2 COVENANT NOT TO SUE WITH RESPECT TO NON-LICENSED RELATED PATENTS AND NEW PATENTS. (a) Merck covenants that it will not initiate or prosecute legal or regulatory action asserting claims seeking to prohibit, limit or recover damages resulting from the making, having made, using, selling, offering for sale or promotion of the Product by Guilford, its Affiliates partners, co-venturers, successors or permitted assigns in the Territory based on the Non-Licensed Related Patents under any Applicable Laws in the Territory seeking either damages or equitable relief against Guilford or its Affiliates, partners, co-venturers, customers, successors or permitted assigns (i) with respect to Covered Indications or (ii) with respect to Non-Covered Indications for which Guilford has exclusive rights pursuant to Section 2.15; provided, however, that the foregoing covenant shall not apply to (x) making, using, selling or offering to sell the API or (y) making, using, selling or offering to sell any compound on which Merck holds a patent or patent application in the Territory other than the Product, and shall not preclude Merck from seeking either damages or equitable relief for any infringement of the Process Patents. Merck shall require that any 14 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. assignee of its interest in the Non-Licensed Related Patents shall be bound by the foregoing covenant. (b) Merck covenants that it will not initiate or prosecute legal or regulatory action asserting claims seeking to prohibit, limit or recover damages resulting from the making, having made, using, selling, offering for sale or promotion of the Product by Guilford, its Affiliates, partners, co-venturers, successors or permitted assigns in the Territory based on any new patents or patent applications on the Product other than process patents ("Merck New Patents") under any Applicable Laws in the Territory seeking either damages or equitable relief against Guilford or its Affiliates, partners, co-venturers, customers, successors or permitted assigns (i) with respect to Covered Indications or (ii) with respect to Non-Covered Indications for which Guilford has exclusive rights pursuant to Section 2.15; provided, however, that the foregoing covenant shall not apply to making, using, selling or offering to sell the API and shall not preclude Merck from seeking either damages or equitable relief for any infringement of the Process Patents. Merck shall require that any assignee of its interest in the Merck New Patents shall be bound by the foregoing covenant. (c) Guilford covenants that it will not initiate or prosecute legal or regulatory action asserting claims based on any new patents or patent applications on the Product ("Guilford New Patents") under any Applicable Laws in the Territory seeking either damages or equitable relief against Merck or its Affiliates, partners, co-venturers or customers seeking to prohibit, limit or recover damages resulting from (i) Merck's use of the Patent License 15 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. granted pursuant to Section 2.13, or (ii) the making, having made, using, selling, offering for sale or promotion of the Product by Merck, its Affiliates, partners or co-venturers in the Territory with respect to Non-Covered Indications for which Merck has exclusive rights pursuant to Section 2.15, or (iii) making and having made the Product in the Territory for sale to Guilford for the Territory or for sale by Merck, Merck's Affiliates or a third party outside the Territory; provided that Merck and its Affiliates will not sell, market or distribute Product to any Person that Merck knows intends to resell, market or distribute in the Territory except to the extent expressly permitted by Section 2.15 with respect to any Non-Covered Indication for which Merck has obtained first Marketing Authorization. Guilford shall require that any assignee of its interest in the Guilford New Patents shall be bound by the foregoing covenant. (d) For purposes of subsections (b) and (c) above, "Merck New Patents" and "Guilford New Patents" shall not include patents or patent applications obtained by Merck or Guilford, as the case may be, through purchase, licensing, merger or consolidation or through the acquisition of an Affiliate that obtained such patents or patent applications prior to becoming an Affiliate, if such patents or patent applications (x) relate to Covered Indications and come into existence after the Effective Date or (y) relate to Non-Covered Indications regardless of when such patents or patent applications come into existence; it being understood that the limitation on the application of subsections (a) and (b) above set forth in this subsection (c) shall not apply to any patents or patent applications 16 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. existing as of the Effective Date to the extent that such patents or patent applications relate to Covered Indications. 2.3 CONDITIONS AND RESERVATIONS. (a) Guilford hereby grants to Merck a perpetual, royalty-free, non-revocable, non-exclusive license in the IND and the NDA, as each exists on the Effective Date, to research the Product (including the performance of clinical trials) inside or outside the Territory for any purpose or indication, including Covered Indications and Non-Covered Indications. (b) The license described in subsection 2.3(a) shall be inseparable from the NDA and the IND and shall run with the NDA and IND in the event of any future transfer of the NDA and/or IND. (c) Merck reserves and retains the non-exclusive right to use and reference the IND and the NDA and any information, data, know-how, formulas, assays, good will, or intellectual property contained in the IND or the NDA as of the Effective Date for any purpose (subject only to the restrictions on Merck's post-Effective Date activities set forth in Section 6.1 and the payment requirement for reference and use of PCI Data set forth in Section 9.13). For purposes of clarification, it is acknowledged and agreed that the right to use and reference information, data, know-how, formulas, assays, good will or intellectual property contained in the IND and the NDA retained by Merck pursuant to this Section 2.3(c) relates solely to the information, data, know-how, formulations, assays, good will and intellectual property contained in the IND and the NDA as of the Effective Date, and does not include any such information, data, know-how, formulations, assays, good will or intellectual property developed, 17 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. discovered, invented or otherwise included in the IND or the NDA after the Effective Date. (d) Merck hereby grants to Guilford a non-exclusive, perpetual, non-revocable and royalty free license to any clinical research conducted by Merck pursuant to Section 2.3(a) to the extent such research is applicable to Covered Indications in the Territory; provided, however, that in the event that the total cost of such clinical research exceeds $10,000,000 and Guilford desires to exercise its rights under such license, Guilford shall notify Merck of such desire, and Merck shall then inform Guilford of the total cost to Merck of such clinical research. In consideration of the license granted pursuant to the preceding sentence, Guilford shall pay to Merck up to one-half of such total cost, the specific amount of which shall be agreed to by the parties in good faith in light of the proposed use by Guilford. (e) Guilford shall have the right, through an independent accounting firm that is reasonably acceptable to Merck, to audit Merck upon reasonable notice in order to verify the information provided to Guilford pursuant to Section 2.3(d). Such audit will be at Guilford's expense unless it is determined that the cost figures provided to Guilford overstated the actual cost by ten percent (10%) or more, in which case the cost of the audit will be paid by Merck. 2.4 COPYRIGHT LICENSE. Merck has claimed an unregistered copyright in the product circular and labeling for the Product in the Territory and in certain of the Marketing Materials used for the Product in the Territory, 18 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. * or as part of the Acquired Assets. However, Merck makes no representation or warranty that such copyrights are valid or existing or that Merck is the holder of any valid registered or unregistered copyrights relating to the Product that would be useful or necessary to Guilford in the promotion and sale of the Product in the Territory (it being understood that many of the Marketing Materials were created by third parties who may claim a copyright or other rights in such materials). To the extent, if any, that any such copyrights exist and are valid and that Merck holds an interest in such copyrights, Merck hereby grants to Guilford a non-exclusive, perpetual, royalty-free license under such copyrights in the Territory solely in connection with the Manufacture, marketing, distribution, sale and promotion of the Product in the Territory (the "Copyright License"); provided, however, that the Copyright License shall have no effect outside the Territory, including with respect to foreign copyrights that are owned by Merck and may be considered derivative of the copyrights licensed under the Copyright License. 2.5 RESERVATION OF RIGHTS OUTSIDE THE TERRITORY. Subject to Article 11, Merck reserves and retains all rights with respect to registrations, sales and all other property and activities relating to the Product outside the Territory. Nothing in this Agreement restricts Merck from making or having made (i) the Product, inside or outside the Territory, for sale outside the Territory, (ii) the API inside or outside the Territory, or (iii) the Product inside the Territory for sale to Guilford. 2.6 RESERVATION OF RIGHTS: PROCESS PATENTS AND OTHER EXCLUDED ASSETS. Guilford shall not acquire pursuant to this Agreement any rights in the Process Patents. Merck shall retain the Excluded Assets. 19 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 2.7 RESERVATION OF RIGHTS: FOREIGN PATENTS. Subject to Article 11, it is understood that Guilford receives no rights by virtue of this Agreement in any countries outside the Territory. For greater certainty but without limiting the generality of anything otherwise contained herein, it is expressly understood and agreed that Merck and/or its Affiliates hold patents on or related to the Product in various countries outside the Territory ("Foreign Patents"). 2.8 GUILFORD COVENANTS REGARDING PROCESS PATENTS AND FOREIGN PATENTS. After the Effective Date and so long as Merck or any of its Affiliates shall hold a valid Foreign Patent or a valid Process Patent on the Product, Guilford and its Affiliates will not (A) sell, market or distribute the Product in any country (other than the Territory) in which a Foreign Patent is held by Merck or any of its Affiliates or (B) sell, market or distribute Product to any Person that Guilford or its Affiliates knows intends to resell, market or distribute in any country (other than the Territory) in which a Foreign Patent is held by Merck or any of its Affiliates, except to the extent Guilford or its Affiliates shall be compelled to sell, market or distribute any such Product by Applicable Laws; provided that Guilford shall promptly notify Merck if Guilford (or its Affiliates) shall determine that it is so compelled, or (C) infringe, take any action to intentionally invalidate, or cooperate with any third party in any action to infringe or invalidate, any Foreign Patent or Process Patent held by Merck or any of its Affiliates. For purposes of this Section 2.8, Merck or its Affiliate shall be deemed to hold a valid Process Patent on the Product until the earlier to occur of (a) expiration of such Process Patent under Applicable Law or (b) entry of a Final Order of a court having jurisdiction of the subject matter thereof declaring that such Process Patent is invalid; and Merck or its Affiliate shall be deemed to hold a valid Foreign Patent on the 20 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Product until the earlier to occur of (a) expiration of such Foreign Patent under Applicable Foreign Law or (b) entry of a Final Order of a court having jurisdiction of the subject matter thereof declaring that such Foreign Patent is invalid. A "Final Order" means a dispositive order which is non-appealable, or as to which the time for appeal has expired, or which (if such order has been appealed) has been affirmed by the highest court to which such order may be appealed. In the event Guilford or its Affiliates shall be compelled by Applicable Laws to sell, market or distribute Product to any Person that Guilford or such Affiliate knows intends to resell, market or distribute in any country (other than the Territory) in which a Foreign Patent is held by Merck or any of its Affiliates, Guilford shall indemnify Merck for damages suffered as a result thereof, which damages shall be limited to Guilford's (or its Affiliate's) profits on any such sales. 2.9 MERCK COVENANTS REGARDING ASSIGNED PATENTS. After the Effective Date and so long as Guilford or its Affiliates shall hold a valid Assigned Patent on the Product, Merck and its Affiliates will not (A) sell, market or distribute the Product in the Territory except to the extent expressly permitted under Section 2.15 with respect to any Non-Covered Indication for which Merck has obtained first Marketing Authorization, (B) sell, market or distribute Product to any Person that Merck or its Affiliates knows intends to resell, market or distribute in the Territory except (i) to the extent expressly permitted by Section 2.15 with respect to any Non-Covered Indication for which Merck has obtained first Marketing Authorization or (ii) to the extent Merck or its Affiliates shall be compelled to sell, market or distribute such Product by Applicable Laws; provided that Merck shall promptly notify Guilford if Merck (or any of its Affiliates) shall determine that it is so compelled, or (C) infringe, take any action to intentionally invalidate, or 21 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. cooperate with any third party in any action to infringe or invalidate, any Assigned Patent held by Guilford or any of its Affiliates. For purposes of this Section 2.9, an Assigned Patent shall be deemed valid until the earlier to occur of (a) expiration of such Assigned Patent under Applicable Law or (b) entry of a Final Order of a court having jurisdiction of the subject matter thereof declaring that such Assigned Patent is invalid. In the event Merck or its Affiliates shall be compelled by Applicable Laws to sell, market or distribute Product to any Person that Merck or its Affiliates knows intends to resell, market or distribute in the Territory, Merck shall indemnify Guilford for damages suffered as a result thereof, which damages shall be limited to Merck's (or its Affiliate's) profits on any such sales. 2.10 RESERVATION OF RIGHTS: MARKS OUTSIDE THE TERRITORY. Guilford is not acquiring any rights outside the Territory, and Merck and its Affiliates (and their successors and assigns) shall retain all rights outside the Territory, to the name "AGGRASTAT," the Logo and any other Marks used on or with the Product and all associated trademarks, service marks, trademark and service mark registrations and good will including without limitation the right to use, sell, alter, abandon or otherwise dispose of such name, trademarks, service marks, registrations and good will as Merck or its Affiliates may desire. 2.11 * 2.12 ACQUIRED ASSETS SUBJECT TO RPR AGREEMENT AND GENENTECH AGREEMENT. Guilford acquires the Acquired Assets hereunder subject to the RPR Agreement and the Genentech Agreement to the extent contemplated in this Section 2.12 and agrees to be bound, as the holder of the NDA after the Effective Date, by the following obligations: (i) the obligation to send, upon written request of RPR, a 22 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. letter or letters to the FDA authorizing the FDA to cross-reference the NDA or the IND to the extent pertaining to the Study (as defined in the RPR Agreement), (ii) the obligation to send, upon written request of Genentech, notification to the FDA and each Agency (as defined in the Genentech Agreement) authorizing the FDA or any such Agency to cross-reference the NDA or the IND as necessary for the purposes of the Study (as defined in the Genentech Agreement) but not for any other purpose, (iii) the obligation to grant to Genentech the right to cross-reference the NDA or the IND, to the extent necessary for regulatory purposes, for the purpose of obtaining the Study's IND (as defined in the Genentech Agreement) and for such other purposes as authorized in the Genentech Agreement. Merck shall promptly notify Guilford of any requests for notification contemplated in this Section 2.12 received by Merck under the RPR Agreement and/or the Genentech Agreement, as the case may be, and Guilford shall promptly take all reasonable commercial actions to comply with such obligations. 2.13 GRANT OF PATENT LICENSE. (a) Subject to Section 2.15, Guilford hereby grants to Merck a non-exclusive, perpetual license (the "Patent License"), which shall be non-revocable and royalty free, under the Assigned Patents (i) for research purposes within the Territory, provided that such research does not support commercialization of the Product in the Territory, and (ii) for such purposes as are reasonably necessary to support Merck's scientific and commercial efforts outside the Territory. Notwithstanding the foregoing, it is agreed and understood that no rights are granted to Merck under the Assigned Patents pursuant to this Section 2.13 (except for such purposes as are reasonably necessary to support Merck's scientific and commercial efforts outside the Territory) to 23 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. make, have made, use, sell, offer to sell or import the Product or to develop, patent or otherwise seek regulatory authorization for any derivatives of the Product, where the derivative is itself claimed by the Assigned Patents for Covered Indications. (b) Merck hereby grants to Guilford a non-exclusive, perpetual, non-revocable and royalty free license to any clinical research conducted by Merck pursuant to Section 2.13(a) to the extent such research is applicable to Covered Indications in the Territory. 2.14 MANUFACTURING INFORMATION. Guilford is not acquiring any Patent Rights related to process or manufacture of the Product inside or outside the Territory. Except as otherwise provided in the Supply Agreement and subject to the terms and conditions set forth therein, Merck shall have no obligation to provide any Manufacturing Information to Guilford or provide any other assistance to Guilford related to Manufacture of the Product, on the Effective Date or at any time in the future. 2.15 RESEARCH ON NON-COVERED INDICATIONS. (a) If either party commences research on the Product with respect to any Non-Covered Indication, such party will promptly inform the other party generally about such research, without any obligation to disclose proprietary information about such research. In the event that research conducted by either party leads to such party obtaining Marketing Authorization (as defined below) with respect to tirofiban hydrochloride for a Non-Covered Indication, the party obtaining such Marketing Authorization will have the exclusive right to commercialize tirofiban hydrochloride in the Territory for such Non-Covered Indication. 24 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (b) Guilford hereby grants to Merck an exclusive, perpetual license, which license shall be non-revocable and royalty free, to the Assigned Patents for use and commercialization of tirofiban hydrochloride in the Territory for any Non-Covered Indication for which Merck shall have obtained Marketing Authorization pursuant to and in accordance with Section 2.15(a), without any further action on the part of Guilford or Merck; provided, that the license contemplated by this Section 2.15(b) shall not be effective unless and until Merck shall obtain Marketing Authorization pursuant to Section 2.15(a). Such license shall be limited to any Non-Covered Indication for which Marketing Authorization has been obtained by Merck and shall be further subject to any prior Marketing Authorization obtained by Guilford for such Non-Covered Indication. (c) For purposes of this Section 2.15, "Marketing Authorization" of a Non-Covered Indication shall mean the approval by the FDA of a new drug application for the development, Manufacture, marketing, sale and distribution of tirofiban hydrochloride in the Territory for such Non-Covered Indication. (d) Guilford covenants that it or its Affiliates will not initiate or prosecute any legal or regulatory action asserting claims based on the NDA or the Assigned Patents, the Related Patents, or the New Guilford Patents under any Applicable Laws in the Territory seeking either damages or equitable relief to prohibit, limit or recover damages resulting from any research or other activities performed by Merck or its Affiliates prior to obtaining Marketing Authorization for a Non-Covered Indication that are reasonably and necessarily aimed at obtaining such Marketing 25 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Authorization and after obtaining Marketing Authorization to support commercialization in the Territory for such Non-Covered Indication. Guilford shall require that any assignee of its interest in the Assigned Patents, the Related Patents or the Guilford New Patents shall be bound by the foregoing covenant. 2.16 TRANSFER OF RIGHTS IN LOGO. It is understood and agreed that the Logo is not a registered trademark in the Territory. Merck has used the Logo in association with the Trademark but Merck does not represent that it has any rights whatsoever in the Logo in the Territory. To the extent, if any, that Merck may have acquired any rights in the Logo in the nature of a common law Mark, Merck shall assign such rights in the Territory to Guilford in the Trademark Assignment to be delivered to Guilford on the Effective Date pursuant to Section 3.1. Such assignment is in the nature of a quitclaim and carries no representations or warranties of any kind whatsoever. 2.17 RIGHTS IN DOMAIN NAMES. Merck shall retain ownership of the Domain Names inside and outside the Territory. Merck shall have the exclusive right to maintain websites and web addresses using the Domain Names. Any such websites or web addresses shall be maintained so that a user who arrives at the website shall first encounter a screen in which the user is given a choice between "Aggrastat(R) in the United States" and "Aggrastat(R) Outside the United States." Users choosing "Aggrastat(R) in the United States" shall have the opportunity to click on a link to a website owned and maintained by Guilford. Merck shall maintain the "aggrastat.com" domain name and the website and web address associated therewith in the manner contemplated above without charge to Guilford for so long as Merck markets the Product outside the Territory under the 26 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. name "Aggrastat," provided that Merck shall have the right (A) to abandon any of the Domain Names at any time and in such event Merck shall notify Guilford and offer to sell its rights in any such Domain Names to Guilford for $1.00, and (B) to transfer any of the Domain Names to another party that purchases Merck's rights in the Product in any country or countries outside the Territory (subject to Guilford's rights set forth in this Section 2.17 and Sections 11.1 and 11.2 hereof) and in such event Merck shall require such party to agree to perform Merck's obligations with respect to the Domain Names under this Section 2.17. Guilford hereby grants to Merck a royalty-free, non-revocable, non-exclusive license in the Trademark and the name "Aggrastat" in the Territory for the limited purpose of using such Trademark and name in the Domain Names and on the websites identified with the Domain Names; such license will last as long as Merck owns the Domain Names and shall be sub-licensable (subject to Sections 11.1 and 11.2) to any party that purchases Merck's rights in the Product in any country or countries outside the Territory. Merck hereby represents that except for the Domain Name "aggrastat.com," the Domain Names are inactive as of the Effective Date and that there are no active websites or web addresses associated with any such Domain Names. Except as otherwise provided above with respect to the "aggrastat.com" domain name, nothing in this Agreement shall require Merck to maintain the Domain Names as active domain names or to activate websites accessible through such Domain Names. 2.18 ASSUMPTION OF LIABILITIES. On the terms and subject to the conditions of this Agreement, as of the Effective Date, Guilford shall assume the Assumed Liabilities and Merck shall remain responsible and liable for the Excluded Liabilities. 27 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 2.19 INITIAL PURCHASE PRICE AND ROYALTY PAYMENTS. (a) Initial Purchase Price. Subject to adjustment in accordance with Section 2.19(b), in partial consideration for the transfer of the Acquired Assets and the licenses granted to Guilford by Merck hereunder, Guilford shall pay Merck the sum of eighty million, three hundred thousand dollars ($80,300,000.00) plus (A) $11,000 for certain IMS Data previously provided to Guilford, and (B) $150,000 for certain administrative services to be performed by Merck, and less (i) $62,500.00 representing 50% of the fee paid to the Federal Trade Commission by Guilford pursuant to the HSR Act, and (ii) the amount of any adjustments pursuant to Section 2.19(b) (the "Initial Purchase Price"). (b) Adjustment to Initial Purchase Price in the event of Unanticipated Sales. The Initial Purchase Price will be reduced by a proportionate share of Net Unanticipated October Sales, if any, determined based on the number of days elapsed in October as of the Effective Date. Definitions: "Unanticipated October Sales" means the amount, if any, by which Headquarter Sales during October 2003 exceeds $2,500,000.00; provided that in the event the Effective Date shall occur prior to October 31, 2003, the $2,500,000.00 threshold shall be proportionately reduced based upon the number of days in October elapsed as of the Effective Date. "Net Unanticipated October Sales" means Unanticipated October Sales reduced by (A) chargebacks, GPO administrative fees, rebates and 28 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. discounts granted or accrued with respect to Unanticipated October Sales and (B) the Fully Allocated Cost of Unanticipated October Sales. (c) Payment of Initial Purchase Price. On the Effective Date, Guilford shall pay the Initial Purchase Price, less any adjustment required by Section 2.19(b), by wire transfer as set forth in Section 2.20. Merck shall certify at the Effective Date the Net Unanticipated October Sales, if any, in such detail as shall be reasonably requested by Guilford. (d) Royalty Payments. (i) In further consideration for the transfer of the Acquired Assets and the licenses granted to Guilford by Merck hereunder, Guilford shall pay royalty payments to Merck on Net Sales in each Calendar Year commencing with 2004 and continuing until the earlier of (i) expiration of the last to expire of the Assigned Patents, or (ii) the date of entry of a Final Order of a court in the Territory having jurisdiction of the subject matter thereof declaring the last of the Assigned Patents invalid under Applicable US Law ("Royalty Payments"), calculated as a percentage of Net Sales in such Calendar Year, as follows: Royalty Payments for Calendar Years 2004, 2005 and 2006 0% of Net Sales up to $40,000,000 ("Initial Threshold"); 10% of Net Sales in excess of $40,000,000 and less than $50,000,000; 12% of Net Sales in excess of $50,000,000 and less than $75,000,000; 14% of Net Sales in excess of $75,000,000 and less than $100,000,000; and 20% of Net Sales over $100,000,000. 29 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Royalty Payments for Calendar Years 2007 and succeeding Calendar Years 5% of Net Sales up to $28,000,000; 10% of Net Sales in excess of $28,000,000 and less than $50,000,000; 12% of Net Sales in excess of $50,000,000 and less than $75,000,000; 14% of Net Sales in excess of $75,000,000 and less than $100,000,000; and 20% of Net Sales over $100,000,000. (ii) Royalty Payments shall be payable not more than forty-five (45) days following the end of each calendar quarter, provided however that with respect to 2004, 2005 and 2006, Royalty Payments shall be payable not more than forty-five (45) days following the end of (x) the calendar quarter in which Net Sales first exceed the Initial Threshold and (y) each succeeding calendar quarter. Royalty Payments will be accompanied by a Quarterly Statement as provided in Section 3.13. (e) Royalty Payments for Combination Product. In the event that Guilford markets, distributes or sells a formulation in which tirofiban hydrochloride or any derivative thereof is present in combination with another substance ("Combination Product"), the Royalty Payment payable on account of Net Sales of such Product shall be based on the amount of tirofiban hydrochloride (or any derivative thereof) in the Combination Product, as follows: First, the amount of tirofiban hydrochloride (or any derivative thereof) in the Combination Product shall be compared to the amount in each available monotherapy Product in order to identify the available monotherapy Product that comes closest to having the 30 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. same amount of tirofiban hydrochloride (or any derivative thereof) (the "Benchmark Product"); second, the number of milliliters of tirofiban hydrochloride (or any derivative thereof) in the Combination Product shall be divided by the number of milliliters of tirofiban hydrochloride (or any derivative thereof) in the Benchmark Product, and the resulting fraction shall be multiplied by the Royalty Payment that would be due for the same number of units of the Benchmark Product. For example, if Guilford currently sells a monotherapy Product containing 100mL of tirofiban hydrochloride and another monotherapy Product containing 250mL of tirofiban hydrochloride, and the Combination Product contains 125mL of tirofiban hydrochloride, then the Benchmark Product would be the 100mL dosage formulation, and the Royalty Payment for the Combination Product would be 125/100 or 125% of the Royalty Payment for the same number of units of the Benchmark Product. 2.20 FORM OF PAYMENTS. (a) The Initial Purchase Price shall be paid by Guilford to Merck by *; Reference: Sale of Aggrastat(R) to Guilford Pharmaceuticals Inc., October 28, 2003. (b) Royalty Payments shall be paid by Guilford to Merck by Federal wire of funds in the manner set forth in paragraph (a) for the Initial Purchase Price or otherwise as may be specified in writing by Merck from time to time. 2.21 HART-SCOTT-RODINO COMPLIANCE Prior to the execution of this Agreement, Merck and Guilford have notified the Federal Trade Commission ("FTC") of the transaction which forms the basis of this Agreement in accordance with the requirements of the HSR Act. Guilford 31 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. and Merck shall equally share the fee required for such notification, which is stipulated and agreed to be $125,000, 50% of which shall be deducted from the Initial Purchase Price pursuant to Section 2.19(a). Each party shall be responsible for the payment of its own attorney fees in connection with any HSR filing or other activities pursuant to the HSR Act. 2.22 ALLOCATION The parties shall make reasonable efforts in good faith to agree upon the allocation of the purchase price for all tax purposes and in any and all filings, declarations and reports with the Internal Revenue Service (the "IRS") in respect thereof, including the reports required to be filed under Section 1060 of the Internal Revenue Code, as amended, if applicable, it being understood that neither party can assure the other that agreement can be reached upon such allocation. If agreement is reached upon such allocation, then in any proceeding related to the determination of any tax, neither party shall, except to the extent required by Applicable Laws (for example, if previously unknown information affecting such allocation, or mathematical errors underlying such allocation, should be learned), contend or represent that such allocation is incorrect. 2.23 * *: (a) *; (b) *; and (c) *. *. *: 32 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (a) *; (b) *; (c) *; or (d) *. * 2.24 IDENTIFICATION OF SCHEDULED ACQUIRED ASSETS Merck prepared each of the Schedules setting forth the Acquired Assets (the "Acquired Assets Schedules") so as to identify those types of assets in the possession or control of Merck and its Affiliates used in the distribution, use, sale, offer for sale and marketing (but not the manufacture) of the Product in the Territory. In the event that after the Effective Date it is determined that an asset of such type should have been included in the Acquired Assets but was inadvertently omitted from the Acquired Assets Schedules, Merck and Guilford shall negotiate in good faith an amendment to the relevant Acquired Asset Schedule to incorporate such asset thereon. 2.25 RIGHTS TO PRODUCT IN THE TERRITORY The Parties acknowledge and agree that GUILFORD shall have the sole and exclusive right from and after the Effective Date to represent to third parties that GUILFORD has acquired all rights to, and is the successor to Merck with respect to, the Product in the Territory, without reservation by Merck of any lien, security interest or right of reversion therein. 2.26 LICENSE TO LICENSED RELATED PATENTS. Merck hereby grants to Guilford a perpetual, royalty-free, exclusive license in the Territory under the Licensed Related Patents to use, sell, offer to sell or import Product in the Territory solely 33 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. for (i) Covered Indications, (ii) Non-Covered Indications for which Guilford has obtained first Marketing Authorization in accordance with Section 2.15, and (iii) any other activities performed by Guilford or its Affiliates prior to obtaining Marketing Authorization for a Non-Covered Indication that are reasonably and necessarily aimed at obtaining such Marketing Authorization and after obtaining Marketing Authorization to support commercialization in the Territory for such Non-Covered Indication. Notwithstanding anything contained in this Agreement, Merck shall have no obligation to maintain any of the Related Patents; provided that in the event Merck shall abandon any of the Related Patents, Merck shall provide prior written notice to Guilford and Guilford shall have the right to elect, upon written notice to Merck, to assume maintenance of such Related Patents, including payment of any maintenance fees associated therewith. 2.27 SUBLICENSE TO DUPONT AGREEMENT, RPR AGREEMENT AND GENENTECH AGREEMENT. Solely to the extent permitted by each of the DuPont Agreement, the Genentech Agreement and the RPR Agreement, Merck grants to Guilford a non-exclusive, non-transferable, non-sublicensable license in the Territory of any sub-licensable rights granted to Merck under the foregoing Agreements to use, sell, offer to sell and import Product in the Territory solely for (i) Covered Indications, (ii) Non-Covered Indications for which Guilford has obtained first Marketing Authorization in accordance with Section 2.15, and (iii) any other activities performed by Guilford or its Affiliates prior to obtaining Marketing Authorization for a Non-Covered Indication that are reasonably and necessarily aimed at obtaining such Marketing Authorization and after obtaining Marketing Authorization to support commercialization in the Territory for such Non-Covered Indication. Notwithstanding anything contained in this Agreement, Merck shall 34 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. have no obligation to prevent the lapse or termination of its rights including but not limited to its right to sublicense rights under the foregoing Agreements; provided, that Merck shall not take any affirmative action to waive or otherwise terminate any such rights. 2.28 * * 2.29 * * 2.30 * (a) * (b) * (c) * 3 EFFECTIVE DATE, EFFECTIVENESS, DELIVERY OF ACQUIRED ASSETS EFFECTIVE DATE 3.1 The parties hereby acknowledge the execution and delivery to the other of the Supply Agreement and the Transition Services Agreement contemporaneously with this Agreement. 3.2 Guilford hereby acknowledges the execution and/or delivery by Merck to Guilford (or its designee) of the following contemporaneously with this Agreement except as otherwise noted below: (a) an appropriately executed Trademark Assignment in the form of Schedule D (the "Trademark Assignment"), (b) an appropriately executed Patent Assignment for the Assigned Patents in the form of Schedule E (the "Patent Assignment"), 35 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) an assignment and bill of sale for the NDA, the IND, the Documentation, the Marketing Materials, the Clinical Data and Materials and the Acquired Domain Name in the form attached hereto as Schedule F. (d) a written notice to the FDA executed by Merck, substantially in the form attached hereto as Schedule 3.2(d), of the transfer of title to the NDA and the IND from Merck to Guilford (or its designee), (e) a true and complete copy of the TARGET Data and the TARGET Materials, except for the redaction of specific patient information as required to protect patient privacy, (f) the certificate regarding Net Unanticipated October Sales as contemplated in Section 2.19(b), (g) those Acquired Assets specifically identified on Schedule 3.2(g) as necessary for delivery on the Effective Date, and (h) if available on the Effective Date, all Acquired Assets other than those identified as necessary for delivery on the Effective Date ("Additional Deliverables"). In the event that the Additional Deliverables have not been delivered on the Effective Date, Merck shall cause the delivery thereof to occur within thirty (30) days of the Effective Date pursuant to Section 3.6. 3.3 Merck hereby acknowledges the execution and/or delivery by Guilford to Merck of the following: (a) the Initial Purchase Price as set forth in Section 2.19, and (b) a written notice to the FDA executed by Guilford, substantially in the form attached hereto as Schedule 3.3, of the transfer of title to the NDA and the IND from Merck to Guilford. 36 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 3.4 Guilford shall pay or cause to be paid any and all transfer, stamp, sales or other similar taxes or duties payable in connection with the sale or transfer of the Acquired Assets to Guilford (or its designee), as well as any and all third-party costs and expenses relating to the transfer and assignment to Guilford (or its designee) of the Trademark and the Assigned Patents, including, without limitation, all costs and taxes with respect to recordation of transfer. Recordation of transfer and assignment of the Trademark and the Assigned Patents shall be the responsibility of Guilford. STEPS TO BE TAKEN AFTER THE EFFECTIVE DATE 3.5 On or immediately following the Effective Date, and in any event within one (1) business day after the Effective Date, Guilford and Merck shall each deliver to the FDA written notices, substantially in the forms attached hereto as Schedules 3.2(d) and 3.3, of the transfer of title to the NDA and the IND from Merck to Guilford. 3.6 As soon as practicable on or after the Effective Date, and in no event later than thirty (30) days after the Effective Date, Merck shall deliver to Guilford any Additional Deliverables (other than those to be delivered pursuant to Section 2.30) not delivered on the Effective Date, by shipment to a destination in the United States specified by Guilford. Copying and shipment of any Acquired Assets shall be at Merck's expense. Notwithstanding any provision of this Agreement to the contrary, Merck shall have the right to retain the original TARGET database and one copy of the other Additional Deliverables for its records, subject to the provisions of Section 10.2 hereof. 3.8 Any information regarding Adverse Experiences for the Product received by Merck before the Effective Date but not yet reported to the FDA as of the 37 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Effective Date shall be provided to Guilford as soon as practicable, and no event later than fifteen (15) days, after the Effective Date. 3.9 Merck will, immediately after the Effective Date, and in any event within two (2) days of the Effective Date, distribute to the other parties to the Contracts a letter in the form attached hereto as Schedule 3.9. Any other notices to such parties or other customers will be the responsibility of Guilford. FURTHER ASSURANCES 3.10 Each of Merck and Guilford shall, at any time or from time to time after the Effective Date, at the request and expense of the other, execute and deliver to the other all such instruments and documents or further assurances as the other party may reasonably request in order to sell, assign and transfer to Guilford the Acquired Assets as contemplated hereby; provided, however, that after the Effective Date, apart from such customary further assurances, Merck shall have no other obligations (including without limitation any obligation to provide technical or other assistance to Guilford) except as specifically set forth and described herein or in the Supply Agreement or the Transition Services Agreement. COOPERATION WITH RESPECT TO ACQUIRED ASSETS AND ASSUMED LIABILITIES 3.11 From and after the Effective Date, each party shall make available to the other party during normal business hours and upon reasonable prior written notice, but without unreasonably disrupting its business, all records as to the Acquired Assets and Assumed Liabilities held by it and reasonably necessary to permit the defense or investigation of any litigation, hearing, regulatory proceeding or investigation directly relating to any of such assets or liabilities and shall preserve 38 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. and retain all such records for the length of time contemplated by their standard record retention policies and schedules; provided, however, that in no event shall Merck be required to supply any Manufacturing Information to Guilford or to assist Guilford in any validation process or other regulatory process or proceeding related to the Manufacture of the Product or any other product except as specifically set forth herein or in any of the other Transaction Documents. Each party will give prompt written notice to the other party of any litigation or regulatory proceeding (including without limitation any investigation, inspection or other administrative review of any Governmental Authority) in which such party is involved as a party that directly concerns, and might materially and adversely affect, the Product or the Acquired Assets or Guilford's rights in the same. 3.12 MERCK RECORDKEEPING REQUIREMENTS; GUILFORD AUDIT RIGHTS. During the period when Merck provides administrative functions pursuant to Article 9, Merck shall keep complete, accurate and detailed records (in addition to any records required to be kept pursuant to the Transition Agreement) of all matters within Merck's administration under Article 9 (including chargebacks, GPO administrative fees, discounts and rebates, product returns and accounts payable and receivable) and shall retain such records for a reasonable time thereafter. Such records shall be kept in sufficient detail to permit independent audit of such records. Merck shall, at Guilford's request and expense, make such records available for examination upon reasonable notice during normal business hours by Guilford or its independent certified public accountants or auditors designated by Guilford and approved by Merck, which approval shall not be unreasonably withheld or delayed. 39 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 3.13 GUILFORD RECORDKEEPING AND REPORTING REQUIREMENTS; MERCK AUDIT RIGHTS; QUARTERLY STATEMENTS. (a) Guilford recordkeeping requirements; Merck audit rights. Guilford shall keep complete and accurate books and records of all Net Sales of the Product and all items necessary to accurately calculate Net Sales in accordance with generally accepted accounting practices consistently applied (except to the extent that the computation of Net Sales in accordance with Section 1.36 requires recordkeeping on a cash rather than accrual basis), including without limitation records of the gross amounts invoiced on all sales of Product, the prices in effect from time to time, the gross revenue derived from sales of the Product, returns, allowances, chargebacks, GPO administrative fees, rebates and discounts actually paid to unaffiliated customers in arm's length transactions in the ordinary course of business, and all other information used or necessary to be used in computing Net Sales or Royalty Payments, and shall retain such records for a reasonable time. Guilford shall, at Merck's request and expense, make all such records available for examination (not more often than once every two years) upon reasonable notice during normal business hours by Merck or its independent certified public accountants or auditors designated by Merck and approved by Guilford, which approval shall not be unreasonably withheld or delayed; provided, however, that any claim for unpaid or inadequate Royalty Payments will not be deemed to arise until the date when Merck shall have discovered such shortfall or lack of payment. (b) Quarterly statements. Not more than forty-five (45) days after the end of each calendar quarter after the Effective Date (regardless of whether a Royalty Payment is payable with respect to such calendar quarter), Guilford shall furnish 40 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. to Merck a statement which shall contain the following information: total gross sales of Product in the Territory during such calendar quarter; the unit price for Product in effect in the Territory from time to time during such calendar quarter; all returns, allowances, chargebacks, GPO administrative fees, rebates and discounts actually paid to unaffiliated customers in arm's length transactions in the ordinary course of business during such calendar quarter; and any other information used or necessary to be used in computing Net Sales or Royalty Payments for such calendar quarter. 4 MERCK'S REPRESENTATIONS AND WARRANTIES 4.1 Merck represents and warrants as of the Effective Date, that: (a) Merck is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey. (b) The execution, delivery and performance by Merck of this Agreement and each of the Transaction Documents to which Merck is a party are within Merck's corporate power, have been duly authorized by all necessary corporate action and do not contravene or constitute a default under any provision of the certificate of incorporation or by-laws of Merck or any provision of Applicable Law or regulation or of any judgment, injunction, order or decree binding upon Merck or to which any Acquired Asset is subject, or any indenture, bank loan, credit, or other agreement binding upon Merck or to which any Acquired Asset is subject. This Agreement and each of the Transaction Documents to which Merck is a party is a legal, valid and binding agreement of Merck enforceable in accordance with its terms. 41 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) Except for the requirement that both Guilford and Merck provide written notice to the FDA of the transfer of the NDA from Merck to Guilford, the execution, delivery and performance by Merck of this Agreement and the other Transaction Documents, and the consummation by Merck of the transactions contemplated hereby and thereby, require no action by or in respect of, or filing with, any governmental body, agency or official or any other consent of any Person, firm or other entity. (d) Merck is the legal and beneficial owner of the Acquired Assets (other than the Logo, with respect to which Merck makes no representations), free and clear of all Liens and Encumbrances. (e) The Marketing Materials consist of, in addition to all promotional materials submitted to the FDA which are included on Schedule C, (1) at least one copy of all promotional materials used by Merck sales representatives in 2002 (subject to certain notations included on the hard copies thereof), (2) all clinical reprints used in promotion of the Product in 2002, (3) all available materials used for training of sales representatives, (4) all available syndicated market research, (5) sales records for the period 1998-2002 (including account level sales data for 2000-2002) and (6) customer lists for 2002. (f) The TARGET Materials consist of (1) a copy of the TARGET database (redacted to delete patient-identifiable information), (2) to the extent existing in WORF as of the Effective Date, completed case report forms (or copies thereof) completed in connection with the TARGET trial (redacted to delete patient-identifiable information), (3) all analysis and correspondence between Merck and the FDA relating to the TARGET 42 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. study (except to the extent included in the NDA, it being understood that Merck believes all such analysis and correspondence is included in the NDA), and (4) the two Statistical Analysis Software ("SAS") Codes necessary to access the TARGET database. Except for the redaction of specific patient information as required to protect patient privacy, the copy of the TARGET database and the other TARGET Materials provided to Guilford on the Effective Date represents a complete, true and accurate copy of all such materials (it being understood and agreed that if completed case report forms (or copies thereof) completed in connection with the TARGET trial do not exist in the WORF, Merck will cooperate with Guilford to attempt to obtain a copy thereof from the Cleveland Clinic). (g) The Clinical Data and Materials, together with the TARGET Materials, the NDA and the IND, include, except for the TACTICS Materials and the Clinical Research Materials, (i) all documentation or other written evidence of ongoing research and development with respect to the Product as of the Effective Date in the WORF or specifically set forth on Schedule 1.12, and (ii) the results of all clinical trials or studies conducted by Merck with respect to the Product prior to the Effective Date (including all Recorded Information related thereto) in the WORF or specifically set forth on Schedule 1.12. (h) The Documentation includes those documents, instrumentation, files and records relating to the Trademark and Assigned Patents (including all patent prosecution files for Assigned Patents and the original issued patent certificates therefor), FDA regulatory processes relating to the 43 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. promotion of the Product, litigation files, and medical inquiries and responses, in each case relating to the Product in the Territory in the possession and control of Merck or its Affiliates as of the Effective Date, that Merck in its reasonable judgment believes to be material to the sale, market or use of the Product in the Territory. (i) Merck is the owner of the Assigned Patents, the Trademark, the NDA, the IND, the Marketing Materials, the TARGET Data and the TARGET Materials, the Clinical Data and Materials, the Documentation and the Related Patents and has the right to assign or license, as applicable, such assets to Guilford without the consent of any third Person. (j) Except as set forth on Schedule 4.1(j), there is no claim pending or, to the knowledge of Merck based on Recorded Information, threatened, that the use of the Assigned Patents, the Trademark, the NDA, the IND, the Marketing Materials, the TARGET Materials, the TARGET Data, the Clinical Data and Materials, the Documentation the Logo or the Acquired Domain Name in the manner heretofore used by Merck and its Affiliates in connection with the distribution, sale and promotion of the Product in the Territory infringes upon or conflicts with any patent or other intellectual property rights of any third party or that Guilford, by practicing under the Assigned Patents in the Territory as of the Effective Date would violate any intellectual property rights of any third party. (k) As of the Effective Date, the Trademark is valid and enforceable, and free and clear of all Liens and Encumbrances. There is no claim pending or, to the knowledge of Merck based on Recorded Information, threatened, that the use of the Trademark in the manner heretofore used by Merck 44 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. and its Affiliates in connection with the distribution, sale and promotion of the Product in the Territory infringes upon or conflicts with any the rights of any third party. (l) Merck has not given notice to any third parties in the two (2) years prior to the Effective Date, asserting infringement by such third party of the Trademark or any of the Assigned Patents or the Related Patents. (m) Except as set forth on Schedule 4.1(m), or as otherwise specifically set forth in this Agreement, as of the Effective Date neither Merck nor any of its Affiliates has executed or granted to any third party any license or other right to market, distribute, sell or offer for sale the Product or any generic substitutes therefor, in or into the Territory. (n) Merck has provided Guilford with the opportunity to review the true, accurate and complete NDA and IND for the Product prior to the Effective Date (except for redaction of confidential patient information). Merck and its Affiliates have no new drug applications or investigational new drug applications in the Territory pertaining to the Product, whether issued, pending, abandoned, withdrawn, or in draft form other than the NDA and the IND. Merck (i) has complied in all material respects with all Applicable US Laws in connection with the preparation and submission to the FDA of each of the NDA and IND and (ii) has filed with the FDA all required notices, supplemental applications, and annual and other reports, including Adverse Experience reports, with respect to each NDA and IND. The NDA has been approved and remains in effect in the United States, and as of the Effective Date, Merck has all the legal rights of a holder of an approved new drug application with respect to the 45 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Product in the United States. There is no action or proceeding by any Governmental Authority in the Territory pending or, to the knowledge of Merck based on Recorded Information, threatened, seeking revocation or suspension of the NDA or the IND. (o) To the knowledge of Merck based on Recorded Information, no recall or withdrawal for the Product in the Territory is pending or threatened. (p) Except as set forth on Schedule 4.1(p) hereof, there are no claims or complaints made or brought against Merck in the Territory prior to the Effective Date relating to the Product or the Acquired Assets, other than (i) litigation and claims listed on Schedule 4.1(p), and (ii) the claims, complaints, adverse reactions or experiences, recalls, and product and packaging complaints contained or disclosed in the NDA or included in Schedule 4.1(q). (For reasons of patient privacy, the names of claimants have been redacted from the claims described in Schedule 4.1(p)). (q) Schedule 4.1(q) sets forth all Adverse Experiences existing with respect to the Product that have not yet been reported to the FDA. (r) The assignments and transfer documents to be delivered to Guilford pursuant to Section 3.2 will be in appropriate form and sufficient to sell, assign and transfer to Guilford all right, title and interest in and to the Acquired Assets free and clear of any Liens or Encumbrances. (s) The IND is true, accurate and complete, and contains all of the information posted to the IND over the life of the Product. (t) The NDA is true, accurate and complete, and contains all of the information posted to the NDA over the life of the Product and all information concerning side effects, injury, toxicity or sensitivity reaction, 46 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. or unexpected incidents, whether or not Serious or Unexpected, relating to the Product ("Adverse Experiences"), that Merck has reported to the FDA during the time from the original filing of the NDA until the Effective Date (except as set forth in paragraph (q)). (u) Except as listed in Schedule 1.14, there are no Contracts between Merck or any of its Affiliates and any third parties (including Governmental Authorities, GPOs, hospitals, health maintenance organizations and other buyers of Product in the Territory) directly relating to or affecting the sale of the Product in the Territory. Merck has made available to Guilford complete and correct copies of the Contracts. Each of the Contracts is in effect as of the Effective Date and constitutes a legal, valid and binding agreement, enforceable in accordance with its terms, of Merck and the other parties thereto. Neither Merck nor any other party thereto has failed to perform or is otherwise in breach in any material respect of any of the Contracts. However, Merck has informed Guilford that such Contracts are not assignable without the consent of the other parties and that Merck intends to terminate all Contracts in accordance with Section 3.9. (v) Merck has not negotiated with or through any broker or finder in connection with this Agreement or the subject matter hereof. No broker's commission or finder's fee will be payable by either party as a result of this Agreement. (w) Merck has complied and will comply in all material respects with the requirements of the HSR Act. (x) Merck is the holder of the Assigned Patents and the Related Patents set forth in Schedules 1.10 and 1.55, respectively. 47 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (y) Schedule 4.1(y) sets forth a list of all ongoing clinical trials conducted by Merck involving the Product in Covered Indications. As of the Effective Date, Merck has no existing research program, nor does the senior management of its research division currently intend to commence any such research programs, with respect to any purpose or indication for the Product other than Covered Indications. (z) Merck has provided Guilford with the opportunity to review the true, accurate and complete copies of the DuPont Agreement, the Genentech Agreement, the RPR Agreement and Merck's third party manufacturing contracts related to the Product in the Territory, together with any and all amendments, supplements or other modifications relevant to such agreements. (aa) As of the Effective Date, to the knowledge of Merck's senior management, Merck and its Affiliates do not have any existing research program, nor do they currently intend to commence any research program, with respect to the Product or any IIb/IIIa inhibitor. Merck has disclosed to Guilford that it has rights in a direct thrombin inhibitor. (bb) Headquarter Sales during September 2003 did not exceed $2,500,000. 4.2 DISCLAIMERS. Except for the representations and warranties set forth in Section 4.1 and in the other agreements executed by Merck or any of its Affiliates in connection herewith, Merck does not make any representation or warranty, and specifically disclaims any warranty: (a) That it is the holder of any unexpired Patent Rights for the Product in the Territory except the Assigned Patents, the Related Patents and the Process Patents. No Patent Rights for the Product are being assigned, 48 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. transferred, licensed or sublicensed to Guilford under this Agreement, except the Assigned Patents, the Licensed Related Patents and any Patent Rights licensed to Guilford pursuant to Section 2.27. (b) Merck makes no representations or warranties concerning the manufacturing process, or the efficacy, efficiency or adequacy of the Acquired Assets for the purpose of manufacturing, marketing or selling the Product either before or after the Effective Date. (c) Concerning the efficacy or safety for human use of the Product, whether in the formulation heretofore Manufactured and sold under the name "AGGRASTAT" or in the form of any other formulation or stereoisomer or other derivative. (d) Concerning legal and regulatory requirements that must be satisfied by Guilford before Guilford will be able lawfully to Manufacture, market and sell the Product in the Territory or any other country. (e) That any medical information provided by Merck to Guilford concerning the use of the Product is in accordance with sound medical practice or may be relied on by Guilford or any other Person for any purpose. (f) That the Marketing Materials are current or in accordance with Product Labeling or can be used for any purpose other than historical reference. (g) That the Contracts are assignable to Guilford without the consent of the other parties to the Contracts or that the other parties will consent to such assignment, enter into contracts with Guilford, purchase the Product from Guilford or do business in any manner with Guilford. To the contrary, Merck has informed Guilford that the Contracts are not assignable without the other parties' consent, that certain additional parties (i.e., group 49 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. purchasing organizations) may need to consent to any such assignment or any new contract with such other parties, and that Merck's communication with such other parties regarding the Product and Guilford will be limited to the letter described in Section 3.9. 4.3 LIMITATION ON MERCK'S REPRESENTATIONS AND WARRANTIES. GUILFORD ACKNOWLEDGES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, MERCK HAS MADE NO REPRESENTATION OR WARRANTY WHATSOEVER AND GUILFORD HAS NOT RELIED ON ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EXCEPT THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, GUILFORD ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, GUILFORD IS ACQUIRING THE ACQUIRED ASSETS ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY EXPRESS OR IMPLIED WARRANTIES AS TO THE FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR CONDITION OF THE ACQUIRED ASSETS OR AS TO ANY OTHER MATTER. 5 GUILFORD'S REPRESENTATIONS AND WARRANTIES 5.1 Guilford represents and warrants as of the Effective Date that: (a) Guilford is a corporation duly organized and validly existing under the laws of the State of Delaware. (b) The execution, delivery and performance by Guilford of this Agreement and each of the documents contemplated hereby to which Guilford is a 50 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. party are within Guilford's power, have been duly approved and authorized by all necessary action and do not contravene or constitute a default under the constitutive documents of Guilford or of Applicable Law or regulation or of any agreement, judgment, injunction, order, decree or other instrument binding upon Guilford. This Agreement is a legal, valid and binding agreement of Guilford enforceable in accordance with its terms. (c) Except for the requirement that both Guilford and Merck provide written notice to the FDA of the transfer of the NDA and the IND from Merck to Guilford and compliance with the requirements of the HSR Act, the execution, delivery and performance by Guilford of this Agreement and each of the documents contemplated hereby to which Guilford is a party require no action by or in respect of, or filing with, any governmental body, agency or official, or any other consent. (d) Guilford has complied and will comply in all material respects with the requirements of the HSR Act. (e) Guilford has not negotiated with or through any broker or finder in connection with this Agreement or the subject matter hereof. No broker's commission or finder's fee will be payable by either party as a result of this Agreement. (f) As of the Effective Date, Guilford has no existing research program with respect to any purpose or indication for the Product other than Covered Indications. 51 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (g) As of the Effective Data, Guilford has no existing plans or intention to effect or experience a "Change of Control" as defined in the Supply Agreement. (h) Guilford will not use any of the Marketing Materials in any way that violates Applicable Law or causes any liability to Merck. 6 POST-EFFECTIVE DATE ACTIVITIES OF MERCK 6.1 After the Effective Date and until the expiration of the Assigned Patents, neither Merck nor any of its Affiliates nor any of their respective successors or assigns shall: (a) directly or indirectly make, have made, use, market, sell, offer to sell, import or distribute tirofiban hyrdrochloride in the Territory (i) for Covered Indications (except for any sales to Guilford pursuant to the Supply Agreement or any sales for use outside of the Territory), or (ii) for Non-Covered Indications for which Guilford has exclusive rights under Section 2.15; or (b) directly or indirectly make, have made, use, market, sell, offer to sell, import or distribute tirofiban hyrdrochloride in the Territory (except for any sales to Guilford pursuant to the Supply Agreement, any sales for use outside of the Territory, or any manufacture, formulation or use as a comparator in clinical trials permitted by Section 6.2(c) below) for any indication in the following dosage forms and package presentations: 100 mL pre-mixed bag (containing 5mg tirofiban); 250 mL pre-mixed bag (containing 12.5 mg tirofiban); 50 mL vial (concentrate, containing 12.5 mg tirofiban); or 52 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) acquire or submit any investigational new drug application, new drug application or abbreviated new drug application, patent application, or request for approval of any Governmental Authority with respect to tirofiban hyrdrochloride in the Territory for the Covered Indications or for Non-Covered Indications for which Guilford has exclusive rights under Section 2.15. 6.2 Notwithstanding anything contained herein to the contrary, nothing in this Agreement shall be construed as restricting the ability of Merck or its Affiliates: (a) to Manufacture (whether such Manufacturing is performed inside or outside the Territory) the Product (i) pursuant to the Supply Agreement, or (ii) for marketing, distribution and sale outside the Territory, or (iii) for Non-Covered Indications for which Merck has exclusive rights under Section 2.15; or (b) from exercising its rights under the licenses granted pursuant to Sections 2.3(a), 2.13 and 2.15 in accordance with the terms, conditions and limitations of such licenses; or (c) to Manufacture, formulate and use tirofiban hyrdrochloride inside or outside the Territory solely for the purpose of using such compound as a comparator in one or more clinical studies inside or outside the Territory; or (d) to research, use, Manufacture, market, distribute or sell any pharmaceuticals, biologicals or chemical entities other than tirofiban hyrdrochloride inside or outside the Territory; or 53 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (e) to use any information, data, know-how, good will or intellectual property contained in the NDA and the IND in a manner consistent with Article 2 hereof. 6.3 Merck shall from and after the Effective Date and during the Transition Period cooperate with Guilford in the transition of the Product from Merck to Guilford through the Joint Committee. 6.4 Merck shall prepare and deliver to Guilford, on or before November 24, 2003, unaudited financial statements with respect to the Product in the Territory for calendar years 2000, 2001 and 2002 which are compliant with the rules and regulations of the United States Securities and Exchange Commission (and for the period ended on the Effective Date). Merck shall permit Guilford's independent auditors such access to books, records, work-papers, personnel and other materials at reasonable times and upon reasonable advance notice in order that such auditors may audit such financial statements in accordance with Securities Laws. Such audit shall commence upon receipt of such unaudited financial statements and shall be concluded on or before December 23, 2003. Merck shall cooperate with, and assist to the extent necessary, Guilford's independent auditor in the performance of such audit. 7 REGULATORY AFFAIRS NDA 7.1 At all times after the Effective Date and until the first to occur of (a) the date when Guilford transfers the Acquired Assets in accordance with Article 11 hereof or (b) two years after the expiration or termination of the Assigned Patents, Guilford will use reasonable commercial efforts to maintain the NDA and the IND for the Product, valid and in good standing and authorizing Guilford to manufacture and 54 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. sell tirofiban hydrochloride in the Territory under the name "AGGRASTAT." During such period: (a) Guilford shall not alter or impair the NDA or the IND in any manner that would impair Merck's ability to Manufacture API or the Product in accordance with its rights under this Agreement and the Supply Agreement, and (b) Guilford will promote the Product in a manner consistent with the Product's current labeling as in effect from time to time. REGULATORY COMPLIANCE 7.2 Within the time permitted under applicable regulations, each of Guilford and Merck shall file or cause to be filed with the FDA all notices, assignments, documents and/or other materials required by Applicable Law to be filed in connection with this Agreement, including without limitation the notices in the forms of Schedule 3.3 and FDA Form 356h. At all later times, each party shall make promptly any further filings and take any actions reasonably required to consummate the transactions contemplated hereby. 7.3 From and after the Effective Date, except to the extent otherwise provided in the Supply Agreement or the Transition Services Agreement, Guilford will be responsible for developing at its own expense, new product labeling (including without limitation new NDC numbers), package inserts, imprinting and packaging data as appropriate, for the Product. 7.4 From and after the Effective Date, except as set forth in Section 7.8, Guilford will be responsible for all regulatory compliance activities with respect to the Product in the Territory. MEDICAL INQUIRIES 55 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 7.5 Until the first to occur of (A) sixty (60) days after the Effective Date or (B) the date when Guilford notifies Merck that Guilford is prepared to assume responsibility for medical inquiries, Merck shall continue to respond to questions and inquiries relating to the Product raised by health care professionals and customers in the manner in which it responded to such questions prior to the Effective Date. Commencing promptly after the Effective Date, Guilford will establish and implement effective procedures and mechanisms for responding to such questions and inquiries and will notify Merck when such procedures and mechanisms are in place; provided, however, that in no event shall Merck have responsibility for such questions and inquiries more than sixty (60) days after the Effective Date, except in the case of medical emergency. 7.6 On the Effective Date (except as provided in Section 7.5), Guilford shall assume all responsibility for all correspondence and communication with physicians and other health care professionals in the Territory relating to the Product. Guilford shall keep such records and make such reports as shall be reasonably necessary to document such communications in compliance with all applicable regulatory requirements. ADVERSE EXPERIENCE AND REACTION REPORTING 7.7 Effective on the Effective Date, and continuing as long as the NDA for the Product is active with the FDA, Guilford and Merck shall be responsible for reporting Adverse Experiences and reactions in accordance with Section 9.1 of the Supply Agreement. REGULATORY REPORTING 7.8 After the Effective Date, Guilford shall have full responsibility for completing and filing the annual report and all other required reports in the Territory for the 56 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Product; provided, however, that Merck has filed or will file the annual report for 2003 for the Product and the IND annual progress report; and provided that Merck will cooperate in good faith to provide Guilford with any information relating to the Product in the Territory and reasonably requested by Guilford as necessary to comply with its obligations under Applicable US Laws. 7.9 After the Effective Date and so long as Merck sells tirofiban hyrdrochloride outside the Territory, Guilford shall send to Merck, within 30 days after filing with the FDA, a copy of each annual report for the NDA and the IND and any other filing in connection with the NDA or the IND, and any changes made to the product circular or product labeling for the Product free of charge. 7.10 CHANGE OF CONTROL. Section 11.3 of the Supply Agreement is incorporated herein to the extent applicable to this Agreement. Notwithstanding any provision of this Agreement or the Supply Agreement to the contrary, in the event of a transfer or Change of Control to a non-affiliated party such that the Resulting Entity is a Qualified Successor, Guilford shall be released from any further obligations under this Agreement; provided, however, that in the event of a transfer or Change of Control to a non-affiliated party such that the Resulting Entity is not a Qualified Successor, Guilford shall retain all of its obligations under this Agreement. Within thirty (30) days after the Effective Date, Guilford shall inform Merck in writing of (1) its net worth as of the date immediately following the Effective Date and (2) its debt rating as of the date immediately following the Effective Date. 7.11 CUSTOMER COMPLAINTS Merck and Guilford shall cooperate in good faith after the Effective Date to establish a procedure for the investigation of and response to customer 57 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. complaints with respect MSD Ireland Image Product (as defined in the Supply Agreement) sold prior to, on and after the Effective Date. 8 POST EFFECTIVE DATE USE OF MARKS 8.1 Beginning on the Effective Date, but except to the extent otherwise provided in the Transition Services Agreement and/or the Supply Agreement, Guilford shall mark clearly all units of the Product Manufactured, packaged or distributed by Guilford to indicate Guilford's ownership of the Product and will not use the words, names or combined letters "Merck", "Merck & Co., Inc.", "MMD", "Merck Manufacturing Division", "Merck Sharp & Dohme", "MSD," or any variation thereof or other word, name or letter combination substantially similar thereto, or any other trade name, trademark or trade dress substantially similar to that used by Merck in connection with the Product or otherwise, or as part of the name of Guilford or any Affiliate of Guilford, after the Effective Date. Except to the extent otherwise provided in the Supply Agreement, Guilford shall not give the impression to the public, to physicians or to the pharmaceutical marketplace that the Product is a product of Merck or in any way connected with Merck (except in a public announcement permitted under Section 10.9 or in accordance with Section 2.25). Notwithstanding the foregoing or any other provision of this Agreement or any of the other Transaction Documents to the contrary, Merck hereby grants to Guilford a non-exclusive, non-revocable, royalty free license, (i) which shall be in effect only during the Transition Period and thereafter only so long as necessary for Guilford to sell and distribute any MSD Ireland Image Product (as defined in the Supply Agreement) that is purchased by Guilford but not sold prior to the end of the Transition Period, in and to any and all Marks 58 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. owned by Merck and used on or with the Product in the Territory, to the extent reasonably necessary to permit Guilford to market, promote, sell and distribute the MSD Ireland Image Product in accordance with the Transition Services Agreement and (ii) which shall be in effect indefinitely, for historical reference as necessary to identify Guilford as Merck's successor with respect to the Product in the Territory. 8.2 Nothing in this Agreement gives to Merck any right to use the Trademark in association with, or for, any goods or services sold, offered for sale, marketed or advertised in the Territory except as set forth in Section 2.12 or in the Transition Services Agreement. However, Merck and its Affiliates shall have the right to use the Trademark in association with the Product; provided that the Product is only sold, marketed or advertised outside the Territory; and provided further that no such Product is knowingly sold, offered for sale, marketed or advertised outside the Territory for use in the Territory. 8.3 Until the later to occur of (i) two years after termination or expiration of the Supply Agreement and (ii) the earlier of (A) expiration of all Foreign Patents for the Product, and (B) the date of entry of a Final Order of a court having jurisdiction of the subject matter thereof declaring the last of the Foreign Patents for the Product invalid: (a) Guilford will not use the Trademark in association with any drug, product, item or service other than the Product, without Merck's specific written consent which shall not be unreasonably withheld or delayed; and (b) If Guilford intends to use, Manufacture, distribute or sell the Product in the form of a stereoisomer or other derivative other than the formulation 59 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. heretofore Manufactured and sold by Merck under the name "AGGRASTAT," Guilford shall notify Merck not less than six (6) months prior to such proposed use, Manufacture, distribution or sale; and (c) Guilford will not market, distribute or sell the Product outside the Territory. 9 MANUFACTURE AND MARKETING OF PRODUCT AFTER EFFECTIVE DATE 9.1 SUPPLY OF PRODUCT During the term of the Supply Agreement, MSD Ireland will Manufacture and/or supply the Product and the API in accordance with the terms and conditions of the Supply Agreement. 9.2 RETURNED PRODUCT (a) Merck shall be responsible for and shall give credit for all Returned Products sold or distributed on or prior to the Effective Date (determined by reference to lot number such that Merck shall be responsible for all lots sold or distributed in their entirety prior to the Effective Date) to (i) customers who purchased such Returned Products from Merck and return such Returned Products to Merck and (ii) Guilford if Guilford provides documentation that it provided credit to a customer who purchased such Returned Products from Merck and returned such Returned Products to Guilford. (b) Guilford shall be responsible for all Returned Products sold on or after the Effective Date (determined with reference to lot number such that Guilford shall be responsible for all lots sold or distributed in whole or in part on or after the Effective Date) to (i) customers who purchased such Returned 60 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Products from Merck or Guilford, as the case may be, and return such Returned Products to Guilford and (ii) Merck if Merck provides documentation that it provided credit to a customer who purchased such Returned Products from Merck or Guilford, as the case may be, and returned such Returned Products to Merck. (c) With respect to any lot some (but not all) of which has been sold or distributed by Merck prior to the Effective Date, the parties shall, within 30 days of the Effective Date, negotiate a credit to reflect Guilford's undertaking of responsibility with respect to returns out of that portion of such lots which were sold or distributed by Merck on or prior to the Effective Date, based on the portion of such lot sold prior to the Effective Date as compared to the portion sold after the Effective Date. (d) From and after the Effective Date, Merck shall keep adequate records of any Returned Product received by Merck and shall promptly notify Guilford of receipt of any Returned Product. Merck shall destroy such Returned Product in which event Merck shall provide such certifications regarding the destruction and cost of destruction of such Returned Product as Guilford shall reasonably require. Destruction by Merck of Returned Product for which Merck shall be responsible pursuant to Section 9.2(a) shall be at Merck's expense, and destruction by Merck of Returned Product for which Guilford shall be responsible pursuant to Section 9.2(b) shall be at Guilford's expense. Guilford shall have the right to be present at such destruction upon request if such request is made a reasonable time in advance of such destruction. 61 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (e) From and after the Effective Date and until the expiration of the time allowed for return of any Returned Products sold prior to the Effective Date, Guilford shall keep adequate records of any Returned Product received by Guilford and shall promptly notify Merck of receipt of any Returned Product that is subject to Section 9.2(a). Guilford shall destroy all such Returned Product and shall provide such certifications regarding the destruction and cost of destruction of such Returned Product as Merck shall reasonably require. Destruction by Guilford of Returned Product for which Merck shall be responsible pursuant to Section 9.2(a) shall be at Merck's expense, and destruction by Guilford of Returned Product for which Guilford shall be responsible pursuant to Section 9.2(b) shall be at Guilford's expense. Merck shall have the right to be present at such destruction upon request if such request is made a reasonable time in advance of such destruction. 9.3 CHARGEBACKS AND GPO ADMINISTRATIVE FEES. (a) Merck and Guilford acknowledge that the Contracts may not remain in place throughout the Transition Period. However, as provided in the letter attached as Schedule 3.9, during the Transition Period Guilford will make available to previously contracted customers the same discounts on the same terms and conditions as have been available under the Contracts immediately prior to the Effective Date. The payment of such discounts involves the administration and payment of chargebacks and the payment of administrative fees to certain group purchasing organizations. Merck will continue to administer the chargeback system during the Transition Period. Guilford shall have the right to make changes consistent with the 62 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. existing structure in the discounts available to up to fifty (50) customers at no additional charge upon written notice to Merck, it being understood that Guilford shall be responsible for customer interface in connection with any such changes. If Guilford desires to make more than the fifty (50) changes contemplated by the previous sentence, it may do so but shall be obligated to reimburse Merck $3,000 per change. Any such changes shall become effective in accordance with Merck's standard procedures but in no event prior to ten (10) days following such notice. Guilford will be responsible for all discounts and GPO administrative fees paid by Merck in accordance with this Section 9.3 in the manner set forth in the Transition Agreement. (b) Merck shall be responsible for processing all chargebacks arising from sales of Product bearing Merck's NDCs by wholesalers to customers in the Territory through the Transition Period. Merck shall be responsible for payment of all such chargeback claims submitted prior to the Effective Date and through thirty (30) days after the Effective Date. Guilford shall be responsible for payment of all such chargeback claims submitted more than thirty (30) days after the Effective Date (including without limitation chargeback claims arising from sales of any Supplied Product sold by Merck as distributor for Guilford pursuant to the Transition Services Agreement). Merck shall maintain and provide to Guilford accurate and complete records of all chargeback claims submitted prior to and through thirty (30) days after the Effective Date. (c) Merck shall be responsible for payment of all group purchasing organization ("GPO") administrative fees relating to sales of Product 63 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. bearing Merck's NDCs occurring prior to the Effective Date and through the Effective Date. Guilford shall be responsible for payment of all such administrative fees relating to sales of Product occurring after the Effective Date (including without limitation any Supplied Product sold by Merck as distributor for Guilford pursuant to the Transition Services Agreement). Merck shall maintain and provide to Guilford accurate and complete records necessary for Guilford to validate GPO administrative fee invoices. 9.4 [INTENTIONALLY OMITTED] 9.5 MEDICAID REBATES. Merck shall be responsible for processing all Medicaid Rebates for Product bearing Merck's NDCs. Guilford will cooperate as necessary to facilitate the processing of Medicaid Rebate claims by Merck. Merck shall be responsible for payment of all such Medicaid Rebates with respect to Product dispensed prior to the Effective Date and through forty-five (45) days after the Effective Date. Guilford shall reimburse Merck for all Medicaid Rebates paid by Merck with respect to Product dispensed more than forty-five (45) days after the Effective Date. 9.6 GUILFORD NDC NUMBERS. Guilford shall at all times have sole and exclusive responsibility for the processing and payment of any and all Rebates arising from or with respect to Product bearing Guilford's NDC numbers. 9.7 MEDICAID INFORMATION. (a) With respect to any Product sold after the Effective Date which bears an NDC number of Merck (including without limitation Product sold by Merck as distributor for Guilford under the Transition Services Agreement), Merck shall determine, in accordance with all applicable laws, the 64 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. following information: (a) the "best price" (as defined under the Social Security Act, 42 U.S.C. Section 1396r-8(c)(1)(C)) for each formulation and package size of Product identified by NDC number, (b) the "average manufacturer price" (as defined under the Social Security Act, 42 U.S.C. Section 1396r-8(k)(1)) ("best price" and "average manufacturer price" are collectively referred to as the "Drug Pricing Information"), and (c) the number of sales units and net dollars including discounts and rebates for each product and class of trade, each identified by NDC number (the "Utilization Information"). Merck shall use the Drug Pricing Information and the Utilization Information in Merck's reporting to the Centers for Medicare and Medicaid Services. Guilford agrees to provide to Merck any additional data or other information in Guilford's possession regarding sales or pricing of the Product which Merck reasonably requests as necessary for the calculation of the rebates or the Drug Pricing Information or Utilization Information as contemplated in this Section 9.7 (including without limitation all relevant information about Product sold by Guilford and all discounts, price reductions and other applicable adjustments). Merck shall compute and report the Drug Pricing Information and Utilization Information in accordance with all applicable laws, including, but not limited to, 42 U.S.C. Section 1396r-8. (b) With respect to Product sold by Guilford after the Effective Date which bears an NDC number of Guilford, in accordance with Section 9.6 of this Agreement, Guilford shall be responsible for all Rebates and for compliance with all requirements regarding the reporting of Drug Pricing Information. Merck shall provide to Guilford the baseline average 65 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. manufacturer price and any assumptions with respect to the calculation thereof for the Product. In the event that the Social Security Act or applicable regulations are amended or interpreted to require different or additional information, Merck shall supply such information as Guilford may reasonably request in order to satisfy such requirements. 9.8 FEDERAL SUPPLY SCHEDULE. (a) Merck and Guilford shall work together with the Veterans Administration National Acquisition Center to agree upon a mutually acceptable date to remove the Product from the Merck Federal Supply Schedule (the "MFSS") and add the Product to the Guilford Federal Supply Schedule. For any period after the Effective Date during which the Product is on the MFSS, Merck will process all chargebacks arising from purchases of Product by entities purchasing off the MFSS from and after thirty (30) days after the Effective Date and Merck will continue to perform such processing services for the Product as long as required by Applicable Laws; provided, however, that notwithstanding any provision hereof to the contrary, (A) Guilford will be responsible for all chargebacks, GPO administrative fees, rebates and discounts paid or credited by Merck to entities purchasing off the MFSS with respect to purchases more than thirty (30) days after the Effective Date, (B) if Merck is required under Applicable Laws to continue to list the Product on the MFSS after the supply of MSD Ireland Image Product (as defined in the Supply Agreement) has been depleted, Guilford will supply Merck with sufficient Product bearing its own image and NDC numbers ("Guilford Image Product") for Merck to discharge all its obligations under Applicable Law 66 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. with respect to the Product and the MFSS, and (C) Guilford will hold Merck harmless with respect to any claim, harm or liability arising from Merck's activities required under this paragraph, including without limitation Merck's supplying of Guilford Image Product under the MFSS. (b) With respect to any Product sold after the Effective Date which bears an NDC number of Merck (including without limitation Product sold by Merck as distributor for Guilford under the Transition Services Agreement), Merck shall determine the "non-Federal Average Manufacturer's Price" (as defined in Section 8126(h)(5) of Section 603 of the Veterans Healthcare Act of 1992, P.L.102-585) for each formulation and package size of Product identified by NDC number. Guilford agrees to provide Merck any additional information in Guilford's possession regarding sales or pricing of the Product which Merck reasonably requests as necessary for the calculation of pricing required to maintain Products on Merck's Federal Supply Schedule. Merck shall use all such information in Merck's reporting to the Veterans Administration National Acquisition Center. Merck shall compute and report the non-Federal Average Manufacturer's Price in accordance with all applicable laws, including, but not limited to, P.L.102-585. (c) With respect to Product sold after the Effective Date which bears an NDC number of Guilford, Guilford will be responsible for reporting all necessary information to the Veterans Administration National Acquisition Center. Merck shall provide to Guilford the necessary baseline information required by Guilford to establish the Products bearing Guilford's NDCs on Guilford's Federal Supply Schedule. Notwithstanding anything in this 67 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Agreement to the contrary, however, Merck shall be responsible for reporting the 2004 non-Federal Average Manufacturer's Price for the Products to the Veterans Administration National Acquisition Center. 9.9 SECTION 340B PRICING. Merck shall be responsible for all Section 340B reporting relating to Product bearing Merck's NDCs. Merck shall provide Guilford with the necessary pricing information for Guilford to include the Product bearing Guilford's NDCs on Guilford's Section 340B contract executed with the Office of Drug Pricing. 9.10 JOINT COMMITTEE. (a) After the Effective Date, a joint committee consisting of Merck and Guilford staff (both technical and commercial) will meet regularly in person or via teleconference to share insights, data and opinions regarding Guilford's development and execution of clinical and commercial plans with regard to the Product in the Territory and Merck's development and execution of clinical and commercial plans with regard to the Product outside the Territory. Neither party will have the right to interfere with or veto the other party's plans with respect to such other party's geography (i.e., in the Territory for Guilford, outside the Territory for Merck). The initial members of the Joint Committee will be (i) for Merck, Edgar Nouss and Peter DiBattiste, M.D., and (ii) for Guilford, Michael Kelly, Craig R. Smith, M.D. and John P. Brennan. The initial meeting of the Joint Committee will take place within thirty (30) days of the Effective Date. (b) Notwithstanding any provision hereof to the contrary, in the event of a Change of Control (as defined in the Supply Agreement), regardless of whether Merck consents to such Change of Control or terminates the Supply Agreement, at 68 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Merck's option, Sections 9.10 and 9.11 hereof will no longer have any force or effect. 9.11 CLINICAL DATA (a) Merck will be the owner of any new data relating to the Product that is obtained or generated through studies or research conducted or paid for, in whole or in part, by Merck (collectively "Merck Data"). *. Guilford will be the owner of any new data relating to the Product that is obtained or generated through studies or research conducted or paid for, in whole or in part, by Guilford ("Guilford Data"). (Merck Data and Guilford Data are hereinafter collectively referred to as "Data".) (b) Guilford will make any Guilford Data available to Merck through the Joint Committee. Merck will make any Merck Data available to Guilford through the Joint Committee. When Data is to be used in regulatory filings, the party supplying such Data to the other party will supply the Data in the format to be utilized for the filing, including the raw data in electronic format, and will work, in cooperation with the other party, towards a simultaneous global filing. All Data will be disclosed to the other party (subject to appropriate confidentiality provisions as determined by the disclosing party) not less than ten business days prior to any release by the disclosing party to the medical community or the general public. After Data is made public by the party owning such Data, the other party will be able to use such Data for marketing and promotion 69 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. within its own geography (i.e., Guilford in the Territory, Merck outside the Territory). 9.12 PUBLICATIONS AND ABSTRACTS (a) Merck hereby grants to Guilford a license, which shall be perpetual and royalty-free, to use any Merck Data solely for publications and abstracts subject to the following restriction: Guilford shall submit to Merck for prior Merck approval all manuscripts of publications or abstracts using Merck Data as far in advance as practicable and in no event less than forty-five (45) days before such publications, and at least thirty (30) days before such abstracts, are published or released to the medical community or the general public. If Merck in its reasonable discretion determines to reject the proposed use of such Merck Data, then Guilford shall not use or include such Merck Data in any publication or abstract disseminated to the medical community or general public. (b) Guilford hereby grants to Merck a license, which shall be perpetual and royalty-free, to use any Guilford Data solely for publications and abstracts subject to the following restriction: Merck shall submit to Guilford for prior Guilford approval all manuscripts of publications or abstracts using Guilford Data as far in advance as practicable and in no event less than forty-five (45) days before such publications, and at least thirty (30) days before such abstracts, are published or released to the medical community or the general public. If Guilford in its reasonable discretion determines to reject the proposed use of such Guilford Data, then Merck shall not use or include such Guilford Data in any publication or abstract disseminated to the medical community or general public. 70 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) The licenses granted by the Parties to each other in Section 9.11(b) shall be in addition to the rights granted elsewhere in this Agreement or in the Supply Agreement or Transition Services Agreement. 9.13 PCI CLINICAL RESEARCH (a) Performance of PCI Clinical Research by Guilford. If commercially REASONABLE, Guilford will perform a clinical study program of Guilford's design, including clinical trials, aimed at securing a PCI Claim for the Product ("PCI Clinical Research"). For illustrative purposes, a trial of the scale and cost of TARGET would fit the definition of "commercially reasonable" if Guilford had a reasonable basis for believing or expecting that in the view of the FDA the Guilford protocol, including the end point(s), was adequate to conduct a study aimed at obtaining a PCI Claim. The design and conduct of the PCI Clinical Research will be consistent with industry standards for studies of this type. Guilford will be solely responsible for and will fund the PCI Clinical Research and any future clinical development for the Product in the Territory. Guilford will afford Merck an opportunity to review and comment on Guilford's protocols for the PCI Clinical Research and publications generated by Guilford relating to the Product in connection with the PCI Clinical Research, but shall have no obligation to implement any of Merck's comments into the design of such Guilford protocols. (b) Milestones. It is understood that the PCI Clinical Research could benefit both parties and that Guilford's obligation to perform such research is a material consideration for this Agreement. Thus, if commercially reasonable as described above, Guilford will conduct the PCI Clinical Research according to the following timetable: 71 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Provide first Guilford protocol to Merck for review within 30 days prior to its scheduled meeting with the FDA; Meet with the FDA by January 2005; and Enroll first patient by January 2006. Although Guilford will use all reasonable efforts to meet the foregoing milestones, its success in doing so is dependent upon receipt of FDA approval and all required regulatory authorizations. To the extent that action or inaction by the FDA results in delays in scheduling the above-referenced meeting with the FDA or the commencement of the PCI Clinical Research, the foregoing milestones will be adjusted accordingly. (c) Merck's right of reference to PCI Data. Merck will have the right to receive all PCI Data in accordance with Section 9.11 and will have the right of reference to all PCI Data for research (including the performance of clinical trials) for any purpose or indication (including Covered Indications and Non-Covered Indications) and for any other purpose that is consistent with Merck's obligations under Section 6.1 hereof. If Merck, at its option, desires to use any PCI Data for purposes of regulatory submissions to procure an expanded label outside the Territory, Merck shall have and Guilford hereby grants, subject to payment by Merck as contemplated by the last sentence of this Section 9.13(c), a perpetual, royalty-free license to use and reference any and all PCI Data and any and all data and know-how in the NDA relating to the PCI Clinical Research and the PCI Data for the purpose of regulatory development and commercialization of the Product outside the Territory. In the event that Merck desires to exercise its rights under such license, Merck shall notify Guilford of such desire, and Guilford shall then inform Merck of the total cost to 72 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Guilford of the PCI Clinical Research. In consideration of the license granted pursuant to the preceding sentence, Merck shall pay to Guilford up to one-half of such total cost, the specific amount of which shall be agreed to by the parties in good faith in light of the proposed use by Merck. (d) Merck audit right. Merck shall have the right, through an independent accounting firm that is reasonably acceptable to Guilford, to audit Guilford upon reasonable notice in order to verify the information provided to Merck pursuant to this Section 9.13. Such audit will be at Merck's expense unless it is determined that the cost figures provided to Merck overstated the actual cost by ten percent (10%) or more, in which case the cost of the audit will be paid by Guilford. 9.14 LIMITATION OF LIABILITY FOR ACTIONS AFTER THE EFFECTIVE DATE. The Parties acknowledge and agree that after the Effective Date, notwithstanding any provision of this Agreement, they will remain as independent contractors and will not be engaged in a partnership, joint venture or fiduciary relationship by virtue of any activities contemplated by this Agreement, and they will have no liability to each other arising from or under this Agreement except as specifically set forth herein or in the Supply Agreement, the Quality Agreement or the Transition Services Agreement. Without limiting the foregoing, participation by the Parties on the Joint Committee shall not be deemed to create a partnership, joint venture or fiduciary relationship and any such participation, and all acts or omissions with respect to the Joint Committee and all communications made by either party as a member of or the Joint Committee or otherwise pursuant to Section 9.10 or 9.11 hereof (including all Data disclosed by one party to another), shall be deemed to be as a volunteer without consideration or obligation of any kind whatsoever, and no such actions or communications shall give rise to any 73 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. liability in contract or tort unless except to the extent that such action or communication is illegal or constitutes willful misconduct or violates the confidentiality provisions set forth in Article 10. 74 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 10 CONFIDENTIALITY 10.1 Guilford will preserve, and will cause each of its Affiliates, employees and agents to preserve, the confidentiality of the Merck Confidential Information and the Joint Confidential Information; provided that (i) Guilford may disclose such information to its employees, attorneys, financial advisors, lenders, agents and Affiliates on a need-to-know basis and, with respect to Joint Confidential Information and the terms and conditions of this Agreement and the other Transaction Documents (including those set forth on Schedule 10), to accredited potential investors in financings or related capital raising transactions by Guilford or its Affiliates for purposes of such financings or related capital raising transactions; provided that Guilford shall not use or disclose any such Confidential Information for the Manufacture of Product for sale or use outside the Territory (Guilford represents and warrants that all such Persons will be bound by this Article 10 or otherwise subject to confidentiality obligations for the benefit of Merck and that such Persons will use such Confidential Information solely for the purposes on which the need to know was established and will not disclose such Confidential Information to any other Person), and (ii) Guilford and its Affiliates may use and disclose any Merck Confidential Information and Joint Confidential Information which has been publicly disclosed (other than directly or indirectly by Guilford or any of its employees, attorneys, financial advisors, lenders, agents and/or Affiliates) or which is otherwise permitted to be disclosed under this Agreement (including without limitation in accordance with the terms of Section 2.23) or the other Transaction Documents, and (iii) to the extent that Guilford or any Affiliate may become legally compelled or required under Applicable US Laws or Securities Laws to disclose any of such Merck Confidential Information or Joint 75 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Confidential Information, Guilford or such Affiliate may (to the extent so compelled or required) disclose such Confidential Information if it shall have first used reasonable efforts in good faith, and shall have afforded Merck the opportunity, to obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the Merck Confidential Information or Joint Confidential Information required to be so disclosed. 10.2 Merck will preserve, and will cause each of its Affiliates, employees and agents to preserve, the confidentiality of the Guilford Confidential Information and the Joint Confidential Information and will use and disclose such information only for the purposes contemplated by this Agreement and the other Transaction Documents (for avoidance of doubt, Merck may use and disclose Joint Confidential Information for any purpose related to Manufacturing the Product or for any other purpose subject to the restrictions on Merck's post-Effective Date activities set forth in Section 6.1), provided that (i) Merck may disclose such information to its attorneys, financial advisors, lenders, agents and Affiliates on a need-to-know basis and that such persons will not use such information except for the purposes contemplated by this Agreement and the other Transaction Documents, (Merck represents and warrants that all such persons will be bound by this Article 10 or otherwise subject to confidentiality obligations for the benefit of Guilford and that such Persons will use such Confidential Information solely for the purposes on which the need to know was established and will not disclose such Confidential Information to any other Person), and (ii) Merck and its Affiliates may use and disclose any Guilford Confidential Information and Joint Confidential Information which has been publicly disclosed (other than directly or indirectly by Merck or any of its employees, attorneys, financial advisors, lenders, 76 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. agents and/or Affiliates) or which is otherwise permitted to be disclosed under this Agreement or the Supply Agreement, provided that, if such Confidential Information is Joint Confidential Information, Merck will, and will cause any Affiliate or third party manufacturer to, maintain its confidentiality only to the extent that maintenance of its confidentiality does not unreasonably interfere with Merck's or its Affiliates' or third party manufacturer's ability to Manufacture the Product or to use, market or sell the Product outside the Territory or manufacture, use, market or sell any or all of the Excluded Assets; and (iii) to the extent that Merck or any Affiliate may become legally compelled to disclose any of such Guilford Confidential Information or Joint Confidential Information, Merck or such Affiliate may (to the extent so compelled) disclose such Guilford Confidential Information if it shall have first used reasonable efforts in good faith, and shall have afforded Guilford the opportunity, to obtain an appropriate protective order, or other satisfactory assurance of confidential treatment, for the Guilford Confidential Information or Joint Confidential Information required to be so disclosed. Nothing in this Section 10.2 shall limit Merck's (or its Affiliates') ability to use or disclose Joint Confidential Information to Manufacture, have Manufactured, use and/or sell the Product outside the Territory or manufacture, have manufactured, use and/or sell any other product, including the registration of the Product or any other product with any health authority outside the Territory. 10.3 Notwithstanding any provision of this Agreement, the Supply Agreement or any of the Transaction Documents to the contrary, any Person with respect to whom participation, in any capacity, in the transactions contemplated by this Agreement or the other Transaction Documents has been discussed (and each employee, representative, or other agent of such Person) may disclose to any and all other 77 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and the other Transaction Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such Person relating to such tax treatment and tax structure. The foregoing is intended solely to comply with the presumption set forth in Treasury Regulation Section 1.6011-4(b)(3)(iii) and is not intended to permit the disclosure of any information to the extent such disclosure is not required in order to avoid any transaction contemplated by any of the Transaction Documents being treated as a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4(b). This Section 10.3 shall not be construed as a waiver of the attorney-client privilege or any other privileges, including under Section 7525 of the Internal Revenue Code. 10.4 Notwithstanding the provisions of this Article 10, Merck acknowledges and agrees that Guilford may be required to disclose some or all of the Confidential Information included in this Agreement and/or the other Transaction Documents, including Joint Confidential Information or Merck Confidential Information and the terms and conditions of the Transaction Documents, in order to comply with its obligations under Securities Laws in the Territory and Guilford shall not be deemed to be prohibited from so doing; provided, however, that Guilford shall use commercially reasonable efforts to seek confidential treatment of all Merck Confidential Information and Joint Confidential Information and the terms and conditions of the Transaction Documents set forth on Schedule 10, and provided, further, that to the extent permitted under Applicable US Laws and Securities Laws, all Merck Confidential Information and Joint Confidential Information shall be redacted from any publication of such agreement or agreements. It is 78 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. understood and agreed that the Merck Confidential Information contains confidential, competitive and proprietary information, the public release of which would be seriously detrimental to Merck. Guilford shall provide prompt written notice to Merck if Guilford shall determine that any Merck Confidential Information and/or Joint Confidential Information must be made public under Applicable US Law or Securities Laws in the Territory, specifically identifying such Merck Confidential Information and/or Joint Confidential Information and the reason why it must be made public, and in such event Merck shall have the right to seek protection of the Merck Confidential Information and/or Joint Confidential Information, as the case may be. Guilford shall provide to Merck reasonable assistance in order to secure available protections to limit the disclosure of Merck Confidential Information and/or Joint Confidential Information, as the case may be. 10.5 The obligations of confidentiality and non-use contained in this Article 10 shall not extend or apply to Confidential Information that: (i) is in or enters the public domain without breach of this Asset Agreement or the other Transaction Documents; or (ii) is disclosed to the receiving party without restriction by a third party having the right to disclose the same. In addition, the obligations of confidentiality and non-use contained in this Article 10 shall not extend or apply to Confidential Information that (i) is first disclosed after the Effective Date and (ii) can be shown to have been known by the receiving party prior to such disclosure or is independently developed by the receiving party. 79 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 10.6 Nothing in this Article 10 shall be interpreted to limit the ability of either party to disclose its own Confidential Information (not including Joint Confidential Information or the terms and conditions of the Transaction Documents listed on Schedule 10) to any other Person on such terms and subject to such conditions as such party deems advisable or appropriate. 10.7 Unless otherwise agreed by the parties in a subsequent written agreement, in the event of cancellation, termination or expiration of the Supply Agreement, each party shall immediately return to the other party (or at the option of the disclosing party destroy and certify to the destruction of) all of the other party's Confidential Information furnished in connection with the Supply Agreement, including all copies or summaries thereof. 10.8 The obligations of confidentiality and non-use contained in this Article 10 relating to Joint Confidential Information shall continue until the cancellation, termination or expiration of the Supply Agreement; provided, however, that (i) if the Supply Agreement is terminated pursuant to (A) Section 11.2 thereof by Merck or (B) Section 11.7 thereof by Guilford, then the obligations of confidentiality and non-use relating to Joint Confidential Information with respect to Guilford (and its Affiliates and agents) only shall continue for a period of ten (10) years following such termination of the Supply Agreement and (ii) if the Supply Agreement is terminated pursuant to Section 11.2 thereof by Guilford, then the obligations of confidentiality relating to Joint Confidential Information with respect to Merck (and its Affiliates and agents) only shall continue for a period of ten (10) years following such termination of the Supply Agreement. The obligations of confidentiality and non-use contained in this Article 10 with respect to Guilford Confidential Information and Merck Confidential Information shall continue until 80 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. ten (10) years following the cancellation, termination or expiration of the Supply Agreement. 10.9 For a period of thirty (30) days after the Effective Date, no press release or public announcement regarding the terms of this Agreement or the Supply Agreement shall be made by either party without the prior written consent (which shall not be unreasonably withheld and shall be provided or denied within 48 hours of the date such consent to any such press release, public announcement or other communication to the public is requested by the requesting party) of the other party with respect to the form, content, timing and means of dissemination of such press release, public announcement or other communication to the public (other than Product advertising, provided that Guilford shall not use the word "Merck" or the other words or names referred to in Section 8.1 except to the extent otherwise permitted in the Transaction Documents); provided, that (i) public announcements substantially in the forms attached hereto as Schedules 10.9(a) and 10.9(b) and (ii) letters to wholesalers, doctors, GPOs and other customers substantially in the form reviewed by Merck prior to the Effective Date, in each case are hereby approved by both parties. 10.10 Notwithstanding any obligation contained in this Agreement and/or the Supply Agreement to the contrary, Merck shall not be required to disclose any information of a third party manufacturer to the extent (in Merck's reasonable judgment) that the disclosure of such information is prohibited by an agreement as to confidentiality with such third party manufacturer; provided, that Merck shall cooperate with Guilford in obtaining such third party consent; but shall not be held liable for failure to obtain such consent. 11 RIGHT OF FIRST NEGOTIATION; RIGHT OF FIRST REFUSAL FOR CANADA 81 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 11.1 RIGHT OF FIRST NEGOTIATION. (a) If at any time prior to expiration of the Assigned Patents Merck chooses to sell or license the rights to promote, market and sell the Product (i) in any countries or group of countries outside the Territory except to the extent Canada is included among such countries (in which case Section 11.2 shall apply) or (ii) in any one specific country outside the Territory unless that country is Canada (in which case Section 11.2 shall apply), Guilford will have a right of first negotiation with respect to the purchase or license of all but not less than all of such rights from Merck. Such right of first negotiation shall be exercised as follows: Merck will provide Guilford with written notice of such negotiation opportunity prior to initiating discussions with any third party. Such notice shall include a data sheet (the "Data Sheet") setting forth the proposed territory, the proposed indication, applicable patent rights and expiration dates, sales in such proposed territory for the last five (5) years by month and year and sales/promotional support information. From the date of delivery of such written notice and Data Sheet and for a period of up to sixty (60) days thereafter, Guilford shall have the exclusive right to enter into negotiations with Merck for such sale or license and Merck shall negotiate in good faith with Guilford during such period, subject to the following. If Guilford desires to engage in discussions with respect to such Data Sheet, it shall notify Merck of such desire within ten (10) business days of receipt of the Data Sheet and Merck and Guilford shall cause a meeting of their respective management representatives within ten (10) business days of Guilford providing such notice. Within ten (10) business days after such meeting, Guilford shall notify Merck whether it desires to continue such discussions and, if not, whether Guilford in good faith would be interested in future discussions regarding 82 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. any one or a subset of the countries in the proposed territory. If Guilford notifies Merck that it desires to continue discussions regarding the Data Sheet, Merck and Guilford shall negotiate in good faith the terms and conditions of such sale or license for the remaining portion of such sixty (60) day period. If after engaging in such discussions for the remainder of such period the parties are unable to reach a mutually acceptable agreement, Merck shall have the right to freely negotiate with third parties for the sale or license of the rights to promote, market and sell the Product (i) in all countries or any group of countries outside the Territory (other than Canada) that were included in the Data Sheet or (ii) in any one specific country outside the Territory (other than Canada) that was included in the Data Sheet; provided, however, that if Merck elects to proceed with the sale or license of such rights in some, but not all, of the countries in the proposed territory contemplated by the Data Sheet, it may do so but Guilford shall retain the right of first negotiation contemplated by this Section 11.1(a) to the extent of any country with respect to which (i) Guilford indicated it was interested in future discussions and (ii) Merck has not sold or licensed the rights in the Product in accordance with this Section 11.1(a) in such country(ies). (b) If at any time prior to expiration of the Assigned Patents, Guilford chooses to sell or license any of the Acquired Assets or the rights acquired thereunder to a third party, Merck shall have a right of first negotiation with respect to the purchase or license of all but not less than all of such Acquired Assets or rights from Guilford. Such right of first negotiation shall be exercised as follows: Guilford will provide Merck with written notice of such negotiation opportunity prior to initiating discussions with any third party. From the date of delivery of such written notice and for a period of up to sixty (60) days thereafter, Merck shall have the 83 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. exclusive right to enter into negotiations with Guilford for such sale or license and Guilford shall negotiate in good faith with Merck during such period, subject to the following. Within ten (10) business days of the receipt of such notice, Merck shall provide written notice of whether it desires to exercise its right of first negotiation. In the event Merck provides notice that it desire to exercise its right of first negotiation, Guilford and Merck shall cause a meeting of their respective management representatives within ten (10) business days to negotiate in good faith the terms and conditions of such sale or license. If after engaging in such discussions for such sixty (60) business day period the parties are unable to reach a mutually acceptable agreement, Guilford shall have the right to freely negotiate with third parties for the sale or license of the Acquired Assets and to consummate any such sale. 11.2 RIGHTS OF FIRST NEGOTIATION AND FIRST REFUSAL WITH RESPECT TO CANADA. If at any time prior to expiration of the Assigned Patents Merck chooses to sell or license the rights to promote, market and sell the Product in Canada, Guilford will have both a right of first negotiation and a right of first refusal with respect to the purchase or license of all but not less than all of such rights from Merck. Such rights of first negotiation and first refusal shall be exercised as follows. Merck will provide Guilford with written notice of such negotiation opportunity prior to initiating discussions with any third party. Such notice shall include a data sheet (the "Canada Data Sheet") setting forth the proposed indication, applicable patent rights and expiration dates, sales in such territory for the past five (5) years by month and year and sales/promotional support information. From the date of delivery of such written notice and Canada Data Sheet and for a period of up to sixty (60) days thereafter, Guilford shall have the exclusive right to enter 84 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. into negotiations with Merck for such sale or license and Merck shall negotiate in good faith with Guilford during such period, subject to the following. If Guilford desires to engage in discussions with respect to such Canada Data Sheet, it shall notify Merck of such desire within ten (10) business days of receipt of the Canada Data Sheet and Merck and Guilford shall cause a meeting of their respective management representatives within ten (10) business days of Guilford providing such notice. Within ten (10) business days after such meeting, Guilford shall notify Merck whether it desires in good faith to continue such discussions. If Guilford does not indicate it desires to continue such discussions or, after engaging in such discussions for such sixty (60) day period the parties are unable to reach a mutually acceptable agreement, Merck shall have the right to freely negotiate with third parties for the sale or license of the rights to promote, market and sell the Product in Canada; provided, that notwithstanding the foregoing, Merck shall not execute an agreement with a third party for the sale or license of the rights to promote, market and sell the Product in Canada unless Merck shall provide Guilford a right of first refusal as follows: If Merck receives a bona fide, third party offer to purchase such rights in Canada (the "Offer"), Merck shall provide written notice to Guilford setting forth in reasonable detail the terms and conditions of the Offer between Merck and such third party. Upon receipt of such Offer and for a period of thirty (30) days thereafter, Guilford shall have the right to provide Merck notice that it desires to enter into negotiations on the same terms and conditions as contained in the Offer. In such event, Merck and Guilford shall negotiate in good faith to reach definitive agreements within thirty (30) days of such notice from Guilford. In the event that Guilford does not elect to proceed with negotiations or the parties are unable to reach definitive 85 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. agreements within such thirty (30) day period, then Merck shall have the right to enter into an agreement with such third party substantially on the terms and conditions reflected in the Offer presented to Guilford pursuant to this Section 11.2. In the event that the terms and conditions of the Offer between Merck and such third party shall materially change after delivery of the Offer to Guilford, Guilford shall have a separate right of first refusal as to such revised Offer for ten (10) business days following receipt of such notice in accordance with this Section 11.2. 12 SURVIVAL; REMEDIES 12.1 All representations and warranties of the parties contained herein shall survive the Effective Date until the last to occur of (a) ten (10) years after the Effective Date or (b) two years after the expiration or termination of the Assigned Patents. The covenants and agreements of Merck and Guilford hereunder that require by their terms performance or compliance on and after the Effective Date shall continue in force thereafter in accordance with their terms or if no term is specified, indefinitely. After the Effective Date all licenses and rights of reference granted hereunder to either party shall survive expiration or termination of this Agreement. MATERIAL BREACH; EQUITABLE REMEDIES 12.2 The parties recognize that material breach by a party of any of the obligations set forth in Article 10 of this Agreement would require a different remedy than other possible material breaches of this Agreement. In the event that such a material breach occurs or is threatened, damages to the non-breaching party will not be readily ascertainable, irreparable harm to the such party may occur, and such party will not have an adequate remedy at law. The parties therefore stipulate 86 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. and agree that in the event a material breach of any of the obligations set forth under Article 10 of this Agreement occurs or is threatened, the non-breaching party may seek equitable relief from any competent court in New Jersey or in the jurisdiction where the breach occurs or is threatened (including without limitation a temporary restraining order and/or preliminary and permanent injunction) notwithstanding the arbitration provisions set forth in Section 15.12 hereof. 13 INDEMNIFICATION 13.1 INDEMNIFICATION BY MERCK. Merck shall indemnify and hold harmless Guilford, its Affiliates and its and their directors, officers, shareholders, employees and agents, and their respective successors and permitted assigns (the "Guilford Indemnitees"), against, and defend the Guilford Indemnitees against, any and all claims, actions, causes of action, suits, proceedings, damages, losses, liabilities and expenses (including, without limitation, reasonable attorneys' fees and expenses) (collectively "Claims") and the cost of remedial action under Applicable Laws and regulations incurred or suffered by Guilford Indemnitees arising out of (i) any misrepresentation or breach of covenant, agreement, representation or warranty of Merck contained in this Agreement or (ii) any Excluded Liability; provided, however, that Guilford shall not be entitled to any indemnification under this Section 13.1 or any other basis of action (including without limitation common law tort and indemnity law), except for claims based on gross negligence or willful misconduct arising under this Agreement, unless and until the amount of claims for which Guilford is entitled to be indemnified exceeds in the aggregate US $250,000 (the "Basket"); and further provided that the total and aggregate liability of Merck for indemnity of Guilford Indemnitees 87 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. under this Section 13.1 (and the comparable provisions of the other Transaction Documents) or any other basis of action (including without limitation common law tort and indemnity law), except for claims based on gross negligence or willful misconduct arising under this Agreement, shall not exceed the aggregate of (i) US $84,000,000.00, plus (ii) any and all Royalty Payments paid to Merck through the date when a payment pursuant to this Section 13.1 becomes due (the "Maximum"); and provided further that the indemnification by Merck pursuant to this Section 13.1 shall relate exclusively to Claims arising under this Agreement and shall not relate to any damage, loss, liability and expense or other matter arising under any representation, warranty, covenant or agreement in the Supply Agreement or the Transition Services Agreement. 13.2 INDEMNIFICATION BY GUILFORD. Guilford shall indemnify and hold harmless Merck, its Affiliates and its and their directors, officers, shareholders, employees and agents, and their respective successors and permitted assigns (the "Merck Indemnitees"), against, and defend Merck Indemnitees against any and all Claims and the cost of remedial action under Applicable Laws and regulations incurred or suffered by Merck Indemnitees arising out of (i) any misrepresentation or breach of covenant, agreement, representation or warranty of Guilford contained in this Agreement, or (ii) subject to the accuracy of the representations and warranties contained in Section 4.1, any Assumed Liability; provided, however, that the total and aggregate liability of Guilford for indemnity of Merck Indemnitees under this Section 13.2 or any other basis of action (including without limitation common law tort and indemnity law), except for claims based on gross negligence or willful misconduct arising under this Agreement, shall not exceed the Maximum. 88 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 13.3 INDEMNIFICATION; NOTICE AND SETTLEMENTS. A party seeking indemnification pursuant to Section 13.1 or 13.2 (an "indemnified party") shall give prompt notice to the party from whom such indemnification is sought (the "indemnifying party") of the assertion of any claim, or the commencement of any action or proceeding, in respect of which indemnity may be sought hereunder. The indemnifying party shall have the right to, and shall at the request of the indemnified party, assume the defense, with counsel reasonably satisfactory to the indemnified party, of any such suit, action or proceeding at its own expense; provided, that in the event any such indemnifying party shall assume the defense of any such claim, such indemnifying party may reserve its rights as to its ultimate liability with respect to the Claim but in such event, and until the indemnifying party shall assume liability for such Claim as an indemnified claim under this Article 13, the indemnified party shall have the right to participate in such defense and to consent to any proposed settlement. An indemnifying party shall not be liable under Section 13.1 or 13.2 for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder, which consent shall not be unreasonably withheld. 13.4 GUILFORD INSURANCE. At all times until the later of (a) ten years after the Effective Date or (b) two years after the date when Merck has proffered the last Products which it is obligated to proffer to Guilford under the Supply Agreement and the Supply Agreement is no longer in effect, Guilford shall maintain standard products/liability/completed operations insurance covering all claims against Guilford whatsoever and howsoever arising from the Manufacture, distribution, sale or use of the Product by Guilford, its servants, employees, agents and assigns, with coverage limits of not less than $10,000,000 per occurrence and in 89 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. the aggregate a deductible of not more than $1,000,000 for all claims made within any year (the "Insurance"). Without limitation of the foregoing, the Insurance obtained by Guilford shall be effective commencing on the Effective Date and shall cover Merck as an additional insured with respect to such claims. Guilford shall continue to make premium payments on the Insurance for as long as necessary to keep the Insurance in full force and effect during the required period. If Guilford fails for any reason to make such premium payments in a timely fashion, Merck shall have the right to make such payments at the expense of Guilford. Guilford shall request its insurer or its agent give Merck prompt written notice if Guilford fails to make a required premium payment in a timely fashion such that Merck shall have not less than ten (10) business days after receipt of such notice to make such premium payments. Guilford shall immediately notify Merck of any change in the status of the Insurance and shall, at Merck's request, provide Merck with a certificate of insurance attesting that the Insurance remains in full force and effect. 14 MISCELLANEOUS 14.1 NOTICES. All notices, requests and other communications to any party hereunder shall be in writing and shall be sent by fax and by first class mail or nationally recognized overnight delivery service: If to Merck to: Merck & Co., Inc. 351 North Sumneytown Pike North Wales, PA 19454-2505 Attn: Executive Director, USHH Business Development Facsimile: 215-616-2335 with a copy to: 90 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Bruce Hartman, Esq. Legal Department UG4A-45 Merck & Co., Inc. 351 N. Sumneytown Pike North Wales, PA 19454-2505 Facsimile: 267-305-2965 If to Guilford, to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: Chief Financial Officer Facsimile: (410) 631-6899 With a copy to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: General Counsel Facsimile: (410) 631-5598 or such other address as such party may hereafter specify by written notice to the other party. Each such notice, request or other communication shall be effective when received at the address specified in this Section 14.1. 14.2 EXPENSES. All legal and other costs and expenses incurred in connection herewith and the transactions contemplated hereby shall (except as otherwise provided herein) be paid by the party incurring such expenses. 14.3 BULK SALES STATUTES. Guilford hereby waives compliance by Merck with any applicable bulk sales statutes in any jurisdiction in connection with the transactions under this Agreement. In consideration of such waiver, Merck will indemnify and hold Guilford harmless for any claim asserted by a third party against Guilford arising from any alleged lack of compliance with any applicable bulk sales statutes. 91 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 14.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may not be assigned by either party without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld or delayed; provided, that (i) Guilford shall have the right to grant a security interest in or collaterally assign this Agreement to the extent required in connection with its financing arrangements relating to the transactions contemplated by this Agreement and the Transaction Documents upon written notice to Merck, such grant or assignment to include the right of the grantee or the assignee to foreclose upon such security interests as collateral upon default by Guilford and, in such event, to sell, assign, license or otherwise dispose of such security interest or collateral to a third party; provided, however, that any such sale, assignment, license or other disposal shall be subject to the provisions of Section 11.3 of the Supply Agreement to the extent applicable, and (ii) each of Guilford and Merck shall have the right to assign this Agreement to any of their respective Affiliates without the prior written consent of the other party, provided that no such assignment of this Agreement shall relieve the assignor of any of its obligations or liabilities under this Agreement. Any attempted assignment in violation of this Section 14.4 shall be void. Notwithstanding the foregoing, the prohibition on assignment set forth in this Section 14.4 shall not apply to any assignment that constitutes a Change of Control, which shall be governed by the provisions of Section 7.10. 14.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement, including, without limitation, the Schedules hereto, together with the other Transaction Documents, embodies the entire agreement of the parties hereto with respect to the subject matter 92 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. hereof and supersedes any and all prior agreements with respect thereto. No waiver, amendment or modification of any provision hereof or of any right or remedy hereunder shall be effective unless in writing and signed by the party against whom such waiver, amendment or modification is sought to be enforced. 14.6 RELATIONSHIP OF SUPPLY AGREEMENT, QUALITY AGREEMENT AND TRANSITION SERVICES AGREEMENT. Notwithstanding Section 14.5 above or any other provision of this Agreement or the Supply Agreement, Quality Agreement or the Transition Services Agreement to the contrary, the Supply Agreement, Quality Agreement, the Transition Services Agreement and this Agreement shall each stand as independent agreements between the parties. Without limitation of the foregoing, the provisions of this Agreement, the Supply Agreement, Quality Agreement and the Transition Services Agreement with respect to indemnification by Guilford and Merck shall remain independently effective and none of such contracts shall be deemed to supersede, augment or limit the indemnification obligations imposed on Guilford or Merck by the other, except that the Maximum shall be cumulative under all such agreements. 14.7 CAPTIONS; CONSTRUCTION. Captions herein are inserted for convenience of reference only and shall be ignored in the construction or interpretation of this Agreement. Unless otherwise specified, the words "herein", "hereof" and terms of like import shall be deemed to refer to the Agreement as a whole and not merely to a single part thereof. 14.8 GOVERNING LAW. This Agreement shall be governed by, interpreted and construed, and all claims and disputes, whether in tort, contract or otherwise be resolved in accordance with the substantive laws of the State of New Jersey without reference to any rules of conflict of laws thereof. 93 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. JURISDICTION; VENUE; ARBITRATION AND OTHER REMEDIES 14.9 JURISDICTION. In the event of any controversy or claim arising out of or relating to this Agreement, performance hereunder, termination hereof, or relationship created hereby, each party irrevocably submits to the exclusive jurisdiction of the courts of the State of New Jersey and the Federal courts of the United States District Court for the District of New Jersey for the purposes of any suit, action or other proceeding arising out of this Agreement or transactions contemplated hereby. Each party irrevocably and unconditionally waives any objection to the laying of venue in the state and Federal courts of New Jersey as stated above and that any such action was brought in an inconvenient forum. Notwithstanding the foregoing: 14.10 INJUNCTION. In the event of a threatened disclosure in violation of this Agreement, either party shall have the right (notwithstanding Section 14.11 below) to seek injunctive relief from any competent court in New Jersey or in the jurisdiction where the disclosure is threatened to prevent such disclosure pending resolution of the merits of the dispute; 14.11 ARBITRATION. Subject to Sections 12.2 and 14.10, any controversy, claim or dispute between the parties hereto arising out of or relating to the performance, construction, interpretation or enforcement of this Agreement shall be submitted to binding confidential arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. in accordance with the Rules of Commercial Arbitration of the American Arbitration Association or its successor. Any arbitration pursuant to this Agreement shall be conducted in New Jersey by three neutral arbitrators selected by the American Arbitration Association. The judgment upon the award rendered in any such arbitration shall be final and binding upon the parties and 94 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. may be entered in any court having jurisdiction thereof. All fees and expenses of the arbitrators and all other expenses of the arbitration, except for attorney's fees, shall be shared equally by the parties. Each party shall bear its own attorneys fees and costs. 14.12 CONSENT AND WAIVER REGARDING SERVICE OF PROCESS AND PERSONAL JURISDICTION. In any action, suit, arbitration or proceeding to enforce the rights of either party under this Agreement or otherwise arising out of this Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Agreement or the transactions contemplated hereby, each party, by execution and delivery of this Agreement, expressly and irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action, suit, arbitration or proceeding by delivery thereof to it by hand or by any other manner provided for in Section 14.1 hereof. Each party hereby expressly and irrevocably waives any claim or defense in any such action, suit, arbitration or proceeding based on any alleged lack of personal jurisdiction, improper venue, forum non conveniens or any similar doctrine or theory. 14.13 WAIVER OF JURY TRIAL. In any action, suit, arbitration or proceeding to enforce the rights of either party under this Agreement or otherwise arising out of this Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Agreement or the transactions contemplated hereby, the parties hereto, by execution and delivery of this Agreement, expressly and irrevocably waive their right to a jury trial and stipulate that any such action, suit or proceeding shall be tried to the court (or arbitrator if the proceeding is under Section 14.12 hereof). 95 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 14.14 WAIVER. No waiver by any party in one or more instances of any of the provisions of this Agreement or the breach thereof shall establish a precedent for any other instance with respect to that or any other provision. Furthermore, in case of waiver of a particular provision, all other provisions of this Agreement will continue in full force and effect. 14.15 SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable, all other provisions shall nevertheless continue in full force and effect. 14.16 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. 14.17 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities. 14.18 COMPLIANCE WITH LAWS AND REGULATIONS. In performing their obligations pursuant to this Agreement, the parties hereto agree and covenant that they will comply with all applicable federal, state, and local laws and regulations. 14.19 NO PRESUMPTION. There shall not be any presumption against either party hereto on the ground that such party was responsible for drafting or preparing the term sheet or this Agreement or any part of either of such documents. 96 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. IN WITNESS WHEREOF, this Agreement has been signed by authorized representatives on behalf of each of the parties hereto as of the day and year first above written. MERCK & CO., INC. By: /s/ RAYMOND V. GILMARTIN ------------------------------------- Name: Raymond V. Gilmartin Title: Chairman, President and Chief Executive Officer GUILFORD PHARMACEUTICALS INC. By: /s/ CRAIG R. SMITH, M.D. --------------------------- Name: Craig R. Smith, M.D. Title: Chairman, President and Chief Executive Officer 97 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. INDEX TO SCHEDULES Schedule A Trademark Schedule B NDA and IND Schedule C Documentation Schedule D Form of Trademark Assignment Schedule E Form of Patent Assignment Schedule F Form of Assignment and Bill of Sale Schedule 1.10 Assigned Patents Schedule 1.12 Clinical Data and Materials Schedule 1.14 Contracts Schedule 1.34 Logo Schedule 1.38 Marketing Materials Schedule 1.50 Process Patents Schedule 1.55 Related Patents Schedule 1.65 TARGET Materials Schedule 3.2(d) Form of FDA notice (Merck) Schedule 3.2(g) Assets to be Delivered on Effective Date Schedule 3.3 Form of FDA notice (Guilford) Schedule 3.9 Form of Contract Notice Schedule 4.1(j) Pending or Threatened Claims Schedule 4.1(m) Licenses Schedule 4.1(p) Litigation Schedule 4.1(q) Unreported Adverse Experiences Schedule 4.1(v) Consents, Approvals and Rights of Third Parties Schedule 4.1(y) Clinical Trials Schedule 10 Confidential Information Schedules 10.9(a) and 10.9(b) Approved Public Announcements #The Company has omitted certain schedules in accordance with Regulation S-K 601(b)(2). The Company will furnish the omitted schedules to the Commission upon request. EX-2.02 4 w91648exv2w02.txt EXHIBIT 2.02 Exhibit 2.02 SUPPLY AGREEMENT This Supply Agreement (this "Supply Agreement"), dated as of the 28th day of October, 2003 (the "Effective Date"), is made by and between MERCK SHARP & DOHME (IRELAND) LIMITED, a corporation organized and existing under the laws of Bermuda, which is engaged in business in the Republic of Ireland ("MSD IRELAND") and GUILFORD PHARMACEUTICALS INC., a corporation organized and existing under the laws of the State of Delaware ("GUILFORD"). WITNESSETH: WHEREAS, pursuant to the terms of that certain Asset Transfer and License Agreement between Merck & Co., Inc., an Affiliate (as hereinafter defined) of MSD IRELAND ("Merck"), and GUILFORD, dated as of the date hereof (the "Asset Agreement"), Merck has agreed to sell, license and transfer to GUILFORD effective as of the Effective Date, certain assets in the Territory (as such term is defined in the Asset Agreement), including the U.S. New Drug Application for AGGRASTAT(R). WHEREAS, in conjunction with the Asset Agreement, GUILFORD and MSD IRELAND have agreed to enter into this Supply Agreement, on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS The following terms as used in this Supply Agreement, whether used in the singular or the plural, shall have the meanings as set forth in this Article 1. References to "Articles", "Sections" and "subsections" in this Supply Agreement shall be to Articles, Sections and subsections respectively, of this Supply Agreement unless otherwise specifically provided. 1.1 "Affiliate" shall mean (a) any corporation, company or business entity, fifty percent (50%) or more of the voting stock or other equity interests of which are owned directly or indirectly by either party; (b) any corporation, company or business entity which owns, directly or indirectly, fifty percent (50%) or more of 1 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. the voting stock or other equity interest of either party; or (c) any corporation, company or business entity under the direct or indirect control of a corporation, company or business entity as described in Section 1.1(a) or (b). 1.2 "API" shall mean tirofiban hydrochloride. 1.3 "Applicable Laws" shall mean the applicable provisions of the United States (federal, state and territorial) constitutions, statutes, laws, rules, regulations and orders of all applicable United States (including its territories) governmental authorities and all applicable orders, rules and decrees of United States (including its territories) courts. 1.4 "Asset Agreement" shall have the meaning given such term in the recitals to this Supply Agreement. 1.5 "Bags" shall mean finished solution of the API, packaged in a final finished labeled form in either the 100 mL pre-mixed bag and/or the 250mL pre-mixed bag. 1.6 "Calendar Year" shall mean the twelve-month period during the Term commencing on January 1 and ending on December 31. 1.7 "cGMP" shall mean current United States Good Manufacturing Practices, as specified in the United States Code of Federal Regulations. 1.8 "Effective Date" shall have the meaning given such term in the introductory paragraph to this Supply Agreement. 1.9 "FDA" shall mean the United States Food and Drug Administration or any successor organization. 1.10 "Finished Product" shall mean either or collectively, as the context requires, Bags and/or Vials, ready for administration. 1.11 "Firm Order" shall mean a binding non-cancelable agreement to purchase Supplied Product as evidenced by a purchase order and delivered to MSD IRELAND by GUILFORD in accordance with Article 3. 1.12 "Force Majeure" shall have the meaning set forth in Section 12.1. 2 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 1.13 "GUILFORD Image" shall mean the labeling to be used by GUILFORD in connection with the marketing, sale and distribution of the Supplied Product in the Territory, which labeling shall include GUILFORD's NDC number. 1.14 "GUILFORD Image Product" shall mean Finished Product using the GUILFORD Image. 1.15 * 1.16 * 1.17 "Manufacture/Manufacturing/Manufactured" shall mean all operations in the acquisition of Materials, production, packaging, labeling (except for labeling as otherwise provided in Section 3.6 and only to the extent that MSD IRELAND is supplying Finished Product in accordance with Section 3.6) and quality control testing of Supplied Product. 1.18 "Materials" shall mean all active pharmaceutical ingredients, raw materials, excipients, bulk packaging components (e.g., drums, etc.) and, only to the extent MSD IRELAND is supplying Finished Product and subject to GUILFORD's obligations set forth in Section 3.6, packaging and labeling components, and other items used to Manufacture Finished Product. 1.19 "MSD IRELAND Image Product" shall have the meaning set forth in Section 3.6. 1.20 "Net Sales" shall have the meaning set forth in the Asset Agreement. 3 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 1.21 "New Drug Application" or "NDA" shall mean the two new drug applications (as defined in 21 C.F.R. Section 314.3) for the Supplied Products as filed under the United States Food, Drug and Cosmetic Act. 1.22 "Process Patents" shall mean the following United States patents, number US 5,206,373 and US 5,312,923. 1.23 "Securities Laws" shall mean the United States Securities Act of 1933, as amended, the United States Securities Exchange Act of 1934, as amended, and any other similar law or regulation of a United States governmental authority, or any successor to any such laws or regulations, together with any rules, regulations or listing standards or agreements of any national or international securities exchange or The NASDAQ Stock Market, as generally applicable. 1.24 "Specifications" shall mean the quality specifications for the Supplied Product as specified on Exhibit B, as may be amended from time to time in accordance with this Supply Agreement. 1.25 "Supplied Product" shall mean, as the context requires, (i) API; and/or (ii) Finished Product, as supplied pursuant to the terms and conditions of this Supply Agreement. 1.26 "Supply Agreement" shall have the meaning given such term in the introductory paragraph to this agreement. 1.27 "Term" shall have the meaning given such term in Section 11.1. 1.28 "Territory" shall have the meaning given such term in the Asset Agreement. 1.29 "Transition Agreement" shall mean that certain Transition Services Agreement dated as of the Effective Date, by and between Merck and GUILFORD. 1.30 "Transition Period" shall have the meaning given such term in the Transition Agreement. 1.31 "Variable Per Unit Price" shall have the meaning set forth in Section 4.2. 1.32 "Vials" shall mean, a concentrated solution of the API packaged in a final finished labeled form or in an unlabeled form, as the case may be, in a 50 ml vial. 4 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 2 SUPPLY OF SUPPLIED PRODUCT 2.1. Subject to Sections 2.2, 2.3 and 2.4, Article 12 and Article 31, MSD IRELAND agrees to supply, or cause its Affiliate or third party to supply, to GUILFORD, and GUILFORD agrees to purchase from MSD IRELAND, MSD IRELAND's Affiliate or third party, as the case may be, all of GUILFORD's requirements for Supplied Product for the Term in accordance with the terms and conditions of this Supply Agreement. The decision as to whether to Manufacture the Supplied Product or have Manufactured by an Affiliate of MSD IRELAND or third party such Supplied Product shall be made by MSD IRELAND in its sole discretion; provided, that any changes to the Manufacturing process or the manufacturer of Supplied Product shall be in accordance with Section 7.8; and provided further, however, that notwithstanding any such assignment, transfer, license or delegation, as applicable, MSD IRELAND shall remain responsible to ensure supply of Supplied Product in accordance with the terms and conditions of this Supply Agreement. 2.2. * (a) * (b) * (c) * (d) * (e) * (f) * (g) * 2.3. * (a) * (b) * (c) * 5 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (d) * 2.4. * (a) * (b) * (c) * 2.5. Notwithstanding anything contained in this Supply Agreement or the Asset Agreement to the contrary and for the avoidance of any doubt, the parties expressly agree that any royalty obligation set forth in the Asset Agreement shall not be affected (nor shall GUILFORD be relieved of any royalty obligation), whether or not MSD IRELAND is able to supply Supplied Product. 3. ORDERS 3.1. Orders for Delivery in the Transition Period. (a) In order to ensure a smooth transition, attached hereto as Schedule 3.1, is a copy of the Firm Orders for delivery of Finished Product during the Transition Period; the quantities are more particularly described on Schedule 3.1. Schedule 3.1 also reflects the month of manufacture and lot number of any MSD IRELAND Image Product existing in MSD IRELAND's (or its Affiliate's) inventory on the Effective Date. On the Effective Date, GUILFORD shall deliver to MSD IRELAND the actual individual monthly Firm Orders for each month in the Transition Period. (b) Firm Orders during the Transition Period for GUILFORD Image Product shall not specify delivery unless such delivery is no less than two hundred and seventy (270) days after the Effective Date. Notwithstanding the foregoing, in the event that the GUILFORD Image is available prior to this time, MSD IRELAND and GUILFORD shall coordinate with each other and will work to implement the GUILFORD Image as quickly as commercially reasonable (even with respect to ordered MSD IRELAND Image Product, if reasonably possible). 6 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) Other than the Firm Orders contemplated by this Section 3.1, MSD IRELAND shall have no further obligation to deliver any Supplied Product to GUILFORD during the Transition Period, but shall use reasonable efforts to accommodate any proposed increase to the Firm Orders; but shall not be held liable for failure to do so. 3.2. Orders relating to Finished Product for Delivery after the Transition Period. (a) In order that MSD IRELAND may properly and economically plan production of Finished Products, on or before the fifteenth (15th) calendar day of each month, commencing within thirty (30) days after the Effective Date, GUILFORD will provide MSD IRELAND with a written rolling twenty-four (24) month forecast of GUILFORD's monthly requirements of Finished Products, broken down into each image of Bags and Vials. Exhibit C sets forth the format in which each forecast shall be provided to MSD IRELAND and GUILFORD shall deliver each such forecast to a person designated from time to time by MSD IRELAND. Firm Orders must be made in full lot quantities as reflected in Exhibit A. (b) The first six (6) months of each twenty-four (24) month forecast as set forth in the form of Exhibit C shall constitute Firm Orders and GUILFORD shall be required to deliver to MSD IRELAND with its twenty-four month forecast, a Firm Order evidencing the sixth month of the twenty-four month forecast. (c) In addition to the rolling monthly forecast, commencing within thirty (30) days after the Effective Date, and thereafter by July 1 of each Calendar Year, GUILFORD shall provide MSD IRELAND with a long range plan containing a non-binding estimate of annual requirements of Finished Product through and including the period ending on (i) December 31, 2004, with respect to Vials and (ii) August 18, 2007, with respect to Bags. Exhibit C-1 sets forth the format in which each long-range plan shall be provided. GUILFORD shall use all commercially reasonable efforts to make its estimated long range forecast a reasonable basis for MSD IRELAND's production planning and capacity investment. (d) The monthly requirements for Finished Product for the sixth month in each rolling forecast shall not be less than seventy-five percent (75%), nor more than one hundred twenty-five percent (125%) of that month's rolling forecast issued 7 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. in the immediately preceding forecast, when that month was the seventh month in the forecast. 3.3. Orders relating to API for Delivery after the Transition Period (a) In order that MSD IRELAND may properly and economically plan production of API, no later than January 1, 2004 and thereafter on or before the fifteenth (15th) calendar day of each month, GUILFORD will provide MSD IRELAND with a written rolling twenty-four (24) month forecast of GUILFORD's monthly requirements of API. Exhibit D sets forth the format in which each forecast shall be provided to MSD IRELAND and GUILFORD shall deliver each such forecast to a person designated from time to time by MSD IRELAND. (b) The first six (6) months of each twenty-four (24) month forecast as set forth in the form of Exhibit D shall constitute Firm Orders and GUILFORD shall be required to deliver to MSD IRELAND with its twenty-four month forecast, a Firm Order evidencing the sixth month of the twenty-four month forecast; provided, however, that with respect to the first twenty-four month forecast, GUILFORD shall provide six Firm Orders evidencing each of the first six (6) months of the twenty-four month forecast. (c) In addition to the rolling monthly forecast, commencing within thirty (30) days after the Effective Date, and thereafter by July 1 of each Calendar Year, GUILFORD shall provide MSD IRELAND with a long-range plan containing a non-binding estimate of annual requirements of API for the next five (5) years. Exhibit D-1 sets forth the format in which each long-range plan shall be provided. GUILFORD shall use all commercially reasonable efforts to make its estimated long-range forecast a reasonable basis for MSD IRELAND's production planning and capacity investment. If at any time GUILFORD's long-range plan reasonably suggests any supply issue, particularly as it relates to production capacity, the parties shall discuss how to address the potential shortage. (d) The monthly requirements for API for the sixth month in each rolling forecast shall not be less than seventy-five percent (75%), nor more than one hundred twenty-five percent (125%) of that month's rolling forecast issued in the immediately preceding forecast, when that month was the seventh month in the forecast. 8 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 3.4. MSD IRELAND shall confirm in writing that a Firm Order has been accepted within ten (10) business days of receipt thereof. MSD IRELAND shall deliver against each such Firm Order in accordance with this Article 3. The parties acknowledge and agree that such amounts and delivery dates are an approximation of the total amount of Supplied Product to be delivered by MSD IRELAND to GUILFORD on the anticipated delivery dates; provided, that, the amount of the Supplied Product specified in a Firm Order shall determine whether any shortage occurred pursuant to Article 2. 3.5. Firm Orders shall not be made in any form of document other than that prescribed by this Supply Agreement unless the parties agree otherwise in writing. Any term or condition of a Firm Order that is different from or contrary to the terms and conditions of this Supply Agreement shall be void. Except as contemplated by Article 11, all Firm Orders shall be non-cancelable by either party and GUILFORD shall be obligated to pay the Variable Per Unit Price for the Supplied Products supplied to GUILFORD pursuant to each such Firm Order. MSD IRELAND agrees to make reasonable efforts to comply with unplanned changes in Firm Orders, but shall not be held liable for its inability to so comply. 3.6. (a) During the Transition Period, MSD IRELAND shall supply to GUILFORD Finished Product using the label as it exists on the Effective Date with Merck & Co., Inc.'s National Drug Code (the "MSD IRELAND Image Product"); provided that the MSD IRELAND Image Product must be distributed by MSD IRELAND (or its Affiliate) in accordance with the Transition Agreement and this Supply Agreement. In the event that at the end of the Transition Period, any inventory of MSD IRELAND Image Product remains which has been ordered by GUILFORD pursuant to Firm Orders, MSD IRELAND shall supply such MSD IRELAND Image Product to GUILFORD in accordance with such Firm Orders and this Supply Agreement and GUILFORD shall be allowed to exhaust such inventory; provided, that GUILFORD expressly agrees to handle and store such MSD IRELAND Image Product in accordance with cGMP and not to promote the MSD IRELAND Image Product in any manner contrary to its labeling. (b) GUILFORD agrees to use its reasonable efforts to expeditiously obtain FDA approval for alternate labeling using the GUILFORD Image. Notwithstanding anything to the contrary in this Supply Agreement, MSD IRELAND shall not be obligated to supply after the Transition Period any MSD IRELAND Image Product in accordance with Section 3.6(a) even if GUILFORD has not obtained FDA approval for alternate labeling. 9 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (c) During the Transition Period, MSD IRELAND shall supply MSD IRELAND Image Product in accordance with Section 3.1. Thereafter, MSD IRELAND shall only be obligated to supply GUILFORD Image Product of (x) Vials until December 31, 2004 and (y) Bags until August 18, 2007; provided, that GUILFORD shall be responsible for submitting to MSD IRELAND within thirty (30) days after the Effective Date all Master Copy for its proposed label in a format specified by MSD IRELAND and which is compatible with MSD IRELAND's (or its Affiliate's or third party's) equipment. Any costs associated with the labeling change shall be for the account of GUILFORD. After such periods set forth in this Section 3.6(c), MSD IRELAND shall supply API during the Term to GUILFORD and MSD IRELAND shall not be obligated to supply Vials and/or Bags. Notwithstanding the foregoing, if ordered by GUILFORD in accordance with this Article 3, MSD IRELAND shall supply API for delivery at any time during the Term of this Supply Agreement; provided, however, that once such API is delivered to GUILFORD, MSD IRELAND shall not have the obligation to (nor shall it) formulate and/or package such API into Finished Products. (d) MSD IRELAND shall provide to GUILFORD no later than five (5) days after the Effective Date, hard copies of all printed trade components comprising the Finished Products (e.g., labels, cartons and circulars). Notwithstanding the foregoing, GUILFORD shall be solely responsible for the content of all print copy and GUILFORD shall ensure that all such print copy complies with all Applicable Laws. 4. PRICE AND PAYMENT 4.1. The consideration for the Supplied Product shall consist of * as follows: * payment of * by wire transfer to the account designated in Section 4.3 below (the " * "); * as set forth in *. The * whether or not this Supply Agreement is terminated, cancelled or expired. 4.2. * 10 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 4.3. For Supplied Product to be delivered during the Transition Period, MSD IRELAND shall invoice GUILFORD upon delivery of such Supplied Product to GUILFORD. Thereafter, MSD IRELAND shall invoice GUILFORD for Supplied Product upon the earlier of (i) delivery of the Supplied Product to GUILFORD; provided, that MSD IRELAND has delivered the release documentation to GUILFORD in accordance with Section 7.4 and GUILFORD has released the Supplied Product or (ii) in the event that GUILFORD has not released the Supplied Product, thirty days after the release documentation specified in Section 7.4 has been delivered to GUILFORD. All payments for Supplied Product shall be made in U.S. Dollars within thirty (30) days after the date of invoice. Other than the Lump Sum Payment, payment shall be remitted by wire transfer in immediately available funds in the invoiced currency to a bank and account to be designated in writing from time to time by MSD IRELAND or by certified check drawn on a United States bank. The Lump Sum Payment shall be paid by GUILFORD to MSD IRELAND by *: * Any payment not made when due shall bear interest at the lesser of (i) 1.0% per month or (ii) the maximum rate permitted under Applicable Law. 4.4. Any and all taxes (excluding income taxes based upon MSD IRELAND's income or franchise fees or taxes) relating to the supply of Supplied Product to GUILFORD hereunder, including, without limitation, sales taxes required to be paid by any United States federal, state, territorial or local authority shall be borne by GUILFORD. Official receipts indicating proof of payment of any such taxes shall be secured and made available to MSD IRELAND upon request as evidence of payment. 4.5. Any payment required to be made by one party to the other party pursuant to the terms and conditions of this Supply Agreement shall be made in United States Dollars, whether or not specified herein. 4.6. * 11 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 4.7. * 12 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 5. DELIVERY AND RISK OF LOSS 5.1. MSD IRELAND shall deliver or arrange for delivery of Supplied Product purchased by GUILFORD to a carrier designated by GUILFORD (provided that such designated carrier shall be approved by MSD IRELAND, such approval not to be unreasonably withheld), FOB (UCC 2-319), MSD IRELAND's (or, as the case may be, its Affiliate's or designated third party's) manufacturing plant; provided, however, that in the event that GUILFORD requests, MSD IRELAND shall facilitate the delivery of such Supplied Product to GUILFORD's warehouse or other designated facility. For the avoidance of any doubt, all shipping costs associated with the delivery of Supplied Products (whether delivered to MSD IRELAND's (or, as the case may be its Affiliate's or designated third party's) manufacturing plant or GUILFORD's warehouse or other designated facility shall 13 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. be paid by GUILFORD. Each shipment shall be accompanied by a Certificate of Analysis in accordance with Section 7.4 with respect to each lot contained in such shipment. 5.2. Title to the Supplied Product sold hereunder shall pass to GUILFORD at MSD IRELAND's (or as the case may be, its Affiliate's or designated third party's) manufacturing plant, and MSD IRELAND's liability as to delivery thereof and risk of loss shall cease at MSD IRELAND's (or, as the case may be, its Affiliate's or designated third party's) manufacturing plant. Notwithstanding the foregoing, it is understood that the sale of Supplied Product is for the resale in the Territory only. GUILFORD expressly acknowledges that MSD IRELAND and/or its Affiliates have or may have patent rights in and outside the Territory and GUILFORD obtains no rights, express or implied, with respect to any patent rights related to Supplied Product outside the Territory. 6. WARRANTY AND LIMITATIONS 6.1. MSD IRELAND warrants, covenants and agrees that the Supplied Product supplied by it hereunder shall, at the time of delivery, be Manufactured and delivered (i) to meet the Specifications, (ii) in compliance with cGMP, and (iii) in all material respects, in accordance with Applicable Law. ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 6.2. Claims that Supplied Product did not, at the time of delivery, meet the warranty specified in Section 6.1 must be made to MSD IRELAND (i) with respect to defects that are apparent or which could have been found with reasonable diligence, within thirty (30) days following delivery of such Supplied Product in accordance with Article 5 and (ii) with respect to all other defects, within thirty (30) days after the date that GUILFORD discovered or should have discovered with reasonable diligence such defect, and in either case, must be in writing, specifying in reasonable detail the nature and basis of the claim and citing relevant control numbers or other information to enable identification of the Supplied Product in question. At MSD IRELAND's request, GUILFORD shall forward for inspection a representative sampling of the Supplied Product that is the subject of GUILFORD's claim. MSD IRELAND shall as soon as is reasonably practicable inspect such samples and provide the results of such inspection to 14 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. GUILFORD. If MSD IRELAND concurs with GUILFORD's claim, MSD IRELAND shall, at GUILFORD's option, replace the defective Supplied Product without any cost to GUILFORD, if commercially reasonable and possible, or credit GUILFORD for the amount of the Variable Per Unit Price for such quantities of Supplied Product. If the parties are unable to resolve their differences, then either party may refer the matter to an independent specialized firm of international reputation agreeable to both parties for final analysis, which shall be a final resolution of such issue, binding on both parties hereto and not subject to arbitration pursuant to Article 14. No Supplied Product shall be returned to MSD IRELAND without the prior written consent of MSD IRELAND. If the Supplied Product is determined to have met such warranty, then GUILFORD shall bear the cost of the independent laboratory testing pursuant to this Section 6.2. If the Supplied Product is determined not to have met such warranty, then MSD IRELAND shall bear the costs of such laboratory testing and shall, at GUILFORD's option, replace the defective Supplied Product without any cost to GUILFORD, if commercially reasonable and possible, or credit GUILFORD for the amount of the Variable Per Unit Price of such Supplied Product. The remedies specified in this Section 6.2 shall constitute GUILFORD's sole and exclusive remedy for claims under Section 6.1 and this Section 6.2 other than with respect to third party claims or remedies under Article 2, in which case Section 10.2 or Article 2, as the case may be, shall apply. 6.3. Any Supplied Product, which fails to meet the warranty specified in Section 6.1, and which is in GUILFORD's or its Affiliate's control shall be destroyed pursuant to MSD IRELAND's reasonable instructions and at MSD IRELAND's expense. MSD IRELAND may, if it so requests, be present at the destruction of such Supplied Product. 6.4. GUILFORD shall have the right to take any and all steps necessary or desirable to transfer the Manufacture of the Finished Product to GUILFORD or its Affiliate, or to establish an alternative supplier of the Finished Product, in a manner consistent with this Supply Agreement; provided, however, that during the Term and subject to Section 7.8 and Article 31, GUILFORD shall not without MSD IRELAND's written consent (which consent shall not be unreasonably withheld or delayed) change, amend or alter the NDA in any way which materially adversely affects (i) the fact that MSD IRELAND (or its Affiliate or third party manufacturer) is Manufacturing the Supplied Product, (ii) the manner in which MSD IRELAND (or its Affiliate or third party manufacturer) is Manufacturing the Supplied Product, 15 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. or (iii) MSD IRELAND's or its Affiliate's other regulatory filings not otherwise included in the Asset Agreement. 7. QUALITY CONTROL 7.1. MSD IRELAND shall Manufacture (or cause its Affiliates or third party to Manufacture) Supplied Product which meets the Specifications, in accordance with cGMP, and in accordance, in all material respects, with Applicable Law. 7.2. Each party shall notify the other party orally within one (1) day of receiving any customer complaints and reported defects relating to Supplied Product, and shall confirm such notification to the other party and provide all available details in writing within three (3) days thereafter. 7.3. Subject to the remaining provisions of this Section 7.3, any recall of Supplied Product instituted at the request of the FDA or voluntarily instituted by GUILFORD for any reason shall be the responsibility of GUILFORD, including any expenses related thereto; provided, that, GUILFORD shall give to MSD IRELAND prior notice of any contemplated recall and an opportunity to discuss and agree upon the appropriate actions to be taken; provided, further, that GUILFORD shall not voluntarily institute any recall unless and until MSD IRELAND agrees with such decision (such agreement not to be unreasonably withheld or delayed). GUILFORD shall indemnify MSD IRELAND against all costs incurred in connection with such recall. MSD IRELAND shall cooperate fully with GUILFORD in the conduct of any such recall. Notwithstanding the foregoing but subject to Section 10.2 and Article 6, to the extent that such recall arises out of MSD IRELAND's failure to supply Supplied Product in accordance with the warranties set forth in Section 6.1 and subject to Section 10.5, MSD IRELAND shall be responsible for the expenses of such recall and shall indemnify GUILFORD for any costs incurred by GUILFORD in connection therewith, including the refund of the Variable Per Unit Price paid for recalled Supplied Product ("Recalled Supplied Product") or replacement of such Recalled Supplied Product, at GUILFORD's option, unless such option is not commercially reasonable and possible. 7.4. MSD IRELAND shall perform, or cause to be performed, such quality control tests as indicated in the Specifications and shall make the results of such quality control tests performed by MSD IRELAND's third party manufacturer, in the case 16 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. of Bags, and by MSD IRELAND or its Affiliate, in the case of API and/or Vials, as the case may be, available to GUILFORD on or before the date of delivery of the Supplied Product to GUILFORD in accordance with Article 5. Each Certificate of Analysis shall, for each lot delivered, specify the quality tests conducted, the Specifications and the test results, and any deviations from the Specifications, and shall include the lot number, the quantity delivered and the expiry date. 7.5. Other than MSD IRELAND Image Product delivered to GUILFORD in accordance with the terms of this Supply Agreement and the Transition Agreement (which shall be released by MSD IRELAND), the release of Supplied Product will be the responsibility of GUILFORD. MSD IRELAND (or its Affiliates or third party designees, as the case may be) shall perform all necessary stability tests relating to Finished Product. 7.6. MSD IRELAND shall, upon GUILFORD's written request, make a copy of the Annual Product Review (to the extent relevant to Supplied Product) with respect to Supplied Product supplied under this Supply Agreement available to GUILFORD for its review. MSD IRELAND will provide information reasonably requested by GUILFORD that is necessary for the preparation by GUILFORD of any of its regulatory filings. 7.7. If MSD IRELAND discovers that any lot of Supplied Product previously delivered to GUILFORD by MSD IRELAND under this Supply Agreement fails to meet the Specifications, MSD IRELAND shall promptly notify GUILFORD of such failure and the nature thereof in detail. MSD IRELAND shall promptly investigate all such failures and provide the findings of such investigation to GUILFORD. MSD IRELAND shall consult with GUILFORD in an effort to arrive at an acceptable procedure for taking appropriate action in response to such failure. 7.8. Change Requests (a) Change to Specifications. In the event of a proposed change by either party in the Specifications during the Term, the proposing party shall promptly notify the other party of the proposed change, and shall provide the other party with documentation in support of such proposed change and within a period of ten (10) business days from receipt of such notice, the parties shall initiate review and comment on such proposed change. MSD IRELAND and GUILFORD shall cooperate in good faith to design a plan to resolve any Supplied Product supply issues that may result from changes in the Specifications, and while MSD 17 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. IRELAND is Manufacturing the Supplied Product hereunder, no change will be made without the written mutual agreement of both parties, such agreement not to be unreasonably withheld, except as required by Applicable Laws. Beginning on the Effective Date, GUILFORD shall obtain all necessary and appropriate regulatory approvals prior to making any agreed upon change or any change required by Applicable Law or regulatory action. MSD IRELAND shall provide GUILFORD with necessary revisions to the Specifications (as well as supporting data) as so changed prior to shipment of any Supplied Product Manufactured using such revised Specifications. Subject to the foregoing, if MSD IRELAND makes a change to the Manufacturing process or Specifications and both parties agree the change can be filed in the Annual Report, MSD IRELAND shall provide the data to GUILFORD prior to submission of the Annual Report. All costs associated with any such change shall be borne as agreed by the parties. (b) Required Manufacturing Changes. Each party shall give the other party reasonable notice prior to any changes to the process of Manufacturing Supplied Product for sale in the Territory that are required by cGMPs or Applicable Laws (collectively, "Required Manufacturing Changes"). The party required by cGMPs or Applicable Laws to make Required Manufacturing Changes shall carry out such Required Manufacturing Changes and the other party shall, where required, assist in carrying out such changes. (c) Discretionary Manufacturing Changes. MSD IRELAND may, upon reasonable notice to GUILFORD, make changes to the process of Manufacturing of Supplied Product other than Required Manufacturing Changes (collectively, "Discretionary Manufacturing Changes"); provided, that any such change does not materially adversely affect GUILFORD's ability to sell Supplied Product in substantially the same manner as sold prior to such change. GUILFORD may also request Discretionary Manufacturing Changes but such changes must be approved by MSD IRELAND prior to the implementation of such changes. (d) Costs of Manufacturing Changes. All costs associated with Required Manufacturing Changes (including, without limitation, write off and other costs due to such changes associated with obsolete raw materials, work-in-process and finished product inventories, all printed materials, including without limitation, packaging and labeling materials) shall be borne by GUILFORD (unless such costs would otherwise be included in Variable Per Unit Price as 18 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. contemplated by Schedule 11.6). MSD IRELAND shall use commercially reasonable efforts to mitigate losses and/or avoid write-offs as a result of any Required Manufacturing Changes. All costs associated with Discretionary Manufacturing Changes shall be paid by the party that requested such Discretionary Manufacturing Changes. (e) Changes from Manufacturing Facility to Another. MSD IRELAND may change its Manufacturing facilities for the Supplied Product hereunder after giving GUILFORD reasonable written prior notice of such change, provided that no change of Manufacturing facility shall relieve MSD IRELAND of any of its obligations under this Supply Agreement. MSD IRELAND shall provide to GUILFORD all supporting data in order to permit GUILFORD to amend its regulatory filing to reflect this change and shall otherwise cooperate in good faith with GUILFORD to comply with all regulatory obligations arising out of such change. All costs associated with MSD IRELAND's change of its Manufacturing facilities for the Supplied Product shall be borne by MSD IRELAND other than any regulatory costs which shall be borne by GUILFORD. 7.9 All Manufacturing records shall be retained by MSD IRELAND or its Affiliate or third party manufacturers for a period of not less than two (2) years after the date of expiry of each batch of Supplied Product to which said records pertain. 7.10 MSD IRELAND shall permit one or more qualified technical specialists from GUILFORD or its Affiliate, upon reasonable prior notice and during normal business hours, to conduct annual audits (including, but not limited to, quality, safety and environmental audits) of MSD IRELAND's or its Affiliate's facility that Manufactures the API or Merck's West Point, Pennsylvania facility that packages certain of the Finished Product or any other facility to which MSD IRELAND transfers such Manufacture pursuant to the terms and conditions of Section 7.8. GUILFORD shall also be permitted to accompany Merck on Merck's annual audits of Merck's third party manufacturers. Observations and conclusions of GUILFORD's audits will be issued to MSD IRELAND. MSD IRELAND shall provide a written response within fifteen (15) days of receipt of such observations and conclusions. The parties will discuss such response and promptly agree on corrective action to be implemented as well as the appropriate apportionment of costs associated therewith. GUILFORD shall have the right to review all relevant documentation. 19 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 7.11 Promptly following the Effective Date, the parties shall work together to negotiate and finalize in an expeditious manner a quality agreement (the "Quality Agreement"), but in no event later than thirty (30) days after the Effective Date. The parties expressly agree that such Quality Agreement will supplement this Article 7 and that should there be any inconsistency between such Quality Agreement and this Supply Agreement, the terms of the Supply Agreement shall govern. 8. REGULATORY INTERACTIONS 8.1. GUILFORD shall be responsible for maintaining the NDAs and all regulatory filings and submissions associated with the Supplied Products in the Territory. MSD IRELAND shall provide any Manufacturing-related information to GUILFORD as may be reasonably necessary for GUILFORD to meet its regulatory obligations to maintain the NDAs and file the required reports thereunder in the Territory, including, providing such information relating to any changes contemplated in Section 7.8 in accordance with the terms set forth therein. Each party shall cooperate with the other in making and maintaining all regulatory filings that may be necessary in connection with the performance of this Supply Agreement until the first annual anniversary date to occur after MSD IRELAND (or its Affiliate or third party manufacturer) ceases to supply a given Supplied Product to GUILFORD hereunder. 8.2. GUILFORD shall have the responsibility for communications with the FDA within the Territory relating to the Supplied Product. MSD IRELAND shall provide GUILFORD, in a timely manner, all information reasonably in its (or its Affiliate's) control concerning the Supplied Product within or outside the Territory reasonably necessary to meet GUILFORD's regulatory obligations in the Territory and GUILFORD shall provide MSD IRELAND or its Affiliate, in a timely manner, all information reasonably in its control concerning the Supplied Product inside or outside the Territory necessary to meet MSD IRELAND's or its Affiliate's regulatory obligations outside the Territory. 8.3. Each party shall advise the other immediately (but in no event greater than twenty-four (24) hours) of FDA visits relating specifically to the Supplied Product or, if applicable, no later than five (5) business days after such party's receipt of notice of any such FDA visits to MSD IRELAND's facilities or the facilities of any of MSD IRELAND's Affiliates or its or their third party manufacturers relating specifically to the Supplied Product, or any written or oral inquiries by such 20 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. regulatory agency, concerning the Finished Product or the API including, without limitation, safety and efficacy claims, subject to any confidentiality obligation with respect to MSD IRELAND's or its Affiliate's third party manufacturers. GUILFORD and MSD IRELAND shall consult with one another in an effort to arrive at a mutually acceptable response. Each party shall promptly furnish to the other party any report or correspondence issued by or provided to any regulatory agency in connection with such visit, purged only of trade secrets of such party that are unrelated to the other party's activities under this Supply Agreement and any information that is unrelated to the Finished Product or the API, as the case may be, subject to any confidentiality obligation with respect to MSD IRELAND's or its Affiliate's third party manufacturers. 8.4. Except for MSD IRELAND Image Product delivered to GUILFORD in accordance with the terms of this Supply Agreement and the Transition Agreement, GUILFORD shall use its or GUILFORD's own NDC numbers on any packaging of Finished Product sold in the Territory. 9. ADVERSE REACTION REPORTING; RETURNED GOODS 9.1. During the Term of this Supply Agreement and for three (3) years thereafter, each of GUILFORD and MSD IRELAND shall be responsible for reporting adverse experiences and reactions with respect to Supplied Product in conformance with all Applicable Laws, rules and regulations. Each of GUILFORD and MSD IRELAND shall send to the other, throughout such period, copies of all such adverse experience or reaction reports, with all Serious or Unexpected (as each term is hereinafter defined) adverse experiences (and relevant government reporting forms) sent to the other party within five (5) calendar days of such party's receipt, and all adverse experiences or reactions other than Serious or Unexpected adverse experiences (and relevant government reporting forms) sent to the other party within thirty (30) calendar days after such party's receipt. Not later than thirty (30) days after the Effective Date, MSD IRELAND (or its designee) and GUILFORD (or its designee) will meet and develop mutually acceptable pharmacovigilance procedures to allow both parties to comply with applicable regulations and orders of regulatory authorities. As used in this Section 9.1, "Serious" shall mean, with respect to any experience or reaction, one which is fatal or life threatening, results in persistent or significant disability, requires inpatient hospitalization or prolongation of existing inpatient hospitalization, is a congenital anomaly, cancer, or the result of an overdose, or 21 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. is another important medical event (even if not life-threatening, resulting in death, or requiring hospitalization) if, based upon appropriate medical judgments, such medical event may jeopardize the patient's or subject's health or may require medical or surgical intervention to prevent one of the other outcomes listed previously; and "Unexpected" shall mean, with respect to any condition or development, one which is not listed in the then-current FDA-approved labeling for the Supplied Products, and includes those experiences or reactions that show a significant increase in incidence or severity over what appears on the labeling for the Supplied Products, or in NDA trials, or that reflect or suggest a failure of the Supplied Products to achieve claimed activity. 9.2. In the event that MSD IRELAND or its Affiliate receives any returned goods of Supplied Product from a third party, then MSD IRELAND shall notify GUILFORD of such returned goods and destroy such returned goods at GUILFORD's expense. GUILFORD shall not have the right to return any Supplied Product to MSD IRELAND, other than in accordance with Article 6. Notwithstanding the foregoing, in the event that any such returned goods of Supplied Product relate to a lot which was partially sold by MSD IRELAND or its Affiliate prior to the Effective Date and partially sold by GUILFORD after the Effective Date or sold by MSD IRELAND (and its Affiliates) in its entirety prior to the Effective Date, then the provisions of the Asset Agreement relating to returned product shall apply. 10. * 10.1. * 10.2. * 10.3. * 10.4. * 10.5. * 22 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 11. TERM AND TERMINATION 11.1. This Supply Agreement shall be effective as of the Effective Date and, unless earlier terminated as provided in this Article 11, Article 2 or Article 31, shall continue in effect with respect to (x) Vials, until December 31, 2004, (y) Bags, until August 18, 2007 and (z) API, until December 31, 2014 (the Effective Date until such date of termination, the "Term"). 11.2. This Supply Agreement may be terminated by written notice given by either party as follows: (a) If the other party shall be in breach of any material obligation hereunder, and has not cured such breach within ninety (90) days after receipt of a notice from the non-breaching party requesting the correction of such breach. Such termination shall be effective upon failure of the breaching party to cure such breach within the specified time period; or (b) Upon the filing or institution of any bankruptcy, reorganization, liquidation or receivership proceedings by the other party, or upon the failure by the other party for more than ninety (90) days to discharge any such actions against it. Such termination shall be effective upon receipt of the notice. * 11.3. GUILFORD shall provide written notice to MSD IRELAND of any Change of Control (a) if practicable, not less than 30 days prior to such Change of Control, or (b) if prior notice is not practicable, within 5 business days after such Change of Control. (a) Failure of Supply Condition. In the event that (i) after a Change of Control, Merck's third party manufacturer fails or refuses to timely supply Bags or Vials, as the case may be (a "Failure of Supply Condition") and (ii) such Change of Control has occurred prior to the date on which GUILFORD has entered into a direct third party Manufacturing arrangement with any such third party 23 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. manufacturer then MSD IRELAND shall have the right to terminate this Supply Agreement as to the applicable Finished Product (Bags or Vials, as the case may be); provided, that, Merck has not amended or permitted the amendment of any provision in the applicable third party agreement in any manner which would reasonably be expected to materially adversely affect Merck's rights under such third party agreements in the event of a Change of Control or GUILFORD's rights under this Supply Agreement in respect thereof. In the event that (x) Merck believes, in its reasonable judgment and after consultation with GUILFORD, that such third party manufacturer has breached its obligations under the applicable agreement with Merck and (y) GUILFORD has requested that Merck enforce its rights under the applicable agreement, then Merck shall attempt to enforce such rights, at the expense of GUILFORD; provided, however, that Merck's obligation set forth in this sentence shall terminate on April 28, 2005. In such event as specified in the previous sentence, if Merck, in its reasonable judgment believes that the formulation and/or packaging of API by GUILFORD, the Resulting Entity or their respective Affiliates, either directly or indirectly through a third party, will not or does not cause Merck to be in default or breach of the applicable agreement with Merck's third party manufacturer, then GUILFORD shall be free to formulate and package the API in the form previously formulated and/or packaged by such third party manufacturer. * (c) For purposes of this Section 11.3, 24 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (i) "Change of Control" shall mean, with respect to GUILFORD or any Resulting Entity, as the case may be, (i) an event whereby any Group becomes a Controlling Group, (ii) the sale, lease or other transfer of all or substantially all of GUILFORD's and/or any Resulting Entity's assets to any third party (other than as a result of GUILFORD's financing sources exercising rights after default in connection with the collateral provided by GUILFORD in connection with its financing arrangements for this transaction), or (iii) the sale, lease, license or other transfer of the NDA, the Trademark, or the Assigned Patents (each, if sold, leased, licensed or otherwise transferred, a "Transferred Acquired Asset") or the Supply Agreement to any third party (other than to an Affiliate of GUILFORD to the extent permitted under Section 17.1 or as a result of GUILFORD's financing sources exercising rights after default in connection with the collateral provided by GUILFORD in connection with its financing arrangements for this transaction). (ii) "Change of Control Condition" shall mean a Failure to Supply Condition or a Competing Product Condition. (iii) "Group" means any shareholder, or any group of shareholders that are Affiliates of each other. For purposes of this definition, individuals (and entities in which they have a controlling or beneficial interest) shall be deemed Affiliates if they are related by blood, marriage or adoption. (iv) "Controlling Group" means any Group that beneficially acquires or obtains control of, directly or indirectly, forty percent (40%) or more of the issued and outstanding shares of capital stock or other equity interests of GUILFORD or other Resulting Entity (other than as a result of GUILFORD's financing sources exercising rights after default in connection with the collateral provided by GUILFORD in connection with its financing arrangements for this transaction). (v) "Qualified" means (i) having a net worth at least equivalent to that of GUILFORD immediately following the Effective Date and (ii) if applicable, having a debt rating at least equivalent to that of GUILFORD immediately following the Effective Date. For purposes of this definition, "net worth" shall mean total assets minus total liabilities as shown in the most recent audited financial statement which has been prepared in accordance with generally accepted accounting principles consistently applied, and the "net 25 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. worth" of a Group consisting of two or more entities shall be the consolidated net worth of such entities. (vi) "Qualified Successor" means (i) a Qualified Controlling Group, or (ii) a Qualified Resulting Entity; provided, however, that in every instance in which there is a Controlling Group, such Controlling Group must be Qualified and in every instance in which there is a Resulting Entity other than GUILFORD, such Resulting Entity must be Qualified. (vii) "Competing Product" means a IIb/IIIa inhibitor which is marketed or sold for Covered Indications anywhere in the world. (d) * 26 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (e) Notwithstanding any provision hereof, MSD IRELAND shall have the right to terminate this Supply Agreement at any time effective immediately in the event of a Change of Control if the Resulting Entity or any member of the Controlling Group is an individual or entity identified as a proscribed party on the Entity List or the Denied Persons List administered by the Bureau of Industry and Security, U.S. Department of Commerce or the Specially Designated Nationals and Blocked Persons List administered by the Office of Foreign Assets Control, U.S. Department of Treasury. 11.4. * 27 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 11.5. The Supply Agreement shall automatically terminate effective eighteen (18) months after *. All Firm Orders for delivery during any period following such date of termination shall be cancelled without any penalty to either party. 11.6. * 11.7. Subject to GUILFORD's obligations set forth in Section 11.6, GUILFORD may terminate this Supply Agreement upon ninety (90) days prior written notice to MSD IRELAND with respect to any Supplied Product that is permanently and completely withdrawn from the market in the Territory for serious adverse health or safety reasons. 11.8. The termination of this Supply Agreement shall not affect the rights and obligations of the parties arising prior to such termination. Termination under this Article 11 shall relieve and release all parties from any liabilities and obligations under this Supply Agreement other than those specifically set forth in this Article 11, those that survive termination in accordance with Article 24 and any and all obligations to indemnify the other party in accordance with Article 10. 12. FORCE MAJEURE 12.1. The parties shall not be liable for the failure or delay in performing any obligation under this Supply Agreement (except for the payment of money) if and to the 28 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. extent such failure or delay is due to (a) acts of God; (b) weather, fire or explosion; (c) war, terrorism, invasion, riot or other civil unrest; (d) governmental laws, orders, restrictions, actions, embargoes or blockades; (e) national or regional emergency; (f) injunctions, strikes, lockouts, labor trouble or other industrial disturbances; (g) shortage of adequate fuel, power, materials, or (h) any other event which is beyond the reasonable control of the affected party (each such event, a "Force Majeure"); provided that the party affected shall promptly notify the other of the Force Majeure condition and shall exert all commercially reasonable efforts at its cost (except for any such costs of MSD IRELAND which would be allocated to the per unit Variable Per Unit Price of Supplied Product in accordance with the methodology set forth in Schedule 11.6) to eliminate, cure or overcome any such causes and to resume performance of its obligations as soon as possible. In the event that any such Force Majeure occurs, then Sections 2.4 and 11.4 shall apply, as the context requires. 13. GOVERNING LAW; ARBITRATION 13.1. This Supply Agreement shall be governed by, interpreted and construed, and all claims and disputes, whether in tort, contract, or otherwise be resolved in accordance with the substantive laws of the State of New Jersey, without reference to any rules of conflict or laws of renvoi. 13.2. In the event of any controversy or claim arising out of or relating to this Supply Agreement, performance hereunder, termination hereof, or any relationship created hereby, or related in any way to the Supplied Product, each party irrevocably submits to the exclusive jurisdiction of the courts of the State of New Jersey and the Federal courts of the United States District Court for the District of New Jersey for the purposes of any suit, action or other proceeding arising out of this Supply Agreement or transactions contemplated hereby. Each party irrevocably and unconditionally waives any objection to the laying of venue in the state and Federal courts of New Jersey as stated above and that any such action was brought in an inconvenient forum. Notwithstanding the foregoing: (a) In the event of a threatened disclosure in violation of this Supply Agreement, either party shall have the right (notwithstanding subsection 13.2(b) below) to seek injunctive relief from any competent court in the jurisdiction where the disclosure is threatened to prevent such disclosure pending resolution of the merits of the dispute; and 29 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. (b) Subject to subsection 13.2(a) above, any controversy, claim or dispute between the parties hereto (except for those disputes as to which an alternative method of resolution is specified under Section 4.6 and Section 6.2) arising out of or relating to the performance, construction, interpretation or enforcement of this Supply Agreement shall be submitted to binding confidential arbitration pursuant to the Federal Arbitration Act, 9 U.S.C.ss. 1 et seq. in accordance with the Rules of Commercial Arbitration of the American Arbitration Association or its successor. Any arbitration pursuant to this Supply Agreement shall be conducted in New Jersey by three neutral arbitrators selected by the American Arbitration Association. The judgment upon the award rendered in any such arbitration shall be final and binding upon the parties and may be entered in any court having jurisdiction thereof. All fees and expenses of the arbitrators and all other expenses of the arbitration, except for attorneys' fees, shall be shared equally by the parties. Each party shall bear its own attorneys fees. 14. CONSENT AND WAIVER REGARDING SERVICES OF PROCESS, PERSONAL JURISDICTION AND JURY TRIAL 14.1. In any action, suit, arbitration or proceeding to enforce the rights of either party under this Supply Agreement or otherwise arising out of this Supply Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Supply Agreement or the transactions contemplated hereby or related in any way to the Supplied Product, each party, by execution and delivery of this Supply Agreement, expressly and irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action, suit, arbitration or proceeding by delivery thereof to it by hand or by any other manner provided for in Section 22.1 hereof. Each party hereby expressly and irrevocably waives any claim or defense in any such action, suit, arbitration or proceeding based on any alleged lack of personal jurisdiction, improper venue, forum non conveniens or any similar doctrine or theory. 14.2. In any action, suit, arbitration or proceeding to enforce the rights of either party under this Supply Agreement or otherwise arising out of this Supply Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Supply Agreement or the transactions contemplated hereby or related in any way to the Supplied Product, the parties hereto, by execution and delivery of this Supply Agreement, expressly and irrevocably waive their right to a 30 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. jury trial and stipulate that any such action, suit or proceeding shall be tried by the court (or arbitrator if the proceeding is under Section 13.2(b) hereof). 15. INDEPENDENT CONTRACTOR 15.1. The parties hereto are independent contractors. Nothing in this Supply Agreement is intended or shall be deemed to constitute a partnership, agency, franchise or joint venture relationship between the parties. Neither party shall enter into any agreements or make any commitments for the other. 16. CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS 16.1. The provisions relating to Confidentiality and Public Announcements contained in the Asset Agreement in Article 10 are hereby incorporated by reference as if set forth herein in full. Any reference therein to Merck shall automatically be amended to include MSD IRELAND. 31 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 17. ASSIGNMENT 17.1 This Supply Agreement and the rights and obligations of the parties hereunder shall not be assignable or delegable, in whole or in part, except that (i) MSD IRELAND shall have the right to assign this Supply Agreement or delegate its rights and obligations in whole or in part to any Affiliate of MSD IRELAND, and with respect to the Manufacture of the Supplied Product only, to a third party; provided, however, that MSD IRELAND shall remain primarily responsible for its obligations hereunder and (ii) GUILFORD shall have the right to assign this Supply Agreement or delegate its rights and obligations in whole or in part to any Affiliate of GUILFORD; provided, however, that such Affiliate remains subject to the provisions set forth in Section 11.3 and GUILFORD shall remain primarily responsible for its obligations hereunder. GUILFORD shall have the right to grant a security interest in or collaterally assign this Supply Agreement to the extent required in connection with its financing arrangements relating to the transactions contemplated by the Asset Agreement or the Transaction Documents (as defined in the Asset Agreement), such grant or assignment to include the right of the grantee or assignee to foreclose upon such security interest or collateral upon default by GUILFORD and, in such event, to sell, assign, license or otherwise dispose of such security interest or collateral to a third party provided, however, that any such sale, assignment, license or other disposal shall be subject to the provisions of Section 11.3 to the extent applicable. Any attempted assignment of this Supply Agreement in violation of this Section 17.1 shall be void. Notwithstanding the foregoing, the prohibition on assignment set forth in this Section 17.1 shall not apply to any assignment that constitutes a Change of Control which shall be governed by the provisions of Section 11.3. 18. ENTIRE AGREEMENT 18.1. This Supply Agreement, including without limitation the Schedules and Exhibits attached hereto, together with the Asset Agreement and the other Transaction 32 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Documents (as defined in the Asset Agreement) constitute the entire agreement between the parties hereto with respect to the subject matter hereof and except as expressly otherwise provided herein, supersedes and cancels all previous agreements, negotiations, commitments and writings in respect to the subject matter hereof, except for any prior confidentiality agreements which shall survive. In the event of any conflict between this Supply Agreement and any such prior confidentiality agreement, the agreement imposing stricter confidentiality shall survive. 18.2. Notwithstanding Section 18.1 or any other provision of this Supply Agreement or the Asset Agreement to the contrary, the Asset Agreement and this Supply Agreement shall each stand as independent agreements between the parties, and after the Effective Date, each of this Supply Agreement and the Asset Agreement will remain in full force and effect and this Supply Agreement shall not be deemed superseded or amended thereby. Without limitation of the foregoing, the provisions of the Asset Agreement and this Supply Agreement with respect to * shall both remain independently effective and no such contracts shall be deemed to supersede or limit *, except as may be specifically specified therein. 19. SUCCESSORS AND ASSIGNS 19.1. The terms and conditions of this Supply Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 20. HEADINGS 20.1. The headings of the Articles, Sections and subsections of this Supply Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Supply Agreement or affect the construction hereof. 21. MODIFICATION AND WAIVER 21.1. No amendment, modification or alteration of the terms of this Supply Agreement shall be binding unless the same shall be in writing and duly executed by the 33 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. parties hereto, except that any of the terms or provisions of this Supply Agreement may be waived in writing at any time by the party which is entitled to the benefits of such waived terms or provisions. No waiver of any of the provisions of this Supply Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No delay on the part of any party exercising any right, power or privilege hereunder shall operate as a waiver thereof. 22. NOTICES 22.1. Any notices or demands required by this Supply Agreement shall be given in writing and shall be given by delivery in person, by electronic facsimile transmission, cable, telegram, telex or other standard forms of written telecommunications, by overnight courier or by registered or certified mail, postage prepaid, if to MSD IRELAND, to: Merck Sharp & Dohme (Ireland) Limited Ballydine, Kilsheelan Clonmel, Co. Tipperary Ireland Attention: Plant Manager Facsimile: 011-353-51-601241 with a copy to: Merck & Co., Inc. One Merck Drive P.O. Box 100 Whitehouse Station, NJ 08889-0100 Attention: Vice President, Procurement Facsimile: (908) 735-1511 and with a copy to: Merck & Co., Inc. One Merck Drive P.O. Box 100 34 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Whitehouse Station, NJ 08889-0100 Attention: Office of the Secretary Facsimile: (908) 735-1224 if to GUILFORD, to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: Chief Financial Officer Facsimile: (410) 631-6899 with a copy to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: General Counsel Facsimile: (410) 631-5598 or at such other address for a party as shall be specified by like notice. The date of giving any such notice shall be the date of hand delivery, the date sent by electronic facsimile transmission, cable, telegram, telex or other standard forms of written communications, the day after delivery to the overnight courier service, and the date three days following the posting of the registered or certified mail. 23. COUNTERPARTS 23.1. This Supply Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute one and the same Supply Agreement. 24. SURVIVAL OF CERTAIN PROVISIONS 24.1. The terms, provisions, representations, and warranties contained in this Supply Agreement that by their sense and context are intended to survive the performance thereof (including, without limitation, Articles 4, 6, 9, 10, 11, 13, 14, 35 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 16, 18, 19, 24, 25, 27 and 31) by either party or both parties hereunder shall so survive the completion of performance, expiration or termination of this Supply Agreement. 25. SEVERABILITY 25.1. If any provision of this Supply Agreement is found invalid or unenforceable by a court of competent jurisdiction, the remainder of this Supply Agreement shall continue in full force and effect. The parties shall negotiate in good faith to substitute a valid, legal, and enforceable provision that reflects the intent of such invalid or unenforceable provision. 26. REVIEW BY LEGAL COUNSEL 26.1. Each of the parties agrees that it has read and had the opportunity to review this Supply Agreement with its legal counsel. Accordingly, the rule of construction that any ambiguity contained in this Supply Agreement shall be construed against the drafting party shall not apply. 27. THIRD PARTY BENEFICIARIES 27.1. Nothing in this Supply Agreement, express or implied, is intended to confer upon any third party, any rights, remedies, obligations or liabilities. 28. ASSET AGREEMENT 28.1. The parties expressly acknowledge and agree that certain provisions of the Asset Agreement are incorporated by reference herein, or by their terms otherwise apply hereto (including, without limitation, Section 13.4 of the Asset Agreement) and further agree that such provisions shall be given full effect in interpreting and enforcing this Supply Agreement. 29. CUMULATIVE REMEDIES 29.1. Unless specified to the contrary in this Supply Agreement, no remedy referred to in this Supply Agreement is intended to be exclusive, but each shall be 36 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. cumulative and in addition to any other remedy referred to in this Supply Agreement or otherwise available under law or at equity. 30. FURTHER ASSURANCES 30.1. Each party agrees to execute such further papers, agreements, documents, instruments and the like as may be necessary or desirable to effect the purpose of this Supply Agreement and to carry out its provisions. 31. ALTERNATIVE SUPPLIER 31.1. After the Effective Date, GUILFORD shall have the right to negotiate directly with MSD IRELAND's or its Affiliate's current third party manufacturers of Finished Product in order that GUILFORD may directly contract with such third party manufacturers prior to December 31, 2004, with respect to Vials, and prior to August 17, 2007, with respect to Bags. GUILFORD's obligations with respect to the purchase of Vials and/or Bags, as the case may be, from MSD IRELAND and MSD IRELAND's obligations with respect to the supply of Vials and/or Bags, as the case may be, shall terminate upon thirty (30) days' notice by GUILFORD to MSD IRELAND that a direct contract between GUILFORD and the applicable third party manufacturer has been executed; provided, that (1) such agreement specifically relieves and releases Merck (to Merck's reasonable satisfaction) from any obligation under Merck's existing agreement with such third party manufacturer with respect to Vials or Bags, as the case may be, for sale in the Territory, and (2) GUILFORD's agreement with such third party manufacturer does not materially adversely affect MSD IRELAND or its Affiliates or its or their business or interests with respect to such third party manufacturer; provided that Merck shall waive any provisions of exclusivity, noncompetition or the like in such third party agreement that would limit GUILFORD's ability to directly contract with such third party manufacturers, and agree to the amendment of Merck's agreements with such third party manufacturers to reflect the direct supply of Supplied Product from such third party manufacturers to GUILFORD in the Territory. In the event GUILFORD shall execute a direct contract with a third party manufacturer as contemplated in the foregoing sentence, GUILFORD shall be obligated to purchase from MSD IRELAND any MSD IRELAND inventory of Materials, work-in-progress or Finished Product to the extent such Materials, 37 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. work-in-progress or Finished Product were procured or created in response to Firm Orders submitted by GUILFORD to MSD IRELAND. 31.2. * 31.3. Unless specifically contemplated by this Supply Agreement, MSD IRELAND shall have no obligation to support any operations of GUILFORD, including, any additional technology transfer, technology license, disclosure of any additional confidential information or any other type of technical or manufacturing assistance. 32. INSURANCE 32.1. Simultaneously with the execution of this Supply Agreement, (i) MSD IRELAND hereby delivers to GUILFORD a certificate of insurance reasonably acceptable to GUILFORD's insurers to permit GUILFORD to obtain the insurance coverage contemplated by the Asset Agreement and (ii) GUILFORD hereby delivers to MSD IRELAND a certificate of insurance reasonably acceptable to MSD IRELAND naming Merck and its subsidiaries as additional insured/loss payee for the amounts and coverage listed in Section 13.4 of the Asset Agreement as well as naming Merck and its subsidiaries as additional insured/loss payee for all 38 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. claims relating to business interruption, sole supplier property coverage and failure of supply. 39 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. IN WITNESS WHEREOF, the undersigned have executed this Supply Agreement as of the Effective Date. MERCK SHARP & DOHME GUILFORD PHARMACEUTICALS (IRELAND) LLC INC. By: /s/ PAT YANG By: /s/ CRAIG R. SMITH, M.D. ------------------------------- -------------------------------- Name: Pat Yang Name: Craig R. Smith, M.D. Title: Vice President Title: Chairman, President and Chief Executive Officer GUARANTEE Merck & Co., Inc. ("Merck") hereby irrevocably and unconditionally guarantees the performance by MSD IRELAND of the contractual obligations set forth in this Supply Agreement. Merck shall be responsible for all liability, direct or indirect, due or to become due, now existing or hereafter arising, resulting from the performance or non-performance of these contractual obligations. GUILFORD shall have no obligation to first seek performance of any of the contractual obligations by MSD IRELAND before seeking enforcement of this guarantee by Merck. Furthermore, with respect to Sections 2.2(d), 2.3(c), 11.2, 11.3, 11.4 and all definitions from Article 1 referenced therein, Merck agrees to be bound to such provisions as if a party hereto. AGREED TO AND ACCEPTED BY: MERCK & CO., INC. By: /s/ PAT YANG ---------------------- Name: Pat Yang Title: Vice President, Supply Chain Management 40 EXECUTION COPY *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. #The Company has omitted certain schedules in accordance with Regulation S-K 601(b)(2). The Company will furnish the omitted schedules to the Commission upon request. EX-2.03 5 w91648exv2w03.txt EXHIBIT 2.03 Exhibit 2.03 TRANSITION SERVICES AGREEMENT This Transition Services Agreement (this "Transition Agreement"), dated as of the 28th day of October, 2003 (the "Effective Date"), is made by and between Merck & Co., Inc., a New Jersey corporation ("Merck"), and Guilford Pharmaceuticals Inc., a Delaware corporation ("Guilford"). WITNESSETH: WHEREAS, pursuant to the terms of that certain Asset Transfer and License Agreement between Merck and Guilford, dated as of October 28, 2003 (the "Asset Agreement"), Merck has sold, transferred, assigned and licensed to Guilford certain assets in the Territory (as defined in the Asset Agreement), including the U.S. NDA for Aggrastat (R). WHEREAS, in connection with the Asset Agreement, Guilford and an Affiliate of Merck, Merck Sharp & Dohme (Ireland) Limited, a corporation organized and existing under the laws of Bermuda which is engaged in business in the Republic of Ireland ("MSD Ireland"), have entered into that certain Supply Agreement dated as of the date hereof (the "Supply Agreement") pursuant to which MSD Ireland will supply (or arrange for the supply) to Guilford of Supplied Product (as defined in the Supply Agreement) on the terms and conditions set forth therein. WHEREAS, in connection with the Asset Agreement and the Supply Agreement, Guilford desires, and Merck is willing, to provide certain warehousing, distribution and other transition services during the Transition Period (as defined in Section 2.1 hereof) with respect to MSD Ireland Image Product (as hereinafter defined) on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the agreements and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINITIONS All capitalized terms in this Transition Agreement (whether used in the singular or the plural), unless otherwise defined herein or referenced to the Supply Agreement, shall have the meanings as set forth in the Asset Agreement. In addition, the following terms as used in this Transition Agreement, whether used in the singular or the plural, shall have the meanings as set forth in this Article 1. References to "Articles", "Sections" and "subsections" in this Transition Agreement shall be to Articles, Sections and subsections respectively, of this Transition Agreement unless otherwise specifically provided. 1.1 "Administrative Services" shall mean the following Transition Services: bookkeeping, invoicing, collections and contract administration. 1.2 "Asset Agreement" shall have the meaning given such term in the recitals to this Transition Agreement. 1.3 "cGMP" shall have the meaning given such term in the Supply Agreement. 1.4 "Effective Date" shall have the meaning given such term in the introductory paragraph to this Transition Agreement. EXECUTION COPY 1.5 "Gross Sales" shall mean the gross amount invoiced or recorded by Merck as a sale on behalf of Guilford to third parties of MSD Ireland Image Product shipped during the Transition Period which amount shall equal the sales price for such Product as determined from time to time by Guilford in accordance with Section 2.8 and which (i) shall not be reduced by promotional, trade or other discounts, credits for returned goods or price adjustments, rebates, chargebacks, GPO administration fees or allowances, and (ii) shall not include freight, sales and excise taxes, value-added and other taxes, insurance premiums and duties which are billed to customers as separate items on invoices, or allowances for short shipments. 1.6 "Merck" shall have the meaning given such term in the recitals to this Transition Agreement. 1.7 "MSD Ireland Image Product" shall have the meaning given such term in the Supply Agreement. 1.8 "Securities Laws" shall have the meaning given such term in the Supply Agreement. 1.9 "Supply Agreement" shall have the meaning given such term in the recitals to this Transition Agreement. 1.10 "Term" shall have the meaning given such term in Section 5 hereof. 1.11 "Transition Agreement" shall have the meaning given such term in the introductory paragraph to this agreement. 1.12 "Transition Period" shall mean the period from the Effective Date until the earlier of (a) June 30, 2004 or (b) depletion of the MSD Ireland Image Product inventory ordered by Guilford pursuant to the Supply Agreement, unless earlier terminated in accordance with Article 5. 1.13 "Transition Services" shall have the meaning given such term in Section 2.1 hereof. 1.14 "United States" shall mean the fifty (50) states of the United States and the District of Columbia. 2 TRANSITION SERVICES 2.1. Transition Services. Subject to the terms and conditions of this Transition Agreement, during the Transition Period, Guilford hereby retains Merck to provide, and Merck hereby agrees to provide (or cause a qualified Affiliate to provide) Guilford, certain warehousing, distribution and contract administration services at Merck's usual distribution facilities, in connection with Merck's distribution of MSD Ireland Image Product on behalf of Guilford in the United States including, without limitation, providing warehousing space at such facilities, providing appropriate personnel to accept and warehouse inventory of MSD Ireland Image Product shipped to such facilities, arranging for the shipping and delivery of MSD Ireland Image Product to customers, providing certain administrative and support services in connection with Guilford's sale of MSD Ireland Image Product in the United States and performing book keeping, collections and accounting functions related to such services, all as more specifically set forth in Schedule 2.1 attached hereto and EXECUTION COPY 2 made a part hereof (collectively, the "Transition Services"). The quantity of MSD Ireland Image Product that is the subject of the Transition Services is more particularly described in the Asset Agreement and the Supply Agreement. 2.2. Compliance with Applicable Laws. Each party shall, and shall cause its respective employees to, comply, in all material respects, with all Applicable Laws which may be applicable to the Transition Services. 2.3. Quality Control. Merck shall provide the Transition Services to the extent applicable in accordance with cGMP. 2.4. Title and Risk of Loss. Title to all MSD Ireland Image Product purchased by Guilford pursuant to the Supply Agreement shall pass to Guilford in accordance with the Supply Agreement. The MSD Ireland Image Product purchased by Guilford under the Supply Agreement will be insured by Guilford at Guilford's expense while in Merck's possession and control pursuant to this Transition Agreement. Merck shall have no risk or liability for loss or casualty to MSD Ireland Image Product during such period except with respect to first party claims where Guilford has shown that any loss or damage to such goods has resulted from the gross negligence or willful misconduct by Merck in conducting the Transition Services, and only after Guilford's insurance carrier, after Guilford has in good faith asserted and prosecuted a claim for such loss or casualty, has denied coverage of such loss or casualty on that basis. 2.5. Exclusivity. During the Term, Guilford shall not distribute or warehouse MSD Ireland Image Product except through Merck hereunder; provided, that in the event that at the conclusion of the Transition Period (upon expiration or termination in accordance with Article 5) there is existing in Guilford's inventory MSD Ireland Image Product, or in the event Guilford has ordered MSD Ireland Image Product pursuant to the Supply Agreement pursuant to an outstanding Firm Order, Guilford shall have the right to sell and distribute such MSD Ireland Image Product. As soon as practicable after the conclusion of the Transition Period, Merck shall deliver any such MSD Ireland Image Product to Guilford at Guilford's expense. 2.6. Customers. In order to inform customers of the change in ownership of the Acquired Assets and of the arrangements between Merck and Guilford with respect to the Contracts and the sales, distribution and customer support services for the MSD Ireland Image Product during and after the Transition Period, (i) Merck shall deliver a notice to parties to the Contracts in accordance with Section 3.9 of the Asset Agreement and (ii) Guilford shall deliver a notice to the parties to such Contracts in a form approved by Merck prior to the Effective Date. Thereafter, the parties shall cooperate in good faith to respond to inquiries by contracted customers, trade customers, wholesalers and other third parties with respect to the transfer of the sales, distribution and customer support services for the Product to Guilford during the Transition Period 2.7. Terms and conditions. All MSD Ireland Image Product distributed by Merck hereunder shall be sold under and pursuant to Merck's standard terms and conditions as the same may be in effect from time to time, which terms and conditions shall be deemed to have been adopted by Guilford with respect to MSD Ireland Image Product as of the Effective Date (a copy of the current terms and conditions has been provided to Guilford). To the extent that such terms and conditions (including without limitation their provisions regarding discounts for prompt payment and return of products for credit) differ from EXECUTION COPY 3 Guilford's standard terms and conditions relating to other products at the time of sale of any MSD Ireland Image Product, it shall be Guilford's responsibility to inform customers of such difference at the time Guilford accepts orders for such MSD Ireland Image Product and to inform customers of the terms and conditions that will govern the transaction and to inform Merck if any variation in terms or processes is required. Guilford will indemnify and hold Merck harmless for any failure to properly inform customers of the terms and conditions that will apply to any sale during the Transition Period. Guilford's standard terms and conditions will apply to any MSD Ireland Image Product for which orders are accepted after the Transition Period. 2.8. Pricing of MSD Ireland Image Product. From and after the Effective Date, pricing of MSD Ireland Image Product shall be solely within the control of Guilford. During the Transition Period, Guilford may desire to change the price for MSD Ireland Image Product. In that event, Guilford will provide two (2) business days prior written notice to Merck of any change in price in written form detailing the new price and the presentation of MSD Ireland Image Product to which such price change shall apply. Merck will make such new price effective within two (2) business days of receipt of such notice. Guilford shall also have the ability to limit purchases in accordance with Merck's standard terms and conditions. Where applicable and until the effective time of a notice provided in accordance with this Section 2.8, any contract prices to specific customers (including without limitation applicable discounts, chargebacks, GPO administration fees and rebates) in effect immediately prior to the Effective Date shall continue in effect. 2.9. Trademarks. Guilford shall not acquire any right, title or interest in any trademark, service mark, name, logo, design or trade dress belonging to Merck (or to any other person or entity under contract or license with Merck) by virtue of this Transition Agreement or any action or omission of Merck, Guilford or any other person acting pursuant to this Transition Agreement. The parties acknowledge and agree that the ownership, license and rights, title and interest in and to any and all intellectual property associated with the MSD Ireland Image Product shall be governed exclusively by the terms and conditions of the Asset Agreement. 2.10. Audit and Inspection Rights. Merck shall keep complete, accurate and detailed records concerning Gross Sales, computation of Reconciled Net Sales, chargebacks, GPO administration fees, discounts and rebates, product returns, accounts payable and receivable, expenses incurred by Merck in connection with this Transition Agreement and all matters with respect to Transition Services. Such records shall be kept in sufficient detail to permit independent audit of such records. Merck shall, at Guilford's request and expense, make such records available upon reasonable notice during normal business hours for examination by Guilford or its independent certified public accountants or auditors designated by Guilford and approved by Merck, which approval shall not be unreasonably withheld or delayed. To the extent required in connection with the preparation or review of quarterly financial statements, Merck shall permit Guilford's independent auditors to access Merck's (or its Affiliate's) warehouses or other distribution facilities no more than twice during the Transition Period to verify inventory levels during normal business hours and upon reasonable advance notice. 2.11. Insurance. During the Term, Guilford shall maintain insurance in accordance with Section 13.4 of the Asset Agreement. EXECUTION COPY 4 2.12. Territories Outside the United States. Unless otherwise agreed by the parties after the Effective Date, Merck shall have no obligation under this Transition Agreement to provide Transition Services in any area of the Territory other than the United States. Notwithstanding the foregoing, to the extent that Merck shall, after the Effective Date, sell MSD Ireland Image Product in any part of the Territory other than the United States, Merck shall, to the extent practicable, periodically notify Guilford of such sales in a manner consistent with the reporting obligations contemplated in Schedule 2.1 and shall pay to Guilford the Reconciled Net Sales (as defined in Schedule 2.1) associated therewith and shall invoice Guilford for any chargebacks, GPO administration fees, discounts and/or rebates accrued in connection such sales, each in accordance with the procedures set forth in Schedule 2.1 as if such sales had been made in the United States. The parties hereby acknowledge and agree that any sale of MSD Ireland Image Product during the Transition Period in any part of the Territory other than the United States made by Merck in accordance with this Section 2.12 shall not constitute a breach of Merck's post-Effective Date covenants set forth in Section 6.1 of the Asset Agreement. In the event that at the conclusion of the Transition Period there remains in the inventory of Merck and its Affiliates MSD Ireland Image Product in any area of the Territory outside of the United States, Merck shall provide Guilford written notice of the amount and location of such inventory, and Guilford shall issue a Firm Order pursuant to the Supply Agreement for purchase of any such remaining MSD Ireland Image Product inventory deliverable within thirty (30) days of the conclusion of the Transition Period; provided that Guilford shall only have an obligation pursuant to this Section 2.12 to purchase that amount of MSD Ireland Image Product representing the difference, if any, between (a) the amount of MSD Ireland Image Product inventory held by Merck and its Affiliates in those areas of the Territory outside of the United States on the Effective Date, and (b) any amounts of such inventory sold by Merck during the Transition Period pursuant to this Section 2.12. 3. FEES AND PAYMENT 3.1. Fees for Transition Services. There shall be no fees payable for Transition Services performed until May 1, 2004. On and after that date and until the end of the Transition Period, in consideration for the Transition Services provided hereunder, Guilford shall pay Merck 0.3% percent of Gross Sales subject to Transition Services. 3.2. Expenses. Guilford shall reimburse Merck for any out-of-pocket expenses reasonably incurred and paid to a third party in performing its obligations under this Transition Agreement. 3.3. Invoicing and Payment of Fees. Within forty-five (45) days after the end of each calendar month during the Term, Merck shall invoice Guilford for any fees due, to the extent applicable under Section 3.1, for Transition Services performed during such calendar month. All payments for Transition Services shall be made in U.S. Dollars within thirty (30) days after the date of invoice. Payment shall be made by corporate check drawn on a United States bank or remitted by wire transfer in immediately available funds in U.S. Dollars to a bank and account to be designated in writing from time to time by Merck. Any payment of fees or expenses not made when due shall bear interest at the lesser of (i) 1.0% per month or (ii) the maximum rate permitted under Applicable Laws. Any unpaid fees and expenses for Transition Services may also, at Merck's discretion and cumulatively with any other remedies available to Merck under EXECUTION COPY 5 this Transition Agreement, any other agreement or Applicable Laws, be set off without notice to Guilford against any amounts owed by Merck to Guilford. 3.4. Guilford Responsible for Taxes. Any and all taxes (excluding income taxes based upon Merck's income or Merck's franchise fees or taxes) relating to the Transition Services provided under this Transition Agreement, including, without limitation, sales, use and excise taxes required to be paid by any federal, state or local authority shall be borne by Guilford. Official receipts indicating proof of payment of any such taxes shall be secured and made available to Merck upon request as evidence of payment. 4. INDEMNITY 4.1. Guilford shall protect, defend, indemnify and hold harmless Merck, its Affiliates and its and their directors, officers, shareholders, employees and agents, and their respective successors and permitted assigns from any and all claims, actions, causes of action, liabilities, losses, costs, damages or expenses, including reasonable attorneys' fees associated therewith ("Losses"), which directly or indirectly arise out of or relate to the Transition Services provided hereunder, unless such Losses result from (i) Merck's breach of this Transition Agreement, or (ii) the gross negligence or willful misconduct of Merck in the performance of its obligations under this Transition Agreement. 4.2. Merck shall protect, defend, indemnify and hold harmless Guilford, its Affiliates and its and their directors, officers, shareholders, employees and agents, and their respective successors and permitted assigns, from any and all Losses which directly or indirectly arise out of or relate to (i) Merck's breach of this Transition Agreement or (ii) the gross negligence or willful misconduct of Merck in the performance of its obligations under this Transition Agreement; provided, however, that the total and aggregate liability of Merck and its Affiliates for any claims paid by Merck and its Affiliates under this Transition Agreement and the Supply Agreement shall not exceed US $20,000,000.00. 4.3. The indemnified party agrees to give the indemnifying party (i) prompt written notice of any claims made for which the indemnified party knows or reasonably should know the indemnifying party reasonably may be liable under the foregoing indemnification and (ii) the opportunity to defend, negotiate, and settle such claims; provided, that in the event any such indemnifying party shall assume the defense of any such claim, such indemnifying party may reserve its rights as to its ultimate liability with respect to the claim but in such event, and until the indemnifying party shall assume liability for such claim as an indemnified claim under this Article 4, the indemnified party shall have the right to participate in such defense and to consent to any proposed settlement. The indemnified party shall provide the indemnifying party with all information in its possession, all authority and all assistance necessary to enable the indemnifying party to carry on the defense of such suit; provided, however, that the indemnified party reserves the right to retain its own counsel to defend itself in such suit. 4.4. Neither party shall be responsible to or bound by any settlement made by the other party without its prior written consent, which consent shall not be unreasonably withheld. 4.5. IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES, OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EXECUTION COPY 6 EMPLOYEES OR AGENTS, FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR INCIDENTAL DAMAGES OR LOSSES OF ANY KIND, NATURE OR DESCRIPTION WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOST REVENUES AND/OR LOST SAVINGS) SUFFERED OR INCURRED BY SUCH PARTY FOR ANY CAUSE WHATSOEVER, REGARDLESS OF WHETHER ARISING FROM BREACH OF CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE OR IF SUCH LOSS OR DAMAGE COULD HAVE BEEN REASONABLY FORESEEN. 4.6. The sole and exclusive remedy for any claim arising under this Transition Agreement shall be a claim for indemnification under this Article 4. 5. TERM AND TERMINATION 5.1. This Transition Agreement shall be effective as of the Effective Date and shall continue in effect until the earlier of (a) the last day of the Transition Period, or (b) the termination of the Supply Agreement in accordance with its terms, unless earlier terminated as provided in this Article 5. Such effective period shall be referred to herein as the "Term". 5.2. Guilford may terminate this Transition Agreement in its entirety by providing written notice thereof to Merck (i) any time on or after May 1, 2004, in which case such termination shall be effective thirty (30) days after the date of such notice, and (ii) any time prior to May 1, 2004, which termination shall not be effective until the inventory of MSD Ireland Image Product ordered by Guilford pursuant to the Supply Agreement and held by Merck for distribution pursuant to this Transition Agreement shall be no greater than thirty (30) days worth of inventory, determined on an average basis with reference to the relative inventory of each presentation of MSD Ireland Image Product held by Merck. If Guilford wishes to terminate this Transition Agreement with respect to less than all of the Transition Services, Guilford shall first obtain the written consent of Merck; provided, however, that to the extent practicable, Guilford may terminate this Transition Agreement solely with respect to all Administrative Services provided hereunder upon thirty (30) days written notice to Merck. 5.3. This Transition Agreement may be terminated by written notice given by either party as follows: (a) If the other party shall be in breach of any material obligation hereunder, and has not cured such breach within thirty (30) days after receipt of a notice from the non-breaching party requesting the correction of such breach. Such termination shall be effective upon failure of the breaching party to cure such breach within the specified time period; or (b) Upon the filing or institution of any bankruptcy, reorganization, liquidation or receivership proceedings by the other party, or upon the failure by the other party for more than sixty (60) days to discharge any such actions against it. Such termination shall be effective upon receipt of the notice. 5.4. Upon termination of this Transition Agreement by Merck pursuant to Section 5.3(a), Guilford shall pay to Merck any fees and expenses due for Transition Services provided prior to the effective date of such termination. Upon any termination or expiration of this EXECUTION COPY 7 Transition Agreement, Merck shall deliver to Guilford all MSD Ireland Image Product in Merck's possession in the United States on the effective date of such termination that was ordered by Guilford pursuant to the Supply Agreement (provided that such MSD Ireland Image Product shall be paid for as provided in the Supply Agreement), and Guilford shall have the right to sell and distribute such MSD Ireland Image Product in the Territory at its discretion notwithstanding any provision of this Transition Agreement or the Supply Agreement to the contrary. Nothing in this Section 5.4 shall be construed to require the delivery to Guilford of MSD Ireland Image Product at a time earlier than when such delivery is required under the Supply Agreement. The provisions of this Section 5.4 shall survive the expiration, cancellation or other termination of this Transition Agreement. 5.5. The termination of this Transition Agreement shall not affect the rights and obligations of the parties arising prior to such termination. Termination under this Article 5 shall relieve and release all parties from any liabilities and obligations under this Transition Agreement other than those specifically set forth in this Article 5, those that survive termination in accordance with Section 6.14 and any and all obligations to indemnify the other party in accordance with Article 4. Notwithstanding any provision of the Asset Agreement or the Supply Agreement to the contrary, termination of this Transition Agreement shall not affect the rights and obligations of the parties under the Supply Agreement or the Asset Agreement. 6. MISCELLANEOUS 6.1. Force Majeure. The parties shall not be liable for the failure or delay in performing any obligation under this Transition Agreement (except for the payment of money) if and to the extent such failure or delay is due to (a) acts of God; (b) weather, fire or explosion; (c) war, terrorism, invasion, riot or other civil unrest; (d) governmental laws, orders, restrictions, actions, embargoes or blockades; (e) national or regional emergency; (f) injunctions, strikes, lockouts, labor trouble or other industrial disturbances; (g) shortage of adequate fuel, power, materials, or (h) any other event which is beyond the reasonable control of the affected party (each such event, a "Force Majeure"); provided that the party affected shall promptly notify the other of the Force Majeure condition and shall exert all commercially reasonable efforts at its cost to eliminate, cure or overcome any such causes and to resume performance of its obligations as soon as possible. 6.2. Governing Law. This Transition Agreement shall be governed by, interpreted and construed, and all claims and disputes, whether in tort, contract, or otherwise be resolved in accordance with the substantive laws of the State of New Jersey, without reference to any rules of conflict of laws thereof. 6.3. Arbitration. In the event of any controversy or claim arising out of or relating to this Transition Agreement, performance hereunder, termination hereof, or any relationship created hereby, or related in any way to the Transition Services, each party irrevocably submits to the exclusive jurisdiction of the courts of the State of New Jersey and the Federal courts of the United States District Court for the District of New Jersey for the purposes of any suit, action or other proceeding arising out of this Transition Agreement or transactions contemplated hereby. Each party irrevocably and unconditionally waives any objection to the laying of venue in the state and Federal courts of New Jersey as EXECUTION COPY 8 stated above and that any such action was brought in an inconvenient forum. Notwithstanding the foregoing: (a) In the event of a threatened disclosure in violation of this Transition Agreement, either party shall have the right (notwithstanding subsection 6.3(b) below) to seek injunctive relief from any competent court in the jurisdiction where the disclosure is threatened to prevent such disclosure pending resolution of the merits of the dispute; and (b) Subject to subsection 6.3(a) above, any controversy, claim or dispute between the parties hereto arising out of or relating to the performance, construction, interpretation or enforcement of this Transition Agreement shall be submitted to binding confidential arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. in accordance with the Rules of -- --- Commercial Arbitration of the American Arbitration Association or its successor. Any arbitration pursuant to this Transition Agreement shall be conducted in New Jersey by three neutral arbitrators selected by the American Arbitration Association. The judgment upon the award rendered in any such arbitration shall be final and binding upon the parties and may be entered in any court having jurisdiction thereof. All fees and expenses of the arbitrators and all other expenses of the arbitration, except for attorneys' fees, shall be shared equally by the parties. Each party shall bear its own attorneys fees. 6.4. Consent and Waiver regarding Service of Process, Personal Jurisdiction and Jury Trial. (a) In any action, suit, arbitration or proceeding to enforce the rights of either party under this Transition Agreement or otherwise arising out of this Transition Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Transition Agreement or the transactions contemplated hereby or related in any way to the Transition Services, each party, by execution and delivery of this Transition Agreement, expressly and irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action, suit, arbitration or proceeding by delivery thereof to it by hand or by any other manner provided for in Section 6.12 hereof. Each party hereby expressly and irrevocably waives any claim or defense in any such action, suit, arbitration or proceeding based on any alleged lack of personal jurisdiction, improper venue, forum non conveniens or any similar doctrine or theory. (b) In any action, suit, arbitration or proceeding to enforce the rights of either party under this Transition Agreement or otherwise arising out of this Transition Agreement or from any acts, omissions or activities of either party arising from or related in any way to this Transition Agreement or the transactions contemplated hereby or related in any way to the Transition Services, the parties hereto, by execution and delivery of this Transition Agreement, expressly and irrevocably waive their right to a jury trial and stipulate that any such action, suit or proceeding shall be tried by the court (or arbitrator if the proceeding is under Section 6.3(b) hereof). 6.5. Independent Contractor. The parties hereto are independent contractors. Nothing in this Transition Agreement is intended or shall be deemed to constitute a partnership, agency, franchise or joint venture relationship between the parties. Neither party shall enter into any agreements or make any commitments for the other. EXECUTION COPY 9 6.6. Confidentiality and Public Announcements. Section 10 of the Asset Agreement is incorporated herein and shall be a part of this Transition Agreement. 6.7. Assignment. This Transition Agreement and the rights and obligations of the parties hereunder shall not be assignable or delegable, in whole or in part, without the consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, that (i) both parties shall have the right to assign this Transition Agreement or delegate its duties in whole or in part to any Affiliate or any third party in connection with a valid assignment of the Supply Agreement pursuant to the terms thereof, and (ii) Guilford shall have the right to collaterally assign this Transition Agreement to the extent required in connection with its financing arrangements for the purpose of permitting its financing sources to exercise their remedies upon any default by Guilford. Any attempted assignment of this Transition Agreement in violation of this Section 6.7 shall be void. Notwithstanding the foregoing, the prohibition on assignment set forth in this Section 6.7 shall not apply to any assignment that constitutes a Change of Control for purposes of Section 11.3 of the Supply Agreement. 6.8. Entire Agreement. This Transition Agreement, including without limitation the Schedules hereto, together with the Asset Agreement and the other agreements contemplated thereby, constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and except as expressly otherwise provided herein, supersedes and cancels all previous agreements, negotiations, commitments and writings in respect to the subject matter thereof. Notwithstanding anything to the contrary in the first paragraph of this Section 6.8, the Asset Agreement, the Supply Agreement and this Transition Agreement shall each stand as independent agreements between the parties, and after the Effective Date each of this Transition Agreement, the Supply Agreement and the Asset Agreement will remain in full force and effect and this Transition Agreement shall not be deemed superseded or amended thereby. Without limitation of the foregoing, the provisions of the Asset Agreement, the Supply Agreement and this Transition Agreement with respect to indemnification shall both remain independently effective (except that the Maximum shall be cumulative with the Maximum under the Supply Agreement and the Asset Agreement) and no such contracts shall be deemed to supersede or limit the indemnification obligations imposed by any other, except as may be specifically specified therein. 6.9. Successors and Assigns. The terms and conditions of this Transition Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 6.10. Headings. The headings of the Articles, Sections and subsections of this Transition Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Transition Agreement or affect the construction hereof. 6.11. Modification and Waiver. No amendment, modification or alteration of the terms of this Transition Agreement shall be binding unless the same shall be in writing and duly executed by the parties hereto, except that any of the terms or provisions of this Transition Agreement may be waived in writing at any time by the party which is entitled to the benefits of such waived terms or provisions. No waiver of any of the provisions of this Transition Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar). No delay on the part of any party exercising any right, power or privilege hereunder shall operate as a waiver thereof. EXECUTION COPY 10 6.12. Notices. Any notices or demands required by this Transition Agreement shall be given in writing and shall be given by delivery in person, by electronic facsimile transmission, cable, telegram, telex or other standard forms of written telecommunications, by overnight courier or by registered or certified mail, postage prepaid, if to Merck, to: Merck & Co., Inc. 351 North Sumneytown Pike North Wales, PA 19454-2505 Attn: Executive Director, USHH Business Development Facsimile: 215-616-2335 with a copy to: Bruce Hartman, Esq. Legal Department UG4A-50 Merck & Co., Inc. 351 N. Sumneytown Pike North Wales, PA 19454-2505 Facsimile: 267-305-2965 with a copy to: Merck & Co., Inc. One Merck Drive P.O. Box 100 Whitehouse Station, NJ 08889-0100 Attention: Office of the Secretary Facsimile: (908) 735-1224 if to Guilford, to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: Chief Financial Officer Facsimile: (410) 631-6899 with a copy to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 21224 Attention: General Counsel Facsimile: (410) 631-5598 or at such other address for a party as shall be specified by like notice. The date of giving any such notice shall be the date of hand delivery, the date sent by electronic EXECUTION COPY 11 facsimile transmission, cable, telegram, telex or other standard forms of written communications, the day after delivery to the overnight courier service, and the date three days following the posting of the registered or certified mail. 6.13. Counterparts. This Transition Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute one and the same agreement. 6.14. Survival of Certain Provisions. The terms, provisions, representations, and warranties contained in this Transition Agreement that by their sense and context are intended to survive the performance thereof (including, without limitation, Article 4 and Sections 6.2, 6.3, 6.4, 6.6, 6.8, 6.9, 6.12, 6.14, 6.15, 6.17, 6.18 and 6.19, and the payment and reconciliation provisions of Schedule 2.1) by either party or both parties hereunder shall so survive the completion of performance, expiration or termination of this Transition Agreement. 6.15. Severability. If any provision of this Transition Agreement is found invalid or unenforceable by a court of competent jurisdiction, the remainder of this Transition Agreement shall continue in full force and effect. The parties shall negotiate in good faith to substitute a valid, legal, and enforceable provision that reflects the intent of such invalid or unenforceable provision. 6.16. Review by Legal Counsel. Each of the parties agrees that it has read and had the opportunity to review this Transition Agreement with its legal counsel. Accordingly, the rule of construction that any ambiguity contained in this Transition Agreement shall be construed against the drafting party shall not apply. 6.17. Third Party Beneficiaries. Nothing in this Transition Agreement, express or implied, is intended to confer upon any third party, any rights, remedies, obligations or liabilities. 6.18. Asset Agreement. The parties expressly acknowledge and agree that certain provisions of the Asset Agreement are incorporated by reference herein, or by their terms otherwise apply hereto and further agree that such provisions shall be given full effect in interpreting and enforcing this Transition Agreement. In the event of any inconsistency between this Transition Agreement and the Asset Agreement, the Asset Agreement shall control. 6.19. Cumulative Remedies. Except as otherwise provided herein, no remedy referred to in this Transition Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Transition Agreement or otherwise available under law or at equity. 6.20. Further Assurances. Each party agrees to execute such further papers, agreements, documents, instruments and the like as may be necessary or desirable to effect the purpose of this Transition Agreement and to carry out its provisions. EXECUTION COPY 12 IN WITNESS WHEREOF, the undersigned have executed this Transition Agreement as of the Effective Date. MERCK & CO., INC. GUILFORD PHARMACEUTICALS INC. By: /s/ Raymond V. Gilmartin By: /s/ Craig R. Smith, M.D. --------------------------- --------------------------- Name: Raymond V. Gilmartin Name: Craig R. Smith, M.D. Title: Chairman, President and Title: Chairman, President and Chief Executive Officer Chief Executive Officer EXECUTION COPY 13 SCHEDULE 2.1 TRANSITION SERVICES Merck shall provide, or shall cause subcontractors used by Merck in the ordinary course of conducting its business to provide, the following services in the United States during the Transition Period: Warehousing of the MSD Ireland Image Product at Merck. Distribution services for the MSD Ireland Image Product in the United States as customarily performed by Merck for the Product during the last twelve (12) months preceding the Effective Date, including but not limited to receiving, accepting (where required), processing and shipping orders for the MSD Ireland Image Product. Accounting for sales of MSD Ireland Image Product, including accounts receivable management, billing, collection and record-keeping. Responding promptly to all product supply inquiries (not including Adverse Event reports, medical inquiries, or similar inquiries which are governed by the Asset Agreement) regarding the MSD Ireland Image Product (all out of pocket costs with respect to such inquiries to be borne by Guilford). Chargebacks and GPO administration fees services and processing, and processing of Medicaid Rebates as provided in Article 9 of the Asset Agreement. Providing the following reports to Guilford: Daily sales reports; A monthly sales report in form reasonably satisfactory to Guilford within five (5) business days following the end of each month setting forth total Gross Sales of MSD Ireland Image Product by SKU in units and dollars; Within fifteen (15) days following the end of each calendar quarter, (i) with respect to the first two months of such calendar quarter, a report (including a breakdown by customers) setting forth net sales of MSD Ireland Image Product by SKU, itemizing all rebates, chargebacks, GPO administration fees, discounts, or allowances credited or paid to customers in the United States, and returned goods received from customers in the United States, and (ii) with respect to the third month of such calendar quarter, a report (including a breakdown by customers) setting forth estimated net sales of MSD Ireland Image Product by SKU, itemizing all rebates, chargebacks, GPO administration fees, discounts, or allowances credited or paid to customers in the United States, and returned goods received from customers in the United States; provided that Merck shall as soon as practicable and in any event within twenty-five (25) days of the end of each calendar quarter provide Guilford with an actual report of the items contemplated in subsection (ii) above; and EXECUTION COPY Within fifteen (15) days after the end of each month, an inventory status report by formulation and SKU, showing the amount of MSD Ireland Image Product in inventory at the end of such month in the warehouses and an accounts receivable aging report. Within five (5) business days after the end of each month, any information reasonably necessary to allow Guilford to create and support audited and unaudited quarterly financial statements prepared in accordance with GAAP and to meet all disclosure requirements of the Securities and Exchange Commission (including estimated net sales of MSD Ireland Image Product by SKU, itemizing all estimated rebates, chargebacks, GPO administration fees, discounts, or allowances credited or paid to customers in the United States, and returned goods received from customers in the United States). Making payments to Guilford as follows: On or before the 15th day after the end of each month (or portion thereof, if the Transition Period ends in the middle of a calendar month) during the Transition Period, Merck shall pay Guilford an amount equal to Reconciled Net Sales in the United States and provide Guilford with a statement together with copies of the related credit memos for such month. For purposes of this Transition Agreement, "Reconciled Net Sales" shall mean: Gross Sales for such month in the United States; less: Product returns received during such month (to the extent that such product returns are chargeable to Guilford in accordance with Article 9 of the Asset Agreement); Cash discounts given in accordance with the standard terms and conditions of Merck in effect during such month; and Bad debt/uncollectible accounts receivable write-offs made in accordance with the standard collection policies of Merck (provided that Guilford itself reserves the right to pursue collection efforts in its discretion). Invoicing Guilford as follows: On or before the 45th day after the end of each calendar quarter (or portion thereof, if the Transition Period ends in the middle of a calendar quarter) during the Transition Period, Merck shall invoice Guilford for all chargebacks, GPO administration fees, discounts and rebates accrued during such calendar quarter (to the extent that such chargebacks, GPO administration fees, discounts and rebates are payable by Guilford in accordance with Article 9 of the Asset Agreement) and Merck shall deduct the amount due to Merck as reflected on each such invoice from the next payment of Reconciled Net Sales to be made to Guilford in accordance with the foregoing paragraph; provided that with respect to the last invoice delivered pursuant to this paragraph, Guilford shall pay the amount due pursuant to such invoice within thirty (30) days of receipt thereof. EXECUTION COPY For the avoidance of doubt, Merck shall not be liable for non-payment by customers, provided that Merck shall have properly billed such customers. Following the end of the Transition Period and prior to the last payment to Guilford, Merck will classify as a bad debt any invoice that has not yet been paid, Merck will provide Guilford with a list of accounts receivable outstanding so that such invoices can be collected by Guilford. Within three months following the end of the Transition Period, a final true up will be performed and any amounts owed by Merck to Guilford, or by Guilford to Merck, will be reconciled. EXECUTION COPY EX-2.04 6 w91648exv2w04.txt EXHIBIT 2.04 EXHIBIT 2.04 REVENUE INTEREST ASSIGNMENT AGREEMENT Dated as of October 28, 2003 among ARTERY, LLC, as Assignor, GUILFORD PHARMACEUTICALS INC., GPI HOLDINGS, INC. and PAUL ROYALTY FUND, L.P., and PAUL ROYALTY FUND HOLDINGS II as Assignees *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. Table of Contents (continued)

Page ---- ARTICLE I DEFINITIONS............................................................................................1 Section 1.01 Definitions................................................................................1 ARTICLE II PURCHASE AND SALE OF ASSIGNED INTERESTS..............................................................23 Section 2.01 Purchase and Sale.........................................................................23 Section 2.02 Payments in Respect of the Assigned Interests.............................................24 Section 2.03 Purchase Price............................................................................28 Section 2.04 No Assumed Obligations....................................................................28 ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD.............................................28 Section 3.01 Organization..............................................................................29 Section 3.02 Corporate Authorization...................................................................29 Section 3.03 Governmental Authorization................................................................29 Section 3.04 Ownership.................................................................................30 Section 3.05 Financial Statements......................................................................30 Section 3.06 No Undisclosed Liabilities................................................................30 Section 3.07 Solvency..................................................................................30 Section 3.08 Litigation................................................................................30 Section 3.09 Compliance with Laws......................................................................31 Section 3.10 Conflicts.................................................................................31 Section 3.11 Material Contracts........................................................................32 Section 3.12 Intellectual Property.....................................................................32 Section 3.13 Regulatory Approval.......................................................................33 Section 3.14 Subordination.............................................................................33 Section 3.15 Place of Business.........................................................................34 Section 3.16 Broker's Fees.............................................................................34 Section 3.17 Other Information.........................................................................34 Section 3.18 Distribution Agreements and License Agreements............................................34 Section 3.19 Insurance.................................................................................37 Section 3.20 Accuracy of Reports.......................................................................37 Section 3.21 * Representations; Closing................................................................37 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ASSIGNEES..........................................................37 Section 4.01 Organization..............................................................................37 Section 4.02 Authorization.............................................................................38

i *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission.

Page ---- Section 4.03 Broker's Fees.............................................................................38 Section 4.04 Conflicts.................................................................................38 Section 4.05 Consents..................................................................................38 Section 4.06 Tax Representation........................................................................39 ARTICLE V COVENANTS.............................................................................................39 Section 5.01 Consents and Waivers......................................................................39 Section 5.02 Access; Books and Records.................................................................39 Section 5.03 Material Contracts........................................................................40 Section 5.04 Confidentiality; Public Announcement......................................................40 Section 5.05 Quarterly Reports.........................................................................41 Section 5.06 Right of First Refusal....................................................................42 Section 5.07 Purchase Options..........................................................................43 Section 5.08 Security Agreements.......................................................................47 Section 5.09 Best Efforts; Further Assurance...........................................................48 Section 5.10 Remittance to Lockbox Account.............................................................49 Section 5.11 Additional Covenants of Assignor, GPI Holdings and Guilford...............................51 Section 5.12 Future Agreements.........................................................................56 Section 5.13 Guarantee.................................................................................57 Section 5.14 Financial Statements......................................................................58 ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING AND FUNDING.......................................................58 Section 6.01 Closing...................................................................................58 Section 6.02 Conditions Applicable to Assignees........................................................59 Section 6.03 Conditions Applicable to Assignor.........................................................62 ARTICLE VII TERMINATION.........................................................................................63 Section 7.01 Termination Date..........................................................................63 Section 7.02 Effect of Termination.....................................................................63 ARTICLE VIII MISCELLANEOUS......................................................................................63 Section 8.01 Survival..................................................................................63 Section 8.02 Specific Performance......................................................................64 Section 8.03 Notices...................................................................................64 Section 8.04 Successors and Assigns....................................................................66 Section 8.05 Indemnification...........................................................................66

ii Section 8.06 Expenses..................................................................................68 Section 8.07 Independent Nature of Relationship........................................................68 Section 8.08 Federal Tax...............................................................................68 Section 8.09 Entire Agreement..........................................................................69 Section 8.10 Amendments; No Waivers....................................................................69 Section 8.11 Interpretation............................................................................69 Section 8.12 Headings and Captions.....................................................................70 Section 8.13 Counterparts; Effectiveness...............................................................70 Section 8.14 Severability..............................................................................70 Section 8.15 Governing Law; Jurisdiction...............................................................70 Section 8.16 Waiver of Jury Trial......................................................................71 iii EXHIBITS AND SCHEDULES EXHIBITS Exhibit A - * Sales Exhibit B - Financial Statements Exhibit C - Bill of Sale Exhibit D - Assignor-Assignee Security Agreement Exhibit D-1 - Guilford-Assignor Security Agreement Exhibit D-2 - Guilford-Assignee Security Agreement Exhibit E(i) - Legal Opinion Hogan & Hartson, L.L.P. Exhibit E(ii) - Legal Opinion of Patent Counsel Exhibit F - LLC Agreement Exhibit G - Certificate of Formation Exhibit H - Management Agreement Exhibit I - Warrant Exhibit J - Aggrastat Net Sales Projection and Budget Exhibit K - Pledge Agreement Exhibits L -N-Conversion Documents Exhibit O - Acceptable Investments SCHEDULES Schedule 1.01 - Applicable Percentage Schedule 3.02 - Corporate Authorization Schedule 3.04 - Liens Schedule 3.06 - Liabilities Schedule 3.08 - Litigation Schedule 3.09 - Compliance with Laws Schedule 3.10 - Conflicts Schedule 3.12(a) - Registered Intellectual Property Schedule 3.12(b) - Intellectual Property Agreements Schedule 3.12(c) - Issues Associated with Intellectual Property Agreements Schedule 3.12(d) - Third Party Intellectual Property Rights Schedule 3.12(f) - Restrictions On Granting Powers Under Distribution Agreements and Licensing Agreements Schedule 3.12(i) - Payments On Primary Products and Intellectual Property Schedule 3.12(k) - Disputes Schedule 3.15 - Place of Business Schedule 3.17 - Other Information Schedule 3.18(a) - Distribution Agreements and License Agreements Schedule 3.18(a)(iii) - Notices of Intention to Terminate Distribution Agreements and License Agreements *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. iv Schedule 3.18(a)(iv) - Right to Receive Payments Under Distribution Agreements and License Agreements Schedule 3.18(a)(v) - Required Payments Under Distribution Agreements and License Agreements Schedule 3.18(b) - Correspondence and Written Communications Regarding Distribution Agreements and License Agreements Schedule 3.19 - Insurance Schedule 5.07(a) - Assignees Option Repurchase Price Schedule 5.07(b)(i) - Assignor Option Repurchase Price Schedule 5.07(b)(ii)(A) - Call Price Schedule 5.07(b)(ii)(B) - Secured Financing Event Price Schedule 5.07(c) - Payment Factors Schedule 6.02(g) - UCC Filing Jurisdictions Schedule 8.08 - Federal Tax-Projected Payment Schedule #The Company has omitted certain schedules in accordance with Regulation S-K 601(b)(2). The Company will furnish the omitted schedules to the Commission upon request. v REVENUE INTEREST ASSIGNMENT AGREEMENT REVENUE INTEREST ASSIGNMENT AGREEMENT (as amended, supplemented or otherwise modified from time to time, this "Agreement") is made and entered into as of October 28, 2003 by and among GUILFORD PHARMACEUTICALS INC., a Delaware corporation ("Guilford"), GPI HOLDINGS, INC., a Delaware corporation and wholly-owned subsidiary of Guilford ("GPI Holdings"), ARTERY, LLC, a Delaware limited liability company and wholly-owned subsidiary of GPI Holdings ("Assignor"), and PAUL ROYALTY FUND, L.P., a Delaware limited partnership ("Fund") and PAUL ROYALTY FUND HOLDINGS II, a California general partnership ("Holdings"), (each an "Assignee" and together, the "Assignees"). WHEREAS, Assignor is the owner of the Intellectual Property (as hereinafter defined) and the Regulatory Approvals (as hereinafter defined) with respect to the Primary Products and the other rights, assets, and properties acquired by Assignor under the Merck Purchase Agreement and the Assignment Documents; and WHEREAS, Assignor has the right to payments under the Management Agreement (as hereinafter defined); and WHEREAS, Assignor wishes to sell, assign, convey and transfer to Assignees, and Assignees wish to purchase from Assignor, the Assigned Interests (as hereinafter defined), upon and subject to the terms and conditions hereinafter set forth; and NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties set forth herein, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 DEFINITIONS. The following terms, as used herein, shall have the following meanings: "Acceptable Investments" shall mean the types of investments, and subject to the applicable concentration limits, described in the GPI Holdings, Inc. - Short Term Investment Policy attached as Exhibit O. "Affiliate" shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person. *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. "After Acquired Products" shall mean any products acquired or in-licensed by Guilford or any Subsidiary of Guilford after the Closing, whether individually or as part of an acquisition, merger or other transaction, and any product that is developed internally by Guilford or a Subsidiary of Guilford that is competitive with either of the Primary Products. "After Acquired Products Net Sales" shall mean, for any period of determination, the aggregate gross revenues of Guilford and its Affiliates, calculated in accordance with GAAP, with respect to the After Acquired Products, arising from direct sales, royalties or otherwise, earned by Guilford and its Affiliates during such period, less, in the case of direct sales only, (i) customary cash trade discounts and rebates actually granted or paid solely in connection with After Acquired Products sold after the Closing, (ii) allowances and adjustments actually credited to customers for After Acquired Products that are spoiled, damaged, outdated, obsolete, returned or otherwise recalled and are solely in connection with After Acquired Products sold after the Closing, (iii) allowances and adjustments actually credited to customers for a recall by a Government Authority of any After Acquired Product sold after the Closing, (iv) charges included as part of the aggregate sales for freight, postage, shipping and insurance charges, to the extent invoiced, and (v) taxes, duties or other governmental charges when included in the invoice, plus any proceeds (including payments of whatever type and whenever received) received by Guilford and its Affiliates from the Transfer of an After Acquired Product or the Intellectual Property, Regulatory Approvals or related assets with respect to an After Acquired Product. In calculating After Acquired Product Net Sales, any Transfer from Guilford to an Affiliate shall be disregarded and the calculation shall instead be based on the first Transfer to an unrelated third party. "Aggrastat" shall mean (a) the product currently known and marketed as AGGRASTAT(R), (b) the active pharmaceutical ingredient tirofiban hydrochloride, (c) the formulated solutions for intravenous injection or infusion containing tirofiban hyrdrochloride marketed under the trademark AGGRASTAT(R), (d) any formulation of or product containing or comprised of tirofiban hyrdrochloride, or any derivative thereof (including but not limited to any stereoisomers, either separated or combined, any hydrates, any salts, any solvates and any crystal forms), and (e) any reformulation or line extension of such product, any product containing or comprised of the same active pharmaceutical ingredient as such product, regardless of dosage or method of administration, and any improvement, enhancement, refinement or modification of such product. 2 "Aggrastat Regulatory Approvals" shall mean with respect to Aggrastat, collectively, all INDs, NDAs and other regulatory approvals, registrations and associated materials (including the product dossier), including IND No. 38,899, NDA No. 20-912 (vial concentrate) and NDA No. 20-913 (pre-mixed bag) acquired from Merck, and all reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining thereto, and all information, data, know-how, formulations, assays, goodwill or intellectual property contained in such IND and the NDAs, relating to Aggrastat in the United States and its territories and possessions, together with all amendments, supplements and updates thereto, and all comparable regulatory approvals, registrations and associated materials throughout the world. "Agreement" shall have the meaning set forth in the first paragraph hereof. "Applicable Percentage" shall mean, as of any date of determination: (a) for the period from the Closing Date through and including December 31, 2006: (i) with respect to annual Primary Products Net Sales earned during a calendar year after the Closing Date (including 2003) of up to and including $75 million, 10% of such Primary Products Net Sales for such calendar year, and in addition, to the extent that Primary Products Net Sales for such calendar year are less than the * Sales for such calendar year, 10% of the lesser of (A) the After Acquired Products Net Sales for such calendar year and (B) (x) the * Sales for such calendar year less (y) the Primary Products Net Sales for such calendar year, and (ii) with respect to annual Primary Products Net Sales earned during a calendar year after the Closing Date (including 2003) in excess of $75 million, 2.5% of such excess Primary Products Net Sales for such calendar year and in addition, to the extent that Primary Products Net Sales for such calendar year are less than the * Sales for such calendar year, 2.5% of the lesser of (A) the After Acquired Products Net Sales for such calendar year and (B) (x) the * Sales for such calendar year less (y) the Primary Products Net Sales for such calendar year, and (b) for the period from January 1, 2007 through and including December 31, 2012: (i) with respect to annual Primary Products Net Sales earned during a calendar year up to and including $75 million, 17.5% of such Primary Products Net Sales for such calendar year and in addition, to the extent that Primary Products Net Sales for such calendar year are less than the * Sales for such calendar year, 17.5% of the lesser of (A) After Acquired Products Net Sales for such calendar year and (B) (x) the * Sales for such calendar year less (y) the Primary Products Net Sales for such calendar year, and *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 3 (ii) with respect to annual Primary Products Net Sales earned during a calendar year in excess of $75 million, 3.5% of such excess Primary Products Net Sales for such calendar year and in addition, to the extent that Primary Products Net Sales for such calendar year are less than the * Sales for such calendar year, 3.5% of the lesser of (A) the After Acquired Products Net Sales for such calendar year and (B) (x) the * Sales for such calendar year less (y) the Primary Products Net Sales for such calendar year. Notwithstanding the foregoing: (x) if, for any of calendar years 2004, 2005 or 2006, the Primary Products Net Sales and the After Acquired Products Net Sales collectively are less than 75% of the * Sales for such year, then the Applicable Percentage set forth in clause (a)(i) above shall be 12.5% rather than 10% for such calendar year, *; (y) if, for any calendar year after December 31, 2006, the Primary Products Net Sales and After Acquired Products Net Sales collectively are less than $75 million, the Applicable Percentage set forth in clause (b)(i) above shall be 22.5% rather than 17.5% for such calendar year, provided, however, that if the 22.5% rate is applicable in a particular year, then Assignees will not receive any payments pursuant to clause (b)(ii) above for that year; (z) if, for any calendar year during the Term, Primary Products Net Sales plus After Acquired Products Net Sales for such calendar year are less than the * Sales for Primary Products for such calendar year, then the Applicable Percentage shall additionally include an amount equal to 2.5% of the lesser of (i) Secondary Products Net Sales for such calendar year and (ii) (A) * Sales for such calendar year less (B) the sum of Primary Products Net Sales for such calendar year and After Acquired Products Net Sales for such calendar year; and The foregoing definition of the Applicable Percentage is to be interpreted in accordance with the illustrative examples set forth on Schedule 1.01 hereto. "Assigned Interests" shall mean an undivided interest in the right to receive amounts payable to Assignor by Guilford under the Management Agreement, without any offset or reduction for any amounts payable by Assignor to Guilford under the Management Agreement, equal to the Applicable Percentage of Total Net Sales and all other amounts payable in accordance with Section 2.02. "Assignees" shall have the meaning set forth in the first paragraph hereof. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 4 "Assignees Concentration Account" shall mean a segregated account established for the benefit of Assignees and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement. Assignees Concentration Account shall be the account into which the funds held in the Joint Concentration Account which are payable to Assignees pursuant to this Agreement are swept by the Lockbox Bank in accordance with the terms of this Agreement and the Lockbox Agreement. "Assignees Indemnified Party" shall have the meaning set forth in Section 8.05(a). "Assignees Option Repurchase" shall have the meaning set forth in Section 5.07(a). "Assignees' Account" shall mean an account maintained by Assignees at any financial institution and designated in writing by Assignees to Assignor, as Assignees may so designate from time to time. "Assignees' Consultants" shall mean, collectively, Assignees' employees, officers, directors, legal and accounting advisors, agents or other authorized representatives. "Assignor" shall have the meaning set forth in the first paragraph hereof. "Assignor-Assignees Security Agreement" shall mean the Security Agreement dated as of October 28, 2003 by and between Assignor and Assignees providing for, among other things, the grant by Assignor in favor of Assignees of a valid continuing, perfected lien on and security interest in, the collateral described therein. "Assignor Concentration Account" shall mean a segregated account established and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement. Assignor Concentration Account shall be the account into which the funds remaining in the Joint Concentration Account after payment therefrom of the amounts payable to Assignees pursuant to this Agreement are swept in accordance with the terms of this Agreement. "Assignor Indemnified Party" shall have the meaning set forth in Section 8.05(b). "Assignor Option Event" shall mean any one of the following events: (i) a Change of Control; or (ii) the acquisition by Guilford of a product for more than $100 million in cash at closing; or (iii) the refinancing of all indebtedness for borrowed money in a single transaction or a series of related transactions, as such indebtedness may 5 exist from time to time, of Guilford and its Subsidiaries, other than leasehold debt, equipment financing and working capital revolving lines of credit. "Assignor Option Repurchase" shall have the meaning set forth in Section 5.07(b). "Assignor Option Repurchase Price" shall have the meaning set forth in Section 5.07(b). "Assignor's Account" shall have the meaning set forth in Section 2.03(b). "Audit Costs" shall mean, with respect to any audit of the books and records of Assignor with respect to amounts payable or paid under this Agreement or any License Party Audit, the cost of such audit, including, without limitation, all fees, costs and expenses incurred in connection therewith. "Audit Reports" shall mean, with respect to a License Party Audit, any and all reports, findings and other written information related to such License Party Audit. "Bankruptcy Event" shall mean: (i) Guilford, GPI Holdings or Assignor shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization, relief of debtors or the like, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its respective debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any portion of its assets, or Assignor, GPI Holdings or Guilford shall make a general assignment for the benefit of its respective creditors; or (ii) there shall be commenced against Assignor, GPI Holdings or Guilford any case, proceeding or other action of a nature referred to in clause (i) above which remains undismissed, undischarged or unbonded for a period of ninety (90) days; or (iii) there shall be commenced against Assignor, GPI Holdings or Guilford any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against (A) all or any 6 major portion of its assets and/or (B) either of the Primary Products, or any significant portion of the Intellectual Property related to either of the Primary Products, which results in the entry of an order for any such relief which shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within forty-five (45) days from the entry thereof; or (iv) Assignor, GPI Holdings or Guilford shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above of this definition of "Bankruptcy Event"; (v) Assignor, GPI Holdings or Guilford shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its respective debts as they become due; or (vi) Assignor, GPI Holdings or Guilford shall be Insolvent. "Bill of Sale" shall mean the Bill of Sale pursuant to which Assignor shall assign to Assignees all of its rights and interests in and to the Assigned Interests purchased hereunder, which Bill of Sale shall be substantially in the form of Exhibit C. "Business Day" shall mean any day other than a Saturday, a Sunday, any day which is a legal holiday under the laws of the State of New York, or any day on which banking institutions located in the State of New York are required by law or other governmental action to close. "Call" shall have the meaning as set forth in Section 5.07(b). "Call Price" shall have the meaning as set forth in Section 5.07(b). "Certificate of Formation" shall mean the certificate of formation of Assignor, dated as of October 27, 2003, a copy of which is attached hereto as Exhibit G. "Change of Control" shall mean: (i) the acquisition by any Person or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (other than any trustee or other fiduciary holding securities under an employee benefit plan of Guilford or any entity controlled by Guilford) of beneficial ownership of any capital stock of Guilford, if after such acquisition, such Person or group would be the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of 7 securities of Guilford representing more than 50% of the combined voting power of Guilford's then outstanding securities entitled to vote generally in the election of directors; or (ii) Guilford's stockholders approve a merger or consolidation of Guilford, with any other Person, other than a merger or consolidation which would result in Guilford's voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of Guilford's voting securities or such surviving entity's voting securities outstanding immediately after such merger or consolidation; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Guilford (together with any new directors (other than a director designated by a Person who has entered into an agreement with Guilford to effect a transaction described in clause (i) or (ii) of this definition of "Change of Control"), whose election by such Board of Directors or nomination for election by Guilford's stockholders, as applicable, was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Guilford then in office; or (iv) GPI Holdings ceases to be the sole owner of 100% of the membership interests in the Assignor; (v) Guilford ceases to be the direct or indirect sole owner of 100% of the capital stock of GPI Holdings; or (vi) Assignor merges or is consolidated with any other Person. "Closing" shall have the meaning set forth in Section 6.01. "Closing Date" shall mean October 28, 2003. "Collateral" shall mean the property included in the definition of "Collateral" in any of the Security Agreements. 8 "Confidential Information" shall mean, as it relates to Assignor, Guilford, Guilford's Affiliates and the Products, the Intellectual Property, know-how, trade secrets, confidential business information, financial data and other like information (including ideas, research and development, know-how, formulas, schematics, compositions, technical data, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), inventory, ideas, algorithms, processes, computer software programs or applications (in both source code and object code form), client lists and tangible or intangible proprietary information or material. Notwithstanding the foregoing definition, Confidential Information shall not include information that is (i) already in the public domain at the time the information is disclosed, (ii) thereafter becomes lawfully obtainable from other sources, (iii) is required to be disclosed in any document to be filed with any Government Authority or (iv) is required to be disclosed under securities laws, rules and regulations applicable to Assignor or Guilford, as the case may be, or pursuant to the rules and regulations of the Nasdaq National Market or any other stock exchange or stock market on which securities of Guilford may be listed for trading. "Consolidated EBITDA" shall mean for any period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to the extent Consolidated Net Income has been reduced thereby, (A) all income taxes of the Surviving Party and its Subsidiaries paid or accrued in accordance with GAAP for such period (other than income taxes attributable to extraordinary, unusual or nonrecurring gains or losses or taxes attributable to sales or dispositions outside of the ordinary course of business), (B) Total Debt Service and (C) the aggregate depreciation, amortization and other noncash expenses of the Surviving Party and its Subsidiaries reducing Consolidated Net Income of the Surviving Party for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss or any charge which requires an accrual of or a reserve for cash charges for any future period) less any noncash items increasing Consolidated Net Income for such period, all as determined on a consolidated basis for the Surviving Party and its Subsidiaries in accordance with GAAP. "Consolidated Net Income" shall mean the aggregate net income (or loss) of the Surviving Party and its Subsidiaries for such period on a consolidated basis, determined in accordance with GAAP; provided that there shall be excluded therefrom (a) after-tax gains or losses from the sale of assets outside of the ordinary course of business, including sale and leaseback transactions and sale of any stock of the Surviving Party to any Person (excluding the disposal and replacement of obsolete equipment in the ordinary course of business) or abandonments or reserves relating thereto, (b) after-tax items classified as extraordinary or nonrecurring gains or losses, (c) the net income (but not loss) of any Subsidiary to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by contract, operation of law or otherwise, (d) income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued), and (e) any noncash losses attributable to 9 the use of a fair value methodology for recognition and measurement of impairment of goodwill not identified with impaired assets in accordance with Financial Accounting Standards Board Statement No. 142. "Contract Party" shall mean any party to a Distribution Agreement or License Agreement. "Conversion Documents" shall mean the Certificate of Conversion, dated October 27, 2003, relating to the conversion by GPI Polymer Holdings, Inc., from a Delaware corporation to the Delaware limited liability company that adopted the LLC Agreement. "Daily Amount" shall have the meaning set forth in Section 2.02(a). "Deposit Accounts" shall mean, collectively, the Lockbox Account, the Joint Concentration Account, Assignor Concentration Account and Assignees Concentration Account, each established and maintained pursuant to the Lockbox Agreement. "Discrepancy Notice" shall have the meaning set forth in Section 2.02(h). "Distribution Agreement" shall mean any existing or future agreement (whether or not in writing) pursuant to which Guilford, or any Affiliate or agent of Guilford, or any other Person markets or sells the Products, whether to end-users, for redistribution by the purchaser thereof, or otherwise, or to license distribution of the Products or the use of the Intellectual Property. "Dollars" or "US$" shall mean the freely transferable lawful money of the United States. "EBITDA to Total Debt Service Ratio" shall mean the ratio of (a) Consolidated EBITDA for the period of four consecutive fiscal quarters (the "Measurement Period") ending on such date, to (b) the Total Debt Service for such Measurement Period. "Excluded Liabilities and Obligations" shall have the meaning set forth in Section 2.04. "Excluded Transfer" shall mean (i) a Transfer to a Person that is not an Affiliate of Guilford pursuant to a Distribution Agreement or License Agreement and that (a) is entered into in the ordinary course of Guilford's or Assignor's business, (b) does not have the effect of a complete or outright transfer of any of the Products or substantial portion of the economic value of any of the Products, and (c) does not entitle Guilford or any of its Affiliates or Assignor to one or more lump sum payments in an aggregate amount in excess of $1,000,000 in consideration of the Transfer or any related series of Transfers or (ii) the Transfer by Guilford of all or any part of 10 any After Acquired Product or any Secondary Product or the Intellectual Property or Regulatory Approvals related thereto if, at the time of such Transfer, the quotient, expressed as a percentage, of (A) the fair market value of the assets proposed to be sold divided by (B) the product of the number of shares of Guilford common stock then issued and outstanding and the average daily closing price for such stock as quoted on the primary exchange on which such shares are quoted (and if not so quoted or listed at any time, the average daily bid and ask price as quoted in the pink sheets) for the ten (10) trading days prior to the date of the Transfer is less than 50% and (iii) a Gliadel Foreign Transaction. "FDA" shall mean the United States Food and Drug Administration. "Financial Statements" shall mean the consolidated balance sheets of Guilford and its Subsidiaries at December 31, 2001, December 31, 2002 and June 30, 2003 and the related consolidated statements of operations, cash flows and changes in stockholders' equity of Guilford and its Subsidiaries audited for the years ended December 31, 2001 and December 31, 2002 and unaudited for the six months ended June 30, 2003, and the accompanying footnotes thereto, copies of which are attached hereto as Exhibit B. "Future Agreement" shall mean any distribution, licensing or similar agreement entered into by Guilford or any Affiliate of Guilford with any other Person after the date hereof relating to the marketing and/or sale of any of the Products, as the same may be amended, supplemented or otherwise modified from time to time. "GAAP" shall mean generally accepted accounting principles in the United States in effect from time to time. "Gliadel" shall mean: (a) the product currently known and marketed under the trademark GLIADEL(R), (b) the pharmaceutical composition comprising the biodegradable polymer prolifeprosan 20 and the active pharmaceutical ingredient carmustine (BCNU), (c) the formulation marketed under the trademark GLIADEL(R)Wafer, (d) any formulation or product comprising or containing prolifeprosan 20 and carmustine (BCNU), or any derivative thereof (including but not limited to any stereoisomers, either separated or combined, any hydrates, any salts, any solvates and any crystal forms), and (e) any reformulation or line extension of such product, any product containing or comprised of the same biodegradable polymer and the same active pharmaceutical ingredient as 11 such product, regardless of dosage or method of administration, and any improvement, enhancement, refinement or modification of such product. "Gliadel Foreign Transaction" shall mean the Transfer in whole or in part of Gliadel, or the Intellectual Property and Regulatory Approvals with respect to Gliadel, to a Person that is not an Affiliate of Guilford, solely for manufacture, sale, distribution or license outside North America. "Gliadel Regulatory Approvals" shall mean, collectively, all INDs, NDAs and other regulatory approvals, registrations and associated materials (including the product dossier) relating to Gliadel, issued by the FDA as to Gliadel and all reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining thereto, and all information, data, know-how, formulations, assays, goodwill or intellectual property contained in such INDs and the NDAs, relating to Gliadel together with all amendments, supplements and updates thereto, and all comparable regulatory approvals, registrations and associated materials throughout the world. "Governmental Authority" means any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether foreign, federal, state or local (domestic or foreign), including, without limitation, the U.S. Patent and Trademark Office, the FDA, the U.S. National Institute of Health or any other government authority in any country. "GPI" shall mean GPI Polymer Holdings, Inc., a Delaware corporation. "GPI Holdings" shall have the meaning set forth in the first paragraph hereof. "Guaranteed Obligations" shall have the meaning set forth in Section 5.13(a). "Guilford" shall have the meaning set forth in the first paragraph hereof. "Guilford-Assignees Security Agreement" shall mean the Security Agreement dated as of October 28, 2003 by and between Assignees and Guilford providing for, among other things, the grant by Guilford in favor of Assignees of a valid continuing, perfected lien on and security interest in, the Collateral described therein. "Guilford-Assignor Security Agreement" shall mean the Security Agreement dated as of October 28, 2003 by and between Assignor and Guilford providing for, among other things, the grant by Guilford in favor of Assignor of a valid continuing, perfected lien on and security interest in, the collateral described therein. 12 "Guilford 5% Convertible Subordinated Notes" shall mean the notes issued by Guilford under the Subordinated Indenture. "Included Products Payments" shall mean the sum of all Primary Products Net Sales, After Acquired Products Net Sales and Secondary Products Net Sales. "IND" shall mean an investigational new drug application as defined in 21 C.F.R. Section 312 et seq. filed with the FDA in the United States or an equivalent application filed with a Regulatory Agency in any country outside of the United States. "Indebtedness" means with respect to any Person, (a) any liability of such Person (1) for borrowed money, or under any reimbursement obligation relating to a letter of credit, or (2) evidenced by a bond, note, debenture, or similar instrument (including a purchase money obligation) given in connection with the acquisition of any businesses, properties or assets of any kind (other than a trade payable or a current liability arising in the ordinary course of business), or (3) for the payment of money relating to any obligations under any capital lease of real or personal property which has been recorded as a capitalized lease obligation; (b) all redeemable stock issued by such Person that is mandatorily redeemable or redeemable or required to be repurchased at the election of the holder thereof (the amount of Indebtedness represented by any involuntary liquidation preference plus accrued and unpaid dividends); (c) any liability of others described in the preceding clause (a) that the Person has guaranteed or that is otherwise its legal liability; and (d) (without duplication) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (a), (b) and (c) above. "Independent Accountants" shall have the meaning set forth in Section 2.02(h). "Insolvent" shall mean, with respect to a Person, a financial condition such that the sum of such Person's debts is greater than the fair market value of such Person's property, when taken together on a consolidated basis. When used with respect to Assignor or Guilford, the debts of such entities shall include the obligations of Guilford under this Agreement and the obligation of Assignor to make payments in respect of the Assigned Interests pursuant to this Agreement, including any payments pursuant to Section 5.07. "Intellectual Property" shall mean all trade secrets; Know-How; Confidential Information; inventions (whether patentable or unpatentable and whether or not reduced to practice) and all improvements thereto; all patents, patent rights, patent applications and invention disclosures, together with all reissuance, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof; all registered or unregistered trademarks, trade names, service marks, including all goodwill associated therewith; all domain names and websites; and all registered and unregistered copyrights and all applications, in each case that are 13 owned, controlled by, issued to, licensed to, licensed by or hereafter acquired by or licensed by Assignor, Guilford or any Subsidiary of Guilford, in each case relating to or involving the Products. "Joint Concentration Account" shall mean a segregated account, subject to a control agreement in favor of the Assignees, established for the benefit of Assignor and Assignees and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement. The Joint Concentration Account shall be the account into which the Lockbox Bank sweeps the funds held in the Lockbox Account. "Know-How" means relating solely to the Products, all trade secrets, materials, discoveries, data, processes, methods of manufacture, devices, techniques, algorithms, flow charts, computer software programs or applications (in both source code and object code form), schematics, compositions, formulations, formula, specifications, uses, patterns, compilations and other information, including, but not limited to (i) medical, chemical, pharmacological and other scientific or clinical data or materials and (ii) methodology and information used in the manufacture, packaging, labeling, development, testing or analysis of the Products, that, in each case, derives actual or potential independent economic value from not generally being known to, and not being readily ascertainable by proper means by, other Persons who can obtain economic value from its disclosure or use, and that is now owned, controlled or licensed by Assignor, Guilford or any Subsidiary of Guilford, or that is hereafter acquired or licensed by Assignor, Guilford of any Subsidiary of Guilford during the term of this Agreement. "Knowledge" shall mean, with respect to Assignor and/or Guilford, as applicable, the knowledge of an officer of such Person relating to a particular matter. "Letter of Intent" shall mean the letter dated September 25, 2003 between Paul Capital Partners and Guilford as the same may be amended to the date hereof. "License Agreement" shall mean any existing or future distribution, co-promotion, manufacturing, marketing or partnering agreements entered into by Guilford relating to the Products and/or the Intellectual Property pursuant to which Guilford or any Affiliate of Guilford grants a license under intellectual property rights that relate to the Products or the Intellectual Property. "License Party Audit" shall have the meaning set forth in Section 5.12(d). "Licensed Intellectual Property" shall mean any intellectual property licensed to Assignor or Guilford by a third party. "Liquidity Account" shall have the meaning set forth in Section 5.07(h). 14 "LLC Agreement" shall mean the limited liability company agreement of Assignor dated as of October 27, 2003, a true and correct copy of which is attached as Exhibit F. "Liens" shall mean all liens, encumbrances, security interests, mortgages, rights to preferential payments or charges of any kind. "Lockbox Account" shall mean collectively, any lockbox and segregated lockbox account established and maintained at the Lockbox Bank pursuant to a Lockbox Agreement and this Agreement. The Lockbox Account shall be the account into which all payments made in respect of the sale of the Primary Products are to be remitted. "Lockbox Agreement" shall mean any agreement entered into by a Lockbox Bank, Guilford, Assignor and Assignees, in form and substance reasonably satisfactory to the parties thereto, pursuant to which, among other things, the Lockbox Account, the Joint Concentration Account, Assignees Concentration Account and Assignor Concentration Account shall be established and maintained. "Lockbox Bank" shall mean JP Morgan Chase Bank or such other bank or financial institution approved by each of Assignees and Assignor. "Losses" shall mean collectively, any and all claims, damages, losses, judgments, liabilities, costs and expenses (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding). "Management Agreement" shall mean the Management and Licensing Agreement dated as of October 28, 2003 by and between Guilford and Assignor providing for, among other things, a license in the Intellectual Property to Guilford by Assignor to manufacture, use, sell, market, license and distribute the Primary Products and the rights relating to Guilford's ability to enter into manufacturing, licensing and distribution agreements with third parties to sell, market, license and distribute the Primary Products, a true and correct copy of which is attached as Exhibit H. "Material Adverse Change" shall mean, with respect to Assignor and/or Guilford, as applicable, a material adverse change in the business, operations, assets, prospects or financial condition of the Assignor and/or Guilford and its Subsidiaries, taken as a whole. "Material Adverse Effect" shall mean (i) the effect of a Material Adverse Change, (ii) a material adverse effect on the validity or enforceability of any of the Transaction Documents, (iii) a material adverse effect on the ability of the Assignor or Guilford to perform any of its obligations under any of the Transaction Documents, (iv) a material adverse effect on the rights or remedies of Assignees under any of the Transaction Documents, (v) an adverse 15 effect on the right of Guilford or Assignor to receive any material payments payable under any Distribution Agreement or License Agreement or any other material rights and remedies of Guilford or Assignor under any Distribution Agreement or License Agreement, (vi) a material adverse effect on the right of Assignees to receive Assigned Interests or the Applicable Percentage of Total Net Sales or any payment due to Assignees hereunder or (vii) a material adverse effect on the Assigned Interests, including, without limitation, any material adverse effect on the Primary Products or the After Acquired Products or the ability of the Guilford to manufacture, distribute, market and/or sell the Primary Products or the After Acquired Products or on the level of anticipated Total Net Sales. "Material Contracts" shall mean any contract, agreement or other arrangement to which either Assignor, Guilford or a Subsidiary of Guilford is a party or any of Assignor's, Guilford's or a Subsidiary of Guilford's respective assets or properties are bound or committed (other than the Transaction Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect. "Merck" shall mean Merck & Co., Inc., a New Jersey corporation. "Merck Purchase Agreement" shall mean the Asset Transfer and License Agreement, dated as of October 28, 2003 between Merck & Co., Inc., Guilford. "NDA" shall mean a New Drug Application, and all amendments and supplements thereto, for regulatory approval by the FDA as defined in 21 CFR ss. 314.50 et seq., as such act or regulations may be amended, supplemented or replaced from time to time. "Necessary Intellectual Property" shall have the meaning set forth in Section 3.12(a). "Notice Event" means either (a) Guilford's or Assignor's intent to cause or to take any action to cause a Bankruptcy Event, (b) Guilford or Assignor being advised or otherwise becoming aware that a Bankruptcy Event (including an involuntary Bankruptcy Event) has occurred or will occur shortly or (c) the presentation to Guilford's Board of Directors or to Assignor's manager or other governing body or to any one of Guilford's directors or managers by an officer, member of senior management, director or manager of either Guilford or Assignor of a proposal to commence a bankruptcy proceeding or otherwise cause a Bankruptcy Event. "Notice of Election" shall have the meaning set forth in Section 5.06(b). "Obligations" shall mean any and all obligations of Assignor or Guilford or GPI Holdings under this Agreement and the other Transaction Documents. "Offered Interests" shall have the meaning set forth in Section 5.06(a). 16 "Other Interests" shall have the meaning set forth in Section 5.06(a). "Owned Intellectual Property" shall have the meaning set forth in Section 3.12(d). "Patent Office" shall mean the respective patent office (foreign or domestic) for any Patent. "Patents" shall mean all current and future patents, patent applications and patent disclosures, together with all reissuances, divisions, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof relating to the Products and/or the Intellectual Property, composition of matter, formulation, or methods of manufacture or use thereof that are issued or filed, including, without limitation, those identified on Schedule 3.12(a), that, in each case, are owned, controlled by, issued to, licensed to, licensed by or hereafter acquired by or licensed by Assignor, Guilford or any Subsidiary of Guilford. "Person" means an individual, corporation, partnership, association, trust or other entity or organization, but not including a government or political subdivision or any agency or instrumentality of such government or political subdivision. "Pledge Agreement" shall mean the Pledge Agreement dated as of the date hereof by and between GPI Holdings and Assignees providing for, among other things, the grant of a security interest by GPI Holdings in favor of Assignees of its membership interest in Assignor as security for GPI Holdings' guarantee of Assignor's Obligations hereunder and GPI Holdings' Obligations hereunder. "Primary Products" shall mean Gliadel and Aggrastat. "Primary Products Net Sales" shall mean, for any period of determination, the aggregate gross end-user sales revenues of the Primary Products in finished form earned during such period, as invoiced by Guilford, its Affiliates, Contract Parties or others to end-users of the Primary Products (provided, however, that Primary Product Net Sales with respect to sales of Gliadel for each Territory outside North America shall instead be the aggregate gross revenues of Guilford and its Affiliates, calculated in accordance with GAAP, for such period with respect to Gliadel sales in such Territory for so long as Guilford sells Gliadel in such Territory solely through third party licensees and distributors) less (i) customary cash trade discounts and rebates actually granted or paid solely in connection with sales after the Closing, (ii) allowances and adjustments actually credited to customers for Primary Products that are spoiled, damaged, outdated, obsolete, returned or otherwise recalled and are solely in connection with Primary Products sold after the Closing, (iii) allowances and adjustments actually credited to customers for a significant recall by a Government Authority of any Primary Product sold after the Closing, (iv) charges included as part of the aggregate sales for freight, postage, shipping and insurance 17 charges, to the extent invoiced, and (v) taxes, duties or other governmental charges when included in the invoice (provided that the total of all amounts in clauses (i) through (iv) for sales of Gliadel for any period shall not exceed *% of the aggregate gross end-user sales revenues of Gliadel for such period and the total of all amounts in clauses (i) through (iv) for sales of Aggrastat for any period shall not exceed *% of the aggregate gross end-user sales revenue of Aggrastat for such period). Primary Products Net Sales shall not include the proceeds of any Transfer by Assignor or Guilford made in compliance with Section 2.02(g). For the avoidance of doubt, the shipment of Primary Products to Contract Parties or other end-users of Primary Products in replacement for damaged or expired Primary Products for which no additional payments are due from any Contract Party or end-user shall, together with the initial sale of the damaged or expired Primary Products, be considered a single sale of Primary Products. "Products" shall mean the Primary Products, the After Acquired Products and the Secondary Products, collectively. "* Sales" shall mean, with respect to any calendar year during the Term, the Primary Products Net Sales * by Assignor for such calendar year, as set forth in Exhibit A hereto. "Proposed Transfer" shall have the meaning set forth in Section 5.06(a). "Purchase Option Exercise Period" shall have the meaning set forth in Section 5.07(a). "Purchase Option Event" shall mean any of the following events: (i) any Change of Control; (ii) any Bankruptcy Event; (iii) Guilford shall have at the end of any calendar month less than $20 million of Working Capital; (iv) the Transfer (other than an Excluded Transfer) by either Assignor or Guilford of (A) all or any major part of its respective interests in the Products, the Intellectual Property and the Regulatory Approvals, taken as a whole, and/or (B) all or any part of either of the Primary Products, any products or proceeds of either of the Primary Products, the Regulatory Approvals as to either Primary Product, any Intellectual Property with respect to either of the Primary Products, or any other property transferred to Assignor or Guilford pursuant to the Merck Purchase Agreement; * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 18 (v) the Transfer by Guilford or its Subsidiaries of a majority, calculated by reference to fair market value, of the consolidated assets of Guilford and its Subsidiaries; (vi) Assignor fails to pay when due any of the amounts set forth in Section 2.02(b)(ii); (vii) (A) any representation, warranty or certification made by either Assignor or Guilford in any of the Transaction Documents or in any certificate at any time given by either Assignor or Guilford in writing pursuant hereto or thereto or in connection herewith or therewith shall be inaccurate on the date as of which it was made or deemed made, and such inaccuracy would, individually or in the aggregate with other inaccuracies on the part of Assignor or Guilford, as the case may be, reasonably be expected to have a Material Adverse Effect or (B) there has occurred a breach of or default under any term, covenant, or agreement under any Transaction Document by either Assignor or Guilford, which would, individually or in the aggregate with other breaches on the part of Assignor or Guilford, as the case may be, reasonably be expected to have a Material Adverse Effect, and (viii) a Notice Event. Notwithstanding * to the contrary, * a Transfer described in Section 2.02(g) shall not constitute a Purchase Option Event if the Assignor has complied with all of the provisions of Section 2.02(g). "Purchase Price" shall have the meaning set forth in Section 2.03. "Quarterly Report" shall mean, with respect to the relevant calendar quarter of Assignor, (i) a report showing all payments made by Assignor to Assignees under this Agreement during such quarter and showing in detail the basis for the calculation of such payments, (ii) a reconciliation of such report referred to in clause (i) above to all information and data deliverable to Guilford or its Affiliates by the parties to any License Agreements or Distribution Agreements, together with relevant supporting documentation, (iii) a report showing, by type of Product, the amount of gross end-user sales of Products and all deductions supporting Assignor's calculation of Primary Products Net Sales, After Acquired Products Net Sales and Secondary Products Net Sales, as applicable and (iv) such additional information as Assignees may reasonably request. "Regulatory Agency" shall mean a Governmental Authority with responsibility for the approval of the marketing and sale of drugs in any country. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 19 "Regulatory Approvals" shall mean, collectively, the Gliadel Regulatory Approvals and the Aggrastat Regulatory Approvals and all INDs, NDAs and other regulatory approvals, registrations and associated materials (including the product dossier) issued by the FDA as to the Secondary Products or any After Acquired Product and all reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining thereto, and all information, data, know-how, formulations, assays, goodwill or intellectual property contained in such INDs and the NDAs, relating to such Products together with all amendments, supplements and updates thereto and all comparable regulatory approvals, registrations and associated materials throughout the world. "Repurchase Event" shall have the meaning set forth in Section 5.07(d). "Repurchase Price" shall have the meaning set forth in Section 5.07(c). "Review Materials" shall have the meaning set forth in Section 5.06(a). "Secondary Products" shall mean (i) the propofol prodrug known as AQUAVAN(TM) Injection and (ii) the neuroimmunophilin ligand capable of regenerating nerves without being immunosuppressive currently known as GPI 1485 or NIL-A, any reformulation or line extension of either of such products, any product containing or comprised of the same active pharmaceutical ingredient as either of such products, regardless of the dosage or method of administration and any improvement, enhancement, refinement or modification of either of such products. "Secondary Products Net Sales" shall mean, for any period of determination, the aggregate gross revenues of Guilford and its Affiliates, calculated in accordance with GAAP, with respect to the Secondary Products, arising from direct sales, royalties or otherwise, earned by Guilford and its Affiliates during such period, less in the case of direct sales only (i) customary cash trade discounts and rebates actually granted or paid solely in connection with sales after the Closing, (ii) allowances and adjustments actually credited to customers for Secondary Products that are spoiled, damaged, outdated, obsolete, returned or otherwise recalled and are solely in connection with Secondary Products sold after the Closing, (iii) allowances and adjustments actually credited to customers for a recall by a Government Authority of any Secondary Product sold after the Closing, (iv) charges included as part of the aggregate sales for freight, postage, shipping and insurance charges, to the extent invoiced, and (v) taxes, duties or other governmental charges when included in the invoice, plus any proceeds (including payments of whatever type and whenever received) received by Guilford and its Affiliates from the Transfer of a Secondary Product or the Intellectual Property, Regulatory Approvals or related assets with respect to a Secondary Product. In calculating Secondary Products Net Sales, any Transfer from Guilford to an Affiliate shall be disregarded and the calculation shall instead be based on the first Transfer to an unrelated third party. 20 "Secured Financing Event Price" shall have the meaning as set forth in Section 5.07(b). "Secured Financing Event Purchase" shall have the meaning as set forth in Section 5.07(b). "Security Agreements" shall mean the Guilford-Assignees Security Agreement, the Guilford-Assignor Security Agreement and the Assignor-Assignees Security Agreement collectively. "Subordinated Indenture" shall mean the Indenture, dated as of June 17, 2003, between Guilford Pharmaceuticals Inc. and Wachovia Bank, National Association, with respect to the issue of Guilford's 5% Convertible Subordinated Notes due 2008. "Supply Agreement" shall mean that certain Supply Agreement by and between Guilford and Merck Sharp & Dohme (Ireland) Limited dated as of October 28, 2003. "Subsidiary" shall mean with respect to any Person (a) any corporation of which the outstanding capital stock having at least a majority of votes entitled to be cast in the election of directors under ordinary circumstances shall at the time owned, directly or indirectly, by such Person or (b) any other Person of which at least a majority voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. "Surviving Party" shall have the meaning set forth in Section 5.07(f). "Technical Agreement" shall mean the Technical Agreement, dated as of October 28, 2003, between Merck and Guilford. "Term" shall mean the term of this Agreement, which shall commence on the date hereof and terminate on the earlier of (i) December 31, 2012 and (ii) the consummation of a Repurchase Event (other than a Secured Financing Event Purchase). "Territories" shall mean, with respect to any of the Products, any location where Guilford or its Affiliates or any Contract Party has the right to sell such Product. "Total Debt" shall mean the aggregate (without duplication) of (i) all outstanding Indebtedness of the Surviving Party and its Subsidiaries relating to or in respect of (A) the borrowing of money or the obtaining of credit, including the issuance of notes or bonds and standby letters of credit outstanding but excluding documentary letters of credit, (B) the deferred purchase price of assets (other than trade payables incurred in the ordinary course of business), (C) any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes or any 21 lease under which the Surviving Party or any of its Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP, and (D) the Obligations to the Assignees under this Agreement, plus (ii) all indebtedness of the type referred to in clause (i) of another Person guaranteed by the Surviving Party or any of its Subsidiaries. "Total Debt Service" shall mean the aggregate (without duplication) of (i) Total Interest Expense plus (ii) any and all scheduled repayments of principal during such period in respect of Total Debt of the Surviving Party and its Subsidiaries plus (iii) all amounts payable to Assignees during such period pursuant to Section 2.02(b)(ii). "Total Debt to Total Capitalization" shall mean, on any date, the ratio of (a) Total Debt as at such date to (b) the sum of (i) Total Debt as at such date plus (ii) the sum of (A) the capital accounts including common stock and preferred stock, but excluding treasury stock of the Surviving Party plus (B) the earned surplus and capital surplus of the Surviving Party (excluding adjustments to translate foreign assets and liabilities for changes in foreign exchange rates made in accordance with Financial Accounting Standards Board Statement No. 52), as determined in accordance with GAAP as of such date. "Total Interest Expense" shall mean the aggregate amount of interest required to be paid or accrued for any period by the Surviving Party and its Subsidiaries during such period on all Indebtedness of the Surviving Party and its Subsidiaries outstanding during all or any part of such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of any lease of goods or other property, whether real or personal, which is treated as an operating lease under GAAP and as a loan or financing for U.S. income tax purposes or any lease under which the Surviving Party or any of its Subsidiaries is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with GAAP and including facility fees, commitment fees, usage fees, agency fees, balance deficiency fees, and similar fees or expenses or in connection with borrowing of money, as determined in accordance with GAAP. "Total Net Sales" shall mean, collectively, the Primary Products Net Sales, the After Acquired Products Net Sales and the Secondary Products Net Sales. "Transaction Documents" shall mean, collectively, this Agreement, the Bill of Sale, the Conversion Documents, the Security Agreements, the Pledge Agreement, the Management Agreement, the LLC Agreement, the Warrant and any Lockbox Agreement. "Transfer" or "Transferred" shall mean any sale, conveyance, assignment, disposition, license, sublicense, co-promotion agreement, or other form of transfer. 22 "Transfer Notice" shall have the meaning set forth in Section 5.06(a). "Transition Services Agreement" shall mean the Transition Services Agreement, dated as of October 28, 2003 between Merck and Guilford. "True-Up Amount" shall have the meaning set forth in Section 2.02(e). "True-Up Date" for any calendar quarter shall mean the 45th day following the end of each such quarter, unless such date is not a Business Day in which case the applicable date will be the immediately succeeding Business Day. "United States" shall mean the United States of America. "UCC" shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction. "Warrants" shall mean those two Warrants issued by Guilford to Assignees in substantially the form attached hereto as Exhibit I, pursuant to which Assignees shall have the right to purchase, in aggregate, 300,000 shares of Guilford's common stock. "Working Capital" shall mean, as to Guilford and its Subsidiaries, on a consolidated basis, as of any date of determination, the amount equal to (i) the total, without duplication, of such parties' unrestricted cash, unrestricted marketable securities and other unrestricted cash equivalents, amounts on deposit in the Liquidity Account, and accounts receivable (less allowance for doubtful accounts as required by GAAP) minus (ii) the total, without duplication, of (A) all Total Debt Service payable during the next four calendar quarters and (B) all other liabilities and obligations of such parties due on demand or within one year (whether by the terms of such obligations or because of the occurrence of one or more events). ARTICLE II PURCHASE AND SALE OF ASSIGNED INTERESTS SECTION 2.01 PURCHASE AND SALE. Upon the terms and subject to the conditions set forth in this Agreement, Assignor agrees to sell, assign, transfer and convey to Assignees, and Assignees agree to purchase from Assignor, free and clear of all Liens (except those Liens created in favor of Assignees pursuant to the Security Agreements and any other Transaction Document), all of Assignor's right, title and interest in and to the Assigned Interests. 23 SECTION 2.02 PAYMENTS IN RESPECT OF THE ASSIGNED INTERESTS. Assignor shall make the following payments to Assignees in respect of the Assigned Interests: (a) Subject to the minimum payment requirements of Section 2.02(b), Assignor shall pay Assignees an amount equal to the Applicable Percentage of Total Net Sales made during the Term. In the event that as of June 30, 2005 or June 30, 2006, Primary Products Net Sales for the first two quarters of such year are less than fifty percent (50%) of * Sales for the same two quarters (calculated by dividing the * Sales for the applicable calendar year by two (2)), the Assignor shall, on or before July 20 of such year, pay to the Assignees the additional amount that would have been paid during the first two quarters of such year had the rate specified in clause (x) of Applicable Percentage been applied during such quarters and the Applicable Percentage shall be thereafter calculated at the rate specified in clause (x) of the definition of Applicable Percentage for the remainder of that year, subject to final adjustment in accordance with Section 2.02(e) and (i) below. In the event that as of June 30 in any calendar year after December 31, 2006, Primary Products Net Sales for the first two quarters of such year are less than $37.5 million, the Assignor shall, on or before July 20 of such year, pay to the Assignees the additional amount that would have been paid during the first two quarters of such year had the rate specified in clause (y) of Applicable Percentage been applied during such quarters and the Applicable Percentage shall be thereafter calculated at the rate specified in clause (y) of the definition of Applicable Percentage for the remainder of that year, subject to final adjustment in accordance with Section 2.02(e) and (i) below. (b) For each calendar year during the Term, Assignor shall be required to pay Assignees the greater of: (i) the aggregate amounts payable in accordance with Sections 2.02(a) above and (ii) the first $5 million of Included Products Payments in 2004, the first $6.25 million of Included Products Payments in 2005, the first $7.5 million of Included Products Payments in 2006, the first $10 million of Included Products Payments in each of the years 2007 through 2009 and the first $12.5 million of Included Products Payments in each of the years 2010 through 2012 and if the Included Product Payments during any period are insufficient to meet the minimum first payments required by this subsection (b)(ii), Assignor shall pay such amounts from any other available source. For purposes of subsection (b)(ii) above, Assignor shall be required to pay to Assignees one quarter of each applicable annual amount during each calendar quarter before Assignor shall be entitled to receive any portion of the Included Products Payments during such Calendar quarter. By way of example, during the first quarter of 2004 Assignees shall receive 100% of the first $1.25 million of Included Products Payments, whether pursuant to the terms of Section 2.02(a) or otherwise. Thereafter, the Assignees shall receive the Applicable Percentage of Total Net Sales pursuant to Section 2.02(a) above from and after the date during each calendar quarter on which the Applicable Percentage of Total Net Sales for such quarter exceeds the minimum amount payable during such quarter under subsection (b)(ii). *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 24 Assignees' right to payments under this Section 2.02(b) shall not be conditioned on the Assignor receiving or retaining any amounts under this Section 2.02. As to any quarter in which Assignees have not received the full quarterly portion of the applicable minimum amount set forth in subsection (b)(ii) above, the unpaid balance of such minimum amounts shall be added to the minimum amount otherwise owing for the following quarter (whereupon such increased minimum amount shall be the then applicable minimum amount). (c) If Assignor, Guilford, or any Affiliate thereof receives any amount of money as a damages award (or pursuant to a settlement agreement) in connection with a patent infringement claim or other cause of action involving any of the Primary Products Intellectual Property or any of the Primary Products, (a) if for each year of the Term, Primary Products Net Sales have equaled or exceeded * Sales, 100% of the proceeds (net of litigation costs) shall be included in Primary Products Net Sales for each of the calendar years in which the proceeds are received, and (b) if for any year of the Term, Primary Products Net Sales have not equaled or exceeded * Sales, Assignor shall pay Assignees an amount equal to 50% of the proceeds (net of litigation costs) within thirty (30) days of each receipt of such proceeds by Assignor, Guilford or any Affiliate thereof. (d) Prior to the date on which the Lockbox Agreement is executed by all parties thereto, the Assignor and Guilford shall cause any payments due to Assignees under this Section 2.02 to be paid directly to Assignees, by wire transfer, on Wednesday of every other week for the period ending on the Friday of the immediately prior two weeks. From and after the execution of the Lockbox Agreement pursuant to Section 5.10 and subject to the other provisions of this Agreement, amounts payable to Assignees pursuant to Section 2.02(a) and (b) shall be paid to Assignees first from the proceeds from the sale of the Primary Products which are received from time to time in the Lockbox Account, which shall be swept from the Joint Concentration Account into Assignees Concentration Account on a daily basis (the "Daily Amount") pursuant to Section 5.10. (e) In the event that the aggregate of the Daily Amounts and other payments on account of Total Net Sales received by Assignees during any quarter is less or more than the amount due pursuant to Section 2.02(a), (b) and (c), then on the applicable True-Up Date, Assignor shall pay to Assignees or Assignees shall pay to Assignor an amount equal to such difference (the "True-Up Amount"). All amounts payable by the Assignor to the Assignees pursuant to clause (z) of the definition of Applicable Percentage shall be paid to Assignees in immediately available funds within forty (40) days after the end of the applicable calendar year. (f) In the event that Assignor, Guilford or any Affiliate of Guilford closes a Gliadel Foreign Transaction, Assignor shall pay to Assignees a percentage of any and all proceeds (including payments of whatever type and whenever received, but excluding future royalties payable to Assignor or Guilford in the ordinary course of business (which shall continue to be *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 25 included in Primary Products Net Sales)) received by Assignor, Guilford or any Affiliate from or with respect to such Gliadel Foreign Transaction calculated as follows: (i) Assignor shall pay 10% of any and all proceeds received during the period from the Closing Date through and including December 31, 2006, plus an additional 2.5% of any and all proceeds received in a calendar year during such period for which the Primary Products Net Sales and the After Acquired Products Net Sales for such year are less than 75% of * Sales for such year; and (ii) Assignor shall pay 17.5% of any and all proceeds received during the period from January 1, 2007 through and including December 31, 2012, plus an additional 5% of any and all proceeds received in a calendar year during such period for which Primary Products Net Sales and After Acquired Products Net Sales are less than $75 million. The base amounts payable under clauses (i) and (ii) above (10% and 17.5%, respectively) shall be paid to Assignees upon the closing of the Gliadel Foreign Transaction or, if later, immediately upon the receipt of proceeds by Assignor, Guilford or an Affiliate of Guilford. Any other amounts payable under clauses (i) and (ii) above shall be payable to Assignees no later than 30 days after the close of the calendar year during which the proceeds were received by Assignor, Guilford or an Affiliate of Guilford. (g) In the event of the Transfer (other than an Excluded Transfer) by Assignor or Guilford of one but not both of the Primary Products, and/or the Regulatory Approvals and Intellectual Property related thereto, the Assignor shall pay to the Assignees an amount equal to a percentage of the Assignees Option Repurchase Price, calculated as of the date of payment, as specified below: (i) if a Transfer of Aggrastat, Assignor shall pay Assignee an amount equal to sixty-five percent (65%) of the applicable Assignees Option Repurchase Price; and (ii) if a Transfer of Gliadel, Assignor shall pay Assignees an amount equal to thirty-five percent (35%) of the applicable Assignees Option Repurchase Price. The amounts payable under clauses (i) and (ii) above shall be paid to Assignees simultaneously with the closing of the Transfer. A payment under this Section 2.02(g) shall not constitute a repurchase of any portion of the Assigned Interests, but shall be included in the calculation of Repurchase Price as set forth in Section 5.07(c)(i). *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 26 (h) Amounts payable pursuant to clauses (a), (b), (c), (d), (e), (f) or (g) of this Section 2.02 shall be in addition to any amounts otherwise payable under this Agreement. (i) Any payments, other than from funds paid to Assignees from the Assignees Concentration Account, to be made by Assignor to Assignees hereunder or under any other Transaction Document shall be made by wire transfer of immediately available funds to Assignees' Account. (j) Within three (3) years following delivery to Assignees by Assignor of the Quarterly Report for the fourth fiscal quarter of each calendar year during the Term, to the extent that either Assignees or Assignor has determined that there is a discrepancy as to the amounts paid to Assignees hereunder for such calendar year, then the Person who has made such determination may notify the other in writing of such discrepancy indicating in reasonable detail its reasons for such determination (the "Discrepancy Notice"). In the event that either Assignees or Assignor delivers to the other party a Discrepancy Notice, Assignees and Assignor shall meet within ten (10) Business Days (or such other time as mutually agreed by the parties) after the receiving party has received a Discrepancy Notice to resolve in good faith such discrepancy. If the discrepancy has been resolved and, as a result thereof, it is determined that a payment is owing by Assignees to Assignor or by Assignor to Assignees, then the party owing such payment shall promptly pay such payment to the other party. If, within forty-five (45) days after receipt of the Discrepancy Notice, Assignor and Assignees cannot resolve any such discrepancies, then Assignees and Assignor shall promptly instruct their respective firms of independent certified public accountants to select, within five (5) Business Days thereafter, a third nationally recognized accounting firm (the "Independent Accountants"). After offering Assignor and its representatives and Assignees and their representatives the opportunity to present their positions as to the disputed items, which opportunity shall not extend for more than ten (10) calendar days after the Independent Accountants have been selected, the Independent Accountants shall review the disputed matters and the materials submitted by Assignor and Assignees and, as promptly as practicable, deliver to Assignor and Assignees a statement in writing setting forth its determination of the proper treatment of the discrepancies as to which there was disagreement, and that determination will be final and binding upon the parties hereto without any further right of appeal. If Assignor has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Assignor will bear all the charges of the Independent Accountants. If Assignees have delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Assignees will bear all the charges of the Independent Accountants unless the Independent Accountants determine that the amounts paid to Assignees for the applicable calendar year underpaid the Assignees by an amount equal or in excess of 7.5% of the amounts determined to be due to Assignees for such calendar year, in which event Assignor shall bear all of the charges of the Independent Accountants. 27 (k) If a portion of the Assigned Interests has been repurchased by Assignor pursuant to the provisions of Section 5.07(b)(ii)(B), the amounts payable to Assignees under this Section 2.02, from and after the date of payment in full of the Secured Financing Event Price shall be ratably reduced to reflect the portion of Assigned Interests then held by the Assignees. (l) Without in any manner limiting its obligations under Section 5.13, Guilford agrees that to the extent that the Assignor does not pay any amount due to the Assignees under this Section 2.02, Guilford will promptly pay or cause Assignor to pay such amounts directly to the Assignees. SECTION 2.03 PURCHASE PRICE. (a) In full consideration for the sale of the Assigned Interests, and subject to the terms and conditions set forth herein, Fund shall pay to Assignor, or its designee, $31.5 million and Holdings shall pay to Assignor, or its designee, $10.5 million (together, the "Purchase Price"). (b) The Purchase Price shall be paid by wire transfer of immediately available funds to the account designated by Assignor (the "Assignor's Account") upon, and subject to the occurrence of, the Closing. SECTION 2.04 NO ASSUMED OBLIGATIONS. Notwithstanding any provision in this Agreement or any other writing to the contrary, Assignees are acquiring only the Assigned Interests and are not assuming any liability or obligation of Assignor or Guilford of whatever nature, whether presently in existence or arising or asserted hereafter, whether under any Distribution Agreement, License Agreement or any other Transaction Document or otherwise. All such liabilities and obligations shall be retained by and remain obligations and liabilities of Assignor or Guilford (the "Excluded Liabilities and Obligations"). ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD Assignor, GPI Holdings and Guilford hereby jointly and severally represent and warrant to Assignees the following (in each case, after giving effect to the concurrent closing of the transactions contemplated by the Merck Purchase Agreement): 28 SECTION 3.01 ORGANIZATION. Guilford is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated hereby and by the other Transaction Documents. Assignor is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, and has all powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated hereby and by the other Transaction Documents. GPI Holdings is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and has all corporate powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated hereby and by the other Transaction Documents. SECTION 3.02 CORPORATE AUTHORIZATION. Except as set forth on Schedule 3.02, each of Assignor, GPI Holdings and Guilford has all necessary power and authority to enter into, execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder. This Agreement and the other Transaction Documents have been duly authorized, executed and delivered by each of Assignor, GPI Holdings and Guilford (to the extent a party thereto) and each of this Agreement and each other Transaction Document to which either Assignor, GPI Holdings or Guilford is a party constitutes the valid and binding obligation of Assignor, GPI Holdings and Guilford, as applicable enforceable against Assignor, GPI Holdings or Guilford in accordance with their respective terms subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or general equitable principles. SECTION 3.03 GOVERNMENTAL AUTHORIZATION. The execution and delivery by each of Assignor, GPI Holdings and Guilford of this Agreement and the other Transaction Documents to which it is a party, and the performance by Assignor, GPI Holdings and Guilford of its respective obligations hereunder and thereunder, does not require any notice to, action or consent by, or in respect of, or filing with, any Government Authority, except for the filing of financing statements under the UCC and filings with the United States Patent and Trademark Office. 29 SECTION 3.04 OWNERSHIP. (a) Assignor owns, or holds a valid license under all of the Intellectual Property and the Regulatory Approvals with respect to the Primary Products and all other rights, properties and assets, acquired by Assignor pursuant to the Merck Purchase Agreement or the Conversion Documents. (b) * (c) GPI Holdings is the sole member of the Assignor. SECTION 3.05 FINANCIAL STATEMENTS. The Financial Statements are complete and accurate in all material respects, were prepared in conformity with GAAP and present fairly in all material respects the consolidated financial position and the consolidated financial results of the operations of Guilford and its Subsidiaries as of the dates and for the periods covered thereby. There has been no Material Adverse Change since June 30, 2003. SECTION 3.06 NO UNDISCLOSED LIABILITIES. Except for those liabilities (a) identified in the Financial Statements, (b) publicly disclosed and identified on Schedule 3.06, (c) incurred by Guilford or its Subsidiaries in the ordinary course of business since June 30, 2003 or (d) described on Schedule 3.06, there are no material liabilities of Guilford or any of its Subsidiaries taken as a whole, or Assignor separately, of any kind whatsoever, whether accrued, contingent, absolute, determined or determinable. Other than the Obligations under this Agreement, Assignor has no outstanding obligations or liabilities and conducts no business other than to own the Primary Products, and the Intellectual Property and Regulatory Approvals related to the Primary Products, and to perform its obligations to Guilford under the Management Agreement. SECTION 3.07 SOLVENCY. * SECTION 3.08 LITIGATION. Except as set forth on Schedule 3.08, there is no (a) action, suit, arbitration proceeding, claim, investigation or other proceeding pending or, to the Knowledge of either Assignor or Guilford, threatened against either Assignor or Guilford or (b) any governmental inquiry pending or, to the Knowledge of either Assignor or Guilford, threatened against either Assignor or Guilford, in each case with respect to clauses (a) and (b) above, which, if adversely 30 determined, would question the validity of, or could adversely affect the transactions contemplated by this Agreement or any of the other Transaction Documents or could reasonably be expected to have a Material Adverse Effect. Other than as set forth on Schedule 3.08, there is no action, suit, claim, proceeding or investigation pending or, to the Knowledge of either Assignor or Guilford, threatened against Assignor, Guilford or any other Person relating to the Products, the Intellectual Property, the Regulatory Approvals or the Assigned Interests. SECTION 3.09 COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.09, neither Assignor nor Guilford (a) is in violation of, has violated, or to the Knowledge of either Assignor or Guilford, is under investigation with respect to, and, (b) has been threatened to be charged with or been given notice of any violation of, with respect to clauses (a) and (b) above, any law, rule, ordinance or regulation of, or any judgment, order, writ decree, permit or license entered by any Government Authority applicable to either Assignor, Guilford or the Assigned Interests which could reasonably be expected to have a Material Adverse Effect. SECTION 3.10 CONFLICTS. (a) Except as set forth in Schedule 3.10, neither the execution and delivery of this Agreement or any other Transaction Document nor the performance or consummation of the transactions contemplated hereby or thereby will: (i) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (A) any law, rule, ordinance or regulation of any Government Authority, the breach or violation of which would be reasonably expected to result in a Material Adverse Effect, or any judgment, order, writ, decree, material permit or license of any Government Authority, to which Assignor or Guilford or its Subsidiaries or any of their respective assets or properties may be subject or bound; or (B) any contract, agreement, commitment or instrument to which either Assignor or Guilford or its Subsidiaries is a party or by which Assignor or Guilford or its Subsidiaries or any of their respective assets or properties is bound or committed; (ii) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any respects any provisions of the certificate of incorporation or by-laws (or other organizational or constitutional documents) of Assignor or Guilford or its Subsidiaries; (iii) except for the filing of the UCC-1 financing statements required hereunder and filings with the United States Patent and Trademark Office, require any notification to, filing with, or consent of, any Person or Government Authority; (iv) give rise to any right of termination, cancellation or acceleration of any right or obligation of Assignor, Guilford or its Subsidiaries or any other Person or to a loss of any benefit relating to the Assigned Interests; or (v) result in the creation or imposition of any Lien on (A) the assets or properties of Assignor or Guilford or its Subsidiaries or (B) the Assigned Interests or any other 31 Collateral, other than, with respect to clauses (A) and (B) above, pursuant to the Guilford-Assignees Security Agreement and the Guilford-Assignor Security Agreement. (b) Neither Assignor nor Guilford has granted, nor does there exist, any Lien on any Distribution Agreement, License Agreement, the Assigned Interests or any other Collateral other than pursuant to the Security Agreements. (c) The obligations of Guilford to Assignees under the Transaction Documents will constitute Senior Debt (as defined in the Subordinated Indenture). SECTION 3.11 MATERIAL CONTRACTS. Neither Assignor nor Guilford or its Subsidiaries is in breach of or in default under any Material Contract, including, without limitation, the Supply Agreement, the Merck Purchase Agreement, the Technical Agreement, the Transition Services Agreement or any Distribution Agreement or any License Agreement to which Assignor, Guilford or its Subsidiaries is a party which default, individually or in the aggregate, would be reasonably expected to result in a Material Adverse Effect. To the knowledge of either Assignor or Guilford, nothing has occurred and no condition exists that would permit any other party thereto to terminate any Material Contract to which either Assignor or Guilford or its Subsidiaries is a party. Neither Assignor nor Guilford nor any of its Subsidiaries has received any notice or, to the Knowledge of either Assignor or Guilford, any threat of termination of any such Material Contract. To the Knowledge of either Assignor or Guilford, no other party to a Material Contract to which either Assignor or Guilford or its Subsidiaries is a party is in breach of or in default under such Material Contract. All Material Contracts to which either Assignor or Guilford or its Subsidiaries is a party are valid and binding on Assignor and Guilford and, to the Knowledge of either Assignor or Guilford, on each other party thereto, and are in full force and effect. SECTION 3.12 INTELLECTUAL PROPERTY. (a) Schedule 3.12(a) sets forth an accurate and complete list of all (1) Patents and Patent applications and (2) trade names, common law trademarks, common law service marks, registered trademarks, registered service marks, and applications for trademark registrations and service mark registrations, and (3) registered and unregistered copyrights and (4) domain name registrations and websites in each case with respect to clauses (1), (2), (3) and (4) above in this subsection (a)* (b) * - (c) * * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 32 (d) * (e) * (f) * (g) * (h) * (i) * (j) * (k) * (l) * (m) * SECTION 3.13 REGULATORY APPROVAL. (a) * (i) *. (ii) * (iii) * (b) * (c) * (d) * SECTION 3.14 SUBORDINATION. (a) * (b) During the Term, Assignor's obligations to pay Guilford the Management Fee (as defined in the Management Agreement) shall be in all respects subordinate to, and shall be paid to Guilford only after the satisfaction in full of, Assignor's past or current payment Obligations * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 33 to Assignee, including Assignor's payment to Assignee of the Applicable Percentage of Total Net Sales and all other Obligations set forth in this Agreement. SECTION 3.15 PLACE OF BUSINESS. Assignor's principal place of business and chief executive office are set forth on Schedule 3.15. Guilford's principal place of business and chief executive office are set forth on Schedule 3.15. SECTION 3.16 BROKER'S FEES. Except for the fees to be paid to UBS Securities LLC solely by Guilford, neither Assignor, GPI Holdings nor Guilford has taken any action which would entitle any Person to any commission or broker's fee in connection with the transactions contemplated by this Agreement. SECTION 3.17 OTHER INFORMATION. Except as set forth on Schedule 3.17, no written statement, information, report or materials prepared by or on behalf of either Assignor or Guilford and furnished to Assignees by or on behalf of either Assignor or Guilford in connection with this Agreement or any Transaction Document or any transaction contemplated hereby or thereby, no written representation, warranty or statement made by either Assignor or Guilford in any Transaction Document, and no schedule or exhibit hereto, in each case taken in the aggregate, contains any untrue statement of a material fact or omits any statement of material fact necessary in order to make the statements made therein in light of the circumstances under which they were made not misleading. SECTION 3.18 DISTRIBUTION AGREEMENTS AND LICENSE AGREEMENTS. Except as set forth on Schedule 3.18(a), the existing Distribution Agreements and existing License Agreements are in full force and effect and, except for such correspondence and written communication as are identified on Schedule 3.18(b), there has been no correspondence or other written communication sent by or on behalf of Assignor or Guilford to, or received by or on behalf of Assignor or Guilford from, any Contract Party, the subject matter of which would reasonably be expected to have a Material Adverse Effect. (a) With respect to existing Distribution Agreements and existing License Agreements: (i) Except for that which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, each such Distribution Agreement and License Agreement is in full force and effect and has not been impaired, waived, altered or modified in any 34 respect, whether by way of any sublicense or consent or otherwise. To the Knowledge of either Assignor or Guilford, no licensee has granted a sublicense under any Distribution Agreement or any License Agreement. (ii) Except for that which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the Contract Party under each such Distribution Agreement or License Agreement has not been released, in whole or in part, from any of its obligations under such Distribution Agreement or License Agreement. (iii) Neither Guilford nor Assignor has received (A) any notice of any Contract Party's intention to terminate such Distribution Agreement or License Agreement in whole or in part or (B) except as set forth on Schedule 3.18(a)(iii), any notice requesting any amendment, alteration or modification of such Distribution Agreement, License Agreement or any sublicense or assignment thereunder which would be reasonably expected to have a Material Adverse Effect. (iv) To the Knowledge of either Assignor or Guilford, nothing has occurred and no condition exists that would adversely impact the right of either Guilford or Assignor to receive any payments payable under such Distribution Agreement or License Agreement. Other than as set forth on Schedule 3.18(a)(iv), none of Assignor, Guilford, or to the Knowledge of either Assignor or Guilford, any Contract Party has taken any action or omitted to take any action, that would adversely impact the right of Assignees to receive the Assigned Interests or the Applicable Percentage of the Total Net Sales. (v) Other than as set forth on Schedule 3.18(a)(v), all payments required to be made under the terms of each existing Distribution Agreement and existing License Agreement have been made. To the Knowledge of either Assignor or Guilford, no payment required to be made under the terms of any existing Distribution Agreement or existing License Agreement has been subject to any claim pursuant to any right of rescission, set-off, counterclaim or defense. Except for that which, individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect, the operation of any of the terms of any existing Distribution Agreement or existing License Agreement, or the exercise of any rights thereunder, will not render such 35 Distribution Agreement or License Agreement unenforceable, in whole or in part. (vi) Except for that which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, such Distribution Agreement or License Agreement has not been satisfied in full, discharged, canceled, terminated, subordinated or rescinded, in whole or in part. Such Distribution Agreement or License Agreement is the entire agreement between Guilford and the Contract Party thereto relating to the subject matter thereof. (vii) Except for that which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, such Distribution Agreement or License Agreement is the legal, valid and binding obligation of each of Guilford and the Contract Party thereto, enforceable against Guilford and such Contract Party in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general equitable principles. The execution, delivery and performance of such Distribution Agreement or License Agreement was and is within the corporate powers of Guilford and, to the Knowledge of either Assignor or Guilford, the Contract Party thereto. Such Distribution Agreement or License Agreement was duly authorized by all necessary action on the part of, and validly executed and delivered by, Guilford and, to the Knowledge of either Assignor or Guilford, the Contract Party thereto. Except for that which, individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect, there is no breach or default, or event which upon notice or the passage of time, or both, could give rise to any breach or default, in the performance of such Distribution Agreement or License Agreement by Guilford or, to the Knowledge of either Assignor or Guilford, the Contract Party thereto. (viii) Except for that which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect, the representations and warranties made in each existing Distribution Agreement or existing License Agreement by Guilford were as of the date made true and correct in all material respects. 36 SECTION 3.19 INSURANCE. Except as set forth in Schedule 3.19, there is in full force and effect insurance policies maintained by Guilford with an insurance company rated not less than A- by A.M. Best Company, Inc., with coverages and in amounts sufficient to comply with the Supply Agreement and otherwise customary for companies of comparable size and condition similarly situated in the same industry as Guilford, including without limitation product liability insurance, directors and officers insurance and insurance against litigation liability, subject only to such exclusions and deductible items as are usual and customary in insurance policies of such type. Guilford has named Assignor as an additional insured party on all of its general liability and product liability insurance policies. A schedule of Guilford's insurance policy or insurance policies is attached hereto as Schedule 3.19. SECTION 3.20 ACCURACY OF REPORTS. All reports required to be filed by Guilford on or after January 1, 2002 under the Securities Exchange Act of 1934, as amended, have been duly filed, were in substantial compliance with the requirements of their respective forms, were complete and correct in all material respects as of the dates at which the information was furnished, and contained (as of such dates) no untrue statement of a material fact nor omitted to state a material fact necessary in order to make the statements made therein in light of the circumstances under which they were made not misleading. SECTION 3.21 * REPRESENTATIONS; CLOSING. To the Knowledge of Guilford and Assignor,* ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ASSIGNEES Assignees represent and warrant to each of Assignor and Guilford the following: SECTION 4.01 ORGANIZATION. Fund is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware. Holdings is a general partnership duly formed and validly existing under the laws of the State of California. Each of Fund and Holdings has all partnership powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 37 SECTION 4.02 AUTHORIZATION. Each of the Assignees has all necessary power and authority to enter into, execute and deliver this Agreement and to perform all of the obligations to be performed by it hereunder. This Agreement has been duly authorized, executed and delivered by each of the Assignees and constitutes the valid and binding obligation of each of the Assignees, enforceable against each of the Assignees in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally and general equitable principles. SECTION 4.03 BROKER'S FEES. Neither of the Assignees has taken any action which would entitle any Person to any commission or broker's fee in connection with the transactions contemplated by this Agreement. SECTION 4.04 CONFLICTS. Neither the execution and delivery of this Agreement or the other Transaction Documents nor the performance or consummation of the transactions contemplated hereby or thereby will: (i) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (A) any law, rule or regulation of any Government Authority, or any judgment, order, writ, decree, permit or license of any Government Authority, to which either of the Assignees or any of their assets or properties may be subject or bound; or (B) any material contract, agreement, commitment or instrument to which either of the Assignees are a party or by which either of the Assignees or any of their assets or properties is bound or committed; (ii) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any respects any provisions of organizational or constitutional documents of either of the Assignees; or (iii) require any notification to, filing with, or consent of, any Person or Government Authority. SECTION 4.05 CONSENTS. The execution and delivery by each of the Assignees of this Agreement and the other Transaction Documents to which it is a party, and the performance by each of the Assignees of its obligations hereunder and thereunder, does not require any notice to, action or consent by, or in respect of, or filing with, any Governmental Authority or Person. 38 SECTION 4.06 TAX REPRESENTATION. Each Assignee is and will continue to be a "United States Person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended. Each Assignee will deliver to Guilford or Assignor, upon reasonable demand by Guilford or Assignor, any form or document, including without limitation, Internal Revenue Service Form W-9, that may be required or reasonably requested in order to allow Guilford or Assignor to make payment under this Agreement without any deduction or withholding for or on account of any tax. ARTICLE V COVENANTS During the Term, the following covenants shall apply: SECTION 5.01 CONSENTS AND WAIVERS. Each of Assignor and Guilford shall use commercially reasonable efforts to obtain any required consents, acknowledgements, certificates or waivers so that the transactions contemplated by this Agreement or any other Transaction Document may be consummated and shall not result in any default or breach or termination of any of the Distribution Agreements, the License Agreements or any other Material Contracts; including, without limitation, the agreements listed on Schedules 3.10 and 3.12(f). SECTION 5.02 ACCESS; BOOKS AND RECORDS. (a) Promptly after receipt by either Assignor or Guilford of notice of any action, claim, investigation or proceeding (commenced or threatened) relating to the transactions contemplated by this Agreement, any other Transaction Document, any Distribution Agreement or any License Agreement, Assignor and/or Guilford shall inform Assignees of the receipt of such notice and the substance of such action, claim, investigation or proceeding and, if in writing shall furnish Assignees with a copy of such notice and any related materials with respect to such action, claim, investigation or proceeding. (b) Guilford and Assignor shall keep and maintain, or cause to be kept and maintained, at all times full and accurate books of account and records adequate to correctly reflect all payments paid and/or payable with respect to Assigned Interests and all deposits made into the applicable Deposit Accounts. (c) Assignees and any of Assignees' Consultants shall have the right, from time to time, to visit Guilford's and/or Assignor's offices and properties where Guilford and/or Assignor 39 keeps and maintains its books and records relating or pertaining to the Assigned Interests and the other Collateral for purposes of conducting an audit of such books and records, and to inspect, copy and audit such books and records, during normal business hours, and, upon five (5) Business Days written notice given by Assignees to Guilford and/or Assignor, Guilford and/or Assignor will provide Assignees and any of Assignees' Consultants reasonable access to such books and records, and shall permit Assignees and any of Assignees' Consultants to discuss the business, operations, properties and financial and other condition of Guilford and/or Assignor or any of their Affiliates relating or pertaining to the Assigned Interests and the other Collateral with officers of such parties, and with their independent certified public accountants (to the extent such independent certified accountants agree to discuss such matters with Assignees). Assignees' visits to Guilford's or Assignor's offices pursuant to this subsection (c) shall occur not more than two times for each company per calendar year; provided, however, that Assignees may so visit more frequently to the extent that there has occurred an event, a reasonably foreseeable consequence of which is a Material Adverse Effect, and Assignees' visit or visits to Guilford's or Assignor's offices in connection therewith are for purposes related to such event. (d) In the event any audit of the books and records of Guilford or Assignor relating to the Total Net Sales, the Assigned Interests or the other Collateral by Assignees and/or any of Assignees' Consultants reveals that the amounts paid to Assignees hereunder for the period of such audit have been understated by more than the greater of $20,000 or 7.5% of the amounts determined to be due for the period subject to such audit, then the Audit Costs in respect of such audit shall be borne by Guilford or Assignor; and in all other cases, such Audit Costs shall be borne by Assignees. SECTION 5.03 MATERIAL CONTRACTS. Each of Assignor and Guilford shall comply with all material terms and conditions of and fulfill all of its obligations under all the Material Contracts including, without limitation, any Distribution Agreement or License Agreement to which Guilford is a party. SECTION 5.04 CONFIDENTIALITY; PUBLIC ANNOUNCEMENT. (a) Except as set forth in Section 5.04(b), all information furnished by Assignees to either Assignor or Guilford or by either Assignor or Guilford to Assignees, including the Confidential Information, in connection with this Agreement and any other Transaction Document and the transactions contemplated hereby and thereby, as well as the terms, conditions and provisions of this Agreement and any other Transaction Document, shall be kept confidential by the recipient thereof, and shall be used by the recipient thereof only in connection with this Agreement and any other Transaction Document and the transactions contemplated hereby and thereby, except to the extent that such information (i) is already known by the party to whom the information is disclosed or is already in the public domain at the time the information is 40 disclosed, (ii) thereafter becomes lawfully obtainable from other sources, (iii) is required to be disclosed in any document to be filed with any Government Authority, or (iv) is required to be disclosed under securities laws, rules and regulations applicable to Assignor, Guilford or Assignees, as the case may be, or pursuant to the rules and regulations of the Nasdaq Stock Market or any other stock exchange or stock market on which securities of Guilford may be listed for trading. Notwithstanding the foregoing, Assignor, Guilford and Assignees may disclose such information to their partners, directors, employees, managers, officers, investors, bankers, advisors, trustees and representatives on a need-to-know basis, provided that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to the terms of this Section 5.04(a). (b) Except as required by law or the rules and regulations of any securities exchange or trading system or the FDA or any Government Authority with similar regulatory authority, or except with the prior written consent of the other party (which consent shall not be unreasonably withheld), neither party shall issue any press release or make any other public disclosure with respect to the transactions contemplated by this Agreement or any other Transaction Document. Except as otherwise required by law or the rules and regulations of any securities exchange or trading system or the FDA or any Government Authority with similar regulatory authority, (i) Assignor, Guilford and the Assignees, on or prior to the Closing, shall agree upon the form and content of the initial press release by Guilford with respect to the Transaction, (ii) Assignor, Guilford and the Assignees, shall agree upon the form of the initial SEC filings by Guilford with respect to the Transaction, (iii) any subsequent disclosures by Guilford or Assignor with respect to the Transaction shall, except as otherwise agreed by Assignees in writing, be substantially consistent with the disclosures described in clauses (i) and (ii) above, and (iv) Guilford and Assignor shall consider the good faith comments made by Assignees in Guilford's confidential treatment request to the SEC regarding the Transaction Documents. (c) Notwithstanding anything herein to the contrary, any party to this Agreement (and each employee, representative, or other agent of such party) may disclose to any and all persons, without limitation of any kinds, the tax treatment and tax structure of the transactions contemplated by this Agreement or any other Transaction Document and all materials of any kind (including opinions and other tax analyses) that are provided to the party relating to such tax treatment and tax structure. SECTION 5.05 QUARTERLY REPORTS. (a) Assignor shall, promptly after the end of each fiscal quarter of Assignor (but in no event later than thirty (30) days following the end of such quarter), produce and deliver to Assignees a Quarterly Report for such quarter, together with a certificate of a senior officer of Assignor and, pursuant to the Management Agreement, a certificate of a senior officer of Guilford, certifying that to the knowledge of each such officer (i) such Quarterly Report is a true 41 and complete copy and (ii) any statements and any data and information therein prepared by Guilford and/or Assignor are true, correct and accurate in all material respects. Guilford shall furnish to Assignor promptly all information that Assignor may require in connection with such Quarterly Reports. SECTION 5.06 RIGHT OF FIRST REFUSAL. Neither Guilford, nor the Assignor, nor any Affiliates of Guilford or the Assignor shall Transfer any rights to payment, including any revenue or royalty interests with respect to any products (including, without limitation, the Products) without complying with the following procedure: (a) If Guilford or any Affiliates of Guilford or the Assignor (the "Transferor") at any time during the Term desires to Transfer (each, a "Proposed Transfer") any rights to payment, including any revenue or royalty interests, with respect to any products, then Transferor shall give written notice (the "Transfer Notice") to Assignees setting forth (i) the interests that are proposed to be Transferred pursuant to such Proposed Transfer (the "Offered Interests"), (ii) the proposed date of the closing of such Proposed Transfer, and (iii) all of the material terms of such Proposed Transfer (the "Proposed Terms"). Guilford and Assignor shall promptly provide to Assignee any additional documentation, information and other diligence materials reasonably requested by Assignees (the "Review Materials"). (b) Upon the receipt of any Transfer Notice, Assignees will have the option, but not the obligation, to purchase all, but not less than all, of all the Offered Interests, on the terms as are specified in the Transfer Notice. Within sixty (60) days after the later of (a) Assignees' receipt of the Transfer Notice and (b) Assignees' receipt of all Review Materials requested under Section 5.06(a), Assignees will give a written notice (a "Notice of Election") to Transferor stating whether Assignees elect to exercise such option. During such sixty (60) day period, the Assignees shall also have the exclusive right to propose and negotiate alternative terms for the Proposed Transfer. (c) If Assignees elect to purchase pursuant to the Notice of Election, the closing of the purchase and sale of the Offered Interests to Assignees will take place as soon as is reasonably practicable on such date and at such time and place, in each case as Assignees may reasonably determine but not later than thirty (30) days following Transferor's receipt of the Notice of Election. If Assignees do not elect to purchase all of the Offered Interests hereunder, Transferor will thereafter be free for a period of one hundred twenty (120) days after expiration of the sixty (60) day period referred to subsection (b) of this Section 5.06 to Transfer the Offered Interests to a transferee on terms no more favorable to that transferee than the Proposed Terms offered to the Assignees. If no Transfer of the Offered Interests is consummated within such one hundred and twenty (120) day period, or if Transferor seeks to transfer the Offered Interests to a 42 transferee on terms more favorable to the proposed transferee than the Proposed Terms offered to the Assignees, the Transferor shall again be required to comply with all of the provisions of this Section 5.06. Failure by Assignees to give a Notice of Election within such time period specified in subsection (b) of this Section 5.06 will be deemed an election by Assignees not to exercise Assignees' option to purchase all the Offered Interests. SECTION 5.07 PURCHASE OPTIONS. (a) In the event that a Purchase Option Event shall occur, Assignees shall have the right, but not the obligation (the "Assignees Option Repurchase"), exercisable from the date of the Purchase Option Event (whether or not Assignor gives notice thereof) through the date one hundred and eighty (180) days after its receipt of written notice from Assignor or Guilford of the Purchase Option Event (the "Purchase Option Exercise Period"), to require Assignor to repurchase from Assignees the Assigned Interests for a repurchase price equal to, if the Purchase Option Event occurs and such payment is made prior to the first anniversary of this Closing Date, $54.6 million, and if it occurs on or after the first anniversary of the Closing Date, the amount determined by reference to the date of payment by Assignor to Assignees in accordance with Schedule 5.07(a) (the "Assignees Option Repurchase Price"). In the event that Assignees elect to exercise their rights to require an Assignees Option Repurchase, then Assignor shall, within ten (10) days following Assignor's receipt of Assignees' repurchase election notice if the Assignees Option Repurchase is based on a Purchase Option Event described in clauses (iii), (iv), (v), (vi) or (vii) thereof and otherwise within fifteen (15) days following Assignor's receipt of Assignees' repurchase election notice (the "Assignees Option Repurchase Period"), repurchase from Assignees the Assigned Interests at the Assignees Option Repurchase Price, the payment of which shall be made by wire transfer, in immediately available funds, to Assignees' Account designated by Assignees in such election notice. Notwithstanding anything to the contrary contained herein, immediately upon the occurrence of a Bankruptcy Event or a Notice Event, the Assignees shall be deemed to have automatically and simultaneously elected to have the Assignor repurchase from the Assignees the Assigned Interests for the Assignees Option Repurchase Price and the Assignees Option Repurchase Price shall be immediately due and payable without any further action or notice by any party. (b) (i)In the event that an Assignor Option Event shall occur, Assignor shall have the option ("Assignor Option Repurchase"), exercisable within one hundred and eighty (180) days after the Assignor Option Event, to repurchase the Assigned Interests for a repurchase price ("Assignor Option Repurchase Price") equal to, if the Assignor Option Event occurs and such payment is made prior to the first anniversary of the Closing Date, $84 million, and if it occurs on or after the first anniversary of the Closing Date, the amount determined by reference to the date of payment by Assignor to Assignees in accordance with Schedule 5.07(b)(i). 43 (ii) In addition, the Assignor may, at its election and regardless of whether there has occurred an Assignor Option Event, (A) on or after the third anniversary of the Closing Date, repurchase the Assigned Interests (a "Call") for a repurchase price ("Call Price") equal to the amount determined by reference to the date of payment by Assignor to Assignees in accordance with Schedule 5.07(b)(ii)(A); and (B) at any time, if a potential secured financing requires a security interest in any of the Intellectual Property ("Secured Financing Event Purchase"), repurchase up to * of the Assigned Interests for a repurchase price ("Secured Financing Event Price") equal to, if the Secured Financing Event Purchase occurs and such payment is made prior to the first anniversary of the Closing Date, $105 million, and if it occurs on or after the first anniversary of the Closing Date, the amount determined by reference to the date of payment by Assignor to Assignees in accordance with Schedule 5.07(b)(ii)(B) (initially calculated with respect to 100% of the Assigned Interests, which shall be reduced on a pro rata basis to reflect the percentage of the Assigned Interests actually repurchased by the Assignor). * (c) The Assignees Option Repurchase Price, the Assignor Option Repurchase Price, the Call Price and the Secured Financing Event Price (as calculated in accordance with Schedule 5.07(b)(ii)(B) and prior to any ratable reduction in accordance with Section 5.07(b)(ii)(B)) (collectively, the "Repurchase Price") shall, in each case, be reduced by the sum of (i) the total payments received and retained by the Assignees under Section 2.02(a), (b), (c), (f) and (g) multiplied by the applicable factor specified in Schedule 5.07(c) for each Repurchase Price and to reflect the calendar year in which each of the applicable Section 2.02 payments was made and the calendar year in which the Repurchase Price is paid, and (ii) the net cash gain (after deduction for the actual exercise price and any brokerage or similar costs and expenses) from the sale proceeds received by Assignees upon the sale of any common stock received by Assignees upon exercise of the Warrants plus, if Assignees have not exercised the Warrants in full or sold all of the common stock received upon the exercise of the Warrants, an amount equal to 90% of (x) the product of (A) the number of shares of common stock (or, if the Warrants have not been exercised in full, the common stock issuable upon full exercise of such Warrants held by the Assignees) on the date the Assignees elect to exercise an Assignees Option Repurchase or the date on which the Assignor elects to exercise an Assignor Option Repurchase, a Call or a Secured Financing Event Purchase and (B) the closing price for such common stock on such date as quoted on the primary exchange on which such shares are quoted (and if not so quoted or listed at any time, the average daily bid and ask price as quoted in the pink sheets) minus (y) the exercise price paid or payable for such common stock under the Warrants. In the event that a Secured Financing Event Purchase is followed by another Repurchase Event, amounts previously credited under clause (c)(i) or (ii) shall not be applied to reduce the Repurchase Price for the subsequent Repurchase Event. Notwithstanding anything herein or in any Schedules to the contrary, the sum of (a) any Repurchase Price (after giving effect to the reductions set forth in the first sentence of this Section 5.07(c)), plus (b) the amounts actually paid to Assignees under Sections 2.02(a), (b), (c), (f) and (g), shall not exceed $147 million. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 44 (d) In connection with the consummation of an Assignees Option Repurchase, an Assignor Option Repurchase, a Call or a Secured Financing Event Purchase pursuant to subparagraphs (a) and (b) above (each, a "Repurchase Event"), Assignees agree that they will (i) promptly execute and deliver to Assignor such UCC termination statements and other documents as may be necessary to release, or evidence the relative ranking of, Assignees' Lien on the collateral and otherwise give effect to such Repurchase Event and (ii) take such other action or provide such other assistance as may be necessary to give effect to the Repurchase Event. (e) Assignees' failure to exercise the Assignees Option Repurchase under Section 5.07(a) upon the occurrence of a Purchase Option Event shall not preclude Assignees from exercising the Assignees Option Repurchase under Section 5.07(a) upon the occurrence of a subsequent Purchase Option Event. (f) Notwithstanding anything to the contrary contained in Section 5.07(a), Assignees shall not be entitled to exercise an Assignees Option Repurchase based upon the occurrence of an event described in clauses (i), (ii) or (iii) of the definition of Change of Control if: (i) Simultaneously with (or, as applicable in clauses (i)(2) through (i)(5) below, thereafter) the occurrence of the Change of Control (or, in the case of an event described in clause (ii) of the definition of Change of Control, upon the closing of the transaction that results from the Change of Control), the surviving entity in the Change of Control transaction, whether Guilford or another Person (the "Surviving Party"), (1) assumes (or if the Surviving Party is Guilford, as to its own existing obligations hereunder, affirms and as to its additional obligations agrees to) all of the obligations of Guilford and Assignor to Assignees hereunder and the additional undertakings described in clauses (2) through (7) below pursuant to documentation in form and substance reasonably acceptable to Assignees; (2) maintains (as applicable with respect to the following specified periods) a fully-dedicated Aggrastat salesforce of at least 25 people (on a full time equivalent basis) from and after June 30, 2004; 45 people from and after June 30, 2005; and 75 people at all times from and after June 30, 2006; (3) maintains sales and marketing expenditures for Aggrastat that are not less than the amounts indicated in the Net Sales Projections and Budget provided to Assignees by Guilford on June 25, 2003, a copy of which is attached hereto as Exhibit J; (4) maintains an EBITDA to Total Debt Service Ratio of 1.25:1.00 and a Total Debt to Total Capitalization Ratio of 0.5:1.0, on a pro forma basis as of the date of the Change of Control (after giving effect to the transaction, if any, that results from the Change of Control) and thereafter measured quarterly on the last day of each calendar quarter on a consolidated basis; (5) achieves Primary Product Net Sales of at least 85% of the * Sales * as projected for each year during the Term; (6) with respect to such Surviving Party, Guilford and Assignor, no Bankruptcy Event or Notice Event occurs at any time and such Person does not become Insolvent at any time; and (7) such Surviving Party's ultimate parent * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 45 unconditionally guarantees in a form comparable to Section 5.13 of this Agreement all of the Obligations assumed or affirmed by such Surviving Party; and (ii) none of the Guilford 5% Convertible Subordinated Notes due 2008 are accelerated, none of the holders of such notes have elected to have such notes repurchased pursuant to a Designated Event Offer (as defined in the Subordinated Indenture) and no other holder of Indebtedness of Guilford or Assignor has accelerated such Indebtedness or elected to have such Indebtedness repurchased. If, at any time or from time to time, any of the provisions in clauses (i) and (ii) of this subsection (f) are not fulfilled, then the Change of Control shall be deemed to be a Purchase Option Event from the first date on which any provision was not fulfilled, Assignees shall have the rights they would otherwise have had under Section 5.07(a) of this Agreement beginning on such date and, if the Assignees exercise an Assignees Option Repurchase, the Assignees Option Repurchase Price shall be immediately due and payable as of the date of such exercise. (g) In the event the Assignees elect to exercise an Assignees Option Repurchase based upon the occurrence of an event described in clauses (i), (ii) or (iii) of the definition of Change of Control and (A) there has not occurred any Notice Event or Bankruptcy Event and (B) none of the Guilford 5% Convertible Subordinated Notes due 2008 are accelerated, none of the holders of such notes have elected to have such notes repurchased pursuant to a Designated Event Offer (as defined in the Subordinated Indenture) and no other holder of Indebtedness of Guilford or Assignor has accelerated such Indebtedness or elected to have such Indebtedness repurchased, the Assignor may elect by written notice given within the Assignees Option Repurchase Period to pay the Assignees Option Repurchase Price either (i) by the payment of one hundred percent (100%) of the Assignees Option Repurchase Price in cash or (ii) by the payment of seventy-five percent (75%) of the Assignees Option Repurchase Price in cash and the remainder, as elected by Assignees in their sole discretion, either by the issuance of (x) common stock of Guilford, covered by an effective resale registration statement which Guilford shall covenant to maintain effective for a period of two (2) years after the date of the issuance of such common stock to Assignees, at a 10% discount to the current market price (determined by the average closing market prices for the ten (10) trading days before the date of the Assignees' election to take such stock), or (y) a secured promissory note of Guilford and Assignor (secured at the least by the Collateral that secures the Obligations upon the occurrence of the Closing provided for in this Agreement and guaranteed by Guilford's ultimate parent in a form comparable to Section 5.13 of this Agreement) senior to all other debt and equity of any kind or type of both Guilford and Assignor, payable in 12 equal quarterly installments of principal with interest at a rate of 20% per annum (or, if lower, the highest legal rate) payable as to principal installments and interest quarterly, each on the last day of each calendar quarter with any unpaid interest to be compounded monthly. 46 (h) Notwithstanding anything to the contrary contained in Section 5.07(a), Assignees shall not exercise an Assignees Option Repurchase based solely upon the occurrence and continuance of an event described in clause (iii) of the definition of Purchase Option Event if (i) on the Closing Date, Assignor pledges to Assignees, and grants to Assignees a first priority security interest in, a collateral account containing unrestricted cash, cash equivalents or other Acceptable Investments in an amount equal to $11,250,000, pursuant to security documents and control agreements acceptable to Assignees (the "Liquidity Account"), securing the Obligations, and (ii) on the first Business Day of each calendar quarter during the Term, Assignor makes an additional deposit into the Liquidity Account such that the total amount on deposit equals the first amounts payable to Assignees by Assignor from Included Product Payments pursuant to Section 2.02(b)(ii) for each of the next eight (8) calendar quarters, including the quarter in which such Business Day occurs. Assignees shall be entitled to exercise all rights as secured parties with respect to the Liquidity Account upon any default in the payment or performance of the Obligations, including the application of amounts in the Liquidity Account to due but unpaid Obligations. The application by Assignees of amounts in the Liquidity Account to the payment of any due but unpaid Obligations, including without limitation, the payment of any amounts due to Assignees from Assignor from Included Product Payments pursuant to Section 2.02(b), shall not cure any failure by Assignor or Guilford to make directly such payments. Upon thirty (30) days prior written notice, Assignor may request that Assignees release their security interest in the Liquidity Account. Upon such request, the Assignees shall release their security interest in the Liquidity Account upon their determination, in their reasonable discretion, that as of the date of release, no Purchase Option Event or Notice Event has occurred and no Purchase Option Event is reasonably expected to occur as a result of such release, including, without limitation, an event described in clause (iii) of the definition of Purchase Option Event. Upon the Assignees' release of their interest in the Liquidity Account, this Section 5.07(h) shall be of no further effect. During any period of the Term prior to the release of the Liquidity Account by Assignees, it shall be an immediate Purchase Option Event if during any calendar quarter, Assignor fails to pay to Assignees the minimum amounts specified in Section 2.02(b)(ii). (i) Without in any manner limiting its obligations under Section 5.13, Guilford agrees that to the extent that Assignor does not pay any amount due to Assignees under this Section 5.07, Guilford will promptly pay or cause Assignor to pay such amounts. SECTION 5.08 SECURITY AGREEMENTS. (a) Assignor Security Agreement. (i) Except as otherwise provided in Section 5.07(b)(ii)(B), Assignor shall at all times until the Obligations of Assignor are paid and performed in full grant in favor of Assignees a valid, continuing, first perfected lien on and security interest in the Assigned Interests, the Intellectual 47 Property with respect to the Primary Products and the other Collateral described in the Assignor-Assignees Security Agreement. (ii) Except as provided in Section 5.07(b)(ii)(B), Assignor shall not grant a security interest in any of its property to any party other than the Assignees. (b) Guilford Security Agreements. Guilford shall at all times until the Obligations of Guilford and the Assignor under this Agreement and the other Transaction Documents are paid and performed in full: (i) grant and maintain in favor of Assignor a valid, continuing, first perfected lien on and security interest in the Collateral described in the Guilford-Assignor Security Agreement and (ii) grant and maintain in favor of Assignees a valid, continuing, first perfected lien on and security interest in the collateral described in the Guilford-Assignees Security Agreement. Notwithstanding the foregoing, if at any time during the Term, Guilford receives a bona fide financing proposal from a third-party institutional lender that is conditioned upon such lender obtaining a first priority security interest in the Intellectual Property relating to the After Acquired Products, or the receivables, payment intangibles or Distribution Agreements or License Agreements relating to the Secondary Products or the After Acquired Products, Assignees shall, at the closing of such new financing, subordinate their security interest under the Guilford-Assignees Security Agreement in such of the assets as the third party lender has required a first priority security interest, pursuant to the terms of a written subordination reasonably satisfactory to the Assignees and such third party lender. The Assignees confirm and agree that Assignor may similarly subordinate its security interest in the same assets under the Guilford-Assignor Security Agreement. Nothing in this Section 5.08(b) or in any subordination agreement entered into in connection therewith shall affect or reduce any of the obligations of Assignor or Guilford to the Assignees under this Agreement or the obligations of Guilford to Assignor under the Management Agreement. SECTION 5.09 BEST EFFORTS; FURTHER ASSURANCE. (a) Subject to the terms and conditions of this Agreement, each party hereto will use its commercially reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by this Agreement and any other Transaction Document. Assignees, Assignor and Guilford agree to execute and deliver such other documents, certificates, agreements and other writings (including any financing statement filings requested by Assignees) and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement and any other Transaction Document and to vest in Assignees good, valid and marketable rights and interests in and to the Assigned Interests free and clear of all Liens, except those Liens created in favor of Assignees pursuant to the Security Agreements and any other Transaction Document. 48 (b) Each of the parties hereto shall execute and deliver such additional documents, certificates and instruments, and perform such additional acts, as may be reasonably requested and necessary or appropriate to carry out and effectuate all of the provisions of this Agreement and any other Transaction Document and to consummate all of the transactions contemplated by this Agreement and any other Transaction Document. (c) Guilford, GPI Holdings, Assignor and Assignees shall cooperate and provide assistance as reasonably requested by the other parties in connection with any litigation, arbitration or other proceeding (whether threatened, existing, initiated, or contemplated prior to, on or after the date hereof) to which any party hereto or any of its officers, directors, shareholders, agents or employees is or may become a party or is or may become otherwise directly or indirectly affected or as to which any such Persons have a direct or indirect interests, in each case relating to this Agreement, any other Transaction Document, the Assigned Interests or any other Collateral, or the transactions described herein or therein but in all cases excluding any litigation brought by Guilford, GPI Holdings or Assignor against Assignees or brought by Assignees against Guilford, GPI Holdings or Assignor. SECTION 5.10 REMITTANCE TO LOCKBOX ACCOUNT. (a) Within sixty (60) days after the date of this Agreement, the parties hereto shall enter into a Lockbox Agreement in form and substance reasonably satisfactory to the parties hereto and the Lockbox Bank, which Lockbox Agreement will provide for, among other things, the establishment and maintenance of a Lockbox Account, a Joint Concentration Account, an Assignor Concentration Account and an Assignees Concentration Account in accordance with the terms herein and therein. Any Assignees Concentration Account shall be held solely for the benefit of Assignees, but shall be subject to the terms and conditions of this Agreement, the Security Agreements, the Management Agreement and the other Transaction Documents. Funds deposited into the Lockbox Account shall be swept by the Lockbox Bank on a daily basis into the Joint Concentration Account and immediately subsequent thereto, the Daily Amount and any other amounts payable to the Assignees under Section 2.02 shall be swept into the Assignees Concentration Account. Assignees shall have immediate and full access to any funds held in the Assignees Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever. After the Daily Amount and any other amounts payable to the Assignees under Section 2.02 are swept into the Assignees Concentration Account the amounts remaining in the Joint Concentration Account shall then be swept, at the direction of Assignor, into the Assignor Concentration Account. Assignor shall have immediate and full access to any funds held in the Assignor Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever other than those of the Lockbox Bank, provided, however, that nothing herein shall (i) affect or reduce Assignor's obligations to pay in full all amounts due to Assignees under this Agreement, or (ii) in any manner limit the recourse of Assignees to the assets of Assignor to satisfy the Assignor's obligations. 49 (b) Upon execution of the Lockbox Agreement, Assignees shall receive an opinion of counsel of Assignor as to the perfection of Assignees' security interest in the Pledged Deposit Accounts (as defined in the Assignor-Assignees Security Agreement). (c) Assignor shall pay for all fees, expenses and charges of the Lockbox Bank by debiting the Assignor Concentration Account. (d) Each Distribution Agreement and License Agreement entered into by Guilford shall contain a provision providing for all payments in respect of sales of the Primary Products and in respect of royalties received from Contract Parties to be remitted directly by the applicable party into the Lockbox Account and Assignor and Guilford shall cause such payments to be remitted directly by the applicable party into the Lockbox Account. Without in any way limiting the foregoing, commencing on the later of the Closing Date and the date on which the Lockbox Agreement is executed and at any time thereafter, any and all payments in respect of Primary Products Net Sales received by Assignor or Guilford shall be deposited into the Lockbox Account within five (5) Business Days of Assignor's or Guilford's receipt thereof. (e) With respect to any Distribution Agreement, License Agreement or other sale agreement or invoice entered into or issued by Guilford from and after the date hereof Guilford shall (i) at the time of the execution and delivery of such Distribution Agreement, License Agreement or other sale agreement or the issuance of any invoice, instruct any party thereto or recipient thereof to remit to the Lockbox Account when due all applicable payments in respect of sales of the Products and in respect of royalties that are due and payable to Assignor or Guilford in respect of or derived from such Distribution Agreement, License Agreement or other sale agreement or invoice during the Term and (ii) in the case of any Distribution Agreement, License Agreement or other sale agreement, deliver to Assignees evidence of such instruction and of such applicable party's agreement thereto. (f) Neither Assignor nor Guilford shall have any right to terminate the Lockbox Bank without Assignees' prior written consent. Any such consent, which Assignees may grant or withhold in their discretion, shall be subject to the satisfaction of each of the following conditions to the satisfaction of Assignees: (i) the successor Lockbox Bank shall be reasonably acceptable to Assignees; (ii) Assignees, Assignor, Guilford and the successor Lockbox Bank shall have entered into a lockbox agreement substantially in the form of the Lockbox Agreement initially entered into; 50 (iii) all funds and items in the accounts subject to the Lockbox Agreement to be terminated shall be transferred to the new accounts held at the successor Lockbox Bank prior to the termination of the then existing Lockbox Bank; and (iv) Assignees shall have received evidence that all of the applicable parties making payments in respect of sales of the Products have been instructed to remit all future payments in respect of sales of the Products to the new accounts held at the successor Lockbox Bank. SECTION 5.11 ADDITIONAL COVENANTS OF ASSIGNOR, GPI HOLDINGS AND GUILFORD (a) In the event that either Assignor or Guilford becomes aware that the making, using or selling of any Products licensed by Guilford to a Contract Party under any of the Distribution Agreements or License Agreements infringes or violates any third party Intellectual Property, Guilford shall promptly use its reasonable best efforts to attempt to secure the right to use such Intellectual Property on behalf of itself and the affected Contract Party and shall pay all costs and amounts associated with obtaining any such license, without any charge to the Contract Party or any reduction in the Assigned Interests. (b) Guilford shall duly perform and observe all of Guilford's covenants and obligations under each Distribution Agreement and License Agreement in all material respects. Upon the occurrence of a material breach of any of the Distribution Agreements or License Agreements by any other party thereto, which is not cured as provided therein, Guilford shall use its commercially reasonable best efforts to seek to enforce all of its rights and remedies thereunder. Guilford and Assignor shall duly comply with all material terms of the Management Agreement and not suffer to exist any default thereunder. (c) Neither Assignor nor Guilford shall, without the prior written consent of Assignees, which consent shall not be unreasonably withheld: (i) Forgive, release or compromise any amount owed to Assignor and relating to the Assigned Interests in a manner which could reasonably be expected to materially adversely affect the Assigned Interests; (ii) Waive, amend, cancel or terminate, exercise or fail to exercise, any of its material rights constituting or relating to the right to receive payment on Total Net Sales; (iii) Amend, modify, restate, cancel, supplement, terminate or waive any provision of any Distribution Agreement or License Agreement, or 51 grant any consent thereunder, or agree to do any of the foregoing, including, without limitation, entering into any agreement with the Contract Party under the provisions of such Distribution Agreement or License Agreement in each case which could reasonably be expected to have a Material, Adverse Effect; or (iv) Create, incur, assume or suffer to exist any Lien, or exercise any right of rescission, offset, counterclaim or defense, upon or with respect to the Assigned Interests or the other Collateral, or agree to do or suffer to exist any of the foregoing, except for (A) any Lien or agreements in favor of Assignees granted under or pursuant to this Agreement and the other Transaction Documents, (B) the Liens set forth on Schedule 3.04, and (C) the Liens described in, and subject to the conditions set forth in, Section 5.07(b)(ii)(B) and Section 5.08(b). (d) Assignor shall promptly provide to Assignees copies of any material reports or other information prepared by any Contract Party it has received pursuant to the Management Agreement that has not been previously provided to Assignees by either Assignor, Guilford or any other Person. (e) Each of Assignor, GPI Holdings and Guilford shall provide Assignees with written notice as promptly as practicable (and in any event within five (5) Business Days) after becoming aware of any of the following: (i) the occurrence of a Bankruptcy Event; (ii) any material breach or default by either Assignor, GPI Holdings or Guilford of any covenant, agreement or other provision of this Agreement or any other Transaction Document; (iii) any representation or warranty made or deemed made by either Assignor, GPI Holdings or Guilford in any of the Transaction Documents to which it is a party or in any certificate delivered to Assignees pursuant hereto shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made or deemed made; (iv) the occurrence of a Purchase Option Event; (v) the occurrence of an Assignor Option Event; 52 (vi) any sublicense by a Contract Party of any rights licensed pursuant to any Distribution Agreement or License Agreement; or (vii) the resignation, death or removal of any Class A Manager or Class B Manager (as such terms are defined in the LLC Agreement) of Assignor. (f) Promptly (but in no event later than five (5) Business Days) after (i) receiving written or oral notice from a Contract Party, (A) terminating the related Distribution Agreement or License Agreement, (B) alleging any material breach of or default under such Distribution Agreement or License Agreement by Guilford or (C) asserting the existence of any facts, circumstances or events which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time or both) to give rise to a material breach of or default under or right to terminate such Distribution Agreement or License Agreement or (ii) either Assignor or Guilford otherwise having Knowledge of any fact, circumstance or event which alone or together with other facts, circumstances or events could reasonably be expected (with or without the giving of notice or passage of time or both) to give rise to a material breach of or default under such Distribution Agreement or License Agreement by Guilford or a right to terminate such Distribution Agreement or License Agreement by such Contract Party, in each case, either Assignor or Guilford shall give a written notice to Assignees describing in reasonable detail the relevant breach, default or termination event, including a copy of any written notice received from such Contract Party and, in the case of any breach or default or alleged breach or default by Guilford, describing any corrective action Guilford proposes to take. (g) Guilford shall, at Guilford's sole expense, either directly or by causing the Contract Party to do so, take any and all actions and prepare, execute, deliver and file any and all agreements, documents or instruments which are necessary or desirable to (A) diligently maintain the applicable licensed Intellectual Property and the Patents and (B) diligently defend such licensed Intellectual Property and such Patents against infringement or interference by any other Persons, and against any claims of invalidity or unenforceability, in any jurisdiction (including, without limitation, by bringing any legal action for infringement or defending any counterclaim of invalidity or action of a third party for declaratory judgment of non-infringement or non-interference). Guilford shall not, and shall use commercially reasonable efforts to cause the applicable Contract Party not to, disclaim or abandon, or fail to take any action necessary or desirable to prevent the disclaimer or abandonment of, the applicable Patents or other Intellectual Property. (h) Guilford shall use its reasonable best efforts to secure and maintain, or, where a Contract Party is required to do so under any Distribution Agreement or License Agreement, assist such Contract Party in securing and maintaining, all regulatory and other governmental 53 approvals, clearances, registrations and permits which may be required to manufacture, market and/or sell any and all of the Products in accordance with Guilford's business plans that are reasonably designed to maximize the commercial potential of the Products. (i) Neither Guilford nor Assignor shall provide samples of Products, sell Products at reduced prices or grant credits against the purchase prices of the Products to any person for purposes of inducing or otherwise related to the sale of other products. (j) Guilford and Assignor shall comply with all manufacturing guidelines and processes required by the FDA. (k) Guilford shall (i) maintain insurance policies with insurance companies rated not less than "A-" by A.M. Best Company, Inc. with coverages and in amounts sufficient to comply with the Supply Agreement and otherwise what is customary for companies of comparable size and condition similarly situated in the same industry as Guilford including without limitation, product liability insurance and directors and officers insurance and (ii) maintain each of Assignor and Assignees as an additional insured party with respect to its general liability and product liability insurance policies. (l) Neither Assignor nor Guilford nor any Affiliate of Guilford will Transfer (other than an Excluded Transfer) (i) all or any major part of its interests in the Products or (ii) all or any part of its interests in either of the Primary Products to a third party purchaser or licensee, as applicable, unless such third party purchaser or licensee, as applicable, assumes in writing all of the obligations of Assignor or Guilford, as applicable, hereunder, including the obligation to make all payments in respect of the Assigned Interests to Assignees pursuant to a written assumption, in a form reasonably satisfactory to Assignees. In the event of any such Transfer, Assignor and Guilford shall hold any proceeds of such transfer in trust for ten (10) business days after the consummation of such Transfer to permit the Assignees to exercise an Assignees Option Repurchase and to be paid directly from such proceeds. Assignor and Guilford shall give Assignees thirty (30) days prior written notice of any such proposed Transfer. (m) Neither Guilford, GPI Holdings nor Assignor will amend, modify or terminate, or permit to be amended, modified or terminated, nor shall Guilford, GPI Holdings or Assignor waive any rights under (i) the Certificate of Formation (ii) the LLC Agreement, (iii) the Management Agreement, (iv) the Guilford-Assignees Security Agreement or (v) the Guilford-Assignor Security Agreement without the prior written consent of Assignees, which consent shall be granted or withheld in Assignees' sole discretion. Without limiting the foregoing, Assignor will diligently pursue all of its rights and remedies with respect to Guilford under the Management Agreement and the Guilford-Assignor Security Agreement. 54 (n) Except as provided in, and subject to the conditions set forth in, Section 5.07(b)(ii)(B), Assignor will not pledge or otherwise assign or transfer any of its assets without the prior written consent of Assignees, which consent shall be granted or withheld in Assignees' sole discretion. (o) Assignor will comply with the procedures and records as set forth in Article V of the LLC Agreement, a copy of which is attached hereto as Exhibit F. (p) Guilford shall cause each Contract Party under any Distribution Agreement or License Agreement, as applicable, to provide, promptly following the end of each calendar quarter, all information with respect to net end-user sales (including all components of information required to calculate Total Net Sales) under each such agreement for inclusion in the Quarterly Report for such quarter, and Guilford shall cause such obligation to be included in every Distribution Agreement and License Agreement it enters into following the Closing Date. (q) Assignor shall not make any dividends or distributions to Guilford or GPI Holdings (including payment of the Management Fee (as defined in the Management Agreement) or any distributions under the LLC Agreement) unless and until all amounts at that time owing to Assignees under this Agreement, the Management Agreement or any obligation under any other Transaction Document are paid in full. (r) Guilford, GPI Holdings and Assignor shall ensure that the claims and rights of Assignees created by this Agreement and any other Transaction Document in and to the Assigned Interests and, subject to the provisions of Section 5.07(b)(ii)(B) and 5.08(b), any other Collateral are and shall remain senior to any creditor of Assignor, GPI Holdings, Guilford or any other Person. (s) Assignor's obligations to pay Guilford the Management Fee (as defined in the Management Agreement) shall be in all respects subordinate to, and shall be paid to Guilford only after the satisfaction in full of, Assignor's payment Obligations to Assignees, including Assignor's payment to Assignees of the Applicable Percentage of Total Net Sales and all other Obligations set forth in this Agreement. (t) Guilford shall not incur any Indebtedness (other than equipment financing, secured financing for an After Acquired Product, senior bank financing (or financing provided by a financial institution on substantially the same terms as senior bank financing) and industrial bond financing) that is not expressly subordinated to Guilford's Obligations to Assignees under this Agreement on terms no less favorable to Assignees than the subordination provisions benefiting Senior Debt, as defined in the Subordinated Indenture. 55 (u) Guilford shall assign, and agrees to cause all of its Affiliates to assign, to Assignor all improvements of or to the Primary Products and the Intellectual Property related to the Primary Products that arise on or after the Closing Date and agrees to execute and deliver, and agrees to cause its Affiliates to execute and deliver, all instruments, documents and agreements as are reasonably required to effectuate such assignment. SECTION 5.12 FUTURE AGREEMENTS. (a) Guilford shall provide Assignees, promptly after the execution of a Distribution Agreement or License Agreement by Guilford and any Contract Party, a copy of the executed Distribution Agreement or License Agreement for review by Assignees. (b) If Guilford, at any time and from time to time during the term of this Agreement, proposes to materially change the form of Distribution Agreement or License Agreement it utilizes, or proposes in connection with any transaction or transactions with a Contract Party to materially vary the terms of the related Distribution Agreement or License Agreement from those contained in the prevailing form of Distribution Agreement or License Agreement, then Guilford shall promptly provide to Assignees such revised form of Distribution Agreement or License Agreement or, at least three (3) Business Days prior to the execution and delivery of any Distribution Agreement or License Agreement that includes a material deviation from the terms of the prevailing form of Distribution Agreement or License Agreement, give written notice to Assignees indicating that Guilford proposes to enter into such Distribution Agreement or License Agreement and the anticipated date of execution of such proposed Distribution Agreement or License Agreement. (c) In the event that any payments under any Distribution Agreement or License Agreement relating to a Product are calculated upon a basis that is materially different than the basis used under the Distribution Agreements or License Agreements in existence at such time, Guilford and Assignor shall, in good faith, discuss with Assignees and mutually agree on the basis of the appropriate payments to be made to Assignees in respect of any such Distribution Agreement or License Agreement and the manner of calculating such payments, which payments and manner of calculating payments will not be less advantageous to Assignees than are provided under the Distribution Agreements or License Agreements in existence at such time. (d) To the extent Guilford has the right to perform or cause to be performed inspections or audits under any of the License Agreements or Distribution Agreements regarding payments payable and/or paid to Guilford thereunder (each, a "License Party Audit"), Guilford shall, at the reasonable request of Assignees, cause such License Party Audit to be promptly performed (it being understood that it shall not be a reasonable request if, in the good faith belief of Guilford, the requested License Party Audit would impair Guilford's commercial relationship with the applicable Contract Party). In conducting a License Party Audit, Guilford may engage 56 its then retained internationally recognized independent public accounting firm, or, if Guilford elects otherwise, such other internationally recognized independent public accounting firm reasonably acceptable to Assignees. Promptly after completion of any License Party Audit (whether or not requested by Assignees), Guilford shall promptly deliver to Assignees an Audit Report in respect of such License Party Audit. With respect to any License Agreement or Distribution Agreement under which Guilford has a right to perform or cause to be performed a License Party Audit, in the event Assignees requests Guilford to perform a License Party Audit and such License Party Audit is in fact performed by or on behalf of Guilford, then if the results thereof reveal that the amounts paid to Guilford in respect of sales of any licensed Product under such License Agreement or Distribution Agreement for the period of such License Party Audit have been understated by more than the greater of $20,000 or 7.5% of the amounts payable to Guilford with respect to sales of any licensed Product and determined to be due for the applicable period of such License Party Audit, then the Audit Costs incurred by Guilford in respect of such License Party Audit shall be borne by Guilford. In all other cases the Audit Costs incurred by Guilford in respect of a License Party Audit shall be borne by Assignees. SECTION 5.13 GUARANTEE. (a) The Guarantee. Guilford and GPI Holdings, jointly and severally (collectively, the "Guarantor") hereby unconditionally and irrevocably guarantees the full and prompt payment of all amounts when due which may be owing by Assignor under this Agreement and the other Transaction Documents and the full and prompt performance of all of the Obligations of Assignor under this Agreement and the other Transaction Documents (collectively, the "Guaranteed Obligations"). * (b) * - (i) * (ii) * (iii) *; or (iv) * * (c) *. - (d) * (e) * - * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 57 (f) * - (g) * - (h) Senior Debt. Guilford confirms and agrees that its Obligations under this Section 5.13 and its other Obligations to Assignees under this Agreement and the other Transaction Documents constitute Senior Debt and Designated Senior Debt as defined in and for the purposes of the Subordinated Indenture. SECTION 5.14 FINANCIAL STATEMENTS. Guilford shall maintain, and cause Assignor to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Guilford shall deliver to Assignees the following financial statements: (a) Within sixty (60) days after the end of each calendar quarter, copies of (i) the unaudited consolidated financial statements of Guilford and its Subsidiaries for the prior fiscal quarter and (ii) the unaudited financial statements of Assignor for the prior fiscal quarter; and (b) Within ninety (90) days after the end of each calendar year, copies of (i) the audited consolidated financial statements of Guilford and its Subsidiaries for the prior calendar year and (ii) the audited financial statements of Assignor for the prior calendar year. (c) Within ten (10) days after the end of each calendar quarter, a certificate of the chief financial officer of Guilford in a form satisfactory to Assignees pursuant to which such officer certifies the amount of Working Capital of Guilford as at the end of the such quarters and certifies that Guilford maintained Working Capital of no less than $20 million at the end of each calendar month during such quarter. ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING AND FUNDING SECTION 6.01 CLOSING. Subject to the closing conditions set forth in Sections 6.02 and 6.03, the closing of the purchase and sale of the Assigned Interests (the "Closing") shall take place at the offices of Hogan & Hartson L.L.P., Baltimore, MD, on the Closing Date. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 58 SECTION 6.02 CONDITIONS APPLICABLE TO ASSIGNEES. The obligations of Assignees to effect the Closing and the payment of the Purchase Price shall be subject to the satisfaction of each of the following conditions, any of which may be waived by Assignees in their sole discretion: (a) Accuracy of Representations and Warranties. The representations and warranties of Assignor and Guilford set forth in this Agreement and the other Transaction Documents shall be true, correct and complete in all material respects as of the Closing Date. (b) No Adverse Circumstances. There shall not have occurred or be continuing any event or circumstance (including any development with respect to the efficacy of the Primary Products or the licensed Intellectual Property or the use or expected future use of the same as opposed to competing products) that could reasonably be expected to have a Material Adverse Effect. (c) Litigation. No action, suit, litigation, proceeding or investigation shall have been instituted, be pending or threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit Assignees' acquisition or future receipt of the Assigned Interests. (d) Officer's Certificates. (i) Assignees shall have received at the Closing a certificate of an executive officer of Assignor pursuant to which such officer certifies that the conditions set forth in Sections 6.02(a), (b), (c), (m) and (o) have been satisfied in all respects as of the Closing Date. (ii) Assignees shall have received at the Closing a certificate of the executive officer of Guilford pursuant to which such officer certifies that the conditions set forth in Sections 6.02(a), (b), (c), (l) and (o) have been satisfied in all respects as of the Closing Date. (iii) Assignees shall have received at the Closing a certificate of the executive officer of GPI Holdings pursuant to which such officer certifies that the conditions set forth in Sections 6.02(a), (b), (c), (n) and (o) have been satisfied in all respects as of the Closing Date. (e) Legal Opinions. (i) Assignees shall have received an opinion of Hogan & Hartson, L.L.P., counsel to Assignor dated the Closing Date, in form and substance 59 satisfactory to Assignees and their counsel, to the effect set forth in Exhibit E(i). (ii) Assignees shall have received an opinion of patent counsel to Assignor, dated the Closing Date, in form and substance satisfactory to Assignees and their counsel, to the effect set forth in Exhibit E(ii). (f) Bill of Sale. A Bill of Sale shall have been executed and delivered by Assignor to Assignees and Assignees shall have received the same. (g) Assignor-Assignees Security Agreement. The Assignor-Assignees Security Agreement shall have been duly executed and delivered by all the parties thereto and shall be in form of Exhibit D hereto, together with proper financing statements (including Form UCC-1s) for filing under the UCC and/or any other applicable law, rule, statute or regulation relating to the perfection of a security interest in filing offices in the jurisdictions listed on Schedule 6.02(g). (h) Guilford Security Agreements. Each of the Guilford-Assignor Security Agreement and the Guilford-Assignees Security Agreement shall have been duly executed and delivered by all the parties thereto and shall be in forms of Exhibits D-1 and D-2 hereto, together with proper financing statements (including Form UCC-1s) for filing under the UCC and/or any other applicable law, rule, statute or regulation relating to the perfection of a security interest in filing offices in the jurisdictions listed on Schedule 6.02(g). (i) Pledge Agreement. The Pledge Agreement shall have been duly executed and delivered by all the parties thereto and shall be in form of Exhibit K hereto, together with proper financing statements (including Form UCC-1s) fully executed for filing under the UCC and/or any other applicable law, rule, statute or regulation relating to the perfection of a security interest in filing offices in the jurisdictions listed on Schedule 6.02(g). (j) Management Agreement. The Management Agreement shall have been duly executed and delivered by all the parties thereto and shall be in form of Exhibit H hereto. (k) Conversion Documents. Each Conversion Document shall have been duly executed and delivered by all the parties thereto and filed with the Secretary of State of the State of Delaware and shall be in forms of Exhibits L-N hereto. (l) Corporate Documents of Guilford. Assignees shall have received on the Closing Date, a certificate, dated the Closing Date, of a senior officer of Guilford (the statements made in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of Guilford's certificate of incorporation and by-laws or other 60 organizational documents (together with any and all amendments thereto) certified by the appropriate Government Authority as being true, correct and complete copies; (ii) attaching copies, certified by such officer as true and complete, of resolutions of the board of directors of Guilford authorizing and approving the execution, delivery and performance by Guilford of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of Guilford who have executed and delivered this Agreement and the other Transaction Documents including therein a signature specimen of each such officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Government Authority of the jurisdiction of formation, stating that Guilford is in good standing under the laws of such jurisdiction. (m) Corporate Documents of Assignor. Assignees shall have received on the Closing Date, a certificate, dated the Closing Date, of a senior officer of Assignor (the statements made in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of Assignor's certificate of formation or other organizational documents (together with any and all amendments thereto) certified by the appropriate Government Authority as being true, correct and complete copies; (ii) attaching copies, certified by such officer as true and complete, of resolutions of the management committee of Assignor authorizing and approving the execution, delivery and performance by Assignor of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of Assignor who have executed and delivered this Agreement and the other Transaction Documents including therein a signature specimen of each such officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Government Authority of the jurisdiction of formation, stating that Assignor is in good standing under the laws of such jurisdiction. (n) Corporate Documents of GPI Holdings. Assignees shall have received on the Closing Date, a certificate, dated the Closing Date, of a senior officer of GPI Holdings (the statements made in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of GPI Holdings' certificate of incorporation and by-laws or other organizational documents (together with any and all amendments thereto) certified by the appropriate Government Authority as being true, correct and complete copies; (ii) attaching copies, certified by such officer as true and complete, of resolutions of the board of directors of GPI Holdings authorizing and approving the execution, delivery and performance by GPI Holdings of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of GPI Holdings who have executed and delivered this Agreement and the other Transaction Documents including therein a signature specimen of each such officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of certificates 61 of the appropriate Government Authority of the jurisdiction of formation, stating that GPI Holdings is in good standing under the laws of such jurisdiction. (o) Lack of Purchase Option Event. There shall not have occurred a Purchase Option Event. (p) Covenants. Each of Assignor, GPI Holdings and Guilford shall have complied in all material respects with the covenants set forth in this Agreement and each other Transaction Document. (q) Warrants. The Warrants shall have been duly executed and issued to Assignees. (r) Merck Transaction. The asset transfer transaction contemplated by the Merck Purchase Agreement shall simultaneously close. (s) Liquidity Account. The Liquidity Account shall have been established on terms and conditions acceptable to the Assignees. SECTION 6.03 CONDITIONS APPLICABLE TO ASSIGNOR. The obligations of each of Assignor and Guilford to effect the Closing shall be subject to the satisfaction of each of the following conditions, any of which may be waived by Assignor and Guilford in their sole discretion: (a) Accuracy of Representations and Warranties. The representations and warranties of Assignees set forth in this Agreement shall have been true, correct and complete as of the Closing Date. (b) Litigation. No action, suit, litigation, proceeding or investigation shall have been formally instituted, be pending or threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit Assignees' acquisition or future receipt of the Assigned Interests. (c) Officer's Certificate. Assignor shall have received at the Closing a certificate of an officer or member of the general partner of Assignees certifying that the conditions set forth in Sections 6.03(a) and (b) have been satisfied, in all respects as of the Closing Date. (d) Full Payment. The Purchase Price shall have been tendered by Assignees to Assignor by wire transfer of immediately available funds to Assignor's Account identified to Assignees on or prior to the Closing. 62 ARTICLE VII TERMINATION SECTION 7.01 TERMINATION DATE. This Agreement shall terminate on December 31, 2012; provided, however, that if any Obligations under this Agreement remain unpaid or any payments are required to be made by one of the parties hereunder after that date, this Agreement shall remain in full force and effect until any and all such payments have been made in full, and solely for that purpose. In addition, this Agreement shall sooner terminate if Assignees or Assignor shall have exercised their right under Sections 5.07(a), (b)(i) or (b)(ii)(A), respectively, with the termination date in that event being the date on which Assignor completes the repurchase in full of the Assigned Interests and pays in full in cash the Assignees Option Repurchase Price, the Call Price, the Assignor Option Repurchase Price or other applicable amount, as the case may be. SECTION 7.02 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.01, this Agreement shall forthwith become void and have no effect without any liability on the part of any party hereto or its Affiliates, directors, officers or stockholders other than the provisions of this Section 7.02 and Sections 5.04, 5.13, 8,01, 8.04 and 8.05 hereof, which shall survive any termination as set forth in Section 8.01. Nothing contained in this Section 7.02 shall relieve any party from liability for any breach of this Agreement. ARTICLE VIII MISCELLANEOUS SECTION 8.01 SURVIVAL. (a) All representations and warranties made herein and in any other Transaction Document, any certificates or in any other writing delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Closing and shall continue to survive indefinitely. Notwithstanding anything in this Agreement or implied by law to the contrary, all the agreements contained in Sections 5.04, 5.13, 8.01, 8.04 and 8.05 shall survive indefinitely following the execution and delivery of this Agreement and the Closing and the termination of this Agreement. (b) Any investigation or other examination that may have been made or may be made at any time by or on behalf of the party to whom representations and warranties are made shall 63 not limit, diminish or in any way affect the representations and warranties in this Agreement and the other Transaction Documents, and the parties may rely on the representations and warranties in this Agreement and the other Transaction Documents irrespective of any information obtained by them by any investigation, examination or otherwise. SECTION 8.02 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledges that the other party will have no adequate remedy at law if it fails to perform any of its obligations under this Agreement or any of the other Transaction Documents. In such event, each of the parties agrees that the other party shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Agreement. SECTION 8.03 NOTICES. All notices, consents, waivers and communications hereunder given by any party to the other shall be in writing (including facsimile transmission) and delivered personally, by telegraph, telecopy, telex or facsimile, by a recognized overnight courier, or by dispatching the same by certified or registered mail, return receipt requested, with postage prepaid, in each case addressed: If to Assignees to: c/o Paul Capital Management, L.L.C. 50 California Street Suite 3000 San Francisco, California 94111 Attention: Chief Financial Officer Facsimile No.: (415) 283-4301 with a copy to: Walter Flamenbaum, M.D. Paul Capital Partners 140th East 45th Street, 44th Floor New York, New York 10017 Facsimile No.: (646) 264-1101 and Hale and Dorr LLP 60 State Street 64 Boston, MA 02109 Attention: David Redlick, Esq. Facsimile No.: (617) 526-5000 If to Assignor to: Artery, LLC 222 Delaware Avenue, 10th Floor Wilmington, DE 19801 Attention: Dan McCollom Facsimile No.: ------------------- with a copy to: Hogan & Hartson L.L.P. 111 South Calvert Street Baltimore, Maryland 21202 Attention: Michael J. Silver, Esq. Facsimile No.: (410) 539-6981 If to Guilford to: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, MD 21224 Attention: Andrew R. Jordan, Chief Financial Officer Facsimile No.: (410) 631-6899 with a copy to: Hogan & Hartson L.L.P. 111 South Calvert Street Baltimore, Maryland 21202 Attention: Michael J. Silver, Esq. Facsimile No.: (410) 539-6981 If to GPI Holdings to: GPI Holdings, Inc. 222 Delaware Avenue, 10th Floor Wilmington, DE 19801 65 Attention: Dan McCollom Facsimile No.: with a copy to: Hogan & Hartson L.L.P. 111 South Calvert Street Baltimore, Maryland 21202 Attention: Michael J. Silver, Esq. Facsimile No.: (410) 539-6981 if or to such other address or addresses as Assignees, Assignor or Guilford may from time to time designate by notice as provided herein, except that notices of changes of address shall be effective only upon receipt. All such notices consents, waivers and communications shall: (a) when posted by certified or registered mail, postage prepaid, return receipt requested, be effective three (3) Business Days after dispatch, unless such communication is sent trans-Atlantic, in which case shall be deemed effective five (5) Business Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be effective upon receipt by the transmitting party of confirmation of complete transmission, (c) when delivered by a recognized overnight courier or in person, be effective upon receipt when hand delivered. SECTION 8.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Neither Assignor nor Guilford shall be entitled to assign any of its obligations and rights hereunder or any other Transaction Documents without the prior written consent of Assignees. * SECTION 8.05 INDEMNIFICATION. (a) Each of Assignor and Guilford hereby jointly and severally indemnifies and holds Assignees and their Affiliates and any of their respective partners, directors, managers, officers, employees and agents (each an "Assignees Indemnified Party") harmless from and against any and all Losses (including all Losses in connection with any product liability claims or claims of infringement or misappropriation of any intellectual property rights of any third parties) incurred or suffered by any Assignees Indemnified Party arising out of any breach of any representation, warranty or certification made by either Assignor or Guilford in any of the Transaction Documents or certificates given by Assignor in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by either Assignor or Guilford pursuant to this Agreement or any Transaction Document, including any failure by either Assignor or Guilford to satisfy any of the Excluded Liabilities and Obligations. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 66 (b) Assignees hereby indemnify and hold Assignor, Guilford, their Affiliates and any of their partners, directors, managers, officers, employees and agents (each an "Assignor Indemnified Party") harmless from and against any and all Losses incurred or suffered by an Assignor Indemnified Party arising out of any breach of any representation, warranty or certification made by Assignees in any of the Transaction Documents or certificates given by Assignees in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by Assignees pursuant to this Agreement or any Transaction Document. (c) If any claim, demand, action or proceeding (including any investigation by any Government Authority) shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to the preceding paragraphs, the indemnified party shall, promptly after receipt of notice of the commencement of any such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any; provided, that, the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under the foregoing provisions of this Section 8.05 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. In case any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8.05 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. In any such proceeding, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of such counsel. It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such 67 consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. SECTION 8.06 EXPENSES. Each party hereto will pay all of its own fees and expenses in connection with entering into and consummating the transactions contemplated by this Agreement, except Guilford agrees to, within the later of 30 days after the Closing and the presentation by Assignees of invoices or other records, reimburse Assignees for the lesser of $375,000 and their documented out of pocket due diligence and legal expenses. SECTION 8.07 INDEPENDENT NATURE OF RELATIONSHIP. (a) The relationship between Assignor and Assignees is solely that of seller and purchaser, and neither Assignees nor Assignor has any fiduciary or other special relationship with the other or any of their respective Affiliates. Nothing contained herein or in any other Transaction Document shall be deemed to constitute Assignor and Assignees as a partnership, an association, a joint venture or other kind of entity or legal form. (b) No officer or employee of Assignees will be located at the premises of Assignor, Guilford or any of their Affiliates, except in connection with an audit performed pursuant to Section 5.02. No officer or employee of Assignees shall engage in any commercial activity with Assignor, Guilford or any of their Affiliates other than as contemplated herein and in the other Transaction Documents. (c) Assignor, Guilford and/or any of its Affiliates shall not at any time obligate Assignees, or impose on Assignees any obligation, in any manner or respect to any Person not a party hereto. (d) Neither Assignor nor Guilford is transferring to Assignees any ownership interest in any patents, other patents or other intellectual property of either Assignor or Guilford. SECTION 8.08 FEDERAL TAX. Notwithstanding the accounting treatment thereof, for United States federal, state and local tax purposes, Guilford, Assignor and Assignees shall treat the transactions contemplated by 68 this Agreement and the other Transaction Documents as (i) purchases of the Warrants by Assignees from Guilford for $* and (ii) loans from Assignees to Assignor in the amount of the balance of the Purchase Price, such Warrant purchases and loans to be made by Assignees in proportion to the respective amounts of the Purchase Price payable by them pursuant to Section 2.03 hereof. * SECTION 8.09 ENTIRE AGREEMENT. This Agreement, together with the Exhibits and Schedules hereto (which are incorporated herein by reference), and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements (including the Letter of Intent), understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement. No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits, Schedules or other Transaction Documents) has been made or relied upon by either party hereto. None of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. SECTION 8.10 AMENDMENTS; NO WAIVERS. (a) This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto. No waiver of any right hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced. (b) No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. SECTION 8.11 INTERPRETATION. When a reference is made in this Agreement to Articles, Sections, Schedules or Exhibits, such reference shall be to an Article, Section, Schedule or Exhibit to this Agreement unless otherwise indicated. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." Neither party hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against one party or the other. * The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. 69 SECTION 8.12 HEADINGS AND CAPTIONS. The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. SECTION 8.13 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto. SECTION 8.14 SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nevertheless be given full force and effect. SECTION 8.15 GOVERNING LAW; JURISDICTION. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. (c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN 70 SUBSECTION (b) ABOVE OF THIS SECTION 8.15 IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUIT, ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW. SECTION 8.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. 71 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written. ASSIGNOR: ARTERY, LLC By: /s/ Daniel McCollom ---------------------------------------- Name: Daniel McCollom ----------------------------- Title: Vice President and Secretary ----------------------------- GUILFORD: GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ----------------------------------- Name: Craig R. Smith, M.D. ------------------------ Title: Chairman, President and ------------------------ Chief Executive Officer ------------------------ ASSIGNEES: PAUL ROYALTY FUND, L.P. By: Paul Capital Management, LLC, its General Partner By: /s/ Walter Flamenbaum ------------------------------ Name: Walter Flamenbaum, M.D. Title: Managing Member PAUL ROYALTY FUND HOLDINGS II By: Paul Royalty Fund II, L.P. its Managing Partner By: Paul Capital Royalty Management, LLC, its General Partner By: /s/ Walter Flamenbaum ------------------------------ Name: Walter Flamenbaum, M.D. Title: Managing Member GPI HOLDINGS GPI HOLDINGS, INC. By: /s/ Daniel McCollom -------------------------------------- Name: Daniel McCollom ------------------------------ Title: Vice President and Secretary ------------------------------ [SIGNATURE PAGE TO ASSIGNMENT AGREEMENT] 73 EXHIBIT A - * SALES * *The asterisk denotes that confidential portions of this exhibit have been omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions have been submitted separately to the Securities and Exchange Commission. SCHEDULE 5.07(A) - ASSIGNEES OPTION REPURCHASE PRICE The Assignees Option Repurchase Price shall be the exact respective amount specified below if payment is received by the Assignees on one of the dates specified below (the "Calculation Dates") and if received by the Assignees on any other date during the Term shall be an amount equal to the sum of (i) the amount specified for the immediately prior Calculation Date and (ii) the product of (A) the amount specified for the immediately following Calculation Date less the amount specified for the immediately prior Calculation Date and (B) the quotient of the number of days that payment is received after the immediately prior Calculation Date over 365.

October 28, October 28, October 28 October 28, October 28, October 28, October 28, October 28, October 28, 2004 2005 2006 2007 2008 2009 2010 2011 2012 - ----------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- $63,000,000 $70,980,000 $92,274,000 $110,991,579 $141,514,263 $160,217,285+ 200,271,606+ 250,339,508+ $312,924,385+

+Subject to the overall limit as set forth in the last sentence of Section 5.07(c). SCHEDULE 5.07(B)(I) - ASSIGNOR OPTION REPURCHASE PRICE The Assignor Option Repurchase Price shall be the exact respective amount specified below if payment is received by the Assignees on one of the dates specified below (the "Calculation Dates") and if received by the Assignees on any other date during the Term shall be an amount equal to the sum of (i) the amount specified for the immediately prior Calculation Date and (ii) the product of (A) the amount specified for the immediately following Calculation Date less the amount specified for the immediately prior Calculation Date and (B) the quotient of the number of days that payment is received after the immediately prior Calculation Date over 365.

October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, 2004 2005 2006 2007 2008 2009 2010 2011 2012 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $84,000,000 $84,000,000 $103,335,750 $119,956,200 $155,943,060+ $202,725,978+ $263,543,771+ $342,606,903+ $445,388,974+

+Subject to the overall limit as set forth in the last sentence of Section 5.07(c). SCHEDULE 5.07(B)(II)(A) - CALL PRICE The Call Price shall be the exact respective amount specified below if payment is received by the Assignees on one of the dates specified below (the "Calculation Dates") and if received by the Assignees on or after any other date on or after October 28, 2006 during the Term shall be an amount equal to the sum of (i) the amount specified for the immediately prior Calculation Date and (ii) the product of (A) the amount specified for the immediately following Calculation Date less the amount specified for the immediately prior Calculation Date and (B) the quotient of the number of days that payment is received after the immediately prior Calculation Date over 365.

October 28, October 28, October 28, October 28, October 28, October 28, October 28, 2006 2007 2008 2009 2010 2011 2012 ----------- ----------- ----------- ----------- ----------- ----------- ----------- $109,183,594 $150,127,441+ $206,425,232+ $283,834,694+ $390,272,704+ $536,624,968+ $737,859,331+

+Subject to the overall limit as set forth in the last sentence of Section 5.07(c). SCHEDULE 5.07(B)(II)(B) - SECURED FINANCING EVENT PRICE The Secured Financing Event Price shall be the exact respective amount specified below if payment is received by the Assignees on one of the dates specified below (the "Calculation Dates") and if received by the Assignees on any other date during the Term shall be an amount equal to the sum of (i) the amount specified for the immediately prior Calculation Date and (ii) the product of (A) the amount specified for the immediately following Calculation Date less the amount specified for the immediately prior Calculation Date and (B) the quotient of the number of days that payment is received after the immediately prior Calculation Date over 365.

October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, 2004 2005 2006 2007 2008 2009 2010 2011 2012 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- $105,000,000 $105,000,000 $109,183,594 $150,127,441+ $206,425,232+ $283,834,694+ $390,272,704+ $536,624,968+ $737,859,331+

+Subject to the overall limit as set forth in the last sentence of Section 5.07(c). SCHEDULE 5.07(C) - PAYMENT FACTORS Payments made under Sections 2.02(a), (b), (f) and (g) shall be multiplied by the factors specified below for each applicable Repurchase Price calculation, and to reflect the calendar years in which the applicable payments were made and the Repurchase Price is paid. Assignees Option Repurchase Price:

Year of Payment Under Section 2.02 ---------------------------------- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 2003 1.00 2004 1.30 1.00 2005 1.69 1.30 1.00 Year of Payment 2006 2.20 1.69 1.30 1.00 of Repurchase 2007 2.64 2.07 1.63 1.28 1.00 Price 2008 3.37 2.64 2.07 1.63 1.28 1.00 2009 3.81 3.05 2.44 1.95 1.56 1.25 1.00 2010 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00 2011 5.96 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00 2012 7.45 5.96 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00

Assignor Option Repurchase Price:

Year of Payment Under Section 2.02 ---------------------------------- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 2003 1.00

2004 1.35 1.00 2005 1.82 1.35 1.00 2006 2.46 1.82 1.35 1.00 2007 2.86 2.20 1.69 1.30 1.00 Year of Payment 2008 3.71 2.86 2.20 1.69 1.30 1.00 of Repurchase 2009 4.83 3.71 2.86 2.20 1.69 1.30 1.00 Price 2010 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00 2011 8.16 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00 2012 10.60 8.16 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00 Call Price and Secured Financing Event Price:

Year of Payment Under Section 2.02 ---------------------------------- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- 2003 1.00+ 2004 1.38+ 1.00+ 2005 1.89+ 1.38+ 1.00+ 2006 2.60 1.89 1.38 1.00 2007 3.57 2.60 1.89 1.38 1.00 Year of Payment 2008 4.91 3.57 2.60 1.89 1.38 1.00 of Repurchase 2009 6.76 4.91 3.57 2.60 1.89 1.38 1.00 Price 2010 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00 2011 12.78 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00 2012 17.57 12.78 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00

+ Only Applicable to a Secured Financing Event Repurchase pursuant to Section 5.07(b)(ii)(B) EX-99.1 7 w91648exv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 GUILFORD PHARMACEUTICALS ACQUIRES U.S. RIGHTS TO AGGRASTAT(R)FROM MERCK & CO., INC. BALTIMORE, Oct. 29 /PRNewswire-FirstCall/ -- Guilford Pharmaceuticals Inc. (Nasdaq: GLFD) today announced that the Company acquired from Merck & Co., Inc. the rights to AGGRASTAT(R) Injection (tirofiban hydrochloride) in the United States and its territories (Puerto Rico, Virgin Islands, and Guam) for all platelet-mediated cardiovascular diseases, including coronary artery, cerebrovascular and peripheral vascular diseases. Launched in the United States in 1998, AGGRASTAT(R) is currently available in 82 countries worldwide and will continue to be marketed by Merck in all countries outside the United States and its territories. AGGRASTAT(R), a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome (ACS) including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction (MI). In these patients, AGGRASTAT(R) reduces the risk of heart attacks by 47 percent within the first seven days and 30 percent within the first month. AGGRASTAT(R) may also be used to treat these patients prior to undergoing angioplasty, a procedure to open the blockages in the arteries supplying blood to the heart muscle. Guilford purchased the U.S. rights to AGGRASTAT(R) for $84 million and has agreed to make certain royalty payments to Merck based on net sales until December 2012. Guilford and Merck have entered into an exclusive supply agreement in which Merck will continue to manufacture and supply the Active Pharmaceutical Ingredient (API) to Guilford through 2014. Additionally, Guilford and Merck have formed a committee to align and leverage the commercial and clinical efforts for AGGRASTAT(R) worldwide. As part of the agreement, Guilford haS also agreed to make commercially reasonable efforts to expand the label for AGGRASTAT(R) in the United States through the pursuit of a percutaneous coronary intervention (PCI) indication. Craig R. Smith, M.D., Chairman, President and Chief Executive Officer of Guilford, remarked, "The acquisition of AGGRASTAT(R) advances our major goal of accelerating Guilford's transition to profitability. It also satisfies a critical element of Guilford's ongoing strategy to expand our hospital-based commercial portfolio and increase top line revenues. With the purchase of AGGRASTAT(R), Guilford gains an established hospital product with extensive clinical data and the potential for market and product growth. We believe through an active and focused marketing effort we can increase sales of the product in this market and build market share for AGGRASTAT(R)." Dr. Smith continued, "To re-launch AGGRASTAT(R), we will be doubling the size of our sales force over the next several months with plans to add additional representatives between 2004 and 2006. This increase in commercial resources will also enhance promotional activities for our marketed product, GLIADEL(R) Wafer (polifeprosan 20 with carmustine implant), as well as help establish an infrastructure for the future launch of AQUAVAN(R) Injection, pending successful completion of clinical trials and regulatory review." Howard C. Herrmann, M.D., Professor of Medicine and Director, Interventional Cardiology and Cardiac Catheterization Laboratories at the University of Pennsylvania Medical Center, stated, "Clinical results from the PRISM-PLUS trial, which looked at the high-risk ACS population, demonstrated that tirofiban, in combination with heparin, reduced the incidence of death and myocardial infarction at 48 hours (66% reduction), 7 days (43% reduction) and 30 days (30% reduction). In addition, the TACTICS-TIMI 18 trial showed the benefit of using tirofiban combined with an aggressive interventional approach when compared to a more conservative interventional approach in ACS patients. These two studies taken together clearly show the benefit tirofiban can provide ACS patients, whether the patient is medically managed or undergoes percutaneous coronary intervention." Dr. Herrmann continued, "I have personally been involved in the clinical plan for AGGRASTAT(R) for the past teN years and am looking forward to participating in Guilford's clinical development activities for AGGRASTAT(R)." To finance the acquisition, Guilford entered into a financing arrangement with Paul Capital Partners. Paul Capital Partners, through Paul Royalty Fund, L.P. and Paul Royalty Fund II, L.P. (the "Paul Royalty Funds") manages more than $950 million of committed capital focused on the healthcare market. Under the arrangement, the Paul Royalty Funds is providing $42 million to be applied to the acquisition purchase price, and will receive a participation in future revenues from certain products in Guilford's product portfolio (currently AGGRASTAT(R) Injection and GLIADEL(R) Wafer) and five year warrants to purchase 300,000 shares of Guilford comMon stock at an exercise price of $9.15. UBS Investment Bank acted as financial advisor for Guilford in connection with the transaction. Conference Call Guilford has scheduled a conference call to discuss the acquisition on Wednesday, October 29, 2003 at 11:00 a.m., EST. To participate in the call, U.S. residents may dial 1-888-425-2604. Participants outside the U.S. should dial 1-706-679-8253. An audio webcast of the conference call will be broadcast live on the Company's website at www.guilfordpharm.com, under the Investor Relations section. An audio replay of the conference call will be available for 48 hours beginning at approximately 2:00 p.m., EST and running until October 31st at approximately 2:00 p.m. EST. To access the reply, U.S. residents may dial 1-800-642-1687; non-U.S. residents may dial 1-706-645-9291 and reference conference identification number 3719197. Important Information About AGGRASTAT(R) AGGRASTAT(R) was approved by the Food and Drug Administration (FDA) on May 14, 1998. AGGRASTAT(R), in combination with heparin, is indicated for the treatment of acute coronary syndrome, including patients who are to be medically managed and those undergoing percutaneous transluminal coronary angioplasty (PTCA) or atherectomy. AGGRASTAT(R) is contraindicated in patients with known hypersensitivity to any component of the product; active internal bleeding or a history of bleeding diathesis within the previous 30 days; or a history of intracranial hemorrhage, intracranial neoplasm, arteriovenous malformation, or aneurysm. Other contraindications to AGGRASTAT(R) include: a history of thrombocytopenia following prior exposure to AGGRASTAT(R); history of stroke within 30 days or any history of hemorrhagic stroke; major surgical procedure or severe physical trauma within the previous month; or history, symptoms, or findings suggestive of aortic dissection. AGGRASTAT(R) is also contraindicated in patients with: severe hypertension (systolic blood pressure >180 mmHg and/or diastolic blood pressure >110 mmHg); concomitant use of another parenteral GP IIb/IIIa inhibitor; or acute pericarditis. Bleeding is the most common complication encountered during therapy with AGGRASTAT(R). Administration of AGGRASTAT(R) is associated with an increase in bleeding events classified as both major and minor bleeding events, by criteria developed by the Thrombolysis in Myocardial Infarction Study group (TIMI). Most major bleeding associated with AGGRASTAT(R) occurs at the arterial access site for cardiac catherterization. Fatal bleedings have been reported. AGGRASTAT(R) should be used with caution in patients with platelet count <150,000/mm3, in patients with hemorrhagic retinopathy, and in chronic hemodialysis patients. Because AGGRASTAT(R) inhibits platelet aggregation, caution should be employed when it is used with other drugs that affect hemostasis. The safety of AGGRASTAT(R) when used in combination with thrombolytic agents has not been established. During therapy with AGGRASTAT(R), patients should be monitored for potential bleeding. When bleeding cannot be controlled with pressure, infusion of AGGRASTAT(R) and heparin should be discontinued. About GP IIb/IIIa Antagonists Platelets are blood cells that provide an early defense from the potential complications of vascular injury. When a blood vessel is damaged, platelets adhere to the site and promote blood clot formation. Clot formation prevents bleeding and recruits other cells to help heal the damage. While usually a beneficial process, this can be harmful when a clot forms on a ruptured lipid plaque within the coronary vasculature. GP IIb/IIIa antagonists block the ability of platelets to aggregate, inhibiting clot formation and reducing the potential for cardiac ischemia. Over the last 8-10 years, several large-scale, placebo-controlled clinical trials have established the efficacy of intravenous GP IIb/IIIa inhibitors for patients with acute coronary syndrome who are medically managed or those undergoing a percutaneous coronary intervention (PCI). PCI is one of the most frequent medical procedures, with approximately 650,000 procedures performed each year in the United States. When patients undergo PCI, damage is done to the vessel wall. When this occurs, the goal is to prevent platelets from sticking to the site, aggregating and potentially blocking the artery. About Guilford Guilford Pharmaceuticals Inc. is a fully integrated pharmaceutical company engaged in the research, development and commercialization of products that target the hospital and neurology markets. Presently, Guilford markets one commercial product, GLIADEL(R) Wafer, for the treatment of brain cancer (please see www.gliadel.com for more information), and has a product pipeline, which includes a novel anesthetic, AQUAVAN(R) Injection, and drugs for treating Parkinson's disease and post-prostatectomy erectile dysfunction. This press release contains forward-looking statements that involve risks and uncertainties, including those described in the section entitled "Risk Factors" contained in the Company's Current Report on Form 8-K filed with the SEC on June 11, 2003, that could cause the Company's actual results and experience to differ materially from anticipated results and expectations expressed in these forward-looking statements. Among other things, there can be no assurance that Guilford will be successful in its sales and marketing efforts related to AGGRASTAT(R), or in its efforts to expand the labeled indication for AGGRASTAT(R). CONTACT: Stacey Jurchison, Director, Corporate Communications, Guilford Pharmaceuticals, (410) 631-5022; jurchisons@guilfordpharm.com. www.guilfordpharm.com. -----END PRIVACY-ENHANCED MESSAGE-----

EX-2.01

                                                                    EXHIBIT 2.01


                      ASSET TRANSFER AND LICENSE AGREEMENT

                                 (AGGRASTAT(R))

                                     Between

                      MERCK & CO., INC.,

                      a New Jersey corporation
                      with an address at
                      One Merck Drive,
                      Whitehouse Station, New Jersey 08889,


                      and

                      GUILFORD PHARMACEUTICALS INC.
                      a Delaware corporation
                      with an address at
                      6611 Tributary Street
                      Baltimore, Maryland 21224



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                      ASSET TRANSFER AND LICENSE AGREEMENT

ASSET TRANSFER AND LICENSE AGREEMENT made effective this 28th day of October,
2003, by and between

                      MERCK & CO., INC.,
                      a New Jersey corporation
                      with an address at
                      One Merck Drive,
                      Whitehouse Station, New Jersey 08889,
                                                             ("Merck")

and

                      GUILFORD PHARMACEUTICALS INC.
                      a Delaware corporation
                      with an address at
                      6611 Tributary Street
                      Baltimore, Maryland 21224

                                                              ("Guilford")


RECITALS:

        WHEREAS, Merck desires to sell, convey, assign and transfer the Acquired
Assets (as defined in Section 1.1 hereof) to Guilford (or its designee, Artery
LLC) in accordance with the terms and conditions hereof and Guilford desires to
acquire and purchase (or to cause its designee, Artery LLC, to acquire and
purchase) the Acquired Assets in accordance with the terms and conditions
hereof; and

        WHEREAS, Guilford's willingness to enter into this Agreement is
conditioned on Merck's entering into the Supply Agreement (as defined herein)
and the Transition Services Agreement (as defined herein) contemporaneously with
this Agreement.


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        NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises and conditions set forth herein and intending to be legally bound
hereby, hereby covenant and agree as follows:

1       DEFINITIONS

        The following terms as used in this Agreement shall have the meanings
        set forth below:

        1.1     "ACQUIRED ASSETS" means all right, title and interest in and to
                (a) the Trademark, together with the goodwill of the business
                symbolized by the Trademark and any registrations or
                applications for registration of the Trademark, (b) the Assigned
                Patents, (c) the NDA, (d) the IND, (e) the Documentation, (f)
                the Marketing Materials, (g) the Logo, (h) the Clinical Data and
                Materials, and (i) the Acquired Domain Name.

        1.2     "ACQUIRED DOMAIN NAME" means the domain name "aggrastat.us."

        1.3     "AFFILIATE" of a Person means (i) any corporation or business
                entity of which fifty (50%) percent or more of the voting stock
                or other equity interest is owned directly or indirectly by such
                Person; or (ii) any corporation or business entity which
                directly or indirectly owns fifty (50%) percent or more of the
                voting stock or other equity interest of such Person; or (iii)
                any corporation or business entity under the direct or indirect
                control of a Person described in clause (i) or (ii), or (iv) any
                corporation or business entity under common control with a
                Person described in clause (i) or (ii).

        1.4     "AGREEMENT" or "THIS AGREEMENT" means this Asset Transfer and
                License Agreement, including all Schedules hereto.

        1.5     "API" shall have the meaning given such term in the Supply
                Agreement.

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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



        1.6     "APPLICABLE FOREIGN LAWS" means, with respect to any Foreign
                Patent held by Merck in any country outside the Territory, all
                applicable provisions of the generally applicable statutes,
                laws, rules and regulations of that country.

        1.7     "APPLICABLE LAWS" means, collectively, Applicable US Laws and
                Applicable Foreign Laws.

        1.8     "APPLICABLE US LAWS" shall mean all applicable provisions of the
                United States federal, state, territorial or local
                constitutions, statutes, laws, rules, regulations and orders of
                all Governmental Authorities and all applicable orders, rules
                and decrees of United States courts and arbitrators.

        1.9     "ARTERY LLC" means Artery LLC, a limited liability company
                organized and existing under the laws of the State of Delaware.

        1.10    "ASSIGNED PATENTS" means those United States patents, patent
                applications and statutory invention registrations, specifically
                described in Schedule 1.10 which, for the purpose of this
                Agreement, will be deemed to include any reissues, divisions,
                continuations, continuations-in-part, extensions and
                reexaminations thereof.

        1.11    "ASSUMED LIABILITIES" means, exclusively, all claims and
                complaints (including, without limitation, all damages, losses,
                expenses, adverse reactions, recalls, product and packaging
                complaints and other liabilities) made or brought after the
                Effective Date and arising out of the sale, purchase,
                consumption or use of the Product in the Territory; provided
                that if each of the sale, purchase, consumption or use of the
                Product out of which any such claim or complaint arises shall
                have occurred prior to the Effective Date, such claim or
                complaint shall not constitute an Assumed Liability.
                Notwithstanding the foregoing, Assumed Liabilities shall not
                include any claim or complaint arising from any Product that can
                be shown,



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                by reference to lot numbers or other documentary evidence, to
                have been sold by Merck on or prior to the Effective Date except
                to the extent that (A) such claim is based in whole or in part
                on the failure of Guilford to give Required Information or the
                giving by Guilford of Required Information inaccurately or
                improperly or in a misleading fashion after the Effective Date
                or (B) such claim is based in whole or in part on the failure of
                Merck to give Required Information or the giving by Merck of
                Required Information inaccurately or improperly or in a
                misleading fashion on or prior to the Effective Date if and only
                if the Required Information that was or should have been given
                by Merck is different from the information or warning that would
                have been Required Information under the same circumstances
                immediately prior to the Effective Date. For purposes of this
                Section 1.11, "Required Information" means any information or
                warning with respect to which the failure to give it to any
                Person, or the giving of it to any Person inaccurately or
                incompletely or in a misleading fashion, results under
                Applicable Law in a valid claim or complaint against the
                manufacturer and/or seller of the Product. Without limiting the
                foregoing, "Assumed Liabilities" does not include any claims or
                complaints which have given rise to litigation (or some other
                form of dispute resolution) prior to the Effective Date or as to
                which Merck has Recorded Information as of the Effective Date
                that litigation (or some other form of dispute resolution) has
                been threatened; and provided further that Assumed Liabilities
                shall not include liabilities for defective Manufacture of the
                Product by Merck prior to the Effective Date.

        1.12    "CLINICAL DATA AND MATERIALS" means the items described in
                Schedule 1.12.

        1.13    "CONFIDENTIAL INFORMATION" shall mean any and all confidential
                or proprietary information, trade secrets, know-how and data,
                whether oral, written or graphical,



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                disclosed or provided (prior to, on or after the Effective Date)
                by one party or its Affiliates, employees, attorneys, financial
                advisors, lenders or agents to the other party or its
                Affiliates, employees, attorneys, financial advisors, lenders or
                agents (including any analysis, materials, product or
                conclusions drawn or derived therefrom) or which may be derived
                from or related to any visits by personnel of one party to the
                location of the other or may be otherwise known to one party
                through its visits or contacts with the other.

        1.14    "CONTRACTS" means the contracts listed in Schedule 1.14.

        1.15    "COPYRIGHT LICENSE" shall have the meaning set forth in Section
                2.4.

        1.16    "COVERED INDICATION" means any platelet-mediated cardiovascular
                indication for the Product, existing prior to, on or after the
                Effective Date, including without limitation coronary artery
                disease, cerebrovascular disease and peripheral vascular
                disease.

        1.17    "DOCUMENTATION" means the items described in Schedule C hereto.

        1.18    "DOMAIN NAMES" means, collectively, the domain names
                "aggrastat.com," "aggrastat.info," "aggrastat.biz,"
                "agrastat.info" and "agrastat.biz" and the "DOMAIN NAME LICENSE"
                means the mutual licenses granted in Section 2.17.

        1.19    "DUPONT AGREEMENT" means the Termination and License Agreement
                by and between Merck, Merck and Company, Incorporated (a
                Delaware corporation), and DuPont Pharmaceuticals Company dated
                as of March 7, 2000. A copy of the DuPont Agreement has been
                provided to Guilford.

        1.20    "EFFECTIVE DATE" means the date of this Agreement.

        1.21    "EXCLUDED ASSETS" means all assets, property, rights and
                interests of Merck and its Affiliates other than the Acquired
                Assets and any copyrights licensed under the Copyright License,
                including, without limitation, all patents other than the



                                       5


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                Assigned Patents (including without limitation the Related
                Patents, other than to the extent of the Related Patent
                License), information, data, Marks (other than the Trademark and
                the Logo), copyrights, trade names, good will, intellectual
                property and proprietary rights, new drug applications and their
                equivalents, investigational new drug applications and their
                equivalents, NDC numbers and their equivalents, product
                registrations and other assets of Merck or its Affiliates not
                transferred as Acquired Assets hereunder.

        1.22    "EXCLUDED LIABILITIES" means all liabilities and obligations of
                Merck or its Affiliates other than Assumed Liabilities.

        1.23    "FDA" means the United States Food and Drug Administration.

        1.24    "FINAL ORDER" has the meaning set forth in Section 2.8.

        1.25    "FULLY ALLOCATED COST" shall have the meaning set forth in the
                Supply Agreement.

        1.26    "GENENTECH AGREEMENT" means the Research Agreement by and
                between Merck and Genentech, Inc. dated as of January 10, 2000.
                A copy of the Genentech Agreement has been provided to Guilford.

        1.27    "GOVERNMENTAL AUTHORITY" shall mean any foreign or domestic
                federal, territorial, state or local governmental authority,
                quasi-governmental authority or court, and any regulatory,
                administrative or other agency, or any political or other
                subdivision, department or branch, of any of the foregoing.


        1.28    "GUILFORD CONFIDENTIAL INFORMATION" shall mean (A) Confidential
                Information disclosed by Guilford or its Affiliates, employees,
                attorneys, financial advisors, lenders or agents to Merck or its
                Affiliates, employees, attorneys, financial advisors, lenders or
                agents, and (B) all Confidential Information and material
                contained in the Acquired Assets other than Manufacturing
                Information (including,



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                without limitation, the CMC section of the NDA), and (C) the
                terms and conditions of this Agreement and the other Transaction
                Documents set forth on Schedule 10.

        1.29    "HEADQUARTER SALES" shall mean the gross amounts invoiced by
                Merck on all direct sales of Product (including, but not limited
                to, hospital sales and sales to governmental entities,
                wholesalers, retailers and medical institutions), in the
                Territory during the applicable measurement period by Merck in
                arm's length sales to independent third parties in the trade, as
                per invoices, net of returns.

        1.30    "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
                of 1974, as amended, 15 U.S.C. 18A.

        1.31    "IND" means the investigational new drug application for the
                Product described in Schedule B including any amendments or
                supplements thereto, reports, correspondence and other
                submissions related thereto and the regulatory and clinical
                files and data pertaining to the foregoing in the possession or
                control of Merck or its Affiliates as of the Effective Date.
                including any and all information, data, know-how, formulations,
                assays, good will or intellectual property contained in the IND.

        1.32    "JOINT CONFIDENTIAL INFORMATION" shall mean all Manufacturing
                Information (including, without limitation, the CMC section of
                the NDA) contained in the Acquired Assets.

        1.33    "LIENS AND ENCUMBRANCES" means, with respect to the Acquired
                Assets, any mortgage, lien, license, pledge, charge, security
                interest or encumbrance of any kind, including, without
                limitation, the interest of a vendor or lessor under any
                conditional sale agreement, capital lease or other title
                retention agreement relating to such asset.




                                       7
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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



        1.34    "LOGO" means the graphic pattern associated with the Trademark
                as set forth in Schedule 1.34.

        1.35    "MANUFACTURE/MANUFACTURING/MANUFACTURED" shall have the meaning
                set forth in the Supply Agreement.

        1.36    "MANUFACTURING INFORMATION" means all data, information,
                specifications or certifications related to or useful in the
                Manufacture of the Product.

        1.37    "MARK" means a trademark, service mark, name, logo, design or
                trade dress.

        1.38    "MARKETING MATERIALS" means the materials listed in Schedule
                1.38.

        1.39    "MERCK CONFIDENTIAL INFORMATION" shall mean (A) Confidential
                Information disclosed by Merck or its Affiliates, employees,
                attorneys, financial advisors, lenders or agents to Guilford or
                its Affiliates, employees, attorneys, financial advisors,
                lenders or agents other than Guilford Confidential Information
                and Joint Confidential Information and (B) the terms and
                conditions of this Agreement and the other Transaction Documents
                set forth on Schedule 10.

        1.40    "MSD IRELAND" means Merck Sharpe & Dohme (Ireland) Limited, a
                corporation organized and existing under the laws of Bermuda.

        1.41    "NET SALES" means the gross amounts invoiced by Guilford or its
                successors or assigns on all sales of Product (including, but
                not limited to, hospital sales and sales to governmental
                entities, wholesalers, retailers, medical institutions and
                product sold through Merck pursuant to the Transition Services
                Agreement) during the applicable Calendar Year, less returns,
                allowances, chargebacks, GPO administrative fees, rebates and
                discounts actually paid to unaffiliated customers in arm's
                length transactions in the ordinary course of business.

        1.42    "NEW DRUG APPLICATION" and "NDA" means, collectively, the two
                new drug applications for the Product described in Schedule B
                including any amendments



                                       8

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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





                or supplements thereto, reports, correspondence and other
                submissions related thereto and the regulatory and clinical
                files and data pertaining to the foregoing in the possession or
                control of Merck or its Affiliates as of the Effective Date,
                including any and all information, data, know-how, formulations,
                assays, good will or intellectual property contained in the NDA.

        1.43    "NON-COVERED INDICATION" means any indication or claim for the
                Product other than a Covered Indication.

        1.44    "PATENT LICENSE" means the license granted to Merck in Section
                2.13.

        1.45    "PATENT RIGHTS" means patents and patent applications owned by
                or licensed to Merck, which claim, cover or relate to the
                Product.

        1.46    "PCI CLAIM" means a claim or indication for percutaneous
                coronary intervention.

        1.47    "PCI CLINICAL RESEARCH" shall have the meaning set forth in
                Section 9.13.

        1.48    "PCI DATA" means the results, information and data generated
                from PCI Clinical Research and included in the NDA and/or the
                IND.

        1.49    "PERSON" means an individual, a corporation, a partnership, an
                association, a trust, or other entity or organization, including
                a government or political subdivision or an agency or
                instrumentality thereof.

        1.50    "PROCESS PATENTS" means those United States patents and patent
                applications listed on Schedule 1.50.

        1.51    "PRODUCT" means:

                (a)     the chemical compound tirofiban hydrochloride, and

                (b)     the formulated solutions for intravenous injection or
                        infusion containing tirofiban hyrdrochloride as marketed
                        by Merck in the Territory prior to the Effective Date
                        under the trademark AGGRASTAT(R), and


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                (c)     any formulation of tirofiban hydrochloride, or any
                        derivative thereof (including but not limited to any
                        stereoisomers, either separated or combined, any
                        hydrates, any salts, any solvates and any crystal forms)
                        as monotherapy or in combination with any other
                        substance, that is distributed, marketed or sold in the
                        Territory after the Effective Date.

        1.52    "QUALITY AGREEMENT" means the Quality Agreement to be entered
                into by and between Merck and Guilford within thirty (30) days
                after the Effective Date, as such agreement may be amended,
                supplemented or otherwise modified.

        1.53    "REBATE" shall mean any discount, rebate, charge, cost, refund
                or credit required under any contract or by operation of law,
                including without limitation any rebate payable to a managed
                care organization pursuant to an agreement and any rebate or
                payment required under Federal law pursuant to the "Best Price"
                provisions of the Social Security Act, 42 U.S.C. Section 1398r-8
                and related provisions.

        1.54    "RECORDED INFORMATION" means information or data that is
                physically recorded or stored in a readable or retrievable form,
                including, without limitation, any information or data recorded
                in or on any writing, microfiche, computer disk, or electronic
                or optical storage media.

        1.55    "RELATED PATENTS" means those United States patents specifically
                described in Schedule 1.55, consisting of "LICENSED RELATED
                PATENTS" and "NON-LICENSED RELATED PATENTS" as set forth in
                Schedule 1.55.

        1.56    "RELATED PATENTS LICENSE" means the license granted to Guilford
                (or its designee, Artery LLC) in Section 2.26.

        1.57    "RETURNED PRODUCT" means (A) any Product sold by Merck before
                the Effective Date and returned to Guilford or to Merck within
                the time allowed for returns



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                under Merck's standard terms and conditions, and (B) any Product
                sold after the Effective Date by Guilford (including without
                limitation Product sold through Merck pursuant to the Transition
                Services Agreement) and returned to Guilford or to Merck within
                the time allowed for return under Merck's standard terms and
                conditions.

        1.58    "RPR AGREEMENT" means, collectively, the Supplies Agreement
                dated June 19, 1998 by and between Merck and Rhone-Poulenc-Rorer
                Pharmaceuticals, Inc. and the Supplies Agreement dated September
                22, 1999 by and between Merck and Rhone-Poulenc-Rorer
                Pharmaceuticals, Inc. A copy of the RPR Agreement has been
                provided to Guilford.

        1.59    "SECURITIES LAWS" means the United States Securities Act of
                1933, as amended, the United States Securities Exchange Act of
                1934, as amended, and any other similar law or regulation of a
                Governmental Authority in the Territory, or any successor to any
                such laws or regulations, together with any generally applicable
                rules, regulations or listing standards of any national or
                international securities exchange or The NASDAQ Stock Market.

        1.60    "SERIOUS" means, with respect to any experience or reaction, one
                which is fatal or life threatening, results in persistent or
                significant disability, requires inpatient hospitalization or
                prolongation of existing inpatient hospitalization, is a
                congenital anomaly, cancer, or the result of an overdose, or is
                another important medical event (even if not life-threatening,
                resulting in death, or requiring hospitalization) if, based upon
                appropriate medical judgments, such medical event may jeopardize
                the patient's or subject's health or may require medical or
                surgical intervention to prevent one of the other outcomes
                listed previously.



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



        1.61    "SUPPLIED PRODUCT" shall have the meaning given such term in the
                Supply Agreement.

        1.62    "SUPPLY AGREEMENT" means the Supply Agreement by and between MSD
                Ireland and Guilford executed contemporaneously herewith.

        1.63    "TACTICS" means the clinical trial that compared the cost of the
                application of the Product in early invasive treatment versus
                early conservative treatment of acute coronary syndrome.

        1.64    "TARGET" means the head-to-head clinical trial that compared the
                Product to ReoPro, with the intended purpose of showing that the
                Product was non-inferior to ReoPro in a PCI setting such that a
                PCI Claim could be obtained for the Product.

        1.65    "TARGET MATERIALS" means the Recorded Information described in
                Schedule 1.65.

        1.66    "TERRITORY" means the United States of America and its
                territories and possessions, including without limitation the
                Commonwealth of Puerto Rico, Guam and the U.S. Virgin Islands.

        1.67    "TRADEMARK" means the United States trademark and trademark
                registration for the Product as set forth in Schedule A and all
                amendments thereto, but does not include the names "Merck,"
                "Merck, Sharp & Dohme," "MSD," "MMD" or any other Marks
                belonging to Merck.

        1.68    "TRANSACTION DOCUMENTS" means this Agreement, the Supply
                Agreement, the Transition Services Agreement, the Quality
                Agreement, any agreements or documents prepared or executed
                pursuant to the transactions contemplated by such agreements,
                any exhibits or attachments to any of the foregoing and any
                other written agreement signed by Merck and Guilford that is
                expressly identified



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                as a Transaction Document, as any of the foregoing may be
                amended, supplemented or otherwise modified from time to time.

        1.69    "TRANSITION PERIOD" shall have the meaning given such term in
                the Transition Services Agreement.

        1.70    "TRANSITION SERVICES AGREEMENT" means the Transition Services
                Agreement between Merck and Guilford executed contemporaneously
                herewith as such agreement may be amended, supplemented or
                otherwise modified.

        1.71    "UNEXPECTED" means, with respect to any condition or
                development, one which is not listed in the then-current
                FDA-approved labeling for the Product, and includes those
                experiences or reactions that show a significant increase in
                incidence or severity over what appears on the labeling for the
                Product, or in NDA trials, or that reflect or suggest a failure
                of the Product to achieve claimed activity.

2       AGREEMENTS OF PARTIES

        2.1     PURCHASE AND SALE OF ACQUIRED ASSETS. On and subject to the
                terms and conditions set forth in Section 2.3 and elsewhere in
                this Agreement, Merck agrees to sell, convey, assign and
                transfer to Guilford (or its designee, Artery LLC) and Guilford
                agrees to acquire and purchase (or to cause its designee, Artery
                LLC, to acquire and purchase) on the Effective Date, the
                Acquired Assets; provided, however, that any information, data,
                know-how, formulas, assays, good will, or intellectual property
                contained in the IND or the NDA as of the Effective Date shall
                be used by Guilford or Artery LLC, as the case may be, and their
                respective successors and assigns, only for the purpose of (i)
                researching, developing, making, having made and commercializing
                the Product for (x)




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Exchange Commission.



                Covered Indications or (y) Non-Covered Indications for which
                Guilford has obtained first Marketing Authorization in
                accordance with Section 2.15, and (ii) any other activities
                performed by Guilford or its Affiliates prior to obtaining
                Marketing Authorization for a Non-Covered Indication that are
                reasonably and necessarily aimed at obtaining such Marketing
                Authorization and after obtaining Marketing Authorization to
                support commercialization in the Territory for such Non-Covered
                Indication.

        2.2     COVENANT NOT TO SUE WITH RESPECT TO NON-LICENSED RELATED PATENTS
                AND NEW PATENTS.

                (a)     Merck covenants that it will not initiate or prosecute
                        legal or regulatory action asserting claims seeking to
                        prohibit, limit or recover damages resulting from the
                        making, having made, using, selling, offering for sale
                        or promotion of the Product by Guilford, its Affiliates
                        partners, co-venturers, successors or permitted assigns
                        in the Territory based on the Non-Licensed Related
                        Patents under any Applicable Laws in the Territory
                        seeking either damages or equitable relief against
                        Guilford or its Affiliates, partners, co-venturers,
                        customers, successors or permitted assigns (i) with
                        respect to Covered Indications or (ii) with respect to
                        Non-Covered Indications for which Guilford has exclusive
                        rights pursuant to Section 2.15; provided, however, that
                        the foregoing covenant shall not apply to (x) making,
                        using, selling or offering to sell the API or (y)
                        making, using, selling or offering to sell any compound
                        on which Merck holds a patent or patent application in
                        the Territory other than the Product, and shall not
                        preclude Merck from seeking either damages or equitable
                        relief for any infringement of the Process Patents.
                        Merck shall require that any



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confidential portions have been submitted separately to the Securities and
Exchange Commission.



                        assignee of its interest in the Non-Licensed Related
                        Patents shall be bound by the foregoing covenant.

                (b)     Merck covenants that it will not initiate or prosecute
                        legal or regulatory action asserting claims seeking to
                        prohibit, limit or recover damages resulting from the
                        making, having made, using, selling, offering for sale
                        or promotion of the Product by Guilford, its Affiliates,
                        partners, co-venturers, successors or permitted assigns
                        in the Territory based on any new patents or patent
                        applications on the Product other than process patents
                        ("Merck New Patents") under any Applicable Laws in the
                        Territory seeking either damages or equitable relief
                        against Guilford or its Affiliates, partners,
                        co-venturers, customers, successors or permitted assigns
                        (i) with respect to Covered Indications or (ii) with
                        respect to Non-Covered Indications for which Guilford
                        has exclusive rights pursuant to Section 2.15; provided,
                        however, that the foregoing covenant shall not apply to
                        making, using, selling or offering to sell the API and
                        shall not preclude Merck from seeking either damages or
                        equitable relief for any infringement of the Process
                        Patents. Merck shall require that any assignee of its
                        interest in the Merck New Patents shall be bound by the
                        foregoing covenant.

                (c)     Guilford covenants that it will not initiate or
                        prosecute legal or regulatory action asserting claims
                        based on any new patents or patent applications on the
                        Product ("Guilford New Patents") under any Applicable
                        Laws in the Territory seeking either damages or
                        equitable relief against Merck or its Affiliates,
                        partners, co-venturers or customers seeking to prohibit,
                        limit or recover damages resulting from (i) Merck's use
                        of the Patent License



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confidential portions have been submitted separately to the Securities and
Exchange Commission.



                        granted pursuant to Section 2.13, or (ii) the making,
                        having made, using, selling, offering for sale or
                        promotion of the Product by Merck, its Affiliates,
                        partners or co-venturers in the Territory with respect
                        to Non-Covered Indications for which Merck has exclusive
                        rights pursuant to Section 2.15, or (iii) making and
                        having made the Product in the Territory for sale to
                        Guilford for the Territory or for sale by Merck, Merck's
                        Affiliates or a third party outside the Territory;
                        provided that Merck and its Affiliates will not sell,
                        market or distribute Product to any Person that Merck
                        knows intends to resell, market or distribute in the
                        Territory except to the extent expressly permitted by
                        Section 2.15 with respect to any Non-Covered Indication
                        for which Merck has obtained first Marketing
                        Authorization. Guilford shall require that any assignee
                        of its interest in the Guilford New Patents shall be
                        bound by the foregoing covenant.

                (d)     For purposes of subsections (b) and (c) above, "Merck
                        New Patents" and "Guilford New Patents" shall not
                        include patents or patent applications obtained by Merck
                        or Guilford, as the case may be, through purchase,
                        licensing, merger or consolidation or through the
                        acquisition of an Affiliate that obtained such patents
                        or patent applications prior to becoming an Affiliate,
                        if such patents or patent applications (x) relate to
                        Covered Indications and come into existence after the
                        Effective Date or (y) relate to Non-Covered Indications
                        regardless of when such patents or patent applications
                        come into existence; it being understood that the
                        limitation on the application of subsections (a) and (b)
                        above set forth in this subsection (c) shall not apply
                        to any patents or patent applications



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Exchange Commission.



                        existing as of the Effective Date to the extent that
                        such patents or patent applications relate to Covered
                        Indications.

        2.3     CONDITIONS AND RESERVATIONS.

                (a)     Guilford hereby grants to Merck a perpetual,
                        royalty-free, non-revocable, non-exclusive license in
                        the IND and the NDA, as each exists on the Effective
                        Date, to research the Product (including the performance
                        of clinical trials) inside or outside the Territory for
                        any purpose or indication, including Covered Indications
                        and Non-Covered Indications.

                (b)     The license described in subsection 2.3(a) shall be
                        inseparable from the NDA and the IND and shall run with
                        the NDA and IND in the event of any future transfer of
                        the NDA and/or IND.

                (c)     Merck reserves and retains the non-exclusive right to
                        use and reference the IND and the NDA and any
                        information, data, know-how, formulas, assays, good
                        will, or intellectual property contained in the IND or
                        the NDA as of the Effective Date for any purpose
                        (subject only to the restrictions on Merck's
                        post-Effective Date activities set forth in Section 6.1
                        and the payment requirement for reference and use of PCI
                        Data set forth in Section 9.13). For purposes of
                        clarification, it is acknowledged and agreed that the
                        right to use and reference information, data, know-how,
                        formulas, assays, good will or intellectual property
                        contained in the IND and the NDA retained by Merck
                        pursuant to this Section 2.3(c) relates solely to the
                        information, data, know-how, formulations, assays, good
                        will and intellectual property contained in the IND and
                        the NDA as of the Effective Date, and does not include
                        any such information, data, know-how, formulations,
                        assays, good will or intellectual property developed,



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Exchange Commission.



                        discovered, invented or otherwise included in the IND or
                        the NDA after the Effective Date.

                (d)     Merck hereby grants to Guilford a non-exclusive,
                        perpetual, non-revocable and royalty free license to any
                        clinical research conducted by Merck pursuant to Section
                        2.3(a) to the extent such research is applicable to
                        Covered Indications in the Territory; provided, however,
                        that in the event that the total cost of such clinical
                        research exceeds $10,000,000 and Guilford desires to
                        exercise its rights under such license, Guilford shall
                        notify Merck of such desire, and Merck shall then inform
                        Guilford of the total cost to Merck of such clinical
                        research. In consideration of the license granted
                        pursuant to the preceding sentence, Guilford shall pay
                        to Merck up to one-half of such total cost, the specific
                        amount of which shall be agreed to by the parties in
                        good faith in light of the proposed use by Guilford.

                (e)     Guilford shall have the right, through an independent
                        accounting firm that is reasonably acceptable to Merck,
                        to audit Merck upon reasonable notice in order to verify
                        the information provided to Guilford pursuant to Section
                        2.3(d). Such audit will be at Guilford's expense unless
                        it is determined that the cost figures provided to
                        Guilford overstated the actual cost by ten percent (10%)
                        or more, in which case the cost of the audit will be
                        paid by Merck.

        2.4     COPYRIGHT LICENSE. Merck has claimed an unregistered copyright
                in the product circular and labeling for the Product in the
                Territory and in certain of the Marketing Materials used for the
                Product in the Territory,



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confidential portions have been submitted separately to the Securities and
Exchange Commission.




                * or as part of the Acquired Assets. However, Merck makes no
                representation or warranty that such copyrights are valid or
                existing or that Merck is the holder of any valid registered or
                unregistered copyrights relating to the Product that would be
                useful or necessary to Guilford in the promotion and sale of the
                Product in the Territory (it being understood that many of the
                Marketing Materials were created by third parties who may claim
                a copyright or other rights in such materials). To the extent,
                if any, that any such copyrights exist and are valid and that
                Merck holds an interest in such copyrights, Merck hereby grants
                to Guilford a non-exclusive, perpetual, royalty-free license
                under such copyrights in the Territory solely in connection with
                the Manufacture, marketing, distribution, sale and promotion of
                the Product in the Territory (the "Copyright License");
                provided, however, that the Copyright License shall have no
                effect outside the Territory, including with respect to foreign
                copyrights that are owned by Merck and may be considered
                derivative of the copyrights licensed under the Copyright
                License.

        2.5     RESERVATION OF RIGHTS OUTSIDE THE TERRITORY. Subject to Article
                11, Merck reserves and retains all rights with respect to
                registrations, sales and all other property and activities
                relating to the Product outside the Territory. Nothing in this
                Agreement restricts Merck from making or having made (i) the
                Product, inside or outside the Territory, for sale outside the
                Territory, (ii) the API inside or outside the Territory, or
                (iii) the Product inside the Territory for sale to Guilford.

        2.6     RESERVATION OF RIGHTS: PROCESS PATENTS AND OTHER EXCLUDED
                ASSETS. Guilford shall not acquire pursuant to this Agreement
                any rights in the Process Patents. Merck shall retain the
                Excluded Assets.




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confidential portions have been submitted separately to the Securities and
Exchange Commission.



        2.7     RESERVATION OF RIGHTS: FOREIGN PATENTS. Subject to Article 11,
                it is understood that Guilford receives no rights by virtue of
                this Agreement in any countries outside the Territory. For
                greater certainty but without limiting the generality of
                anything otherwise contained herein, it is expressly understood
                and agreed that Merck and/or its Affiliates hold patents on or
                related to the Product in various countries outside the
                Territory ("Foreign Patents").

        2.8     GUILFORD COVENANTS REGARDING PROCESS PATENTS AND FOREIGN
                PATENTS. After the Effective Date and so long as Merck or any of
                its Affiliates shall hold a valid Foreign Patent or a valid
                Process Patent on the Product, Guilford and its Affiliates will
                not (A) sell, market or distribute the Product in any country
                (other than the Territory) in which a Foreign Patent is held by
                Merck or any of its Affiliates or (B) sell, market or distribute
                Product to any Person that Guilford or its Affiliates knows
                intends to resell, market or distribute in any country (other
                than the Territory) in which a Foreign Patent is held by Merck
                or any of its Affiliates, except to the extent Guilford or its
                Affiliates shall be compelled to sell, market or distribute any
                such Product by Applicable Laws; provided that Guilford shall
                promptly notify Merck if Guilford (or its Affiliates) shall
                determine that it is so compelled, or (C) infringe, take any
                action to intentionally invalidate, or cooperate with any third
                party in any action to infringe or invalidate, any Foreign
                Patent or Process Patent held by Merck or any of its Affiliates.
                For purposes of this Section 2.8, Merck or its Affiliate shall
                be deemed to hold a valid Process Patent on the Product until
                the earlier to occur of (a) expiration of such Process Patent
                under Applicable Law or (b) entry of a Final Order of a court
                having jurisdiction of the subject matter thereof declaring that
                such Process Patent is invalid; and Merck or its Affiliate shall
                be deemed to hold a valid Foreign Patent on the



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confidential portions have been submitted separately to the Securities and
Exchange Commission.



                Product until the earlier to occur of (a) expiration of such
                Foreign Patent under Applicable Foreign Law or (b) entry of a
                Final Order of a court having jurisdiction of the subject matter
                thereof declaring that such Foreign Patent is invalid. A "Final
                Order" means a dispositive order which is non-appealable, or as
                to which the time for appeal has expired, or which (if such
                order has been appealed) has been affirmed by the highest court
                to which such order may be appealed. In the event Guilford or
                its Affiliates shall be compelled by Applicable Laws to sell,
                market or distribute Product to any Person that Guilford or such
                Affiliate knows intends to resell, market or distribute in any
                country (other than the Territory) in which a Foreign Patent is
                held by Merck or any of its Affiliates, Guilford shall indemnify
                Merck for damages suffered as a result thereof, which damages
                shall be limited to Guilford's (or its Affiliate's) profits on
                any such sales.

        2.9     MERCK COVENANTS REGARDING ASSIGNED PATENTS. After the Effective
                Date and so long as Guilford or its Affiliates shall hold a
                valid Assigned Patent on the Product, Merck and its Affiliates
                will not (A) sell, market or distribute the Product in the
                Territory except to the extent expressly permitted under Section
                2.15 with respect to any Non-Covered Indication for which Merck
                has obtained first Marketing Authorization, (B) sell, market or
                distribute Product to any Person that Merck or its Affiliates
                knows intends to resell, market or distribute in the Territory
                except (i) to the extent expressly permitted by Section 2.15
                with respect to any Non-Covered Indication for which Merck has
                obtained first Marketing Authorization or (ii) to the extent
                Merck or its Affiliates shall be compelled to sell, market or
                distribute such Product by Applicable Laws; provided that Merck
                shall promptly notify Guilford if Merck (or any of its
                Affiliates) shall determine that it is so compelled, or (C)
                infringe, take any action to intentionally invalidate, or



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Exchange Commission.



                cooperate with any third party in any action to infringe or
                invalidate, any Assigned Patent held by Guilford or any of its
                Affiliates. For purposes of this Section 2.9, an Assigned Patent
                shall be deemed valid until the earlier to occur of (a)
                expiration of such Assigned Patent under Applicable Law or (b)
                entry of a Final Order of a court having jurisdiction of the
                subject matter thereof declaring that such Assigned Patent is
                invalid. In the event Merck or its Affiliates shall be compelled
                by Applicable Laws to sell, market or distribute Product to any
                Person that Merck or its Affiliates knows intends to resell,
                market or distribute in the Territory, Merck shall indemnify
                Guilford for damages suffered as a result thereof, which damages
                shall be limited to Merck's (or its Affiliate's) profits on any
                such sales.

        2.10    RESERVATION OF RIGHTS: MARKS OUTSIDE THE TERRITORY. Guilford is
                not acquiring any rights outside the Territory, and Merck and
                its Affiliates (and their successors and assigns) shall retain
                all rights outside the Territory, to the name "AGGRASTAT," the
                Logo and any other Marks used on or with the Product and all
                associated trademarks, service marks, trademark and service mark
                registrations and good will including without limitation the
                right to use, sell, alter, abandon or otherwise dispose of such
                name, trademarks, service marks, registrations and good will as
                Merck or its Affiliates may desire.

        2.11    *

        2.12    ACQUIRED ASSETS SUBJECT TO RPR AGREEMENT AND GENENTECH
                AGREEMENT. Guilford acquires the Acquired Assets hereunder
                subject to the RPR Agreement and the Genentech Agreement to the
                extent contemplated in this Section 2.12 and agrees to be bound,
                as the holder of the NDA after the Effective Date, by the
                following obligations: (i) the obligation to send, upon written
                request of RPR, a



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Exchange Commission.



                letter or letters to the FDA authorizing the FDA to
                cross-reference the NDA or the IND to the extent pertaining to
                the Study (as defined in the RPR Agreement), (ii) the obligation
                to send, upon written request of Genentech, notification to the
                FDA and each Agency (as defined in the Genentech Agreement)
                authorizing the FDA or any such Agency to cross-reference the
                NDA or the IND as necessary for the purposes of the Study (as
                defined in the Genentech Agreement) but not for any other
                purpose, (iii) the obligation to grant to Genentech the right to
                cross-reference the NDA or the IND, to the extent necessary for
                regulatory purposes, for the purpose of obtaining the Study's
                IND (as defined in the Genentech Agreement) and for such other
                purposes as authorized in the Genentech Agreement. Merck shall
                promptly notify Guilford of any requests for notification
                contemplated in this Section 2.12 received by Merck under the
                RPR Agreement and/or the Genentech Agreement, as the case may
                be, and Guilford shall promptly take all reasonable commercial
                actions to comply with such obligations.

        2.13    GRANT OF PATENT LICENSE.

                (a)     Subject to Section 2.15, Guilford hereby grants to Merck
                        a non-exclusive, perpetual license (the "Patent
                        License"), which shall be non-revocable and royalty
                        free, under the Assigned Patents (i) for research
                        purposes within the Territory, provided that such
                        research does not support commercialization of the
                        Product in the Territory, and (ii) for such purposes as
                        are reasonably necessary to support Merck's scientific
                        and commercial efforts outside the Territory.
                        Notwithstanding the foregoing, it is agreed and
                        understood that no rights are granted to Merck under the
                        Assigned Patents pursuant to this Section 2.13 (except
                        for such purposes as are reasonably necessary to support
                        Merck's scientific and commercial efforts outside the
                        Territory) to



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confidential portions have been submitted separately to the Securities and
Exchange Commission.



                        make, have made, use, sell, offer to sell or import the
                        Product or to develop, patent or otherwise seek
                        regulatory authorization for any derivatives of the
                        Product, where the derivative is itself claimed by the
                        Assigned Patents for Covered Indications.

                (b)     Merck hereby grants to Guilford a non-exclusive,
                        perpetual, non-revocable and royalty free license to any
                        clinical research conducted by Merck pursuant to Section
                        2.13(a) to the extent such research is applicable to
                        Covered Indications in the Territory.

        2.14    MANUFACTURING INFORMATION.

                Guilford is not acquiring any Patent Rights related to process
                or manufacture of the Product inside or outside the Territory.
                Except as otherwise provided in the Supply Agreement and subject
                to the terms and conditions set forth therein, Merck shall have
                no obligation to provide any Manufacturing Information to
                Guilford or provide any other assistance to Guilford related to
                Manufacture of the Product, on the Effective Date or at any time
                in the future.

        2.15    RESEARCH ON NON-COVERED INDICATIONS.

                (a)     If either party commences research on the Product with
                        respect to any Non-Covered Indication, such party will
                        promptly inform the other party generally about such
                        research, without any obligation to disclose proprietary
                        information about such research. In the event that
                        research conducted by either party leads to such party
                        obtaining Marketing Authorization (as defined below)
                        with respect to tirofiban hydrochloride for a
                        Non-Covered Indication, the party obtaining such
                        Marketing Authorization will have the exclusive right to
                        commercialize tirofiban hydrochloride in the Territory
                        for such Non-Covered Indication.

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Exchange Commission.




                (b)     Guilford hereby grants to Merck an exclusive, perpetual
                        license, which license shall be non-revocable and
                        royalty free, to the Assigned Patents for use and
                        commercialization of tirofiban hydrochloride in the
                        Territory for any Non-Covered Indication for which Merck
                        shall have obtained Marketing Authorization pursuant to
                        and in accordance with Section 2.15(a), without any
                        further action on the part of Guilford or Merck;
                        provided, that the license contemplated by this Section
                        2.15(b) shall not be effective unless and until Merck
                        shall obtain Marketing Authorization pursuant to Section
                        2.15(a). Such license shall be limited to any
                        Non-Covered Indication for which Marketing Authorization
                        has been obtained by Merck and shall be further subject
                        to any prior Marketing Authorization obtained by
                        Guilford for such Non-Covered Indication.

                (c)     For purposes of this Section 2.15, "Marketing
                        Authorization" of a Non-Covered Indication shall mean
                        the approval by the FDA of a new drug application for
                        the development, Manufacture, marketing, sale and
                        distribution of tirofiban hydrochloride in the Territory
                        for such Non-Covered Indication.

                (d)     Guilford covenants that it or its Affiliates will not
                        initiate or prosecute any legal or regulatory action
                        asserting claims based on the NDA or the Assigned
                        Patents, the Related Patents, or the New Guilford
                        Patents under any Applicable Laws in the Territory
                        seeking either damages or equitable relief to prohibit,
                        limit or recover damages resulting from any research or
                        other activities performed by Merck or its Affiliates
                        prior to obtaining Marketing Authorization for a
                        Non-Covered Indication that are reasonably and
                        necessarily aimed at obtaining such Marketing



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Exchange Commission.



                        Authorization and after obtaining Marketing
                        Authorization to support commercialization in the
                        Territory for such Non-Covered Indication. Guilford
                        shall require that any assignee of its interest in the
                        Assigned Patents, the Related Patents or the Guilford
                        New Patents shall be bound by the foregoing covenant.

        2.16    TRANSFER OF RIGHTS IN LOGO. It is understood and agreed that the
                Logo is not a registered trademark in the Territory. Merck has
                used the Logo in association with the Trademark but Merck does
                not represent that it has any rights whatsoever in the Logo in
                the Territory. To the extent, if any, that Merck may have
                acquired any rights in the Logo in the nature of a common law
                Mark, Merck shall assign such rights in the Territory to
                Guilford in the Trademark Assignment to be delivered to Guilford
                on the Effective Date pursuant to Section 3.1. Such assignment
                is in the nature of a quitclaim and carries no representations
                or warranties of any kind whatsoever.

        2.17    RIGHTS IN DOMAIN NAMES. Merck shall retain ownership of the
                Domain Names inside and outside the Territory. Merck shall have
                the exclusive right to maintain websites and web addresses using
                the Domain Names. Any such websites or web addresses shall be
                maintained so that a user who arrives at the website shall first
                encounter a screen in which the user is given a choice between
                "Aggrastat(R) in the United States" and "Aggrastat(R) Outside
                the United States." Users choosing "Aggrastat(R) in the United
                States" shall have the opportunity to click on a link to a
                website owned and maintained by Guilford. Merck shall maintain
                the "aggrastat.com" domain name and the website and web address
                associated therewith in the manner contemplated above without
                charge to Guilford for so long as Merck markets the Product
                outside the Territory under the



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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                name "Aggrastat," provided that Merck shall have the right (A)
                to abandon any of the Domain Names at any time and in such event
                Merck shall notify Guilford and offer to sell its rights in any
                such Domain Names to Guilford for $1.00, and (B) to transfer any
                of the Domain Names to another party that purchases Merck's
                rights in the Product in any country or countries outside the
                Territory (subject to Guilford's rights set forth in this
                Section 2.17 and Sections 11.1 and 11.2 hereof) and in such
                event Merck shall require such party to agree to perform Merck's
                obligations with respect to the Domain Names under this Section
                2.17. Guilford hereby grants to Merck a royalty-free,
                non-revocable, non-exclusive license in the Trademark and the
                name "Aggrastat" in the Territory for the limited purpose of
                using such Trademark and name in the Domain Names and on the
                websites identified with the Domain Names; such license will
                last as long as Merck owns the Domain Names and shall be
                sub-licensable (subject to Sections 11.1 and 11.2) to any party
                that purchases Merck's rights in the Product in any country or
                countries outside the Territory. Merck hereby represents that
                except for the Domain Name "aggrastat.com," the Domain Names are
                inactive as of the Effective Date and that there are no active
                websites or web addresses associated with any such Domain Names.
                Except as otherwise provided above with respect to the
                "aggrastat.com" domain name, nothing in this Agreement shall
                require Merck to maintain the Domain Names as active domain
                names or to activate websites accessible through such Domain
                Names.

        2.18    ASSUMPTION OF LIABILITIES. On the terms and subject to the
                conditions of this Agreement, as of the Effective Date, Guilford
                shall assume the Assumed Liabilities and Merck shall remain
                responsible and liable for the Excluded Liabilities.



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



        2.19    INITIAL PURCHASE PRICE AND ROYALTY PAYMENTS.

                (a) Initial Purchase Price. Subject to adjustment in accordance
                with Section 2.19(b), in partial consideration for the transfer
                of the Acquired Assets and the licenses granted to Guilford by
                Merck hereunder, Guilford shall pay Merck the sum of eighty
                million, three hundred thousand dollars ($80,300,000.00) plus
                (A) $11,000 for certain IMS Data previously provided to
                Guilford, and (B) $150,000 for certain administrative services
                to be performed by Merck, and less (i) $62,500.00 representing
                50% of the fee paid to the Federal Trade Commission by Guilford
                pursuant to the HSR Act, and (ii) the amount of any adjustments
                pursuant to Section 2.19(b) (the "Initial Purchase Price").

                (b) Adjustment to Initial Purchase Price in the event of
                Unanticipated Sales. The Initial Purchase Price will be reduced
                by a proportionate share of Net Unanticipated October Sales, if
                any, determined based on the number of days elapsed in October
                as of the Effective Date.

                        Definitions:

                        "Unanticipated October Sales" means the amount, if any,
                        by which Headquarter Sales during October 2003 exceeds
                        $2,500,000.00; provided that in the event the Effective
                        Date shall occur prior to October 31, 2003, the
                        $2,500,000.00 threshold shall be proportionately reduced
                        based upon the number of days in October elapsed as of
                        the Effective Date.

                        "Net Unanticipated October Sales" means Unanticipated
                        October Sales reduced by (A) chargebacks, GPO
                        administrative fees, rebates and



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Exchange Commission.





                        discounts granted or accrued with respect to
                        Unanticipated October Sales and (B) the Fully Allocated
                        Cost of Unanticipated October Sales.

                (c) Payment of Initial Purchase Price. On the Effective Date,
                Guilford shall pay the Initial Purchase Price, less any
                adjustment required by Section 2.19(b), by wire transfer as set
                forth in Section 2.20. Merck shall certify at the Effective Date
                the Net Unanticipated October Sales, if any, in such detail as
                shall be reasonably requested by Guilford.

                (d) Royalty Payments.

                (i) In further consideration for the transfer of the Acquired
                Assets and the licenses granted to Guilford by Merck hereunder,
                Guilford shall pay royalty payments to Merck on Net Sales in
                each Calendar Year commencing with 2004 and continuing until the
                earlier of (i) expiration of the last to expire of the Assigned
                Patents, or (ii) the date of entry of a Final Order of a court
                in the Territory having jurisdiction of the subject matter
                thereof declaring the last of the Assigned Patents invalid under
                Applicable US Law ("Royalty Payments"), calculated as a
                percentage of Net Sales in such Calendar Year, as follows:

                Royalty Payments for Calendar Years 2004, 2005 and 2006

                0% of Net Sales up to $40,000,000 ("Initial Threshold");

                10% of Net Sales in excess of $40,000,000 and less than
                $50,000,000;

                12% of Net Sales in excess of $50,000,000 and less than
                $75,000,000;

                14% of Net Sales in excess of $75,000,000 and less than
                $100,000,000; and

                20% of Net Sales over $100,000,000.



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                Royalty Payments for Calendar Years 2007 and succeeding Calendar
                Years

                5% of Net Sales up to $28,000,000;

                10% of Net Sales in excess of $28,000,000 and less than
                $50,000,000;

                12% of Net Sales in excess of $50,000,000 and less than
                $75,000,000;

                14% of Net Sales in excess of $75,000,000 and less than
                $100,000,000; and

                20% of Net Sales over $100,000,000.

                (ii) Royalty Payments shall be payable not more than forty-five
                (45) days following the end of each calendar quarter, provided
                however that with respect to 2004, 2005 and 2006, Royalty
                Payments shall be payable not more than forty-five (45) days
                following the end of (x) the calendar quarter in which Net Sales
                first exceed the Initial Threshold and (y) each succeeding
                calendar quarter. Royalty Payments will be accompanied by a
                Quarterly Statement as provided in Section 3.13.

                (e) Royalty Payments for Combination Product. In the event that
                Guilford markets, distributes or sells a formulation in which
                tirofiban hydrochloride or any derivative thereof is present in
                combination with another substance ("Combination Product"), the
                Royalty Payment payable on account of Net Sales of such Product
                shall be based on the amount of tirofiban hydrochloride (or any
                derivative thereof) in the Combination Product, as follows:
                First, the amount of tirofiban hydrochloride (or any derivative
                thereof) in the Combination Product shall be compared to the
                amount in each available monotherapy Product in order to
                identify the available monotherapy Product that comes closest to
                having the



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                same amount of tirofiban hydrochloride (or any derivative
                thereof) (the "Benchmark Product"); second, the number of
                milliliters of tirofiban hydrochloride (or any derivative
                thereof) in the Combination Product shall be divided by the
                number of milliliters of tirofiban hydrochloride (or any
                derivative thereof) in the Benchmark Product, and the resulting
                fraction shall be multiplied by the Royalty Payment that would
                be due for the same number of units of the Benchmark Product.
                For example, if Guilford currently sells a monotherapy Product
                containing 100mL of tirofiban hydrochloride and another
                monotherapy Product containing 250mL of tirofiban hydrochloride,
                and the Combination Product contains 125mL of tirofiban
                hydrochloride, then the Benchmark Product would be the 100mL
                dosage formulation, and the Royalty Payment for the Combination
                Product would be 125/100 or 125% of the Royalty Payment for the
                same number of units of the Benchmark Product.

        2.20    FORM OF PAYMENTS.

                (a) The Initial Purchase Price shall be paid by Guilford to
                Merck by *; Reference: Sale of Aggrastat(R) to Guilford
                Pharmaceuticals Inc., October 28, 2003.

                (b) Royalty Payments shall be paid by Guilford to Merck by
                Federal wire of funds in the manner set forth in paragraph (a)
                for the Initial Purchase Price or otherwise as may be specified
                in writing by Merck from time to time.

        2.21    HART-SCOTT-RODINO COMPLIANCE

                Prior to the execution of this Agreement, Merck and Guilford
                have notified the Federal Trade Commission ("FTC") of the
                transaction which forms the basis of this Agreement in
                accordance with the requirements of the HSR Act. Guilford



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Exchange Commission.



                and Merck shall equally share the fee required for such
                notification, which is stipulated and agreed to be $125,000, 50%
                of which shall be deducted from the Initial Purchase Price
                pursuant to Section 2.19(a). Each party shall be responsible for
                the payment of its own attorney fees in connection with any HSR
                filing or other activities pursuant to the HSR Act.

        2.22    ALLOCATION

                The parties shall make reasonable efforts in good faith to agree
                upon the allocation of the purchase price for all tax purposes
                and in any and all filings, declarations and reports with the
                Internal Revenue Service (the "IRS") in respect thereof,
                including the reports required to be filed under Section 1060 of
                the Internal Revenue Code, as amended, if applicable, it being
                understood that neither party can assure the other that
                agreement can be reached upon such allocation. If agreement is
                reached upon such allocation, then in any proceeding related to
                the determination of any tax, neither party shall, except to the
                extent required by Applicable Laws (for example, if previously
                unknown information affecting such allocation, or mathematical
                errors underlying such allocation, should be learned), contend
                or represent that such allocation is incorrect.

        2.23    *

                *:

                (a)     *;

                (b)     *; and

                (c)     *.

                *.

                *:



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                (a)     *;

                (b)     *;

                (c)     *; or

                (d)     *.

                *

        2.24    IDENTIFICATION OF SCHEDULED ACQUIRED ASSETS

                Merck prepared each of the Schedules setting forth the Acquired
                Assets (the "Acquired Assets Schedules") so as to identify those
                types of assets in the possession or control of Merck and its
                Affiliates used in the distribution, use, sale, offer for sale
                and marketing (but not the manufacture) of the Product in the
                Territory. In the event that after the Effective Date it is
                determined that an asset of such type should have been included
                in the Acquired Assets but was inadvertently omitted from the
                Acquired Assets Schedules, Merck and Guilford shall negotiate in
                good faith an amendment to the relevant Acquired Asset Schedule
                to incorporate such asset thereon.

        2.25    RIGHTS TO PRODUCT IN THE TERRITORY

                The Parties acknowledge and agree that GUILFORD shall have the
                sole and exclusive right from and after the Effective Date to
                represent to third parties that GUILFORD has acquired all rights
                to, and is the successor to Merck with respect to, the Product
                in the Territory, without reservation by Merck of any lien,
                security interest or right of reversion therein.

        2.26    LICENSE TO LICENSED RELATED PATENTS. Merck hereby grants to
                Guilford a perpetual, royalty-free, exclusive license in the
                Territory under the Licensed Related Patents to use, sell, offer
                to sell or import Product in the Territory solely



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                for (i) Covered Indications, (ii) Non-Covered Indications for
                which Guilford has obtained first Marketing Authorization in
                accordance with Section 2.15, and (iii) any other activities
                performed by Guilford or its Affiliates prior to obtaining
                Marketing Authorization for a Non-Covered Indication that are
                reasonably and necessarily aimed at obtaining such Marketing
                Authorization and after obtaining Marketing Authorization to
                support commercialization in the Territory for such Non-Covered
                Indication. Notwithstanding anything contained in this
                Agreement, Merck shall have no obligation to maintain any of the
                Related Patents; provided that in the event Merck shall abandon
                any of the Related Patents, Merck shall provide prior written
                notice to Guilford and Guilford shall have the right to elect,
                upon written notice to Merck, to assume maintenance of such
                Related Patents, including payment of any maintenance fees
                associated therewith.

        2.27    SUBLICENSE TO DUPONT AGREEMENT, RPR AGREEMENT AND GENENTECH
                AGREEMENT. Solely to the extent permitted by each of the DuPont
                Agreement, the Genentech Agreement and the RPR Agreement, Merck
                grants to Guilford a non-exclusive, non-transferable,
                non-sublicensable license in the Territory of any sub-licensable
                rights granted to Merck under the foregoing Agreements to use,
                sell, offer to sell and import Product in the Territory solely
                for (i) Covered Indications, (ii) Non-Covered Indications for
                which Guilford has obtained first Marketing Authorization in
                accordance with Section 2.15, and (iii) any other activities
                performed by Guilford or its Affiliates prior to obtaining
                Marketing Authorization for a Non-Covered Indication that are
                reasonably and necessarily aimed at obtaining such Marketing
                Authorization and after obtaining Marketing Authorization to
                support commercialization in the Territory for such Non-Covered
                Indication. Notwithstanding anything contained in this
                Agreement, Merck shall



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Exchange Commission.



                have no obligation to prevent the lapse or termination of its
                rights including but not limited to its right to sublicense
                rights under the foregoing Agreements; provided, that Merck
                shall not take any affirmative action to waive or otherwise
                terminate any such rights.

        2.28    *

                *

        2.29    *

                *

        2.30    *

                (a)     *

                (b)     *

                (c)     *

3       EFFECTIVE DATE, EFFECTIVENESS, DELIVERY OF ACQUIRED ASSETS

        EFFECTIVE DATE

        3.1     The parties hereby acknowledge the execution and delivery to the
                other of the Supply Agreement and the Transition Services
                Agreement contemporaneously with this Agreement.

        3.2     Guilford hereby acknowledges the execution and/or delivery by
                Merck to Guilford (or its designee) of the following
                contemporaneously with this Agreement except as otherwise noted
                below:

                (a)     an appropriately executed Trademark Assignment in the
                        form of Schedule D (the "Trademark Assignment"),

                (b)     an appropriately executed Patent Assignment for the
                        Assigned Patents in the form of Schedule E (the "Patent
                        Assignment"),

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                (c)     an assignment and bill of sale for the NDA, the IND, the
                        Documentation, the Marketing Materials, the Clinical
                        Data and Materials and the Acquired Domain Name in the
                        form attached hereto as Schedule F.

                (d)     a written notice to the FDA executed by Merck,
                        substantially in the form attached hereto as Schedule
                        3.2(d), of the transfer of title to the NDA and the IND
                        from Merck to Guilford (or its designee),

                (e)     a true and complete copy of the TARGET Data and the
                        TARGET Materials, except for the redaction of specific
                        patient information as required to protect patient
                        privacy,

                (f)     the certificate regarding Net Unanticipated October
                        Sales as contemplated in Section 2.19(b),

                (g)     those Acquired Assets specifically identified on
                        Schedule 3.2(g) as necessary for delivery on the
                        Effective Date, and

                (h)     if available on the Effective Date, all Acquired Assets
                        other than those identified as necessary for delivery on
                        the Effective Date ("Additional Deliverables"). In the
                        event that the Additional Deliverables have not been
                        delivered on the Effective Date, Merck shall cause the
                        delivery thereof to occur within thirty (30) days of the
                        Effective Date pursuant to Section 3.6.

        3.3     Merck hereby acknowledges the execution and/or delivery by
                Guilford to Merck of the following:

                (a)     the Initial Purchase Price as set forth in Section 2.19,
                        and

                (b)     a written notice to the FDA executed by Guilford,
                        substantially in the form attached hereto as Schedule
                        3.3, of the transfer of title to the NDA and the IND
                        from Merck to Guilford.



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        3.4     Guilford shall pay or cause to be paid any and all transfer,
                stamp, sales or other similar taxes or duties payable in
                connection with the sale or transfer of the Acquired Assets to
                Guilford (or its designee), as well as any and all third-party
                costs and expenses relating to the transfer and assignment to
                Guilford (or its designee) of the Trademark and the Assigned
                Patents, including, without limitation, all costs and taxes with
                respect to recordation of transfer. Recordation of transfer and
                assignment of the Trademark and the Assigned Patents shall be
                the responsibility of Guilford.

        STEPS TO BE TAKEN AFTER THE EFFECTIVE DATE

        3.5     On or immediately following the Effective Date, and in any event
                within one (1) business day after the Effective Date, Guilford
                and Merck shall each deliver to the FDA written notices,
                substantially in the forms attached hereto as Schedules 3.2(d)
                and 3.3, of the transfer of title to the NDA and the IND from
                Merck to Guilford.

        3.6     As soon as practicable on or after the Effective Date, and in no
                event later than thirty (30) days after the Effective Date,
                Merck shall deliver to Guilford any Additional Deliverables
                (other than those to be delivered pursuant to Section 2.30) not
                delivered on the Effective Date, by shipment to a destination in
                the United States specified by Guilford. Copying and shipment of
                any Acquired Assets shall be at Merck's expense. Notwithstanding
                any provision of this Agreement to the contrary, Merck shall
                have the right to retain the original TARGET database and one
                copy of the other Additional Deliverables for its records,
                subject to the provisions of Section 10.2 hereof.

        3.8     Any information regarding Adverse Experiences for the Product
                received by Merck before the Effective Date but not yet reported
                to the FDA as of the



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                Effective Date shall be provided to Guilford as soon as
                practicable, and no event later than fifteen (15) days, after
                the Effective Date.

        3.9     Merck will, immediately after the Effective Date, and in any
                event within two (2) days of the Effective Date, distribute to
                the other parties to the Contracts a letter in the form attached
                hereto as Schedule 3.9. Any other notices to such parties or
                other customers will be the responsibility of Guilford.

        FURTHER ASSURANCES

        3.10    Each of Merck and Guilford shall, at any time or from time to
                time after the Effective Date, at the request and expense of the
                other, execute and deliver to the other all such instruments and
                documents or further assurances as the other party may
                reasonably request in order to sell, assign and transfer to
                Guilford the Acquired Assets as contemplated hereby; provided,
                however, that after the Effective Date, apart from such
                customary further assurances, Merck shall have no other
                obligations (including without limitation any obligation to
                provide technical or other assistance to Guilford) except as
                specifically set forth and described herein or in the Supply
                Agreement or the Transition Services Agreement.

        COOPERATION WITH RESPECT TO ACQUIRED ASSETS AND ASSUMED LIABILITIES

        3.11    From and after the Effective Date, each party shall make
                available to the other party during normal business hours and
                upon reasonable prior written notice, but without unreasonably
                disrupting its business, all records as to the Acquired Assets
                and Assumed Liabilities held by it and reasonably necessary to
                permit the defense or investigation of any litigation, hearing,
                regulatory proceeding or investigation directly relating to any
                of such assets or liabilities and shall preserve



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                and retain all such records for the length of time contemplated
                by their standard record retention policies and schedules;
                provided, however, that in no event shall Merck be required to
                supply any Manufacturing Information to Guilford or to assist
                Guilford in any validation process or other regulatory process
                or proceeding related to the Manufacture of the Product or any
                other product except as specifically set forth herein or in any
                of the other Transaction Documents. Each party will give prompt
                written notice to the other party of any litigation or
                regulatory proceeding (including without limitation any
                investigation, inspection or other administrative review of any
                Governmental Authority) in which such party is involved as a
                party that directly concerns, and might materially and adversely
                affect, the Product or the Acquired Assets or Guilford's rights
                in the same.

        3.12    MERCK RECORDKEEPING REQUIREMENTS; GUILFORD AUDIT RIGHTS. During
                the period when Merck provides administrative functions pursuant
                to Article 9, Merck shall keep complete, accurate and detailed
                records (in addition to any records required to be kept pursuant
                to the Transition Agreement) of all matters within Merck's
                administration under Article 9 (including chargebacks, GPO
                administrative fees, discounts and rebates, product returns and
                accounts payable and receivable) and shall retain such records
                for a reasonable time thereafter. Such records shall be kept in
                sufficient detail to permit independent audit of such records.
                Merck shall, at Guilford's request and expense, make such
                records available for examination upon reasonable notice during
                normal business hours by Guilford or its independent certified
                public accountants or auditors designated by Guilford and
                approved by Merck, which approval shall not be unreasonably
                withheld or delayed.



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        3.13    GUILFORD RECORDKEEPING AND REPORTING REQUIREMENTS; MERCK AUDIT
                RIGHTS; QUARTERLY STATEMENTS.

        (a)     Guilford recordkeeping requirements; Merck audit rights.
                Guilford shall keep complete and accurate books and records of
                all Net Sales of the Product and all items necessary to
                accurately calculate Net Sales in accordance with generally
                accepted accounting practices consistently applied (except to
                the extent that the computation of Net Sales in accordance with
                Section 1.36 requires recordkeeping on a cash rather than
                accrual basis), including without limitation records of the
                gross amounts invoiced on all sales of Product, the prices in
                effect from time to time, the gross revenue derived from sales
                of the Product, returns, allowances, chargebacks, GPO
                administrative fees, rebates and discounts actually paid to
                unaffiliated customers in arm's length transactions in the
                ordinary course of business, and all other information used or
                necessary to be used in computing Net Sales or Royalty Payments,
                and shall retain such records for a reasonable time. Guilford
                shall, at Merck's request and expense, make all such records
                available for examination (not more often than once every two
                years) upon reasonable notice during normal business hours by
                Merck or its independent certified public accountants or
                auditors designated by Merck and approved by Guilford, which
                approval shall not be unreasonably withheld or delayed;
                provided, however, that any claim for unpaid or inadequate
                Royalty Payments will not be deemed to arise until the date when
                Merck shall have discovered such shortfall or lack of payment.

        (b)     Quarterly statements. Not more than forty-five (45) days after
                the end of each calendar quarter after the Effective Date
                (regardless of whether a Royalty Payment is payable with respect
                to such calendar quarter), Guilford shall furnish



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Exchange Commission.



                to Merck a statement which shall contain the following
                information: total gross sales of Product in the Territory
                during such calendar quarter; the unit price for Product in
                effect in the Territory from time to time during such calendar
                quarter; all returns, allowances, chargebacks, GPO
                administrative fees, rebates and discounts actually paid to
                unaffiliated customers in arm's length transactions in the
                ordinary course of business during such calendar quarter; and
                any other information used or necessary to be used in computing
                Net Sales or Royalty Payments for such calendar quarter.

4       MERCK'S REPRESENTATIONS AND WARRANTIES

        4.1     Merck represents and warrants as of the Effective Date, that:

                (a)     Merck is a corporation duly organized, validly existing
                        and in good standing under the laws of the State of New
                        Jersey.

                (b)     The execution, delivery and performance by Merck of this
                        Agreement and each of the Transaction Documents to which
                        Merck is a party are within Merck's corporate power,
                        have been duly authorized by all necessary corporate
                        action and do not contravene or constitute a default
                        under any provision of the certificate of incorporation
                        or by-laws of Merck or any provision of Applicable Law
                        or regulation or of any judgment, injunction, order or
                        decree binding upon Merck or to which any Acquired Asset
                        is subject, or any indenture, bank loan, credit, or
                        other agreement binding upon Merck or to which any
                        Acquired Asset is subject. This Agreement and each of
                        the Transaction Documents to which Merck is a party is a
                        legal, valid and binding agreement of Merck enforceable
                        in accordance with its terms.

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                (c)     Except for the requirement that both Guilford and Merck
                        provide written notice to the FDA of the transfer of the
                        NDA from Merck to Guilford, the execution, delivery and
                        performance by Merck of this Agreement and the other
                        Transaction Documents, and the consummation by Merck of
                        the transactions contemplated hereby and thereby,
                        require no action by or in respect of, or filing with,
                        any governmental body, agency or official or any other
                        consent of any Person, firm or other entity.

                (d)     Merck is the legal and beneficial owner of the Acquired
                        Assets (other than the Logo, with respect to which Merck
                        makes no representations), free and clear of all Liens
                        and Encumbrances.

                (e)     The Marketing Materials consist of, in addition to all
                        promotional materials submitted to the FDA which are
                        included on Schedule C, (1) at least one copy of all
                        promotional materials used by Merck sales
                        representatives in 2002 (subject to certain notations
                        included on the hard copies thereof), (2) all clinical
                        reprints used in promotion of the Product in 2002, (3)
                        all available materials used for training of sales
                        representatives, (4) all available syndicated market
                        research, (5) sales records for the period 1998-2002
                        (including account level sales data for 2000-2002) and
                        (6) customer lists for 2002.

                (f)     The TARGET Materials consist of (1) a copy of the TARGET
                        database (redacted to delete patient-identifiable
                        information), (2) to the extent existing in WORF as of
                        the Effective Date, completed case report forms (or
                        copies thereof) completed in connection with the TARGET
                        trial (redacted to delete patient-identifiable
                        information), (3) all analysis and correspondence
                        between Merck and the FDA relating to the TARGET



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                        study (except to the extent included in the NDA, it
                        being understood that Merck believes all such analysis
                        and correspondence is included in the NDA), and (4) the
                        two Statistical Analysis Software ("SAS") Codes
                        necessary to access the TARGET database. Except for the
                        redaction of specific patient information as required to
                        protect patient privacy, the copy of the TARGET database
                        and the other TARGET Materials provided to Guilford on
                        the Effective Date represents a complete, true and
                        accurate copy of all such materials (it being understood
                        and agreed that if completed case report forms (or
                        copies thereof) completed in connection with the TARGET
                        trial do not exist in the WORF, Merck will cooperate
                        with Guilford to attempt to obtain a copy thereof from
                        the Cleveland Clinic).

                (g)     The Clinical Data and Materials, together with the
                        TARGET Materials, the NDA and the IND, include, except
                        for the TACTICS Materials and the Clinical Research
                        Materials, (i) all documentation or other written
                        evidence of ongoing research and development with
                        respect to the Product as of the Effective Date in the
                        WORF or specifically set forth on Schedule 1.12, and
                        (ii) the results of all clinical trials or studies
                        conducted by Merck with respect to the Product prior to
                        the Effective Date (including all Recorded Information
                        related thereto) in the WORF or specifically set forth
                        on Schedule 1.12.

                (h)     The Documentation includes those documents,
                        instrumentation, files and records relating to the
                        Trademark and Assigned Patents (including all patent
                        prosecution files for Assigned Patents and the original
                        issued patent certificates therefor), FDA regulatory
                        processes relating to the


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                        promotion of the Product, litigation files, and medical
                        inquiries and responses, in each case relating to the
                        Product in the Territory in the possession and control
                        of Merck or its Affiliates as of the Effective Date,
                        that Merck in its reasonable judgment believes to be
                        material to the sale, market or use of the Product in
                        the Territory.

                (i)     Merck is the owner of the Assigned Patents, the
                        Trademark, the NDA, the IND, the Marketing Materials,
                        the TARGET Data and the TARGET Materials, the Clinical
                        Data and Materials, the Documentation and the Related
                        Patents and has the right to assign or license, as
                        applicable, such assets to Guilford without the consent
                        of any third Person.

                (j)     Except as set forth on Schedule 4.1(j), there is no
                        claim pending or, to the knowledge of Merck based on
                        Recorded Information, threatened, that the use of the
                        Assigned Patents, the Trademark, the NDA, the IND, the
                        Marketing Materials, the TARGET Materials, the TARGET
                        Data, the Clinical Data and Materials, the Documentation
                        the Logo or the Acquired Domain Name in the manner
                        heretofore used by Merck and its Affiliates in
                        connection with the distribution, sale and promotion of
                        the Product in the Territory infringes upon or conflicts
                        with any patent or other intellectual property rights of
                        any third party or that Guilford, by practicing under
                        the Assigned Patents in the Territory as of the
                        Effective Date would violate any intellectual property
                        rights of any third party.

                (k)     As of the Effective Date, the Trademark is valid and
                        enforceable, and free and clear of all Liens and
                        Encumbrances. There is no claim pending or, to the
                        knowledge of Merck based on Recorded Information,
                        threatened, that the use of the Trademark in the manner
                        heretofore used by Merck



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                        and its Affiliates in connection with the distribution,
                        sale and promotion of the Product in the Territory
                        infringes upon or conflicts with any the rights of any
                        third party.

                (l)     Merck has not given notice to any third parties in the
                        two (2) years prior to the Effective Date, asserting
                        infringement by such third party of the Trademark or any
                        of the Assigned Patents or the Related Patents.

                (m)     Except as set forth on Schedule 4.1(m), or as otherwise
                        specifically set forth in this Agreement, as of the
                        Effective Date neither Merck nor any of its Affiliates
                        has executed or granted to any third party any license
                        or other right to market, distribute, sell or offer for
                        sale the Product or any generic substitutes therefor, in
                        or into the Territory.

                (n)     Merck has provided Guilford with the opportunity to
                        review the true, accurate and complete NDA and IND for
                        the Product prior to the Effective Date (except for
                        redaction of confidential patient information). Merck
                        and its Affiliates have no new drug applications or
                        investigational new drug applications in the Territory
                        pertaining to the Product, whether issued, pending,
                        abandoned, withdrawn, or in draft form other than the
                        NDA and the IND. Merck (i) has complied in all material
                        respects with all Applicable US Laws in connection with
                        the preparation and submission to the FDA of each of the
                        NDA and IND and (ii) has filed with the FDA all required
                        notices, supplemental applications, and annual and other
                        reports, including Adverse Experience reports, with
                        respect to each NDA and IND. The NDA has been approved
                        and remains in effect in the United States, and as of
                        the Effective Date, Merck has all the legal rights of a
                        holder of an approved new drug application with respect
                        to the



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Exchange Commission.



                        Product in the United States. There is no action or
                        proceeding by any Governmental Authority in the
                        Territory pending or, to the knowledge of Merck based on
                        Recorded Information, threatened, seeking revocation or
                        suspension of the NDA or the IND.

                (o)     To the knowledge of Merck based on Recorded Information,
                        no recall or withdrawal for the Product in the Territory
                        is pending or threatened.

                (p)     Except as set forth on Schedule 4.1(p) hereof, there are
                        no claims or complaints made or brought against Merck in
                        the Territory prior to the Effective Date relating to
                        the Product or the Acquired Assets, other than (i)
                        litigation and claims listed on Schedule 4.1(p), and
                        (ii) the claims, complaints, adverse reactions or
                        experiences, recalls, and product and packaging
                        complaints contained or disclosed in the NDA or included
                        in Schedule 4.1(q). (For reasons of patient privacy, the
                        names of claimants have been redacted from the claims
                        described in Schedule 4.1(p)).

                (q)     Schedule 4.1(q) sets forth all Adverse Experiences
                        existing with respect to the Product that have not yet
                        been reported to the FDA.

                (r)     The assignments and transfer documents to be delivered
                        to Guilford pursuant to Section 3.2 will be in
                        appropriate form and sufficient to sell, assign and
                        transfer to Guilford all right, title and interest in
                        and to the Acquired Assets free and clear of any Liens
                        or Encumbrances.

                (s)     The IND is true, accurate and complete, and contains all
                        of the information posted to the IND over the life of
                        the Product.

                (t)     The NDA is true, accurate and complete, and contains all
                        of the information posted to the NDA over the life of
                        the Product and all information concerning side effects,
                        injury, toxicity or sensitivity reaction,



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                        or unexpected incidents, whether or not Serious or
                        Unexpected, relating to the Product ("Adverse
                        Experiences"), that Merck has reported to the FDA during
                        the time from the original filing of the NDA until the
                        Effective Date (except as set forth in paragraph (q)).

                (u)     Except as listed in Schedule 1.14, there are no
                        Contracts between Merck or any of its Affiliates and any
                        third parties (including Governmental Authorities, GPOs,
                        hospitals, health maintenance organizations and other
                        buyers of Product in the Territory) directly relating to
                        or affecting the sale of the Product in the Territory.
                        Merck has made available to Guilford complete and
                        correct copies of the Contracts. Each of the Contracts
                        is in effect as of the Effective Date and constitutes a
                        legal, valid and binding agreement, enforceable in
                        accordance with its terms, of Merck and the other
                        parties thereto. Neither Merck nor any other party
                        thereto has failed to perform or is otherwise in breach
                        in any material respect of any of the Contracts.
                        However, Merck has informed Guilford that such Contracts
                        are not assignable without the consent of the other
                        parties and that Merck intends to terminate all
                        Contracts in accordance with Section 3.9.

                (v)     Merck has not negotiated with or through any broker or
                        finder in connection with this Agreement or the subject
                        matter hereof. No broker's commission or finder's fee
                        will be payable by either party as a result of this
                        Agreement.

                (w)     Merck has complied and will comply in all material
                        respects with the requirements of the HSR Act.

                (x)     Merck is the holder of the Assigned Patents and the
                        Related Patents set forth in Schedules 1.10 and 1.55,
                        respectively.



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                (y)     Schedule 4.1(y) sets forth a list of all ongoing
                        clinical trials conducted by Merck involving the Product
                        in Covered Indications. As of the Effective Date, Merck
                        has no existing research program, nor does the senior
                        management of its research division currently intend to
                        commence any such research programs, with respect to any
                        purpose or indication for the Product other than Covered
                        Indications.

                (z)     Merck has provided Guilford with the opportunity to
                        review the true, accurate and complete copies of the
                        DuPont Agreement, the Genentech Agreement, the RPR
                        Agreement and Merck's third party manufacturing
                        contracts related to the Product in the Territory,
                        together with any and all amendments, supplements or
                        other modifications relevant to such agreements.

                (aa)    As of the Effective Date, to the knowledge of Merck's
                        senior management, Merck and its Affiliates do not have
                        any existing research program, nor do they currently
                        intend to commence any research program, with respect to
                        the Product or any IIb/IIIa inhibitor. Merck has
                        disclosed to Guilford that it has rights in a direct
                        thrombin inhibitor.

                (bb)    Headquarter Sales during September 2003 did not exceed
                        $2,500,000.

        4.2     DISCLAIMERS. Except for the representations and warranties set
                forth in Section 4.1 and in the other agreements executed by
                Merck or any of its Affiliates in connection herewith, Merck
                does not make any representation or warranty, and specifically
                disclaims any warranty:

                (a)     That it is the holder of any unexpired Patent Rights for
                        the Product in the Territory except the Assigned
                        Patents, the Related Patents and the Process Patents. No
                        Patent Rights for the Product are being assigned,



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                        transferred, licensed or sublicensed to Guilford under
                        this Agreement, except the Assigned Patents, the
                        Licensed Related Patents and any Patent Rights licensed
                        to Guilford pursuant to Section 2.27.

                (b)     Merck makes no representations or warranties concerning
                        the manufacturing process, or the efficacy, efficiency
                        or adequacy of the Acquired Assets for the purpose of
                        manufacturing, marketing or selling the Product either
                        before or after the Effective Date.

                (c)     Concerning the efficacy or safety for human use of the
                        Product, whether in the formulation heretofore
                        Manufactured and sold under the name "AGGRASTAT" or in
                        the form of any other formulation or stereoisomer or
                        other derivative.

                (d)     Concerning legal and regulatory requirements that must
                        be satisfied by Guilford before Guilford will be able
                        lawfully to Manufacture, market and sell the Product in
                        the Territory or any other country.

                (e)     That any medical information provided by Merck to
                        Guilford concerning the use of the Product is in
                        accordance with sound medical practice or may be relied
                        on by Guilford or any other Person for any purpose.

                (f)     That the Marketing Materials are current or in
                        accordance with Product Labeling or can be used for any
                        purpose other than historical reference.

                (g)     That the Contracts are assignable to Guilford without
                        the consent of the other parties to the Contracts or
                        that the other parties will consent to such assignment,
                        enter into contracts with Guilford, purchase the Product
                        from Guilford or do business in any manner with
                        Guilford. To the contrary, Merck has informed Guilford
                        that the Contracts are not assignable without the other
                        parties' consent, that certain additional parties (i.e.,
                        group



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                        purchasing organizations) may need to consent to any
                        such assignment or any new contract with such other
                        parties, and that Merck's communication with such other
                        parties regarding the Product and Guilford will be
                        limited to the letter described in Section 3.9.

        4.3     LIMITATION ON MERCK'S REPRESENTATIONS AND WARRANTIES. GUILFORD
                ACKNOWLEDGES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
                EXPRESSLY CONTAINED IN THIS AGREEMENT OR ANY OF THE OTHER
                TRANSACTION DOCUMENTS, MERCK HAS MADE NO REPRESENTATION OR
                WARRANTY WHATSOEVER AND GUILFORD HAS NOT RELIED ON ANY
                REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EXCEPT THOSE
                EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT LIMITING THE
                GENERALITY OF THE FOREGOING, GUILFORD ACKNOWLEDGES THAT, EXCEPT
                AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY OF THE OTHER
                TRANSACTION DOCUMENTS, GUILFORD IS ACQUIRING THE ACQUIRED ASSETS
                ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY EXPRESS OR IMPLIED
                WARRANTIES AS TO THE FITNESS FOR A PARTICULAR PURPOSE,
                MERCHANTABILITY OR CONDITION OF THE ACQUIRED ASSETS OR AS TO ANY
                OTHER MATTER.

5       GUILFORD'S REPRESENTATIONS AND WARRANTIES

        5.1     Guilford represents and warrants as of the Effective Date that:

                (a)     Guilford is a corporation duly organized and validly
                        existing under the laws of the State of Delaware.

                (b)     The execution, delivery and performance by Guilford of
                        this Agreement and each of the documents contemplated
                        hereby to which Guilford is a



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                        party are within Guilford's power, have been duly
                        approved and authorized by all necessary action and do
                        not contravene or constitute a default under the
                        constitutive documents of Guilford or of Applicable Law
                        or regulation or of any agreement, judgment, injunction,
                        order, decree or other instrument binding upon Guilford.
                        This Agreement is a legal, valid and binding agreement
                        of Guilford enforceable in accordance with its terms.

                (c)     Except for the requirement that both Guilford and Merck
                        provide written notice to the FDA of the transfer of the
                        NDA and the IND from Merck to Guilford and compliance
                        with the requirements of the HSR Act, the execution,
                        delivery and performance by Guilford of this Agreement
                        and each of the documents contemplated hereby to which
                        Guilford is a party require no action by or in respect
                        of, or filing with, any governmental body, agency or
                        official, or any other consent.

                (d)     Guilford has complied and will comply in all material
                        respects with the requirements of the HSR Act.

                (e)     Guilford has not negotiated with or through any broker
                        or finder in connection with this Agreement or the
                        subject matter hereof. No broker's commission or
                        finder's fee will be payable by either party as a result
                        of this Agreement.

                (f)     As of the Effective Date, Guilford has no existing
                        research program with respect to any purpose or
                        indication for the Product other than Covered
                        Indications.

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                (g)     As of the Effective Data, Guilford has no existing plans
                        or intention to effect or experience a "Change of
                        Control" as defined in the Supply Agreement.


                (h)     Guilford will not use any of the Marketing Materials in
                        any way that violates Applicable Law or causes any
                        liability to Merck.

6       POST-EFFECTIVE DATE ACTIVITIES OF MERCK

        6.1     After the Effective Date and until the expiration of the
                Assigned Patents, neither Merck nor any of its Affiliates nor
                any of their respective successors or assigns shall:

                (a)     directly or indirectly make, have made, use, market,
                        sell, offer to sell, import or distribute tirofiban
                        hyrdrochloride in the Territory (i) for Covered
                        Indications (except for any sales to Guilford pursuant
                        to the Supply Agreement or any sales for use outside of
                        the Territory), or (ii) for Non-Covered Indications for
                        which Guilford has exclusive rights under Section 2.15;
                        or

                (b)     directly or indirectly make, have made, use, market,
                        sell, offer to sell, import or distribute tirofiban
                        hyrdrochloride in the Territory (except for any sales to
                        Guilford pursuant to the Supply Agreement, any sales for
                        use outside of the Territory, or any manufacture,
                        formulation or use as a comparator in clinical trials
                        permitted by Section 6.2(c) below) for any indication in
                        the following dosage forms and package presentations:
                        100 mL pre-mixed bag (containing 5mg tirofiban); 250 mL
                        pre-mixed bag (containing 12.5 mg tirofiban); 50 mL vial
                        (concentrate, containing 12.5 mg tirofiban); or



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                (c)     acquire or submit any investigational new drug
                        application, new drug application or abbreviated new
                        drug application, patent application, or request for
                        approval of any Governmental Authority with respect to
                        tirofiban hyrdrochloride in the Territory for the
                        Covered Indications or for Non-Covered Indications for
                        which Guilford has exclusive rights under Section 2.15.

        6.2     Notwithstanding anything contained herein to the contrary,
                nothing in this Agreement shall be construed as restricting the
                ability of Merck or its Affiliates:

                (a)     to Manufacture (whether such Manufacturing is performed
                        inside or outside the Territory) the Product (i)
                        pursuant to the Supply Agreement, or (ii) for marketing,
                        distribution and sale outside the Territory, or (iii)
                        for Non-Covered Indications for which Merck has
                        exclusive rights under Section 2.15; or

                (b)     from exercising its rights under the licenses granted
                        pursuant to Sections 2.3(a), 2.13 and 2.15 in accordance
                        with the terms, conditions and limitations of such
                        licenses; or

                (c)     to Manufacture, formulate and use tirofiban
                        hyrdrochloride inside or outside the Territory solely
                        for the purpose of using such compound as a comparator
                        in one or more clinical studies inside or outside the
                        Territory; or

                (d)     to research, use, Manufacture, market, distribute or
                        sell any pharmaceuticals, biologicals or chemical
                        entities other than tirofiban hyrdrochloride inside or
                        outside the Territory; or

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                (e)     to use any information, data, know-how, good will or
                        intellectual property contained in the NDA and the IND
                        in a manner consistent with Article 2 hereof.

        6.3     Merck shall from and after the Effective Date and during the
                Transition Period cooperate with Guilford in the transition of
                the Product from Merck to Guilford through the Joint Committee.

        6.4     Merck shall prepare and deliver to Guilford, on or before
                November 24, 2003, unaudited financial statements with respect
                to the Product in the Territory for calendar years 2000, 2001
                and 2002 which are compliant with the rules and regulations of
                the United States Securities and Exchange Commission (and for
                the period ended on the Effective Date). Merck shall permit
                Guilford's independent auditors such access to books, records,
                work-papers, personnel and other materials at reasonable times
                and upon reasonable advance notice in order that such auditors
                may audit such financial statements in accordance with
                Securities Laws. Such audit shall commence upon receipt of such
                unaudited financial statements and shall be concluded on or
                before December 23, 2003. Merck shall cooperate with, and assist
                to the extent necessary, Guilford's independent auditor in the
                performance of such audit.

7       REGULATORY AFFAIRS

        NDA

        7.1     At all times after the Effective Date and until the first to
                occur of (a) the date when Guilford transfers the Acquired
                Assets in accordance with Article 11 hereof or (b) two years
                after the expiration or termination of the Assigned Patents,
                Guilford will use reasonable commercial efforts to maintain the
                NDA and the IND for the Product, valid and in good standing and
                authorizing Guilford to manufacture and



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                sell tirofiban hydrochloride in the Territory under the name
                "AGGRASTAT." During such period: (a) Guilford shall not alter or
                impair the NDA or the IND in any manner that would impair
                Merck's ability to Manufacture API or the Product in accordance
                with its rights under this Agreement and the Supply Agreement,
                and (b) Guilford will promote the Product in a manner consistent
                with the Product's current labeling as in effect from time to
                time.

        REGULATORY COMPLIANCE

        7.2     Within the time permitted under applicable regulations, each of
                Guilford and Merck shall file or cause to be filed with the FDA
                all notices, assignments, documents and/or other materials
                required by Applicable Law to be filed in connection with this
                Agreement, including without limitation the notices in the forms
                of Schedule 3.3 and FDA Form 356h. At all later times, each
                party shall make promptly any further filings and take any
                actions reasonably required to consummate the transactions
                contemplated hereby.

        7.3     From and after the Effective Date, except to the extent
                otherwise provided in the Supply Agreement or the Transition
                Services Agreement, Guilford will be responsible for developing
                at its own expense, new product labeling (including without
                limitation new NDC numbers), package inserts, imprinting and
                packaging data as appropriate, for the Product.

        7.4     From and after the Effective Date, except as set forth in
                Section 7.8, Guilford will be responsible for all regulatory
                compliance activities with respect to the Product in the
                Territory.

        MEDICAL INQUIRIES



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        7.5     Until the first to occur of (A) sixty (60) days after the
                Effective Date or (B) the date when Guilford notifies Merck that
                Guilford is prepared to assume responsibility for medical
                inquiries, Merck shall continue to respond to questions and
                inquiries relating to the Product raised by health care
                professionals and customers in the manner in which it responded
                to such questions prior to the Effective Date. Commencing
                promptly after the Effective Date, Guilford will establish and
                implement effective procedures and mechanisms for responding to
                such questions and inquiries and will notify Merck when such
                procedures and mechanisms are in place; provided, however, that
                in no event shall Merck have responsibility for such questions
                and inquiries more than sixty (60) days after the Effective
                Date, except in the case of medical emergency.

        7.6     On the Effective Date (except as provided in Section 7.5),
                Guilford shall assume all responsibility for all correspondence
                and communication with physicians and other health care
                professionals in the Territory relating to the Product. Guilford
                shall keep such records and make such reports as shall be
                reasonably necessary to document such communications in
                compliance with all applicable regulatory requirements.

        ADVERSE EXPERIENCE AND REACTION REPORTING

        7.7     Effective on the Effective Date, and continuing as long as the
                NDA for the Product is active with the FDA, Guilford and Merck
                shall be responsible for reporting Adverse Experiences and
                reactions in accordance with Section 9.1 of the Supply
                Agreement.

        REGULATORY REPORTING

        7.8     After the Effective Date, Guilford shall have full
                responsibility for completing and filing the annual report and
                all other required reports in the Territory for the



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                Product; provided, however, that Merck has filed or will file
                the annual report for 2003 for the Product and the IND annual
                progress report; and provided that Merck will cooperate in good
                faith to provide Guilford with any information relating to the
                Product in the Territory and reasonably requested by Guilford as
                necessary to comply with its obligations under Applicable US
                Laws.

        7.9     After the Effective Date and so long as Merck sells tirofiban
                hyrdrochloride outside the Territory, Guilford shall send to
                Merck, within 30 days after filing with the FDA, a copy of each
                annual report for the NDA and the IND and any other filing in
                connection with the NDA or the IND, and any changes made to the
                product circular or product labeling for the Product free of
                charge.

        7.10    CHANGE OF CONTROL. Section 11.3 of the Supply Agreement is
                incorporated herein to the extent applicable to this Agreement.
                Notwithstanding any provision of this Agreement or the Supply
                Agreement to the contrary, in the event of a transfer or Change
                of Control to a non-affiliated party such that the Resulting
                Entity is a Qualified Successor, Guilford shall be released from
                any further obligations under this Agreement; provided, however,
                that in the event of a transfer or Change of Control to a
                non-affiliated party such that the Resulting Entity is not a
                Qualified Successor, Guilford shall retain all of its
                obligations under this Agreement. Within thirty (30) days after
                the Effective Date, Guilford shall inform Merck in writing of
                (1) its net worth as of the date immediately following the
                Effective Date and (2) its debt rating as of the date
                immediately following the Effective Date.

        7.11    CUSTOMER COMPLAINTS

                Merck and Guilford shall cooperate in good faith after the
                Effective Date to establish a procedure for the investigation of
                and response to customer



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                complaints with respect MSD Ireland Image Product (as defined in
                the Supply Agreement) sold prior to, on and after the Effective
                Date.

8       POST EFFECTIVE DATE USE OF MARKS

        8.1     Beginning on the Effective Date, but except to the extent
                otherwise provided in the Transition Services Agreement and/or
                the Supply Agreement, Guilford shall mark clearly all units of
                the Product Manufactured, packaged or distributed by Guilford to
                indicate Guilford's ownership of the Product and will not use
                the words, names or combined letters "Merck", "Merck & Co.,
                Inc.", "MMD", "Merck Manufacturing Division", "Merck Sharp &
                Dohme", "MSD," or any variation thereof or other word, name or
                letter combination substantially similar thereto, or any other
                trade name, trademark or trade dress substantially similar to
                that used by Merck in connection with the Product or otherwise,
                or as part of the name of Guilford or any Affiliate of Guilford,
                after the Effective Date. Except to the extent otherwise
                provided in the Supply Agreement, Guilford shall not give the
                impression to the public, to physicians or to the pharmaceutical
                marketplace that the Product is a product of Merck or in any way
                connected with Merck (except in a public announcement permitted
                under Section 10.9 or in accordance with Section 2.25).
                Notwithstanding the foregoing or any other provision of this
                Agreement or any of the other Transaction Documents to the
                contrary, Merck hereby grants to Guilford a non-exclusive,
                non-revocable, royalty free license, (i) which shall be in
                effect only during the Transition Period and thereafter only so
                long as necessary for Guilford to sell and distribute any MSD
                Ireland Image Product (as defined in the Supply Agreement) that
                is purchased by Guilford but not sold prior to the end of the
                Transition Period, in and to any and all Marks



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                owned by Merck and used on or with the Product in the Territory,
                to the extent reasonably necessary to permit Guilford to market,
                promote, sell and distribute the MSD Ireland Image Product in
                accordance with the Transition Services Agreement and (ii) which
                shall be in effect indefinitely, for historical reference as
                necessary to identify Guilford as Merck's successor with respect
                to the Product in the Territory.

        8.2     Nothing in this Agreement gives to Merck any right to use the
                Trademark in association with, or for, any goods or services
                sold, offered for sale, marketed or advertised in the Territory
                except as set forth in Section 2.12 or in the Transition
                Services Agreement. However, Merck and its Affiliates shall have
                the right to use the Trademark in association with the Product;
                provided that the Product is only sold, marketed or advertised
                outside the Territory; and provided further that no such Product
                is knowingly sold, offered for sale, marketed or advertised
                outside the Territory for use in the Territory.

        8.3     Until the later to occur of (i) two years after termination or
                expiration of the Supply Agreement and (ii) the earlier of (A)
                expiration of all Foreign Patents for the Product, and (B) the
                date of entry of a Final Order of a court having jurisdiction of
                the subject matter thereof declaring the last of the Foreign
                Patents for the Product invalid:

                (a)     Guilford will not use the Trademark in association with
                        any drug, product, item or service other than the
                        Product, without Merck's specific written consent which
                        shall not be unreasonably withheld or delayed; and

                (b)     If Guilford intends to use, Manufacture, distribute or
                        sell the Product in the form of a stereoisomer or other
                        derivative other than the formulation



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                        heretofore Manufactured and sold by Merck under the name
                        "AGGRASTAT," Guilford shall notify Merck not less than
                        six (6) months prior to such proposed use, Manufacture,
                        distribution or sale; and

                (c)     Guilford will not market, distribute or sell the Product
                        outside the Territory.

9       MANUFACTURE AND MARKETING OF PRODUCT AFTER EFFECTIVE DATE

        9.1     SUPPLY OF PRODUCT

                During the term of the Supply Agreement, MSD Ireland will
                Manufacture and/or supply the Product and the API in accordance
                with the terms and conditions of the Supply Agreement.

        9.2     RETURNED PRODUCT

                (a)     Merck shall be responsible for and shall give credit for
                        all Returned Products sold or distributed on or prior to
                        the Effective Date (determined by reference to lot
                        number such that Merck shall be responsible for all lots
                        sold or distributed in their entirety prior to the
                        Effective Date) to (i) customers who purchased such
                        Returned Products from Merck and return such Returned
                        Products to Merck and (ii) Guilford if Guilford provides
                        documentation that it provided credit to a customer who
                        purchased such Returned Products from Merck and returned
                        such Returned Products to Guilford.

                (b)     Guilford shall be responsible for all Returned Products
                        sold on or after the Effective Date (determined with
                        reference to lot number such that Guilford shall be
                        responsible for all lots sold or distributed in whole or
                        in part on or after the Effective Date) to (i) customers
                        who purchased such Returned



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                        Products from Merck or Guilford, as the case may be, and
                        return such Returned Products to Guilford and (ii) Merck
                        if Merck provides documentation that it provided credit
                        to a customer who purchased such Returned Products from
                        Merck or Guilford, as the case may be, and returned such
                        Returned Products to Merck.

                (c)     With respect to any lot some (but not all) of which has
                        been sold or distributed by Merck prior to the Effective
                        Date, the parties shall, within 30 days of the Effective
                        Date, negotiate a credit to reflect Guilford's
                        undertaking of responsibility with respect to returns
                        out of that portion of such lots which were sold or
                        distributed by Merck on or prior to the Effective Date,
                        based on the portion of such lot sold prior to the
                        Effective Date as compared to the portion sold after the
                        Effective Date.

                (d)     From and after the Effective Date, Merck shall keep
                        adequate records of any Returned Product received by
                        Merck and shall promptly notify Guilford of receipt of
                        any Returned Product. Merck shall destroy such Returned
                        Product in which event Merck shall provide such
                        certifications regarding the destruction and cost of
                        destruction of such Returned Product as Guilford shall
                        reasonably require. Destruction by Merck of Returned
                        Product for which Merck shall be responsible pursuant to
                        Section 9.2(a) shall be at Merck's expense, and
                        destruction by Merck of Returned Product for which
                        Guilford shall be responsible pursuant to Section 9.2(b)
                        shall be at Guilford's expense. Guilford shall have the
                        right to be present at such destruction upon request if
                        such request is made a reasonable time in advance of
                        such destruction.



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                (e)     From and after the Effective Date and until the
                        expiration of the time allowed for return of any
                        Returned Products sold prior to the Effective Date,
                        Guilford shall keep adequate records of any Returned
                        Product received by Guilford and shall promptly notify
                        Merck of receipt of any Returned Product that is subject
                        to Section 9.2(a). Guilford shall destroy all such
                        Returned Product and shall provide such certifications
                        regarding the destruction and cost of destruction of
                        such Returned Product as Merck shall reasonably require.
                        Destruction by Guilford of Returned Product for which
                        Merck shall be responsible pursuant to Section 9.2(a)
                        shall be at Merck's expense, and destruction by Guilford
                        of Returned Product for which Guilford shall be
                        responsible pursuant to Section 9.2(b) shall be at
                        Guilford's expense. Merck shall have the right to be
                        present at such destruction upon request if such request
                        is made a reasonable time in advance of such
                        destruction.

        9.3     CHARGEBACKS AND GPO ADMINISTRATIVE FEES.

                (a)     Merck and Guilford acknowledge that the Contracts may
                        not remain in place throughout the Transition Period.
                        However, as provided in the letter attached as Schedule
                        3.9, during the Transition Period Guilford will make
                        available to previously contracted customers the same
                        discounts on the same terms and conditions as have been
                        available under the Contracts immediately prior to the
                        Effective Date. The payment of such discounts involves
                        the administration and payment of chargebacks and the
                        payment of administrative fees to certain group
                        purchasing organizations. Merck will continue to
                        administer the chargeback system during the Transition
                        Period. Guilford shall have the right to make changes
                        consistent with the


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                        existing structure in the discounts available to up to
                        fifty (50) customers at no additional charge upon
                        written notice to Merck, it being understood that
                        Guilford shall be responsible for customer interface in
                        connection with any such changes. If Guilford desires to
                        make more than the fifty (50) changes contemplated by
                        the previous sentence, it may do so but shall be
                        obligated to reimburse Merck $3,000 per change. Any such
                        changes shall become effective in accordance with
                        Merck's standard procedures but in no event prior to ten
                        (10) days following such notice. Guilford will be
                        responsible for all discounts and GPO administrative
                        fees paid by Merck in accordance with this Section 9.3
                        in the manner set forth in the Transition Agreement.

                (b)     Merck shall be responsible for processing all
                        chargebacks arising from sales of Product bearing
                        Merck's NDCs by wholesalers to customers in the
                        Territory through the Transition Period. Merck shall be
                        responsible for payment of all such chargeback claims
                        submitted prior to the Effective Date and through thirty
                        (30) days after the Effective Date. Guilford shall be
                        responsible for payment of all such chargeback claims
                        submitted more than thirty (30) days after the Effective
                        Date (including without limitation chargeback claims
                        arising from sales of any Supplied Product sold by Merck
                        as distributor for Guilford pursuant to the Transition
                        Services Agreement). Merck shall maintain and provide to
                        Guilford accurate and complete records of all chargeback
                        claims submitted prior to and through thirty (30) days
                        after the Effective Date.

                (c)     Merck shall be responsible for payment of all group
                        purchasing organization ("GPO") administrative fees
                        relating to sales of Product


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                        bearing Merck's NDCs occurring prior to the Effective
                        Date and through the Effective Date. Guilford shall be
                        responsible for payment of all such administrative fees
                        relating to sales of Product occurring after the
                        Effective Date (including without limitation any
                        Supplied Product sold by Merck as distributor for
                        Guilford pursuant to the Transition Services Agreement).
                        Merck shall maintain and provide to Guilford accurate
                        and complete records necessary for Guilford to validate
                        GPO administrative fee invoices.

        9.4     [INTENTIONALLY OMITTED]

        9.5     MEDICAID REBATES. Merck shall be responsible for processing all
                Medicaid Rebates for Product bearing Merck's NDCs. Guilford will
                cooperate as necessary to facilitate the processing of Medicaid
                Rebate claims by Merck. Merck shall be responsible for payment
                of all such Medicaid Rebates with respect to Product dispensed
                prior to the Effective Date and through forty-five (45) days
                after the Effective Date. Guilford shall reimburse Merck for all
                Medicaid Rebates paid by Merck with respect to Product dispensed
                more than forty-five (45) days after the Effective Date.

        9.6     GUILFORD NDC NUMBERS. Guilford shall at all times have sole and
                exclusive responsibility for the processing and payment of any
                and all Rebates arising from or with respect to Product bearing
                Guilford's NDC numbers.

        9.7     MEDICAID INFORMATION.

                (a)     With respect to any Product sold after the Effective
                        Date which bears an NDC number of Merck (including
                        without limitation Product sold by Merck as distributor
                        for Guilford under the Transition Services Agreement),
                        Merck shall determine, in accordance with all applicable
                        laws, the



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                        following information: (a) the "best price" (as defined
                        under the Social Security Act, 42 U.S.C. Section
                        1396r-8(c)(1)(C)) for each formulation and package size
                        of Product identified by NDC number, (b) the "average
                        manufacturer price" (as defined under the Social
                        Security Act, 42 U.S.C. Section 1396r-8(k)(1)) ("best
                        price" and "average manufacturer price" are collectively
                        referred to as the "Drug Pricing Information"), and (c)
                        the number of sales units and net dollars including
                        discounts and rebates for each product and class of
                        trade, each identified by NDC number (the "Utilization
                        Information"). Merck shall use the Drug Pricing
                        Information and the Utilization Information in Merck's
                        reporting to the Centers for Medicare and Medicaid
                        Services. Guilford agrees to provide to Merck any
                        additional data or other information in Guilford's
                        possession regarding sales or pricing of the Product
                        which Merck reasonably requests as necessary for the
                        calculation of the rebates or the Drug Pricing
                        Information or Utilization Information as contemplated
                        in this Section 9.7 (including without limitation all
                        relevant information about Product sold by Guilford and
                        all discounts, price reductions and other applicable
                        adjustments). Merck shall compute and report the Drug
                        Pricing Information and Utilization Information in
                        accordance with all applicable laws, including, but not
                        limited to, 42 U.S.C. Section 1396r-8.

                (b)     With respect to Product sold by Guilford after the
                        Effective Date which bears an NDC number of Guilford, in
                        accordance with Section 9.6 of this Agreement, Guilford
                        shall be responsible for all Rebates and for compliance
                        with all requirements regarding the reporting of Drug
                        Pricing Information. Merck shall provide to Guilford the
                        baseline average



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                        manufacturer price and any assumptions with respect to
                        the calculation thereof for the Product. In the event
                        that the Social Security Act or applicable regulations
                        are amended or interpreted to require different or
                        additional information, Merck shall supply such
                        information as Guilford may reasonably request in order
                        to satisfy such requirements.

                9.8     FEDERAL SUPPLY SCHEDULE.

                (a)     Merck and Guilford shall work together with the Veterans
                        Administration National Acquisition Center to agree upon
                        a mutually acceptable date to remove the Product from
                        the Merck Federal Supply Schedule (the "MFSS") and add
                        the Product to the Guilford Federal Supply Schedule. For
                        any period after the Effective Date during which the
                        Product is on the MFSS, Merck will process all
                        chargebacks arising from purchases of Product by
                        entities purchasing off the MFSS from and after thirty
                        (30) days after the Effective Date and Merck will
                        continue to perform such processing services for the
                        Product as long as required by Applicable Laws;
                        provided, however, that notwithstanding any provision
                        hereof to the contrary, (A) Guilford will be responsible
                        for all chargebacks, GPO administrative fees, rebates
                        and discounts paid or credited by Merck to entities
                        purchasing off the MFSS with respect to purchases more
                        than thirty (30) days after the Effective Date, (B) if
                        Merck is required under Applicable Laws to continue to
                        list the Product on the MFSS after the supply of MSD
                        Ireland Image Product (as defined in the Supply
                        Agreement) has been depleted, Guilford will supply Merck
                        with sufficient Product bearing its own image and NDC
                        numbers ("Guilford Image Product") for Merck to
                        discharge all its obligations under Applicable Law


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                        with respect to the Product and the MFSS, and (C)
                        Guilford will hold Merck harmless with respect to any
                        claim, harm or liability arising from Merck's activities
                        required under this paragraph, including without
                        limitation Merck's supplying of Guilford Image Product
                        under the MFSS.

                (b)     With respect to any Product sold after the Effective
                        Date which bears an NDC number of Merck (including
                        without limitation Product sold by Merck as distributor
                        for Guilford under the Transition Services Agreement),
                        Merck shall determine the "non-Federal Average
                        Manufacturer's Price" (as defined in Section 8126(h)(5)
                        of Section 603 of the Veterans Healthcare Act of 1992,
                        P.L.102-585) for each formulation and package size of
                        Product identified by NDC number. Guilford agrees to
                        provide Merck any additional information in Guilford's
                        possession regarding sales or pricing of the Product
                        which Merck reasonably requests as necessary for the
                        calculation of pricing required to maintain Products on
                        Merck's Federal Supply Schedule. Merck shall use all
                        such information in Merck's reporting to the Veterans
                        Administration National Acquisition Center. Merck shall
                        compute and report the non-Federal Average
                        Manufacturer's Price in accordance with all applicable
                        laws, including, but not limited to, P.L.102-585.

                (c)     With respect to Product sold after the Effective Date
                        which bears an NDC number of Guilford, Guilford will be
                        responsible for reporting all necessary information to
                        the Veterans Administration National Acquisition Center.
                        Merck shall provide to Guilford the necessary baseline
                        information required by Guilford to establish the
                        Products bearing Guilford's NDCs on Guilford's Federal
                        Supply Schedule. Notwithstanding anything in this



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                        Agreement to the contrary, however, Merck shall be
                        responsible for reporting the 2004 non-Federal Average
                        Manufacturer's Price for the Products to the Veterans
                        Administration National Acquisition Center.

        9.9     SECTION 340B PRICING. Merck shall be responsible for all Section
                340B reporting relating to Product bearing Merck's NDCs. Merck
                shall provide Guilford with the necessary pricing information
                for Guilford to include the Product bearing Guilford's NDCs on
                Guilford's Section 340B contract executed with the Office of
                Drug Pricing.

        9.10    JOINT COMMITTEE. (a) After the Effective Date, a joint committee
                consisting of Merck and Guilford staff (both technical and
                commercial) will meet regularly in person or via teleconference
                to share insights, data and opinions regarding Guilford's
                development and execution of clinical and commercial plans with
                regard to the Product in the Territory and Merck's development
                and execution of clinical and commercial plans with regard to
                the Product outside the Territory. Neither party will have the
                right to interfere with or veto the other party's plans with
                respect to such other party's geography (i.e., in the Territory
                for Guilford, outside the Territory for Merck). The initial
                members of the Joint Committee will be (i) for Merck, Edgar
                Nouss and Peter DiBattiste, M.D., and (ii) for Guilford, Michael
                Kelly, Craig R. Smith, M.D. and John P. Brennan. The initial
                meeting of the Joint Committee will take place within thirty
                (30) days of the Effective Date.

        (b)     Notwithstanding any provision hereof to the contrary, in the
                event of a Change of Control (as defined in the Supply
                Agreement), regardless of whether Merck consents to such Change
                of Control or terminates the Supply Agreement, at






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                Merck's option, Sections 9.10 and 9.11 hereof will no longer
                have any force or effect.

        9.11    CLINICAL DATA

                (a)     Merck will be the owner of any new data relating to the
                        Product that is obtained or generated through studies or
                        research conducted or paid for, in whole or in part, by
                        Merck (collectively "Merck Data"). *. Guilford will be
                        the owner of any new data relating to the Product that
                        is obtained or generated through studies or research
                        conducted or paid for, in whole or in part, by Guilford
                        ("Guilford Data"). (Merck Data and Guilford Data are
                        hereinafter collectively referred to as "Data".)

                (b)     Guilford will make any Guilford Data available to Merck
                        through the Joint Committee. Merck will make any Merck
                        Data available to Guilford through the Joint Committee.
                        When Data is to be used in regulatory filings, the party
                        supplying such Data to the other party will supply the
                        Data in the format to be utilized for the filing,
                        including the raw data in electronic format, and will
                        work, in cooperation with the other party, towards a
                        simultaneous global filing. All Data will be disclosed
                        to the other party (subject to appropriate
                        confidentiality provisions as determined by the
                        disclosing party) not less than ten business days prior
                        to any release by the disclosing party to the medical
                        community or the general public. After Data is made
                        public by the party owning such Data, the other party
                        will be able to use such Data for marketing and
                        promotion


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                        within its own geography (i.e., Guilford in the
                        Territory, Merck outside the Territory).

        9.12    PUBLICATIONS AND ABSTRACTS

                (a)     Merck hereby grants to Guilford a license, which shall
                        be perpetual and royalty-free, to use any Merck Data
                        solely for publications and abstracts subject to the
                        following restriction: Guilford shall submit to Merck
                        for prior Merck approval all manuscripts of publications
                        or abstracts using Merck Data as far in advance as
                        practicable and in no event less than forty-five (45)
                        days before such publications, and at least thirty (30)
                        days before such abstracts, are published or released to
                        the medical community or the general public. If Merck in
                        its reasonable discretion determines to reject the
                        proposed use of such Merck Data, then Guilford shall not
                        use or include such Merck Data in any publication or
                        abstract disseminated to the medical community or
                        general public.

                (b)     Guilford hereby grants to Merck a license, which shall
                        be perpetual and royalty-free, to use any Guilford Data
                        solely for publications and abstracts subject to the
                        following restriction: Merck shall submit to Guilford
                        for prior Guilford approval all manuscripts of
                        publications or abstracts using Guilford Data as far in
                        advance as practicable and in no event less than
                        forty-five (45) days before such publications, and at
                        least thirty (30) days before such abstracts, are
                        published or released to the medical community or the
                        general public. If Guilford in its reasonable discretion
                        determines to reject the proposed use of such Guilford
                        Data, then Merck shall not use or include such Guilford
                        Data in any publication or abstract disseminated to the
                        medical community or general public.



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                (c)     The licenses granted by the Parties to each other in
                        Section 9.11(b) shall be in addition to the rights
                        granted elsewhere in this Agreement or in the Supply
                        Agreement or Transition Services Agreement.

        9.13   PCI CLINICAL RESEARCH

                (a) Performance of PCI Clinical Research by Guilford. If
                commercially REASONABLE, Guilford will perform a clinical study
                program of Guilford's design, including clinical trials, aimed
                at securing a PCI Claim for the Product ("PCI Clinical
                Research"). For illustrative purposes, a trial of the scale and
                cost of TARGET would fit the definition of "commercially
                reasonable" if Guilford had a reasonable basis for believing or
                expecting that in the view of the FDA the Guilford protocol,
                including the end point(s), was adequate to conduct a study
                aimed at obtaining a PCI Claim. The design and conduct of the
                PCI Clinical Research will be consistent with industry standards
                for studies of this type. Guilford will be solely responsible
                for and will fund the PCI Clinical Research and any future
                clinical development for the Product in the Territory. Guilford
                will afford Merck an opportunity to review and comment on
                Guilford's protocols for the PCI Clinical Research and
                publications generated by Guilford relating to the Product in
                connection with the PCI Clinical Research, but shall have no
                obligation to implement any of Merck's comments into the design
                of such Guilford protocols.

                (b) Milestones. It is understood that the PCI Clinical Research
                could benefit both parties and that Guilford's obligation to
                perform such research is a material consideration for this
                Agreement. Thus, if commercially reasonable as described above,
                Guilford will conduct the PCI Clinical Research according to the
                following timetable:



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                     Provide first Guilford protocol to Merck for review
                     within 30 days prior to its

                     scheduled meeting with the FDA;

                     Meet with the FDA by January 2005; and

                     Enroll first patient by January 2006.

                Although Guilford will use all reasonable efforts to meet the
                foregoing milestones, its success in doing so is dependent upon
                receipt of FDA approval and all required regulatory
                authorizations. To the extent that action or inaction by the FDA
                results in delays in scheduling the above-referenced meeting
                with the FDA or the commencement of the PCI Clinical Research,
                the foregoing milestones will be adjusted accordingly.

                (c) Merck's right of reference to PCI Data. Merck will have the
                right to receive all PCI Data in accordance with Section 9.11
                and will have the right of reference to all PCI Data for
                research (including the performance of clinical trials) for any
                purpose or indication (including Covered Indications and
                Non-Covered Indications) and for any other purpose that is
                consistent with Merck's obligations under Section 6.1 hereof. If
                Merck, at its option, desires to use any PCI Data for purposes
                of regulatory submissions to procure an expanded label outside
                the Territory, Merck shall have and Guilford hereby grants,
                subject to payment by Merck as contemplated by the last sentence
                of this Section 9.13(c), a perpetual, royalty-free license to
                use and reference any and all PCI Data and any and all data and
                know-how in the NDA relating to the PCI Clinical Research and
                the PCI Data for the purpose of regulatory development and
                commercialization of the Product outside the Territory. In the
                event that Merck desires to exercise its rights under such
                license, Merck shall notify Guilford of such desire, and
                Guilford shall then inform Merck of the total cost to


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                Guilford of the PCI Clinical Research. In consideration of the
                license granted pursuant to the preceding sentence, Merck shall
                pay to Guilford up to one-half of such total cost, the specific
                amount of which shall be agreed to by the parties in good faith
                in light of the proposed use by Merck.

                (d) Merck audit right. Merck shall have the right, through an
                independent accounting firm that is reasonably acceptable to
                Guilford, to audit Guilford upon reasonable notice in order to
                verify the information provided to Merck pursuant to this
                Section 9.13. Such audit will be at Merck's expense unless it is
                determined that the cost figures provided to Merck overstated
                the actual cost by ten percent (10%) or more, in which case the
                cost of the audit will be paid by Guilford.

        9.14    LIMITATION OF LIABILITY FOR ACTIONS AFTER THE EFFECTIVE DATE.

                The Parties acknowledge and agree that after the Effective Date,
                notwithstanding any provision of this Agreement, they will
                remain as independent contractors and will not be engaged in a
                partnership, joint venture or fiduciary relationship by virtue
                of any activities contemplated by this Agreement, and they will
                have no liability to each other arising from or under this
                Agreement except as specifically set forth herein or in the
                Supply Agreement, the Quality Agreement or the Transition
                Services Agreement. Without limiting the foregoing,
                participation by the Parties on the Joint Committee shall not be
                deemed to create a partnership, joint venture or fiduciary
                relationship and any such participation, and all acts or
                omissions with respect to the Joint Committee and all
                communications made by either party as a member of or the Joint
                Committee or otherwise pursuant to Section 9.10 or 9.11 hereof
                (including all Data disclosed by one party to another), shall be
                deemed to be as a volunteer without consideration or obligation
                of any kind whatsoever, and no such actions or communications
                shall give rise to any


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                liability in contract or tort unless except to the extent that
                such action or communication is illegal or constitutes willful
                misconduct or violates the confidentiality provisions set forth
                in Article 10.




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10      CONFIDENTIALITY

        10.1    Guilford will preserve, and will cause each of its Affiliates,
                employees and agents to preserve, the confidentiality of the
                Merck Confidential Information and the Joint Confidential
                Information; provided that (i) Guilford may disclose such
                information to its employees, attorneys, financial advisors,
                lenders, agents and Affiliates on a need-to-know basis and, with
                respect to Joint Confidential Information and the terms and
                conditions of this Agreement and the other Transaction Documents
                (including those set forth on Schedule 10), to accredited
                potential investors in financings or related capital raising
                transactions by Guilford or its Affiliates for purposes of such
                financings or related capital raising transactions; provided
                that Guilford shall not use or disclose any such Confidential
                Information for the Manufacture of Product for sale or use
                outside the Territory (Guilford represents and warrants that all
                such Persons will be bound by this Article 10 or otherwise
                subject to confidentiality obligations for the benefit of Merck
                and that such Persons will use such Confidential Information
                solely for the purposes on which the need to know was
                established and will not disclose such Confidential Information
                to any other Person), and (ii) Guilford and its Affiliates may
                use and disclose any Merck Confidential Information and Joint
                Confidential Information which has been publicly disclosed
                (other than directly or indirectly by Guilford or any of its
                employees, attorneys, financial advisors, lenders, agents and/or
                Affiliates) or which is otherwise permitted to be disclosed
                under this Agreement (including without limitation in accordance
                with the terms of Section 2.23) or the other Transaction
                Documents, and (iii) to the extent that Guilford or any
                Affiliate may become legally compelled or required under
                Applicable US Laws or Securities Laws to disclose any of such
                Merck Confidential Information or Joint





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Exchange Commission.




                Confidential Information, Guilford or such Affiliate may (to the
                extent so compelled or required) disclose such Confidential
                Information if it shall have first used reasonable efforts in
                good faith, and shall have afforded Merck the opportunity, to
                obtain an appropriate protective order, or other satisfactory
                assurance of confidential treatment, for the Merck Confidential
                Information or Joint Confidential Information required to be so
                disclosed.

        10.2    Merck will preserve, and will cause each of its Affiliates,
                employees and agents to preserve, the confidentiality of the
                Guilford Confidential Information and the Joint Confidential
                Information and will use and disclose such information only for
                the purposes contemplated by this Agreement and the other
                Transaction Documents (for avoidance of doubt, Merck may use and
                disclose Joint Confidential Information for any purpose related
                to Manufacturing the Product or for any other purpose subject to
                the restrictions on Merck's post-Effective Date activities set
                forth in Section 6.1), provided that (i) Merck may disclose such
                information to its attorneys, financial advisors, lenders,
                agents and Affiliates on a need-to-know basis and that such
                persons will not use such information except for the purposes
                contemplated by this Agreement and the other Transaction
                Documents, (Merck represents and warrants that all such persons
                will be bound by this Article 10 or otherwise subject to
                confidentiality obligations for the benefit of Guilford and that
                such Persons will use such Confidential Information solely for
                the purposes on which the need to know was established and will
                not disclose such Confidential Information to any other Person),
                and (ii) Merck and its Affiliates may use and disclose any
                Guilford Confidential Information and Joint Confidential
                Information which has been publicly disclosed (other than
                directly or indirectly by Merck or any of its employees,
                attorneys, financial advisors, lenders,



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Exchange Commission.


                agents and/or Affiliates) or which is otherwise permitted to be
                disclosed under this Agreement or the Supply Agreement, provided
                that, if such Confidential Information is Joint Confidential
                Information, Merck will, and will cause any Affiliate or third
                party manufacturer to, maintain its confidentiality only to the
                extent that maintenance of its confidentiality does not
                unreasonably interfere with Merck's or its Affiliates' or third
                party manufacturer's ability to Manufacture the Product or to
                use, market or sell the Product outside the Territory or
                manufacture, use, market or sell any or all of the Excluded
                Assets; and (iii) to the extent that Merck or any Affiliate may
                become legally compelled to disclose any of such Guilford
                Confidential Information or Joint Confidential Information,
                Merck or such Affiliate may (to the extent so compelled)
                disclose such Guilford Confidential Information if it shall have
                first used reasonable efforts in good faith, and shall have
                afforded Guilford the opportunity, to obtain an appropriate
                protective order, or other satisfactory assurance of
                confidential treatment, for the Guilford Confidential
                Information or Joint Confidential Information required to be so
                disclosed. Nothing in this Section 10.2 shall limit Merck's (or
                its Affiliates') ability to use or disclose Joint Confidential
                Information to Manufacture, have Manufactured, use and/or sell
                the Product outside the Territory or manufacture, have
                manufactured, use and/or sell any other product, including the
                registration of the Product or any other product with any health
                authority outside the Territory.

        10.3    Notwithstanding any provision of this Agreement, the Supply
                Agreement or any of the Transaction Documents to the contrary,
                any Person with respect to whom participation, in any capacity,
                in the transactions contemplated by this Agreement or the other
                Transaction Documents has been discussed (and each employee,
                representative, or other agent of such Person) may disclose to
                any and all other



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                Persons, without limitation of any kind, the tax treatment and
                tax structure of the transactions contemplated by this Agreement
                and the other Transaction Documents and all materials of any
                kind (including opinions or other tax analyses) that are
                provided to such Person relating to such tax treatment and tax
                structure. The foregoing is intended solely to comply with the
                presumption set forth in Treasury Regulation Section
                1.6011-4(b)(3)(iii) and is not intended to permit the disclosure
                of any information to the extent such disclosure is not required
                in order to avoid any transaction contemplated by any of the
                Transaction Documents being treated as a "reportable
                transaction" within the meaning of Treasury Regulation Section
                1.6011-4(b). This Section 10.3 shall not be construed as a
                waiver of the attorney-client privilege or any other privileges,
                including under Section 7525 of the Internal Revenue Code.

        10.4    Notwithstanding the provisions of this Article 10, Merck
                acknowledges and agrees that Guilford may be required to
                disclose some or all of the Confidential Information included in
                this Agreement and/or the other Transaction Documents, including
                Joint Confidential Information or Merck Confidential Information
                and the terms and conditions of the Transaction Documents, in
                order to comply with its obligations under Securities Laws in
                the Territory and Guilford shall not be deemed to be prohibited
                from so doing; provided, however, that Guilford shall use
                commercially reasonable efforts to seek confidential treatment
                of all Merck Confidential Information and Joint Confidential
                Information and the terms and conditions of the Transaction
                Documents set forth on Schedule 10, and provided, further, that
                to the extent permitted under Applicable US Laws and Securities
                Laws, all Merck Confidential Information and Joint Confidential
                Information shall be redacted from any publication of such
                agreement or agreements. It is



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Exchange Commission.



                understood and agreed that the Merck Confidential Information
                contains confidential, competitive and proprietary information,
                the public release of which would be seriously detrimental to
                Merck. Guilford shall provide prompt written notice to Merck if
                Guilford shall determine that any Merck Confidential Information
                and/or Joint Confidential Information must be made public under
                Applicable US Law or Securities Laws in the Territory,
                specifically identifying such Merck Confidential Information
                and/or Joint Confidential Information and the reason why it must
                be made public, and in such event Merck shall have the right to
                seek protection of the Merck Confidential Information and/or
                Joint Confidential Information, as the case may be. Guilford
                shall provide to Merck reasonable assistance in order to secure
                available protections to limit the disclosure of Merck
                Confidential Information and/or Joint Confidential Information,
                as the case may be.

        10.5    The obligations of confidentiality and non-use contained in this
                Article 10 shall not extend or apply to Confidential Information
                that:

                (i) is in or enters the public domain without breach of this
                Asset Agreement or the other Transaction Documents; or

                (ii) is disclosed to the receiving party without restriction by
                a third party having the right to disclose the same.

                In addition, the obligations of confidentiality and non-use
                contained in this Article 10 shall not extend or apply to
                Confidential Information that (i) is first disclosed after the
                Effective Date and (ii) can be shown to have been known by the
                receiving party prior to such disclosure or is independently
                developed by the receiving party.



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Exchange Commission.



        10.6    Nothing in this Article 10 shall be interpreted to limit the
                ability of either party to disclose its own Confidential
                Information (not including Joint Confidential Information or the
                terms and conditions of the Transaction Documents listed on
                Schedule 10) to any other Person on such terms and subject to
                such conditions as such party deems advisable or appropriate.

        10.7    Unless otherwise agreed by the parties in a subsequent written
                agreement, in the event of cancellation, termination or
                expiration of the Supply Agreement, each party shall immediately
                return to the other party (or at the option of the disclosing
                party destroy and certify to the destruction of) all of the
                other party's Confidential Information furnished in connection
                with the Supply Agreement, including all copies or summaries
                thereof.

        10.8    The obligations of confidentiality and non-use contained in this
                Article 10 relating to Joint Confidential Information shall
                continue until the cancellation, termination or expiration of
                the Supply Agreement; provided, however, that (i) if the Supply
                Agreement is terminated pursuant to (A) Section 11.2 thereof by
                Merck or (B) Section 11.7 thereof by Guilford, then the
                obligations of confidentiality and non-use relating to Joint
                Confidential Information with respect to Guilford (and its
                Affiliates and agents) only shall continue for a period of ten
                (10) years following such termination of the Supply Agreement
                and (ii) if the Supply Agreement is terminated pursuant to
                Section 11.2 thereof by Guilford, then the obligations of
                confidentiality relating to Joint Confidential Information with
                respect to Merck (and its Affiliates and agents) only shall
                continue for a period of ten (10) years following such
                termination of the Supply Agreement. The obligations of
                confidentiality and non-use contained in this Article 10 with
                respect to Guilford Confidential Information and Merck
                Confidential Information shall continue until


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Exchange Commission.




                ten (10) years following the cancellation, termination or
                expiration of the Supply Agreement.

        10.9    For a period of thirty (30) days after the Effective Date, no
                press release or public announcement regarding the terms of this
                Agreement or the Supply Agreement shall be made by either party
                without the prior written consent (which shall not be
                unreasonably withheld and shall be provided or denied within 48
                hours of the date such consent to any such press release, public
                announcement or other communication to the public is requested
                by the requesting party) of the other party with respect to the
                form, content, timing and means of dissemination of such press
                release, public announcement or other communication to the
                public (other than Product advertising, provided that Guilford
                shall not use the word "Merck" or the other words or names
                referred to in Section 8.1 except to the extent otherwise
                permitted in the Transaction Documents); provided, that (i)
                public announcements substantially in the forms attached hereto
                as Schedules 10.9(a) and 10.9(b) and (ii) letters to
                wholesalers, doctors, GPOs and other customers substantially in
                the form reviewed by Merck prior to the Effective Date, in each
                case are hereby approved by both parties.

        10.10   Notwithstanding any obligation contained in this Agreement
                and/or the Supply Agreement to the contrary, Merck shall not be
                required to disclose any information of a third party
                manufacturer to the extent (in Merck's reasonable judgment) that
                the disclosure of such information is prohibited by an agreement
                as to confidentiality with such third party manufacturer;
                provided, that Merck shall cooperate with Guilford in obtaining
                such third party consent; but shall not be held liable for
                failure to obtain such consent.

11      RIGHT OF FIRST NEGOTIATION; RIGHT OF FIRST REFUSAL FOR CANADA



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        11.1    RIGHT OF FIRST NEGOTIATION.

        (a)     If at any time prior to expiration of the Assigned Patents Merck
                chooses to sell or license the rights to promote, market and
                sell the Product (i) in any countries or group of countries
                outside the Territory except to the extent Canada is included
                among such countries (in which case Section 11.2 shall apply) or
                (ii) in any one specific country outside the Territory unless
                that country is Canada (in which case Section 11.2 shall apply),
                Guilford will have a right of first negotiation with respect to
                the purchase or license of all but not less than all of such
                rights from Merck. Such right of first negotiation shall be
                exercised as follows: Merck will provide Guilford with written
                notice of such negotiation opportunity prior to initiating
                discussions with any third party. Such notice shall include a
                data sheet (the "Data Sheet") setting forth the proposed
                territory, the proposed indication, applicable patent rights and
                expiration dates, sales in such proposed territory for the last
                five (5) years by month and year and sales/promotional support
                information. From the date of delivery of such written notice
                and Data Sheet and for a period of up to sixty (60) days
                thereafter, Guilford shall have the exclusive right to enter
                into negotiations with Merck for such sale or license and Merck
                shall negotiate in good faith with Guilford during such period,
                subject to the following. If Guilford desires to engage in
                discussions with respect to such Data Sheet, it shall notify
                Merck of such desire within ten (10) business days of receipt of
                the Data Sheet and Merck and Guilford shall cause a meeting of
                their respective management representatives within ten (10)
                business days of Guilford providing such notice. Within ten (10)
                business days after such meeting, Guilford shall notify Merck
                whether it desires to continue such discussions and, if not,
                whether Guilford in good faith would be interested in future
                discussions regarding



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Exchange Commission.




                any one or a subset of the countries in the proposed territory.
                If Guilford notifies Merck that it desires to continue
                discussions regarding the Data Sheet, Merck and Guilford shall
                negotiate in good faith the terms and conditions of such sale or
                license for the remaining portion of such sixty (60) day period.
                If after engaging in such discussions for the remainder of such
                period the parties are unable to reach a mutually acceptable
                agreement, Merck shall have the right to freely negotiate with
                third parties for the sale or license of the rights to promote,
                market and sell the Product (i) in all countries or any group of
                countries outside the Territory (other than Canada) that were
                included in the Data Sheet or (ii) in any one specific country
                outside the Territory (other than Canada) that was included in
                the Data Sheet; provided, however, that if Merck elects to
                proceed with the sale or license of such rights in some, but not
                all, of the countries in the proposed territory contemplated by
                the Data Sheet, it may do so but Guilford shall retain the right
                of first negotiation contemplated by this Section 11.1(a) to the
                extent of any country with respect to which (i) Guilford
                indicated it was interested in future discussions and (ii) Merck
                has not sold or licensed the rights in the Product in accordance
                with this Section 11.1(a) in such country(ies).

        (b)     If at any time prior to expiration of the Assigned Patents,
                Guilford chooses to sell or license any of the Acquired Assets
                or the rights acquired thereunder to a third party, Merck shall
                have a right of first negotiation with respect to the purchase
                or license of all but not less than all of such Acquired Assets
                or rights from Guilford. Such right of first negotiation shall
                be exercised as follows: Guilford will provide Merck with
                written notice of such negotiation opportunity prior to
                initiating discussions with any third party. From the date of
                delivery of such written notice and for a period of up to sixty
                (60) days thereafter, Merck shall have the



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Exchange Commission.




                exclusive right to enter into negotiations with Guilford for
                such sale or license and Guilford shall negotiate in good faith
                with Merck during such period, subject to the following. Within
                ten (10) business days of the receipt of such notice, Merck
                shall provide written notice of whether it desires to exercise
                its right of first negotiation. In the event Merck provides
                notice that it desire to exercise its right of first
                negotiation, Guilford and Merck shall cause a meeting of their
                respective management representatives within ten (10) business
                days to negotiate in good faith the terms and conditions of such
                sale or license. If after engaging in such discussions for such
                sixty (60) business day period the parties are unable to reach a
                mutually acceptable agreement, Guilford shall have the right to
                freely negotiate with third parties for the sale or license of
                the Acquired Assets and to consummate any such sale.

        11.2    RIGHTS OF FIRST NEGOTIATION AND FIRST REFUSAL WITH RESPECT TO
                CANADA.

                If at any time prior to expiration of the Assigned Patents Merck
                chooses to sell or license the rights to promote, market and
                sell the Product in Canada, Guilford will have both a right of
                first negotiation and a right of first refusal with respect to
                the purchase or license of all but not less than all of such
                rights from Merck. Such rights of first negotiation and first
                refusal shall be exercised as follows. Merck will provide
                Guilford with written notice of such negotiation opportunity
                prior to initiating discussions with any third party. Such
                notice shall include a data sheet (the "Canada Data Sheet")
                setting forth the proposed indication, applicable patent rights
                and expiration dates, sales in such territory for the past five
                (5) years by month and year and sales/promotional support
                information. From the date of delivery of such written notice
                and Canada Data Sheet and for a period of up to sixty (60) days
                thereafter, Guilford shall have the exclusive right to enter



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Exchange Commission.




                into negotiations with Merck for such sale or license and Merck
                shall negotiate in good faith with Guilford during such period,
                subject to the following. If Guilford desires to engage in
                discussions with respect to such Canada Data Sheet, it shall
                notify Merck of such desire within ten (10) business days of
                receipt of the Canada Data Sheet and Merck and Guilford shall
                cause a meeting of their respective management representatives
                within ten (10) business days of Guilford providing such notice.
                Within ten (10) business days after such meeting, Guilford shall
                notify Merck whether it desires in good faith to continue such
                discussions. If Guilford does not indicate it desires to
                continue such discussions or, after engaging in such discussions
                for such sixty (60) day period the parties are unable to reach a
                mutually acceptable agreement, Merck shall have the right to
                freely negotiate with third parties for the sale or license of
                the rights to promote, market and sell the Product in Canada;
                provided, that notwithstanding the foregoing, Merck shall not
                execute an agreement with a third party for the sale or license
                of the rights to promote, market and sell the Product in Canada
                unless Merck shall provide Guilford a right of first refusal as
                follows: If Merck receives a bona fide, third party offer to
                purchase such rights in Canada (the "Offer"), Merck shall
                provide written notice to Guilford setting forth in reasonable
                detail the terms and conditions of the Offer between Merck and
                such third party. Upon receipt of such Offer and for a period of
                thirty (30) days thereafter, Guilford shall have the right to
                provide Merck notice that it desires to enter into negotiations
                on the same terms and conditions as contained in the Offer. In
                such event, Merck and Guilford shall negotiate in good faith to
                reach definitive agreements within thirty (30) days of such
                notice from Guilford. In the event that Guilford does not elect
                to proceed with negotiations or the parties are unable to reach
                definitive



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Exchange Commission.



                agreements within such thirty (30) day period, then Merck shall
                have the right to enter into an agreement with such third party
                substantially on the terms and conditions reflected in the Offer
                presented to Guilford pursuant to this Section 11.2. In the
                event that the terms and conditions of the Offer between Merck
                and such third party shall materially change after delivery of
                the Offer to Guilford, Guilford shall have a separate right of
                first refusal as to such revised Offer for ten (10) business
                days following receipt of such notice in accordance with this
                Section 11.2.

12      SURVIVAL; REMEDIES

        12.1    All representations and warranties of the parties contained
                herein shall survive the Effective Date until the last to occur
                of (a) ten (10) years after the Effective Date or (b) two years
                after the expiration or termination of the Assigned Patents. The
                covenants and agreements of Merck and Guilford hereunder that
                require by their terms performance or compliance on and after
                the Effective Date shall continue in force thereafter in
                accordance with their terms or if no term is specified,
                indefinitely. After the Effective Date all licenses and rights
                of reference granted hereunder to either party shall survive
                expiration or termination of this Agreement.

        MATERIAL BREACH; EQUITABLE REMEDIES

        12.2    The parties recognize that material breach by a party of any of
                the obligations set forth in Article 10 of this Agreement would
                require a different remedy than other possible material breaches
                of this Agreement. In the event that such a material breach
                occurs or is threatened, damages to the non-breaching party will
                not be readily ascertainable, irreparable harm to the such party
                may occur, and such party will not have an adequate remedy at
                law. The parties therefore stipulate





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Exchange Commission.



                and agree that in the event a material breach of any of the
                obligations set forth under Article 10 of this Agreement occurs
                or is threatened, the non-breaching party may seek equitable
                relief from any competent court in New Jersey or in the
                jurisdiction where the breach occurs or is threatened (including
                without limitation a temporary restraining order and/or
                preliminary and permanent injunction) notwithstanding the
                arbitration provisions set forth in Section 15.12 hereof.

13      INDEMNIFICATION

        13.1    INDEMNIFICATION BY MERCK. Merck shall indemnify and hold
                harmless Guilford, its Affiliates and its and their directors,
                officers, shareholders, employees and agents, and their
                respective successors and permitted assigns (the "Guilford
                Indemnitees"), against, and defend the Guilford Indemnitees
                against, any and all claims, actions, causes of action, suits,
                proceedings, damages, losses, liabilities and expenses
                (including, without limitation, reasonable attorneys' fees and
                expenses) (collectively "Claims") and the cost of remedial
                action under Applicable Laws and regulations incurred or
                suffered by Guilford Indemnitees arising out of (i) any
                misrepresentation or breach of covenant, agreement,
                representation or warranty of Merck contained in this Agreement
                or (ii) any Excluded Liability; provided, however, that Guilford
                shall not be entitled to any indemnification under this Section
                13.1 or any other basis of action (including without limitation
                common law tort and indemnity law), except for claims based on
                gross negligence or willful misconduct arising under this
                Agreement, unless and until the amount of claims for which
                Guilford is entitled to be indemnified exceeds in the aggregate
                US $250,000 (the "Basket"); and further provided that the total
                and aggregate liability of Merck for indemnity of Guilford
                Indemnitees


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                under this Section 13.1 (and the comparable provisions of the
                other Transaction Documents) or any other basis of action
                (including without limitation common law tort and indemnity
                law), except for claims based on gross negligence or willful
                misconduct arising under this Agreement, shall not exceed the
                aggregate of (i) US $84,000,000.00, plus (ii) any and all
                Royalty Payments paid to Merck through the date when a payment
                pursuant to this Section 13.1 becomes due (the "Maximum"); and
                provided further that the indemnification by Merck pursuant to
                this Section 13.1 shall relate exclusively to Claims arising
                under this Agreement and shall not relate to any damage, loss,
                liability and expense or other matter arising under any
                representation, warranty, covenant or agreement in the Supply
                Agreement or the Transition Services Agreement.

        13.2    INDEMNIFICATION BY GUILFORD. Guilford shall indemnify and hold
                harmless Merck, its Affiliates and its and their directors,
                officers, shareholders, employees and agents, and their
                respective successors and permitted assigns (the "Merck
                Indemnitees"), against, and defend Merck Indemnitees against any
                and all Claims and the cost of remedial action under Applicable
                Laws and regulations incurred or suffered by Merck Indemnitees
                arising out of (i) any misrepresentation or breach of covenant,
                agreement, representation or warranty of Guilford contained in
                this Agreement, or (ii) subject to the accuracy of the
                representations and warranties contained in Section 4.1, any
                Assumed Liability; provided, however, that the total and
                aggregate liability of Guilford for indemnity of Merck
                Indemnitees under this Section 13.2 or any other basis of action
                (including without limitation common law tort and indemnity
                law), except for claims based on gross negligence or willful
                misconduct arising under this Agreement, shall not exceed the
                Maximum.



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        13.3    INDEMNIFICATION; NOTICE AND SETTLEMENTS. A party seeking
                indemnification pursuant to Section 13.1 or 13.2 (an
                "indemnified party") shall give prompt notice to the party from
                whom such indemnification is sought (the "indemnifying party")
                of the assertion of any claim, or the commencement of any action
                or proceeding, in respect of which indemnity may be sought
                hereunder. The indemnifying party shall have the right to, and
                shall at the request of the indemnified party, assume the
                defense, with counsel reasonably satisfactory to the indemnified
                party, of any such suit, action or proceeding at its own
                expense; provided, that in the event any such indemnifying party
                shall assume the defense of any such claim, such indemnifying
                party may reserve its rights as to its ultimate liability with
                respect to the Claim but in such event, and until the
                indemnifying party shall assume liability for such Claim as an
                indemnified claim under this Article 13, the indemnified party
                shall have the right to participate in such defense and to
                consent to any proposed settlement. An indemnifying party shall
                not be liable under Section 13.1 or 13.2 for any settlement
                effected without its consent of any claim, litigation or
                proceeding in respect of which indemnity may be sought
                hereunder, which consent shall not be unreasonably withheld.

        13.4    GUILFORD INSURANCE. At all times until the later of (a) ten
                years after the Effective Date or (b) two years after the date
                when Merck has proffered the last Products which it is obligated
                to proffer to Guilford under the Supply Agreement and the Supply
                Agreement is no longer in effect, Guilford shall maintain
                standard products/liability/completed operations insurance
                covering all claims against Guilford whatsoever and howsoever
                arising from the Manufacture, distribution, sale or use of the
                Product by Guilford, its servants, employees, agents and
                assigns, with coverage limits of not less than $10,000,000 per
                occurrence and in



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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




                the aggregate a deductible of not more than $1,000,000 for all
                claims made within any year (the "Insurance"). Without
                limitation of the foregoing, the Insurance obtained by Guilford
                shall be effective commencing on the Effective Date and shall
                cover Merck as an additional insured with respect to such
                claims. Guilford shall continue to make premium payments on the
                Insurance for as long as necessary to keep the Insurance in full
                force and effect during the required period. If Guilford fails
                for any reason to make such premium payments in a timely
                fashion, Merck shall have the right to make such payments at the
                expense of Guilford. Guilford shall request its insurer or its
                agent give Merck prompt written notice if Guilford fails to make
                a required premium payment in a timely fashion such that Merck
                shall have not less than ten (10) business days after receipt of
                such notice to make such premium payments. Guilford shall
                immediately notify Merck of any change in the status of the
                Insurance and shall, at Merck's request, provide Merck with a
                certificate of insurance attesting that the Insurance remains in
                full force and effect.

14      MISCELLANEOUS

        14.1    NOTICES. All notices, requests and other communications to any
                party hereunder shall be in writing and shall be sent by fax and
                by first class mail or nationally recognized overnight delivery
                service:

                If to Merck to:

                Merck & Co., Inc.
                351 North Sumneytown Pike
                North Wales, PA 19454-2505
                Attn: Executive Director, USHH Business Development
                Facsimile: 215-616-2335



                with a copy to:

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confidential portions have been submitted separately to the Securities and
Exchange Commission.



                Bruce Hartman, Esq.
                Legal Department UG4A-45
                Merck & Co., Inc.
                351 N. Sumneytown Pike
                North Wales, PA 19454-2505
                Facsimile: 267-305-2965


                If to Guilford, to:

                Guilford Pharmaceuticals Inc.
                6611 Tributary Street
                Baltimore, Maryland 21224
                Attention:  Chief Financial Officer
                Facsimile:  (410) 631-6899

                With a copy to:

                Guilford Pharmaceuticals Inc.
                6611 Tributary Street
                Baltimore, Maryland 21224
                Attention:  General Counsel
                Facsimile:  (410) 631-5598


                or such other address as such party may hereafter specify by
                written notice to the other party. Each such notice, request or
                other communication shall be effective when received at the
                address specified in this Section 14.1.

        14.2    EXPENSES. All legal and other costs and expenses incurred in
                connection herewith and the transactions contemplated hereby
                shall (except as otherwise provided herein) be paid by the party
                incurring such expenses.

        14.3    BULK SALES STATUTES. Guilford hereby waives compliance by Merck
                with any applicable bulk sales statutes in any jurisdiction in
                connection with the transactions under this Agreement. In
                consideration of such waiver, Merck will indemnify and hold
                Guilford harmless for any claim asserted by a third party
                against Guilford arising from any alleged lack of compliance
                with any applicable bulk sales statutes.



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Exchange Commission.



        14.4    SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
                shall inure to the benefit of the parties and their respective
                successors and assigns. This Agreement may not be assigned by
                either party without the prior written consent of the other
                party hereto, which consent shall not be unreasonably withheld
                or delayed; provided, that (i) Guilford shall have the right to
                grant a security interest in or collaterally assign this
                Agreement to the extent required in connection with its
                financing arrangements relating to the transactions contemplated
                by this Agreement and the Transaction Documents upon written
                notice to Merck, such grant or assignment to include the right
                of the grantee or the assignee to foreclose upon such security
                interests as collateral upon default by Guilford and, in such
                event, to sell, assign, license or otherwise dispose of such
                security interest or collateral to a third party; provided,
                however, that any such sale, assignment, license or other
                disposal shall be subject to the provisions of Section 11.3 of
                the Supply Agreement to the extent applicable, and (ii) each of
                Guilford and Merck shall have the right to assign this Agreement
                to any of their respective Affiliates without the prior written
                consent of the other party, provided that no such assignment of
                this Agreement shall relieve the assignor of any of its
                obligations or liabilities under this Agreement. Any attempted
                assignment in violation of this Section 14.4 shall be void.
                Notwithstanding the foregoing, the prohibition on assignment set
                forth in this Section 14.4 shall not apply to any assignment
                that constitutes a Change of Control, which shall be governed by
                the provisions of Section 7.10.

        14.5    ENTIRE AGREEMENT; AMENDMENT. This Agreement, including, without
                limitation, the Schedules hereto, together with the other
                Transaction Documents, embodies the entire agreement of the
                parties hereto with respect to the subject matter



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Exchange Commission.



                hereof and supersedes any and all prior agreements with respect
                thereto. No waiver, amendment or modification of any provision
                hereof or of any right or remedy hereunder shall be effective
                unless in writing and signed by the party against whom such
                waiver, amendment or modification is sought to be enforced.

        14.6    RELATIONSHIP OF SUPPLY AGREEMENT, QUALITY AGREEMENT AND
                TRANSITION SERVICES AGREEMENT. Notwithstanding Section 14.5
                above or any other provision of this Agreement or the Supply
                Agreement, Quality Agreement or the Transition Services
                Agreement to the contrary, the Supply Agreement, Quality
                Agreement, the Transition Services Agreement and this Agreement
                shall each stand as independent agreements between the parties.
                Without limitation of the foregoing, the provisions of this
                Agreement, the Supply Agreement, Quality Agreement and the
                Transition Services Agreement with respect to indemnification by
                Guilford and Merck shall remain independently effective and none
                of such contracts shall be deemed to supersede, augment or limit
                the indemnification obligations imposed on Guilford or Merck by
                the other, except that the Maximum shall be cumulative under all
                such agreements.

        14.7    CAPTIONS; CONSTRUCTION. Captions herein are inserted for
                convenience of reference only and shall be ignored in the
                construction or interpretation of this Agreement. Unless
                otherwise specified, the words "herein", "hereof" and terms of
                like import shall be deemed to refer to the Agreement as a whole
                and not merely to a single part thereof.

        14.8    GOVERNING LAW. This Agreement shall be governed by, interpreted
                and construed, and all claims and disputes, whether in tort,
                contract or otherwise be resolved in accordance with the
                substantive laws of the State of New Jersey without reference to
                any rules of conflict of laws thereof.



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confidential portions have been submitted separately to the Securities and
Exchange Commission.



        JURISDICTION; VENUE; ARBITRATION AND OTHER REMEDIES

        14.9    JURISDICTION. In the event of any controversy or claim arising
                out of or relating to this Agreement, performance hereunder,
                termination hereof, or relationship created hereby, each party
                irrevocably submits to the exclusive jurisdiction of the courts
                of the State of New Jersey and the Federal courts of the United
                States District Court for the District of New Jersey for the
                purposes of any suit, action or other proceeding arising out of
                this Agreement or transactions contemplated hereby. Each party
                irrevocably and unconditionally waives any objection to the
                laying of venue in the state and Federal courts of New Jersey as
                stated above and that any such action was brought in an
                inconvenient forum. Notwithstanding the foregoing:

        14.10   INJUNCTION. In the event of a threatened disclosure in violation
                of this Agreement, either party shall have the right
                (notwithstanding Section 14.11 below) to seek injunctive relief
                from any competent court in New Jersey or in the jurisdiction
                where the disclosure is threatened to prevent such disclosure
                pending resolution of the merits of the dispute;

        14.11   ARBITRATION. Subject to Sections 12.2 and 14.10, any
                controversy, claim or dispute between the parties hereto arising
                out of or relating to the performance, construction,
                interpretation or enforcement of this Agreement shall be
                submitted to binding confidential arbitration pursuant to the
                Federal Arbitration Act, 9 U.S.C. Section 1 et seq. in
                accordance with the Rules of Commercial Arbitration of the
                American Arbitration Association or its successor. Any
                arbitration pursuant to this Agreement shall be conducted in New
                Jersey by three neutral arbitrators selected by the American
                Arbitration Association. The judgment upon the award rendered in
                any such arbitration shall be final and binding upon the parties
                and


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Exchange Commission.




                may be entered in any court having jurisdiction thereof. All
                fees and expenses of the arbitrators and all other expenses of
                the arbitration, except for attorney's fees, shall be shared
                equally by the parties. Each party shall bear its own attorneys
                fees and costs.

        14.12   CONSENT AND WAIVER REGARDING SERVICE OF PROCESS AND PERSONAL

                JURISDICTION. In any action, suit, arbitration or proceeding to
                enforce the rights of either party under this Agreement or
                otherwise arising out of this Agreement or from any acts,
                omissions or activities of either party arising from or related
                in any way to this Agreement or the transactions contemplated
                hereby, each party, by execution and delivery of this Agreement,
                expressly and irrevocably consents to the service of any
                complaint, summons, notice or other process relating to any such
                action, suit, arbitration or proceeding by delivery thereof to
                it by hand or by any other manner provided for in Section 14.1
                hereof. Each party hereby expressly and irrevocably waives any
                claim or defense in any such action, suit, arbitration or
                proceeding based on any alleged lack of personal jurisdiction,
                improper venue, forum non conveniens or any similar doctrine or
                theory.

        14.13   WAIVER OF JURY TRIAL. In any action, suit, arbitration or
                proceeding to enforce the rights of either party under this
                Agreement or otherwise arising out of this Agreement or from any
                acts, omissions or activities of either party arising from or
                related in any way to this Agreement or the transactions
                contemplated hereby, the parties hereto, by execution and
                delivery of this Agreement, expressly and irrevocably waive
                their right to a jury trial and stipulate that any such action,
                suit or proceeding shall be tried to the court (or arbitrator if
                the proceeding is under Section 14.12 hereof).


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Exchange Commission.



        14.14   WAIVER. No waiver by any party in one or more instances of any
                of the provisions of this Agreement or the breach thereof shall
                establish a precedent for any other instance with respect to
                that or any other provision. Furthermore, in case of waiver of a
                particular provision, all other provisions of this Agreement
                will continue in full force and effect.

        14.15   SEVERABILITY. If any provision of this Agreement is held to be
                invalid or unenforceable, all other provisions shall
                nevertheless continue in full force and effect.

        14.16   COUNTERPARTS. This Agreement may be executed in any number of
                counterparts, each of which shall be deemed to be an original,
                but all of which together shall constitute but one and the same
                instrument.

        14.17   NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express
                or implied, is intended to confer upon any third party any
                rights, remedies, obligations or liabilities.

        14.18   COMPLIANCE WITH LAWS AND REGULATIONS. In performing their
                obligations pursuant to this Agreement, the parties hereto agree
                and covenant that they will comply with all applicable federal,
                state, and local laws and regulations.

        14.19   NO PRESUMPTION. There shall not be any presumption against
                either party hereto on the ground that such party was
                responsible for drafting or preparing the term sheet or this
                Agreement or any part of either of such documents.





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Exchange Commission.






        IN WITNESS WHEREOF, this Agreement has been signed by authorized
representatives on behalf of each of the parties hereto as of the day and year
first above written.

MERCK & CO., INC.

By:  /s/ RAYMOND V. GILMARTIN
   -------------------------------------

Name: Raymond V. Gilmartin

Title: Chairman, President and Chief Executive Officer

GUILFORD PHARMACEUTICALS INC.

By:  /s/ CRAIG R. SMITH, M.D.
    ---------------------------

Name:  Craig R. Smith, M.D.

Title: Chairman, President and Chief Executive Officer



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confidential portions have been submitted separately to the Securities and
Exchange Commission.




                               INDEX TO SCHEDULES

                                
Schedule A                          Trademark
Schedule B                          NDA and IND
Schedule C                          Documentation
Schedule D                          Form of Trademark Assignment
Schedule E                          Form of Patent Assignment
Schedule F                          Form of Assignment and Bill of Sale
Schedule 1.10                       Assigned Patents
Schedule 1.12                       Clinical Data and Materials
Schedule 1.14                       Contracts
Schedule 1.34                       Logo
Schedule 1.38                       Marketing Materials
Schedule 1.50                       Process Patents
Schedule 1.55                       Related Patents
Schedule 1.65                       TARGET Materials
Schedule 3.2(d)                     Form of FDA notice (Merck)
Schedule 3.2(g)                     Assets to be Delivered on Effective Date
Schedule 3.3                        Form of FDA notice (Guilford)
Schedule 3.9                        Form of Contract Notice
Schedule 4.1(j)                     Pending or Threatened Claims
Schedule 4.1(m)                     Licenses
Schedule 4.1(p)                     Litigation
Schedule 4.1(q)                     Unreported Adverse Experiences
Schedule 4.1(v)                     Consents, Approvals and Rights of Third Parties
Schedule 4.1(y)                     Clinical Trials
Schedule 10                         Confidential Information
Schedules 10.9(a) and 10.9(b)       Approved Public Announcements



#The Company has omitted certain schedules in accordance with Regulation S-K
601(b)(2). The Company will furnish the omitted schedules to the Commission
upon request.

EX-2.02

                                                                    Exhibit 2.02

                                SUPPLY AGREEMENT

This Supply Agreement (this "Supply Agreement"), dated as of the 28th day of
October, 2003 (the "Effective Date"), is made by and between MERCK SHARP & DOHME
(IRELAND) LIMITED, a corporation organized and existing under the laws of
Bermuda, which is engaged in business in the Republic of Ireland ("MSD IRELAND")
and GUILFORD PHARMACEUTICALS INC., a corporation organized and existing under
the laws of the State of Delaware ("GUILFORD").

                                   WITNESSETH:

WHEREAS, pursuant to the terms of that certain Asset Transfer and License
Agreement between Merck & Co., Inc., an Affiliate (as hereinafter defined) of
MSD IRELAND ("Merck"), and GUILFORD, dated as of the date hereof (the "Asset
Agreement"), Merck has agreed to sell, license and transfer to GUILFORD
effective as of the Effective Date, certain assets in the Territory (as such
term is defined in the Asset Agreement), including the U.S. New Drug Application
for AGGRASTAT(R).

WHEREAS, in conjunction with the Asset Agreement, GUILFORD and MSD IRELAND have
agreed to enter into this Supply Agreement, on the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1.   DEFINITIONS

     The following terms as used in this Supply Agreement, whether used in the
     singular or the plural, shall have the meanings as set forth in this
     Article 1. References to "Articles", "Sections" and "subsections" in this
     Supply Agreement shall be to Articles, Sections and subsections
     respectively, of this Supply Agreement unless otherwise specifically
     provided.

1.1         "Affiliate" shall mean (a) any corporation, company or business
        entity, fifty percent (50%) or more of the voting stock or other
        equity interests of which are owned directly or indirectly by either
        party; (b) any corporation, company or business entity which owns,
        directly or indirectly, fifty percent (50%) or more of

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confidential portions have been submitted separately to the Securities and
Exchange Commission.




        the voting stock or other equity interest of either party; or (c) any
        corporation, company or business entity under the direct or indirect
        control of a corporation, company or business entity as described in
        Section 1.1(a) or (b).

1.2         "API" shall mean tirofiban hydrochloride.

1.3         "Applicable Laws" shall mean the applicable provisions of the United
        States (federal, state and territorial) constitutions, statutes, laws,
        rules, regulations and orders of all applicable United States
        (including its territories) governmental authorities and all applicable
        orders, rules and decrees of United States (including its territories)
        courts.

1.4         "Asset Agreement" shall have the meaning given such term in the
        recitals to this Supply Agreement.

1.5         "Bags" shall mean finished  solution of the API,  packaged in a
        final finished labeled form in either the 100 mL pre-mixed bag and/or
        the 250mL pre-mixed bag.

1.6         "Calendar Year" shall mean the twelve-month period during the Term
        commencing on January 1 and ending on December 31.

1.7         "cGMP" shall mean current United States Good Manufacturing
        Practices, as specified in the United States Code of Federal
        Regulations.

1.8         "Effective Date" shall have the meaning given such term in the
        introductory paragraph to this Supply Agreement.

1.9         "FDA" shall mean the United States Food and Drug Administration or
        any successor organization.

1.10        "Finished Product" shall mean either or collectively, as the context
        requires, Bags and/or Vials, ready for administration.

1.11        "Firm Order" shall mean a binding non-cancelable agreement to
        purchase Supplied Product as evidenced by a purchase order and delivered
        to MSD IRELAND by GUILFORD in accordance with Article 3.

1.12        "Force Majeure" shall have the meaning set forth in Section 12.1.

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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



1.13        "GUILFORD Image" shall mean the labeling to be used by GUILFORD in
        connection with the marketing, sale and distribution of the Supplied
        Product in the Territory, which labeling shall include GUILFORD's NDC
        number.

1.14        "GUILFORD Image Product" shall mean Finished Product using the
        GUILFORD Image.

1.15      *

1.16      *

1.17        "Manufacture/Manufacturing/Manufactured" shall mean all operations
        in the acquisition of Materials, production, packaging, labeling (except
        for labeling as otherwise provided in Section 3.6 and only to the extent
        that MSD IRELAND is supplying Finished Product in accordance with
        Section 3.6) and quality control testing of Supplied Product.

1.18        "Materials" shall mean all active pharmaceutical ingredients, raw
        materials, excipients, bulk packaging components (e.g., drums, etc.)
        and, only to the extent MSD IRELAND is supplying Finished Product and
        subject to GUILFORD's obligations set forth in Section 3.6, packaging
        and labeling components, and other items used to Manufacture Finished
        Product.

1.19        "MSD IRELAND Image Product" shall have the meaning set forth in
        Section 3.6.

1.20        "Net Sales" shall have the meaning set forth in the Asset Agreement.

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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



1.21        "New Drug  Application" or "NDA" shall mean the two new drug
        applications (as defined in 21 C.F.R. Section 314.3) for the Supplied
        Products as filed under the United States Food, Drug and Cosmetic Act.

1.22        "Process Patents" shall mean the following United States patents,
        number US 5,206,373 and US 5,312,923.

1.23        "Securities Laws" shall mean the United States Securities Act of
        1933, as amended, the United States Securities Exchange Act of 1934, as
        amended, and any other similar law or regulation of a United States
        governmental authority, or any successor to any such laws or
        regulations, together with any rules, regulations or listing standards
        or agreements of any national or international securities exchange or
        The NASDAQ Stock Market, as generally applicable.

1.24        "Specifications" shall mean the quality specifications for the
        Supplied Product as specified on Exhibit B, as may be amended from time
        to time in accordance with this Supply Agreement.

1.25        "Supplied Product" shall mean, as the context requires, (i) API;
        and/or (ii) Finished Product, as supplied pursuant to the terms and
        conditions of this Supply Agreement.

1.26        "Supply Agreement" shall have the meaning given such term in the
        introductory paragraph to this agreement.

1.27        "Term" shall have the meaning given such term in Section 11.1.

1.28        "Territory" shall have the meaning given such term in the Asset
        Agreement.

1.29        "Transition  Agreement" shall mean that certain Transition Services
        Agreement dated as of the Effective Date, by and between Merck and
        GUILFORD.

1.30        "Transition Period" shall have the meaning given such term in the
        Transition Agreement.

1.31        "Variable Per Unit Price" shall have the meaning set forth in
        Section 4.2.

1.32        "Vials" shall mean, a concentrated solution of the API packaged in
        a final finished labeled form or in an unlabeled form, as the case may
        be, in a 50 ml vial.


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confidential portions have been submitted separately to the Securities and
Exchange Commission.





2       SUPPLY OF SUPPLIED PRODUCT

2.1.    Subject to Sections 2.2, 2.3 and 2.4, Article 12 and Article 31, MSD
        IRELAND agrees to supply, or cause its Affiliate or third party to
        supply, to GUILFORD, and GUILFORD agrees to purchase from MSD IRELAND,
        MSD IRELAND's Affiliate or third party, as the case may be, all of
        GUILFORD's requirements for Supplied Product for the Term in accordance
        with the terms and conditions of this Supply Agreement. The decision as
        to whether to Manufacture the Supplied Product or have Manufactured by
        an Affiliate of MSD IRELAND or third party such Supplied Product shall
        be made by MSD IRELAND in its sole discretion; provided, that any
        changes to the Manufacturing process or the manufacturer of Supplied
        Product shall be in accordance with Section 7.8; and provided further,
        however, that notwithstanding any such assignment, transfer, license or
        delegation, as applicable, MSD IRELAND shall remain responsible to
        ensure supply of Supplied Product in accordance with the terms and
        conditions of this Supply Agreement.

2.2.    *

        (a) *

        (b) *

        (c) *

        (d) *

        (e) *

        (f) *

        (g) *

2.3.    *

        (a) *

        (b) *

        (c) *


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Exchange Commission.




        (d) *

2.4.    *

        (a) *

        (b) *

        (c) *

2.5.    Notwithstanding anything contained in this Supply Agreement or the Asset
        Agreement to the contrary and for the avoidance of any doubt, the
        parties expressly agree that any royalty obligation set forth in the
        Asset Agreement shall not be affected (nor shall GUILFORD be relieved of
        any royalty obligation), whether or not MSD IRELAND is able to supply
        Supplied Product.

3.      ORDERS

3.1.    Orders for Delivery in the Transition Period.

        (a) In order to ensure a smooth transition, attached hereto as Schedule
        3.1, is a copy of the Firm Orders for delivery of Finished Product
        during the Transition Period; the quantities are more particularly
        described on Schedule 3.1. Schedule 3.1 also reflects the month of
        manufacture and lot number of any MSD IRELAND Image Product existing in
        MSD IRELAND's (or its Affiliate's) inventory on the Effective Date. On
        the Effective Date, GUILFORD shall deliver to MSD IRELAND the actual
        individual monthly Firm Orders for each month in the Transition Period.

        (b) Firm Orders during the Transition Period for GUILFORD Image Product
        shall not specify delivery unless such delivery is no less than two
        hundred and seventy (270) days after the Effective Date. Notwithstanding
        the foregoing, in the event that the GUILFORD Image is available prior
        to this time, MSD IRELAND and GUILFORD shall coordinate with each other
        and will work to implement the GUILFORD Image as quickly as commercially
        reasonable (even with respect to ordered MSD IRELAND Image Product, if
        reasonably possible).

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confidential portions have been submitted separately to the Securities and
Exchange Commission.




        (c) Other than the Firm Orders contemplated by this Section 3.1, MSD
        IRELAND shall have no further obligation to deliver any Supplied Product
        to GUILFORD during the Transition Period, but shall use reasonable
        efforts to accommodate any proposed increase to the Firm Orders; but
        shall not be held liable for failure to do so.

3.2.    Orders relating to Finished Product for Delivery after the Transition
        Period.

        (a) In order that MSD IRELAND may properly and economically plan
        production of Finished Products, on or before the fifteenth (15th)
        calendar day of each month, commencing within thirty (30) days after the
        Effective Date, GUILFORD will provide MSD IRELAND with a written rolling
        twenty-four (24) month forecast of GUILFORD's monthly requirements of
        Finished Products, broken down into each image of Bags and Vials.
        Exhibit C sets forth the format in which each forecast shall be provided
        to MSD IRELAND and GUILFORD shall deliver each such forecast to a person
        designated from time to time by MSD IRELAND. Firm Orders must be made in
        full lot quantities as reflected in Exhibit A.

        (b) The first six (6) months of each twenty-four (24) month forecast as
        set forth in the form of Exhibit C shall constitute Firm Orders and
        GUILFORD shall be required to deliver to MSD IRELAND with its
        twenty-four month forecast, a Firm Order evidencing the sixth month of
        the twenty-four month forecast.

        (c) In addition to the rolling monthly forecast, commencing within
        thirty (30) days after the Effective Date, and thereafter by July 1 of
        each Calendar Year, GUILFORD shall provide MSD IRELAND with a long range
        plan containing a non-binding estimate of annual requirements of
        Finished Product through and including the period ending on (i) December
        31, 2004, with respect to Vials and (ii) August 18, 2007, with respect
        to Bags. Exhibit C-1 sets forth the format in which each long-range plan
        shall be provided. GUILFORD shall use all commercially reasonable
        efforts to make its estimated long range forecast a reasonable basis for
        MSD IRELAND's production planning and capacity investment.

        (d) The monthly requirements for Finished Product for the sixth month in
        each rolling forecast shall not be less than seventy-five percent (75%),
        nor more than one hundred twenty-five percent (125%) of that month's
        rolling forecast issued

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Exchange Commission.





        in the immediately preceding forecast, when that month was the seventh
        month in the forecast.

3.3.    Orders relating to API for Delivery after the Transition Period

        (a) In order that MSD IRELAND may properly and economically plan
        production of API, no later than January 1, 2004 and thereafter on or
        before the fifteenth (15th) calendar day of each month, GUILFORD will
        provide MSD IRELAND with a written rolling twenty-four (24) month
        forecast of GUILFORD's monthly requirements of API. Exhibit D sets forth
        the format in which each forecast shall be provided to MSD IRELAND and
        GUILFORD shall deliver each such forecast to a person designated from
        time to time by MSD IRELAND.

        (b) The first six (6) months of each twenty-four (24) month forecast as
        set forth in the form of Exhibit D shall constitute Firm Orders and
        GUILFORD shall be required to deliver to MSD IRELAND with its
        twenty-four month forecast, a Firm Order evidencing the sixth month of
        the twenty-four month forecast; provided, however, that with respect to
        the first twenty-four month forecast, GUILFORD shall provide six Firm
        Orders evidencing each of the first six (6) months of the twenty-four
        month forecast.

        (c) In addition to the rolling monthly forecast, commencing within
        thirty (30) days after the Effective Date, and thereafter by July 1 of
        each Calendar Year, GUILFORD shall provide MSD IRELAND with a long-range
        plan containing a non-binding estimate of annual requirements of API for
        the next five (5) years. Exhibit D-1 sets forth the format in which each
        long-range plan shall be provided. GUILFORD shall use all commercially
        reasonable efforts to make its estimated long-range forecast a
        reasonable basis for MSD IRELAND's production planning and capacity
        investment. If at any time GUILFORD's long-range plan reasonably
        suggests any supply issue, particularly as it relates to production
        capacity, the parties shall discuss how to address the potential
        shortage.

        (d) The monthly requirements for API for the sixth month in each rolling
        forecast shall not be less than seventy-five percent (75%), nor more
        than one hundred twenty-five percent (125%) of that month's rolling
        forecast issued in the immediately preceding forecast, when that month
        was the seventh month in the forecast.

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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





3.4.    MSD IRELAND shall confirm in writing that a Firm Order has been accepted
        within ten (10) business days of receipt thereof. MSD IRELAND shall
        deliver against each such Firm Order in accordance with this Article 3.
        The parties acknowledge and agree that such amounts and delivery dates
        are an approximation of the total amount of Supplied Product to be
        delivered by MSD IRELAND to GUILFORD on the anticipated delivery dates;
        provided, that, the amount of the Supplied Product specified in a Firm
        Order shall determine whether any shortage occurred pursuant to Article
        2.

3.5.    Firm Orders shall not be made in any form of document other than that
        prescribed by this Supply Agreement unless the parties agree otherwise
        in writing. Any term or condition of a Firm Order that is different from
        or contrary to the terms and conditions of this Supply Agreement shall
        be void. Except as contemplated by Article 11, all Firm Orders shall be
        non-cancelable by either party and GUILFORD shall be obligated to pay
        the Variable Per Unit Price for the Supplied Products supplied to
        GUILFORD pursuant to each such Firm Order. MSD IRELAND agrees to make
        reasonable efforts to comply with unplanned changes in Firm Orders, but
        shall not be held liable for its inability to so comply.

3.6.    (a) During the Transition Period, MSD IRELAND shall supply to GUILFORD
        Finished Product using the label as it exists on the Effective Date with
        Merck & Co., Inc.'s National Drug Code (the "MSD IRELAND Image
        Product"); provided that the MSD IRELAND Image Product must be
        distributed by MSD IRELAND (or its Affiliate) in accordance with the
        Transition Agreement and this Supply Agreement. In the event that at the
        end of the Transition Period, any inventory of MSD IRELAND Image Product
        remains which has been ordered by GUILFORD pursuant to Firm Orders, MSD
        IRELAND shall supply such MSD IRELAND Image Product to GUILFORD in
        accordance with such Firm Orders and this Supply Agreement and GUILFORD
        shall be allowed to exhaust such inventory; provided, that GUILFORD
        expressly agrees to handle and store such MSD IRELAND Image Product in
        accordance with cGMP and not to promote the MSD IRELAND Image Product in
        any manner contrary to its labeling.

        (b) GUILFORD agrees to use its reasonable efforts to expeditiously
        obtain FDA approval for alternate labeling using the GUILFORD Image.
        Notwithstanding anything to the contrary in this Supply Agreement, MSD
        IRELAND shall not be obligated to supply after the Transition Period any
        MSD IRELAND Image Product in accordance with Section 3.6(a) even if
        GUILFORD has not obtained FDA approval for alternate labeling.


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




        (c) During the Transition Period, MSD IRELAND shall supply MSD IRELAND
        Image Product in accordance with Section 3.1. Thereafter, MSD IRELAND
        shall only be obligated to supply GUILFORD Image Product of (x) Vials
        until December 31, 2004 and (y) Bags until August 18, 2007; provided,
        that GUILFORD shall be responsible for submitting to MSD IRELAND within
        thirty (30) days after the Effective Date all Master Copy for its
        proposed label in a format specified by MSD IRELAND and which is
        compatible with MSD IRELAND's (or its Affiliate's or third party's)
        equipment. Any costs associated with the labeling change shall be for
        the account of GUILFORD. After such periods set forth in this Section
        3.6(c), MSD IRELAND shall supply API during the Term to GUILFORD and MSD
        IRELAND shall not be obligated to supply Vials and/or Bags.
        Notwithstanding the foregoing, if ordered by GUILFORD in accordance with
        this Article 3, MSD IRELAND shall supply API for delivery at any time
        during the Term of this Supply Agreement; provided, however, that once
        such API is delivered to GUILFORD, MSD IRELAND shall not have the
        obligation to (nor shall it) formulate and/or package such API into
        Finished Products.

        (d) MSD IRELAND shall provide to GUILFORD no later than five (5) days
        after the Effective Date, hard copies of all printed trade components
        comprising the Finished Products (e.g., labels, cartons and circulars).
        Notwithstanding the foregoing, GUILFORD shall be solely responsible for
        the content of all print copy and GUILFORD shall ensure that all such
        print copy complies with all Applicable Laws.

4.      PRICE AND PAYMENT

4.1.    The consideration for the Supplied Product shall consist of   *
        as follows:  *   payment of  *  by wire transfer to the account
        designated in Section 4.3 below (the
        "  *  ");  *  as set forth in   *. The   *   whether or
        not this Supply Agreement is terminated, cancelled or expired.

4.2.      *


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



4.3.    For Supplied Product to be delivered during the Transition Period, MSD
        IRELAND shall invoice GUILFORD upon delivery of such Supplied Product to
        GUILFORD. Thereafter, MSD IRELAND shall invoice GUILFORD for Supplied
        Product upon the earlier of (i) delivery of the Supplied Product to
        GUILFORD; provided, that MSD IRELAND has delivered the release
        documentation to GUILFORD in accordance with Section 7.4 and GUILFORD
        has released the Supplied Product or (ii) in the event that GUILFORD has
        not released the Supplied Product, thirty days after the release
        documentation specified in Section 7.4 has been delivered to GUILFORD.
        All payments for Supplied Product shall be made in U.S. Dollars within
        thirty (30) days after the date of invoice. Other than the Lump Sum
        Payment, payment shall be remitted by wire transfer in immediately
        available funds in the invoiced currency to a bank and account to be
        designated in writing from time to time by MSD IRELAND or by certified
        check drawn on a United States bank. The Lump Sum Payment shall be paid
        by GUILFORD to MSD IRELAND by *:

*

        Any payment not made when due shall bear interest at the lesser of (i)
        1.0% per month or (ii) the maximum rate permitted under Applicable Law.

4.4.    Any and all taxes (excluding income taxes based upon MSD IRELAND's
        income or franchise fees or taxes) relating to the supply of Supplied
        Product to GUILFORD hereunder, including, without limitation, sales
        taxes required to be paid by any United States federal, state,
        territorial or local authority shall be borne by GUILFORD. Official
        receipts indicating proof of payment of any such taxes shall be secured
        and made available to MSD IRELAND upon request as evidence of payment.

4.5.    Any payment required to be made by one party to the other party pursuant
        to the terms and conditions of this Supply Agreement shall be made in
        United States Dollars, whether or not specified herein.

4.6.      *


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




4.7.      *



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






5.      DELIVERY AND RISK OF LOSS

5.1.    MSD IRELAND shall deliver or arrange for delivery of Supplied Product
        purchased by GUILFORD to a carrier designated by GUILFORD (provided that
        such designated carrier shall be approved by MSD IRELAND, such approval
        not to be unreasonably withheld), FOB (UCC 2-319), MSD IRELAND's (or, as
        the case may be, its Affiliate's or designated third party's)
        manufacturing plant; provided, however, that in the event that GUILFORD
        requests, MSD IRELAND shall facilitate the delivery of such Supplied
        Product to GUILFORD's warehouse or other designated facility. For the
        avoidance of any doubt, all shipping costs associated with the delivery
        of Supplied Products (whether delivered to MSD IRELAND's (or, as the
        case may be its Affiliate's or designated third party's) manufacturing
        plant or GUILFORD's warehouse or other designated facility shall




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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




        be paid by GUILFORD. Each shipment shall be accompanied by a Certificate
        of Analysis in accordance with Section 7.4 with respect to each lot
        contained in such shipment.

5.2.    Title to the Supplied Product sold hereunder shall pass to GUILFORD at
        MSD IRELAND's (or as the case may be, its Affiliate's or designated
        third party's) manufacturing plant, and MSD IRELAND's liability as to
        delivery thereof and risk of loss shall cease at MSD IRELAND's (or, as
        the case may be, its Affiliate's or designated third party's)
        manufacturing plant. Notwithstanding the foregoing, it is understood
        that the sale of Supplied Product is for the resale in the Territory
        only. GUILFORD expressly acknowledges that MSD IRELAND and/or its
        Affiliates have or may have patent rights in and outside the Territory
        and GUILFORD obtains no rights, express or implied, with respect to any
        patent rights related to Supplied Product outside the Territory.

6.      WARRANTY AND LIMITATIONS

6.1.    MSD IRELAND warrants, covenants and agrees that the Supplied Product
        supplied by it hereunder shall, at the time of delivery, be Manufactured
        and delivered (i) to meet the Specifications, (ii) in compliance with
        cGMP, and (iii) in all material respects, in accordance with Applicable
        Law. ALL OTHER WARRANTIES ARE EXPRESSLY DISCLAIMED, INCLUDING ANY
        WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

6.2.    Claims that Supplied Product did not, at the time of delivery, meet the
        warranty specified in Section 6.1 must be made to MSD IRELAND (i) with
        respect to defects that are apparent or which could have been found with
        reasonable diligence, within thirty (30) days following delivery of such
        Supplied Product in accordance with Article 5 and (ii) with respect to
        all other defects, within thirty (30) days after the date that GUILFORD
        discovered or should have discovered with reasonable diligence such
        defect, and in either case, must be in writing, specifying in reasonable
        detail the nature and basis of the claim and citing relevant control
        numbers or other information to enable identification of the Supplied
        Product in question. At MSD IRELAND's request, GUILFORD shall forward
        for inspection a representative sampling of the Supplied Product that is
        the subject of GUILFORD's claim. MSD IRELAND shall as soon as is
        reasonably practicable inspect such samples and provide the results of
        such inspection to


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        GUILFORD. If MSD IRELAND concurs with GUILFORD's claim, MSD IRELAND
        shall, at GUILFORD's option, replace the defective Supplied Product
        without any cost to GUILFORD, if commercially reasonable and possible,
        or credit GUILFORD for the amount of the Variable Per Unit Price for
        such quantities of Supplied Product. If the parties are unable to
        resolve their differences, then either party may refer the matter to an
        independent specialized firm of international reputation agreeable to
        both parties for final analysis, which shall be a final resolution of
        such issue, binding on both parties hereto and not subject to
        arbitration pursuant to Article 14. No Supplied Product shall be
        returned to MSD IRELAND without the prior written consent of MSD
        IRELAND. If the Supplied Product is determined to have met such
        warranty, then GUILFORD shall bear the cost of the independent
        laboratory testing pursuant to this Section 6.2. If the Supplied Product
        is determined not to have met such warranty, then MSD IRELAND shall bear
        the costs of such laboratory testing and shall, at GUILFORD's option,
        replace the defective Supplied Product without any cost to GUILFORD, if
        commercially reasonable and possible, or credit GUILFORD for the amount
        of the Variable Per Unit Price of such Supplied Product. The remedies
        specified in this Section 6.2 shall constitute GUILFORD's sole and
        exclusive remedy for claims under Section 6.1 and this Section 6.2 other
        than with respect to third party claims or remedies under Article 2, in
        which case Section 10.2 or Article 2, as the case may be, shall apply.

6.3.    Any Supplied Product, which fails to meet the warranty specified in
        Section 6.1, and which is in GUILFORD's or its Affiliate's control shall
        be destroyed pursuant to MSD IRELAND's reasonable instructions and at
        MSD IRELAND's expense. MSD IRELAND may, if it so requests, be present at
        the destruction of such Supplied Product.

6.4.    GUILFORD shall have the right to take any and all steps necessary or
        desirable to transfer the Manufacture of the Finished Product to
        GUILFORD or its Affiliate, or to establish an alternative supplier of
        the Finished Product, in a manner consistent with this Supply Agreement;
        provided, however, that during the Term and subject to Section 7.8 and
        Article 31, GUILFORD shall not without MSD IRELAND's written consent
        (which consent shall not be unreasonably withheld or delayed) change,
        amend or alter the NDA in any way which materially adversely affects (i)
        the fact that MSD IRELAND (or its Affiliate or third party manufacturer)
        is Manufacturing the Supplied Product, (ii) the manner in which MSD
        IRELAND (or its Affiliate or third party manufacturer) is Manufacturing
        the Supplied Product,


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        or (iii) MSD IRELAND's or its Affiliate's other regulatory filings not
        otherwise included in the Asset Agreement.

7.      QUALITY CONTROL

7.1.    MSD IRELAND shall Manufacture (or cause its Affiliates or third party to
        Manufacture) Supplied Product which meets the Specifications, in
        accordance with cGMP, and in accordance, in all material respects, with
        Applicable Law.

7.2.    Each party shall notify the other party orally within one (1) day of
        receiving any customer complaints and reported defects relating to
        Supplied Product, and shall confirm such notification to the other party
        and provide all available details in writing within three (3) days
        thereafter.

7.3.    Subject to the remaining provisions of this Section 7.3, any recall of
        Supplied Product instituted at the request of the FDA or voluntarily
        instituted by GUILFORD for any reason shall be the responsibility of
        GUILFORD, including any expenses related thereto; provided, that,
        GUILFORD shall give to MSD IRELAND prior notice of any contemplated
        recall and an opportunity to discuss and agree upon the appropriate
        actions to be taken; provided, further, that GUILFORD shall not
        voluntarily institute any recall unless and until MSD IRELAND agrees
        with such decision (such agreement not to be unreasonably withheld or
        delayed). GUILFORD shall indemnify MSD IRELAND against all costs
        incurred in connection with such recall. MSD IRELAND shall cooperate
        fully with GUILFORD in the conduct of any such recall. Notwithstanding
        the foregoing but subject to Section 10.2 and Article 6, to the extent
        that such recall arises out of MSD IRELAND's failure to supply Supplied
        Product in accordance with the warranties set forth in Section 6.1 and
        subject to Section 10.5, MSD IRELAND shall be responsible for the
        expenses of such recall and shall indemnify GUILFORD for any costs
        incurred by GUILFORD in connection therewith, including the refund of
        the Variable Per Unit Price paid for recalled Supplied Product
        ("Recalled Supplied Product") or replacement of such Recalled Supplied
        Product, at GUILFORD's option, unless such option is not commercially
        reasonable and possible.

7.4.    MSD IRELAND shall perform, or cause to be performed, such quality
        control tests as indicated in the Specifications and shall make the
        results of such quality control tests performed by MSD IRELAND's third
        party manufacturer, in the case



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        of Bags, and by MSD IRELAND or its Affiliate, in the case of API and/or
        Vials, as the case may be, available to GUILFORD on or before the date
        of delivery of the Supplied Product to GUILFORD in accordance with
        Article 5. Each Certificate of Analysis shall, for each lot delivered,
        specify the quality tests conducted, the Specifications and the test
        results, and any deviations from the Specifications, and shall include
        the lot number, the quantity delivered and the expiry date.

7.5.    Other than MSD IRELAND Image Product delivered to GUILFORD in accordance
        with the terms of this Supply Agreement and the Transition Agreement
        (which shall be released by MSD IRELAND), the release of Supplied
        Product will be the responsibility of GUILFORD. MSD IRELAND (or its
        Affiliates or third party designees, as the case may be) shall perform
        all necessary stability tests relating to Finished Product.

7.6.    MSD IRELAND shall, upon GUILFORD's written request, make a copy of the
        Annual Product Review (to the extent relevant to Supplied Product) with
        respect to Supplied Product supplied under this Supply Agreement
        available to GUILFORD for its review. MSD IRELAND will provide
        information reasonably requested by GUILFORD that is necessary for the
        preparation by GUILFORD of any of its regulatory filings.

7.7.    If MSD IRELAND discovers that any lot of Supplied Product previously
        delivered to GUILFORD by MSD IRELAND under this Supply Agreement fails
        to meet the Specifications, MSD IRELAND shall promptly notify GUILFORD
        of such failure and the nature thereof in detail. MSD IRELAND shall
        promptly investigate all such failures and provide the findings of such
        investigation to GUILFORD. MSD IRELAND shall consult with GUILFORD in an
        effort to arrive at an acceptable procedure for taking appropriate
        action in response to such failure.

7.8.    Change Requests

        (a) Change to Specifications. In the event of a proposed change by
        either party in the Specifications during the Term, the proposing party
        shall promptly notify the other party of the proposed change, and shall
        provide the other party with documentation in support of such proposed
        change and within a period of ten (10) business days from receipt of
        such notice, the parties shall initiate review and comment on such
        proposed change. MSD IRELAND and GUILFORD shall cooperate in good faith
        to design a plan to resolve any Supplied Product supply issues that may
        result from changes in the Specifications, and while MSD


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        IRELAND is Manufacturing the Supplied Product hereunder, no change will
        be made without the written mutual agreement of both parties, such
        agreement not to be unreasonably withheld, except as required by
        Applicable Laws. Beginning on the Effective Date, GUILFORD shall obtain
        all necessary and appropriate regulatory approvals prior to making any
        agreed upon change or any change required by Applicable Law or
        regulatory action. MSD IRELAND shall provide GUILFORD with necessary
        revisions to the Specifications (as well as supporting data) as so
        changed prior to shipment of any Supplied Product Manufactured using
        such revised Specifications. Subject to the foregoing, if MSD IRELAND
        makes a change to the Manufacturing process or Specifications and both
        parties agree the change can be filed in the Annual Report, MSD IRELAND
        shall provide the data to GUILFORD prior to submission of the Annual
        Report. All costs associated with any such change shall be borne as
        agreed by the parties.

        (b) Required Manufacturing Changes. Each party shall give the other
        party reasonable notice prior to any changes to the process of
        Manufacturing Supplied Product for sale in the Territory that are
        required by cGMPs or Applicable Laws (collectively, "Required
        Manufacturing Changes"). The party required by cGMPs or Applicable Laws
        to make Required Manufacturing Changes shall carry out such Required
        Manufacturing Changes and the other party shall, where required, assist
        in carrying out such changes.

        (c) Discretionary Manufacturing Changes. MSD IRELAND may, upon
        reasonable notice to GUILFORD, make changes to the process of
        Manufacturing of Supplied Product other than Required Manufacturing
        Changes (collectively, "Discretionary Manufacturing Changes"); provided,
        that any such change does not materially adversely affect GUILFORD's
        ability to sell Supplied Product in substantially the same manner as
        sold prior to such change. GUILFORD may also request Discretionary
        Manufacturing Changes but such changes must be approved by MSD IRELAND
        prior to the implementation of such changes.

        (d) Costs of Manufacturing Changes. All costs associated with Required
        Manufacturing Changes (including, without limitation, write off and
        other costs due to such changes associated with obsolete raw materials,
        work-in-process and finished product inventories, all printed materials,
        including without limitation, packaging and labeling materials) shall be
        borne by GUILFORD (unless such costs would otherwise be included in
        Variable Per Unit Price as


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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        contemplated by Schedule 11.6). MSD IRELAND shall use commercially
        reasonable efforts to mitigate losses and/or avoid write-offs as a
        result of any Required Manufacturing Changes. All costs associated with
        Discretionary Manufacturing Changes shall be paid by the party that
        requested such Discretionary Manufacturing Changes.

        (e) Changes from Manufacturing Facility to Another. MSD IRELAND may
        change its Manufacturing facilities for the Supplied Product hereunder
        after giving GUILFORD reasonable written prior notice of such change,
        provided that no change of Manufacturing facility shall relieve MSD
        IRELAND of any of its obligations under this Supply Agreement. MSD
        IRELAND shall provide to GUILFORD all supporting data in order to permit
        GUILFORD to amend its regulatory filing to reflect this change and shall
        otherwise cooperate in good faith with GUILFORD to comply with all
        regulatory obligations arising out of such change. All costs associated
        with MSD IRELAND's change of its Manufacturing facilities for the
        Supplied Product shall be borne by MSD IRELAND other than any regulatory
        costs which shall be borne by GUILFORD.

7.9     All Manufacturing records shall be retained by MSD IRELAND or its
        Affiliate or third party manufacturers for a period of not less than two
        (2) years after the date of expiry of each batch of Supplied Product to
        which said records pertain.

7.10    MSD IRELAND shall permit one or more qualified technical specialists
        from GUILFORD or its Affiliate, upon reasonable prior notice and during
        normal business hours, to conduct annual audits (including, but not
        limited to, quality, safety and environmental audits) of MSD IRELAND's
        or its Affiliate's facility that Manufactures the API or Merck's West
        Point, Pennsylvania facility that packages certain of the Finished
        Product or any other facility to which MSD IRELAND transfers such
        Manufacture pursuant to the terms and conditions of Section 7.8.
        GUILFORD shall also be permitted to accompany Merck on Merck's annual
        audits of Merck's third party manufacturers. Observations and
        conclusions of GUILFORD's audits will be issued to MSD IRELAND. MSD
        IRELAND shall provide a written response within fifteen (15) days of
        receipt of such observations and conclusions. The parties will discuss
        such response and promptly agree on corrective action to be implemented
        as well as the appropriate apportionment of costs associated therewith.
        GUILFORD shall have the right to review all relevant documentation.

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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





7.11    Promptly following the Effective Date, the parties shall work together
        to negotiate and finalize in an expeditious manner a quality agreement
        (the "Quality Agreement"), but in no event later than thirty (30) days
        after the Effective Date. The parties expressly agree that such Quality
        Agreement will supplement this Article 7 and that should there be any
        inconsistency between such Quality Agreement and this Supply Agreement,
        the terms of the Supply Agreement shall govern.

8.      REGULATORY INTERACTIONS

8.1.    GUILFORD shall be responsible for maintaining the NDAs and all
        regulatory filings and submissions associated with the Supplied Products
        in the Territory. MSD IRELAND shall provide any Manufacturing-related
        information to GUILFORD as may be reasonably necessary for GUILFORD to
        meet its regulatory obligations to maintain the NDAs and file the
        required reports thereunder in the Territory, including, providing such
        information relating to any changes contemplated in Section 7.8 in
        accordance with the terms set forth therein. Each party shall cooperate
        with the other in making and maintaining all regulatory filings that may
        be necessary in connection with the performance of this Supply Agreement
        until the first annual anniversary date to occur after MSD IRELAND (or
        its Affiliate or third party manufacturer) ceases to supply a given
        Supplied Product to GUILFORD hereunder.

8.2.    GUILFORD shall have the responsibility for communications with the FDA
        within the Territory relating to the Supplied Product. MSD IRELAND shall
        provide GUILFORD, in a timely manner, all information reasonably in its
        (or its Affiliate's) control concerning the Supplied Product within or
        outside the Territory reasonably necessary to meet GUILFORD's regulatory
        obligations in the Territory and GUILFORD shall provide MSD IRELAND or
        its Affiliate, in a timely manner, all information reasonably in its
        control concerning the Supplied Product inside or outside the Territory
        necessary to meet MSD IRELAND's or its Affiliate's regulatory
        obligations outside the Territory.

8.3.    Each party shall advise the other immediately (but in no event greater
        than twenty-four (24) hours) of FDA visits relating specifically to the
        Supplied Product or, if applicable, no later than five (5) business days
        after such party's receipt of notice of any such FDA visits to MSD
        IRELAND's facilities or the facilities of any of MSD IRELAND's
        Affiliates or its or their third party manufacturers relating
        specifically to the Supplied Product, or any written or oral inquiries
        by such

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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        regulatory agency, concerning the Finished Product or the API including,
        without limitation, safety and efficacy claims, subject to any
        confidentiality obligation with respect to MSD IRELAND's or its
        Affiliate's third party manufacturers. GUILFORD and MSD IRELAND shall
        consult with one another in an effort to arrive at a mutually acceptable
        response. Each party shall promptly furnish to the other party any
        report or correspondence issued by or provided to any regulatory agency
        in connection with such visit, purged only of trade secrets of such
        party that are unrelated to the other party's activities under this
        Supply Agreement and any information that is unrelated to the Finished
        Product or the API, as the case may be, subject to any confidentiality
        obligation with respect to MSD IRELAND's or its Affiliate's third party
        manufacturers.

8.4.    Except for MSD IRELAND Image Product delivered to GUILFORD in accordance
        with the terms of this Supply Agreement and the Transition Agreement,
        GUILFORD shall use its or GUILFORD's own NDC numbers on any packaging of
        Finished Product sold in the Territory.

9.      ADVERSE REACTION REPORTING; RETURNED GOODS

9.1.    During the Term of this Supply Agreement and for three (3) years
        thereafter, each of GUILFORD and MSD IRELAND shall be responsible for
        reporting adverse experiences and reactions with respect to Supplied
        Product in conformance with all Applicable Laws, rules and regulations.
        Each of GUILFORD and MSD IRELAND shall send to the other, throughout
        such period, copies of all such adverse experience or reaction reports,
        with all Serious or Unexpected (as each term is hereinafter defined)
        adverse experiences (and relevant government reporting forms) sent to
        the other party within five (5) calendar days of such party's receipt,
        and all adverse experiences or reactions other than Serious or
        Unexpected adverse experiences (and relevant government reporting forms)
        sent to the other party within thirty (30) calendar days after such
        party's receipt. Not later than thirty (30) days after the Effective
        Date, MSD IRELAND (or its designee) and GUILFORD (or its designee) will
        meet and develop mutually acceptable pharmacovigilance procedures to
        allow both parties to comply with applicable regulations and orders of
        regulatory authorities. As used in this Section 9.1, "Serious" shall
        mean, with respect to any experience or reaction, one which is fatal or
        life threatening, results in persistent or significant disability,
        requires inpatient hospitalization or prolongation of existing inpatient
        hospitalization, is a congenital anomaly, cancer, or the result of an
        overdose, or


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        is another important medical event (even if not life-threatening,
        resulting in death, or requiring hospitalization) if, based upon
        appropriate medical judgments, such medical event may jeopardize the
        patient's or subject's health or may require medical or surgical
        intervention to prevent one of the other outcomes listed previously; and
        "Unexpected" shall mean, with respect to any condition or development,
        one which is not listed in the then-current FDA-approved labeling for
        the Supplied Products, and includes those experiences or reactions that
        show a significant increase in incidence or severity over what appears
        on the labeling for the Supplied Products, or in NDA trials, or that
        reflect or suggest a failure of the Supplied Products to achieve claimed
        activity.

9.2.    In the event that MSD IRELAND or its Affiliate receives any returned
        goods of Supplied Product from a third party, then MSD IRELAND shall
        notify GUILFORD of such returned goods and destroy such returned goods
        at GUILFORD's expense. GUILFORD shall not have the right to return any
        Supplied Product to MSD IRELAND, other than in accordance with Article
        6. Notwithstanding the foregoing, in the event that any such returned
        goods of Supplied Product relate to a lot which was partially sold by
        MSD IRELAND or its Affiliate prior to the Effective Date and partially
        sold by GUILFORD after the Effective Date or sold by MSD IRELAND (and
        its Affiliates) in its entirety prior to the Effective Date, then the
        provisions of the Asset Agreement relating to returned product shall
        apply.

10.     *

10.1.   *

10.2.   *

10.3.   *

10.4.   *

10.5.   *

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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





11.     TERM AND TERMINATION

11.1.   This Supply Agreement shall be effective as of the Effective Date and,
        unless earlier terminated as provided in this Article 11, Article 2 or
        Article 31, shall continue in effect with respect to (x) Vials, until
        December 31, 2004, (y) Bags, until August 18, 2007 and (z) API, until
        December 31, 2014 (the Effective Date until such date of termination,
        the "Term").

11.2.   This Supply Agreement may be terminated by written notice given by
        either party as follows:

        (a) If the other party shall be in breach of any material obligation
        hereunder, and has not cured such breach within ninety (90) days after
        receipt of a notice from the non-breaching party requesting the
        correction of such breach. Such termination shall be effective upon
        failure of the breaching party to cure such breach within the specified
        time period; or

        (b) Upon the filing or institution of any bankruptcy, reorganization,
        liquidation or receivership proceedings by the other party, or upon the
        failure by the other party for more than ninety (90) days to discharge
        any such actions against it. Such termination shall be effective upon
        receipt of the notice.

          *

11.3.   GUILFORD shall provide written notice to MSD IRELAND of any Change of
        Control (a) if practicable, not less than 30 days prior to such Change
        of Control, or (b) if prior notice is not practicable, within 5 business
        days after such Change of Control.

        (a)    Failure of Supply Condition. In the event that (i) after a
        Change of Control, Merck's third party manufacturer fails or refuses to
        timely supply Bags or Vials, as the case may be (a "Failure of Supply
        Condition") and (ii) such Change of Control has occurred prior to the
        date on which GUILFORD has entered into a direct third party
        Manufacturing arrangement with any such third party


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Exchange Commission.





        manufacturer then MSD IRELAND shall have the right to terminate this
        Supply Agreement as to the applicable Finished Product (Bags or Vials,
        as the case may be); provided, that, Merck has not amended or permitted
        the amendment of any provision in the applicable third party agreement
        in any manner which would reasonably be expected to materially adversely
        affect Merck's rights under such third party agreements in the event of
        a Change of Control or GUILFORD's rights under this Supply Agreement in
        respect thereof. In the event that (x) Merck believes, in its reasonable
        judgment and after consultation with GUILFORD, that such third party
        manufacturer has breached its obligations under the applicable agreement
        with Merck and (y) GUILFORD has requested that Merck enforce its rights
        under the applicable agreement, then Merck shall attempt to enforce such
        rights, at the expense of GUILFORD; provided, however, that Merck's
        obligation set forth in this sentence shall terminate on April 28, 2005.
        In such event as specified in the previous sentence, if Merck, in its
        reasonable judgment believes that the formulation and/or packaging of
        API by GUILFORD, the Resulting Entity or their respective Affiliates,
        either directly or indirectly through a third party, will not or does
        not cause Merck to be in default or breach of the applicable agreement
        with Merck's third party manufacturer, then GUILFORD shall be free to
        formulate and package the API in the form previously formulated and/or
        packaged by such third party manufacturer.

          *

        (c)    For purposes of this Section 11.3,

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Exchange Commission.





        (i)    "Change of Control" shall mean, with respect to GUILFORD or any
               Resulting Entity, as the case may be, (i) an event whereby any
               Group becomes a Controlling Group, (ii) the sale, lease or other
               transfer of all or substantially all of GUILFORD's and/or any
               Resulting Entity's assets to any third party (other than as a
               result of GUILFORD's financing sources exercising rights after
               default in connection with the collateral provided by GUILFORD in
               connection with its financing arrangements for this transaction),
               or (iii) the sale, lease, license or other transfer of the NDA,
               the Trademark, or the Assigned Patents (each, if sold, leased,
               licensed or otherwise transferred, a "Transferred Acquired
               Asset") or the Supply Agreement to any third party (other than to
               an Affiliate of GUILFORD to the extent permitted under Section
               17.1 or as a result of GUILFORD's financing sources exercising
               rights after default in connection with the collateral provided
               by GUILFORD in connection with its financing arrangements for
               this transaction).

        (ii)   "Change of Control Condition" shall mean a Failure to Supply
               Condition or a Competing Product Condition.

        (iii)  "Group" means any shareholder, or any group of shareholders that
               are Affiliates of each other. For purposes of this definition,
               individuals (and entities in which they have a controlling or
               beneficial interest) shall be deemed Affiliates if they are
               related by blood, marriage or adoption.

        (iv)   "Controlling Group" means any Group that beneficially acquires or
               obtains control of, directly or indirectly, forty percent (40%)
               or more of the issued and outstanding shares of capital stock or
               other equity interests of GUILFORD or other Resulting Entity
               (other than as a result of GUILFORD's financing sources
               exercising rights after default in connection with the collateral
               provided by GUILFORD in connection with its financing
               arrangements for this transaction).

        (v)    "Qualified" means (i) having a net worth at least equivalent to
               that of GUILFORD immediately following the Effective Date and
               (ii) if applicable, having a debt rating at least equivalent to
               that of GUILFORD immediately following the Effective Date. For
               purposes of this definition, "net worth" shall mean total assets
               minus total liabilities as shown in the most recent audited
               financial statement which has been prepared in accordance with
               generally accepted accounting principles consistently applied,
               and the "net



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confidential portions have been submitted separately to the Securities and
Exchange Commission.




               worth" of a Group consisting of two or more entities shall be the
               consolidated net worth of such entities.

        (vi)   "Qualified Successor" means (i) a Qualified Controlling Group, or
               (ii) a Qualified Resulting Entity; provided, however, that in
               every instance in which there is a Controlling Group, such
               Controlling Group must be Qualified and in every instance in
               which there is a Resulting Entity other than GUILFORD, such
               Resulting Entity must be Qualified.

        (vii)  "Competing Product" means a IIb/IIIa inhibitor which is marketed
               or sold for Covered Indications anywhere in the world.

          (d)    *


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        (e)    Notwithstanding any provision hereof, MSD IRELAND shall have the
        right to terminate this Supply Agreement at any time effective
        immediately in the event of a Change of Control if the Resulting Entity
        or any member of the Controlling Group is an individual or entity
        identified as a proscribed party on the Entity List or the Denied
        Persons List administered by the Bureau of Industry and Security, U.S.
        Department of Commerce or the Specially Designated Nationals and Blocked
        Persons List administered by the Office of Foreign Assets Control, U.S.
        Department of Treasury.

11.4.     *

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confidential portions have been submitted separately to the Securities and
Exchange Commission.





11.5.   The Supply Agreement shall automatically terminate effective eighteen
        (18) months after *. All Firm Orders for delivery during any period
        following such date of termination shall be cancelled without any
        penalty to either party.

11.6.     *

11.7.   Subject to GUILFORD's obligations set forth in Section 11.6, GUILFORD
        may terminate this Supply Agreement upon ninety (90) days prior written
        notice to MSD IRELAND with respect to any Supplied Product that is
        permanently and completely withdrawn from the market in the Territory
        for serious adverse health or safety reasons.

11.8.   The termination of this Supply Agreement shall not affect the rights and
        obligations of the parties arising prior to such termination.
        Termination under this Article 11 shall relieve and release all parties
        from any liabilities and obligations under this Supply Agreement other
        than those specifically set forth in this Article 11, those that survive
        termination in accordance with Article 24 and any and all obligations to
        indemnify the other party in accordance with Article 10.

12.     FORCE MAJEURE

12.1.   The parties shall not be liable for the failure or delay in performing
        any obligation under this Supply Agreement (except for the payment of
        money) if and to the


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confidential portions have been submitted separately to the Securities and
Exchange Commission.





        extent such failure or delay is due to (a) acts of God; (b) weather,
        fire or explosion; (c) war, terrorism, invasion, riot or other civil
        unrest; (d) governmental laws, orders, restrictions, actions, embargoes
        or blockades; (e) national or regional emergency; (f) injunctions,
        strikes, lockouts, labor trouble or other industrial disturbances; (g)
        shortage of adequate fuel, power, materials, or (h) any other event
        which is beyond the reasonable control of the affected party (each such
        event, a "Force Majeure"); provided that the party affected shall
        promptly notify the other of the Force Majeure condition and shall exert
        all commercially reasonable efforts at its cost (except for any such
        costs of MSD IRELAND which would be allocated to the per unit Variable
        Per Unit Price of Supplied Product in accordance with the methodology
        set forth in Schedule 11.6) to eliminate, cure or overcome any such
        causes and to resume performance of its obligations as soon as possible.
        In the event that any such Force Majeure occurs, then Sections 2.4 and
        11.4 shall apply, as the context requires.

13.     GOVERNING LAW; ARBITRATION

13.1.   This Supply Agreement shall be governed by, interpreted and construed,
        and all claims and disputes, whether in tort, contract, or otherwise be
        resolved in accordance with the substantive laws of the State of New
        Jersey, without reference to any rules of conflict or laws of renvoi.

13.2.   In the event of any controversy or claim arising out of or relating to
        this Supply Agreement, performance hereunder, termination hereof, or any
        relationship created hereby, or related in any way to the Supplied
        Product, each party irrevocably submits to the exclusive jurisdiction of
        the courts of the State of New Jersey and the Federal courts of the
        United States District Court for the District of New Jersey for the
        purposes of any suit, action or other proceeding arising out of this
        Supply Agreement or transactions contemplated hereby. Each party
        irrevocably and unconditionally waives any objection to the laying of
        venue in the state and Federal courts of New Jersey as stated above and
        that any such action was brought in an inconvenient forum.
        Notwithstanding the foregoing:

        (a) In the event of a threatened disclosure in violation of this Supply
        Agreement, either party shall have the right (notwithstanding subsection
        13.2(b) below) to seek injunctive relief from any competent court in the
        jurisdiction where the disclosure is threatened to prevent such
        disclosure pending resolution of the merits of the dispute; and

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Exchange Commission.






        (b) Subject to subsection 13.2(a) above, any controversy, claim or
        dispute between the parties hereto (except for those disputes as to
        which an alternative method of resolution is specified under Section 4.6
        and Section 6.2) arising out of or relating to the performance,
        construction, interpretation or enforcement of this Supply Agreement
        shall be submitted to binding confidential arbitration pursuant to the
        Federal Arbitration Act, 9 U.S.C.ss. 1 et seq. in accordance with the
        Rules of Commercial Arbitration of the American Arbitration Association
        or its successor. Any arbitration pursuant to this Supply Agreement
        shall be conducted in New Jersey by three neutral arbitrators selected
        by the American Arbitration Association. The judgment upon the award
        rendered in any such arbitration shall be final and binding upon the
        parties and may be entered in any court having jurisdiction thereof. All
        fees and expenses of the arbitrators and all other expenses of the
        arbitration, except for attorneys' fees, shall be shared equally by the
        parties. Each party shall bear its own attorneys fees.

14.     CONSENT AND WAIVER REGARDING SERVICES OF PROCESS, PERSONAL JURISDICTION
        AND JURY TRIAL

14.1.   In any action, suit, arbitration or proceeding to enforce the rights of
        either party under this Supply Agreement or otherwise arising out of
        this Supply Agreement or from any acts, omissions or activities of
        either party arising from or related in any way to this Supply Agreement
        or the transactions contemplated hereby or related in any way to the
        Supplied Product, each party, by execution and delivery of this Supply
        Agreement, expressly and irrevocably consents to the service of any
        complaint, summons, notice or other process relating to any such action,
        suit, arbitration or proceeding by delivery thereof to it by hand or by
        any other manner provided for in Section 22.1 hereof. Each party hereby
        expressly and irrevocably waives any claim or defense in any such
        action, suit, arbitration or proceeding based on any alleged lack of
        personal jurisdiction, improper venue, forum non conveniens or any
        similar doctrine or theory.

14.2.   In any action, suit, arbitration or proceeding to enforce the rights of
        either party under this Supply Agreement or otherwise arising out of
        this Supply Agreement or from any acts, omissions or activities of
        either party arising from or related in any way to this Supply Agreement
        or the transactions contemplated hereby or related in any way to the
        Supplied Product, the parties hereto, by execution and delivery of this
        Supply Agreement, expressly and irrevocably waive their right to a


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




        jury trial and stipulate that any such action, suit or proceeding shall
        be tried by the court (or arbitrator if the proceeding is under Section
        13.2(b) hereof).

15.     INDEPENDENT CONTRACTOR

15.1.   The parties hereto are independent contractors. Nothing in this Supply
        Agreement is intended or shall be deemed to constitute a partnership,
        agency, franchise or joint venture relationship between the parties.
        Neither party shall enter into any agreements or make any commitments
        for the other.

16.     CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS

16.1.   The provisions relating to Confidentiality and Public Announcements
        contained in the Asset Agreement in Article 10 are hereby incorporated
        by reference as if set forth herein in full. Any reference therein to
        Merck shall automatically be amended to include MSD IRELAND.



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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




17.     ASSIGNMENT

17.1    This Supply Agreement and the rights and obligations of the parties
        hereunder shall not be assignable or delegable, in whole or in part,
        except that (i) MSD IRELAND shall have the right to assign this Supply
        Agreement or delegate its rights and obligations in whole or in part to
        any Affiliate of MSD IRELAND, and with respect to the Manufacture of the
        Supplied Product only, to a third party; provided, however, that MSD
        IRELAND shall remain primarily responsible for its obligations hereunder
        and (ii) GUILFORD shall have the right to assign this Supply Agreement
        or delegate its rights and obligations in whole or in part to any
        Affiliate of GUILFORD; provided, however, that such Affiliate remains
        subject to the provisions set forth in Section 11.3 and GUILFORD shall
        remain primarily responsible for its obligations hereunder. GUILFORD
        shall have the right to grant a security interest in or collaterally
        assign this Supply Agreement to the extent required in connection with
        its financing arrangements relating to the transactions contemplated by
        the Asset Agreement or the Transaction Documents (as defined in the
        Asset Agreement), such grant or assignment to include the right of the
        grantee or assignee to foreclose upon such security interest or
        collateral upon default by GUILFORD and, in such event, to sell, assign,
        license or otherwise dispose of such security interest or collateral to
        a third party provided, however, that any such sale, assignment, license
        or other disposal shall be subject to the provisions of Section 11.3 to
        the extent applicable. Any attempted assignment of this Supply Agreement
        in violation of this Section 17.1 shall be void. Notwithstanding the
        foregoing, the prohibition on assignment set forth in this Section 17.1
        shall not apply to any assignment that constitutes a Change of Control
        which shall be governed by the provisions of Section 11.3.

18.     ENTIRE AGREEMENT

18.1.    This Supply Agreement, including without limitation the Schedules and
         Exhibits attached hereto, together with the Asset Agreement and the
         other Transaction

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Exchange Commission.






        Documents (as defined in the Asset Agreement) constitute the entire
        agreement between the parties hereto with respect to the subject matter
        hereof and except as expressly otherwise provided herein, supersedes and
        cancels all previous agreements, negotiations, commitments and writings
        in respect to the subject matter hereof, except for any prior
        confidentiality agreements which shall survive. In the event of any
        conflict between this Supply Agreement and any such prior
        confidentiality agreement, the agreement imposing stricter
        confidentiality shall survive.

18.2.   Notwithstanding Section 18.1 or any other provision of this Supply
        Agreement or the Asset Agreement to the contrary, the Asset Agreement
        and this Supply Agreement shall each stand as independent agreements
        between the parties, and after the Effective Date, each of this Supply
        Agreement and the Asset Agreement will remain in full force and effect
        and this Supply Agreement shall not be deemed superseded or amended
        thereby. Without limitation of the foregoing, the provisions of the
        Asset Agreement and this Supply Agreement with respect to * shall both
        remain independently effective and no such contracts shall be deemed to
        supersede or limit *, except as may be specifically specified therein.

19.     SUCCESSORS AND ASSIGNS

19.1.   The terms and conditions of this Supply Agreement shall be binding upon
        and shall inure to the benefit of the parties hereto and their
        respective successors and permitted assigns.

20.     HEADINGS

20.1.   The headings of the Articles, Sections and subsections of this Supply
        Agreement are inserted for convenience only and shall not be deemed to
        constitute a part of this Supply Agreement or affect the construction
        hereof.

21.     MODIFICATION AND WAIVER

21.1.   No amendment, modification or alteration of the terms of this Supply
        Agreement shall be binding unless the same shall be in writing and duly
        executed by the


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        parties hereto, except that any of the terms or provisions of this
        Supply Agreement may be waived in writing at any time by the party which
        is entitled to the benefits of such waived terms or provisions. No
        waiver of any of the provisions of this Supply Agreement shall be deemed
        to or shall constitute a waiver of any other provision hereof (whether
        or not similar). No delay on the part of any party exercising any right,
        power or privilege hereunder shall operate as a waiver thereof.

22.     NOTICES

22.1.   Any notices or demands required by this Supply Agreement shall be given
        in writing and shall be given by delivery in person, by electronic
        facsimile transmission, cable, telegram, telex or other standard forms
        of written telecommunications, by overnight courier or by registered or
        certified mail, postage prepaid,

        if to MSD IRELAND, to:

        Merck Sharp & Dohme (Ireland) Limited
        Ballydine, Kilsheelan
        Clonmel, Co. Tipperary
        Ireland
        Attention:  Plant Manager
        Facsimile:  011-353-51-601241

        with a copy to:

        Merck & Co., Inc.
        One Merck Drive
        P.O. Box 100
        Whitehouse Station, NJ  08889-0100
        Attention:  Vice President, Procurement
        Facsimile:  (908) 735-1511

        and with a copy to:

        Merck & Co., Inc.
        One Merck Drive
        P.O. Box 100


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        Whitehouse Station, NJ  08889-0100
        Attention:  Office of the Secretary
        Facsimile:  (908) 735-1224

        if to GUILFORD, to:

        Guilford Pharmaceuticals Inc.
        6611 Tributary Street
        Baltimore, Maryland 21224
        Attention:  Chief Financial Officer
        Facsimile:  (410) 631-6899

        with a copy to:

        Guilford Pharmaceuticals Inc.
        6611 Tributary Street
        Baltimore, Maryland 21224
        Attention:  General Counsel
        Facsimile:  (410) 631-5598

        or at such other address for a party as shall be specified by like
        notice. The date of giving any such notice shall be the date of hand
        delivery, the date sent by electronic facsimile transmission, cable,
        telegram, telex or other standard forms of written communications, the
        day after delivery to the overnight courier service, and the date three
        days following the posting of the registered or certified mail.

23.     COUNTERPARTS

23.1.   This Supply Agreement may be executed in one or more counterparts, each
        of which shall for all purposes be deemed an original and all of which
        shall constitute one and the same Supply Agreement.

24.     SURVIVAL OF CERTAIN PROVISIONS

24.1.   The terms, provisions, representations, and warranties contained in this
        Supply Agreement that by their sense and context are intended to survive
        the performance thereof (including, without limitation, Articles 4, 6,
        9, 10, 11, 13, 14,

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Exchange Commission.






        16, 18, 19, 24, 25, 27 and 31) by either party or both parties hereunder
        shall so survive the completion of performance, expiration or
        termination of this Supply Agreement.

25.     SEVERABILITY

25.1.   If any provision of this Supply Agreement is found invalid or
        unenforceable by a court of competent jurisdiction, the remainder of
        this Supply Agreement shall continue in full force and effect. The
        parties shall negotiate in good faith to substitute a valid, legal, and
        enforceable provision that reflects the intent of such invalid or
        unenforceable provision.

26.     REVIEW BY LEGAL COUNSEL

26.1.   Each of the parties agrees that it has read and had the opportunity to
        review this Supply Agreement with its legal counsel. Accordingly, the
        rule of construction that any ambiguity contained in this Supply
        Agreement shall be construed against the drafting party shall not apply.

27.     THIRD PARTY BENEFICIARIES

27.1.   Nothing in this Supply Agreement, express or implied, is intended to
        confer upon any third party, any rights, remedies, obligations or
        liabilities.

28.     ASSET AGREEMENT

28.1.   The parties expressly acknowledge and agree that certain provisions of
        the Asset Agreement are incorporated by reference herein, or by their
        terms otherwise apply hereto (including, without limitation, Section
        13.4 of the Asset Agreement) and further agree that such provisions
        shall be given full effect in interpreting and enforcing this Supply
        Agreement.

29.     CUMULATIVE REMEDIES

29.1.   Unless specified to the contrary in this Supply Agreement, no remedy
        referred to in this Supply Agreement is intended to be exclusive, but
        each shall be


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omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.






        cumulative and in addition to any other remedy referred to in this
        Supply Agreement or otherwise available under law or at equity.

30.     FURTHER ASSURANCES

30.1.   Each party agrees to execute such further papers, agreements, documents,
        instruments and the like as may be necessary or desirable to effect the
        purpose of this Supply Agreement and to carry out its provisions.

31.     ALTERNATIVE SUPPLIER

31.1.   After the Effective Date, GUILFORD shall have the right to negotiate
        directly with MSD IRELAND's or its Affiliate's current third party
        manufacturers of Finished Product in order that GUILFORD may directly
        contract with such third party manufacturers prior to December 31, 2004,
        with respect to Vials, and prior to August 17, 2007, with respect to
        Bags. GUILFORD's obligations with respect to the purchase of Vials
        and/or Bags, as the case may be, from MSD IRELAND and MSD IRELAND's
        obligations with respect to the supply of Vials and/or Bags, as the case
        may be, shall terminate upon thirty (30) days' notice by GUILFORD to MSD
        IRELAND that a direct contract between GUILFORD and the applicable third
        party manufacturer has been executed; provided, that (1) such agreement
        specifically relieves and releases Merck (to Merck's reasonable
        satisfaction) from any obligation under Merck's existing agreement with
        such third party manufacturer with respect to Vials or Bags, as the case
        may be, for sale in the Territory, and (2) GUILFORD's agreement with
        such third party manufacturer does not materially adversely affect MSD
        IRELAND or its Affiliates or its or their business or interests with
        respect to such third party manufacturer; provided that Merck shall
        waive any provisions of exclusivity, noncompetition or the like in such
        third party agreement that would limit GUILFORD's ability to directly
        contract with such third party manufacturers, and agree to the amendment
        of Merck's agreements with such third party manufacturers to reflect the
        direct supply of Supplied Product from such third party manufacturers to
        GUILFORD in the Territory. In the event GUILFORD shall execute a direct
        contract with a third party manufacturer as contemplated in the
        foregoing sentence, GUILFORD shall be obligated to purchase from MSD
        IRELAND any MSD IRELAND inventory of Materials, work-in-progress or
        Finished Product to the extent such Materials,

                                        37                       EXECUTION COPY

*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        work-in-progress or Finished Product were procured or created in
        response to Firm Orders submitted by GUILFORD to MSD IRELAND.


31.2.     *

31.3.   Unless specifically contemplated by this Supply Agreement, MSD IRELAND
        shall have no obligation to support any operations of GUILFORD,
        including, any additional technology transfer, technology license,
        disclosure of any additional confidential information or any other type
        of technical or manufacturing assistance.

32.     INSURANCE

32.1.   Simultaneously with the execution of this Supply Agreement, (i) MSD
        IRELAND hereby delivers to GUILFORD a certificate of insurance
        reasonably acceptable to GUILFORD's insurers to permit GUILFORD to
        obtain the insurance coverage contemplated by the Asset Agreement and
        (ii) GUILFORD hereby delivers to MSD IRELAND a certificate of insurance
        reasonably acceptable to MSD IRELAND naming Merck and its subsidiaries
        as additional insured/loss payee for the amounts and coverage listed in
        Section 13.4 of the Asset Agreement as well as naming Merck and its
        subsidiaries as additional insured/loss payee for all


                                        38                       EXECUTION COPY

*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





        claims relating to business interruption, sole supplier property
        coverage and failure of supply.

                                        39                       EXECUTION COPY

*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





         IN WITNESS WHEREOF, the undersigned have executed this Supply Agreement
as of the Effective Date.




MERCK SHARP & DOHME                         GUILFORD PHARMACEUTICALS
(IRELAND) LLC                               INC.

By:   /s/ PAT YANG                          By:   /s/ CRAIG R. SMITH, M.D.
    -------------------------------             --------------------------------
Name:   Pat Yang                            Name: Craig R. Smith, M.D.

Title:  Vice President                      Title:  Chairman, President and
                                            Chief Executive Officer


                                    GUARANTEE

     Merck & Co., Inc. ("Merck") hereby irrevocably and unconditionally
guarantees the performance by MSD IRELAND of the contractual obligations set
forth in this Supply Agreement. Merck shall be responsible for all liability,
direct or indirect, due or to become due, now existing or hereafter arising,
resulting from the performance or non-performance of these contractual
obligations. GUILFORD shall have no obligation to first seek performance of any
of the contractual obligations by MSD IRELAND before seeking enforcement of this
guarantee by Merck.

     Furthermore, with respect to Sections 2.2(d), 2.3(c), 11.2, 11.3, 11.4 and
all definitions from Article 1 referenced therein, Merck agrees to be bound to
such provisions as if a party hereto.

AGREED TO AND ACCEPTED BY:

MERCK & CO., INC.

By:   /s/ PAT YANG
     ----------------------
     Name:  Pat Yang
     Title:  Vice President, Supply Chain Management



                                        40                       EXECUTION COPY

*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

#The Company has omitted certain schedules in accordance with Regulation S-K
601(b)(2). The Company will furnish the omitted schedules to the Commission
upon request.

EX-2.03

                                                                   Exhibit 2.03

                          TRANSITION SERVICES AGREEMENT


This Transition Services Agreement (this "Transition Agreement"), dated as of
the 28th day of October, 2003 (the "Effective Date"), is made by and between
Merck & Co., Inc., a New Jersey corporation ("Merck"), and Guilford
Pharmaceuticals Inc., a Delaware corporation ("Guilford").

                                   WITNESSETH:

WHEREAS, pursuant to the terms of that certain Asset Transfer and License
Agreement between Merck and Guilford, dated as of October 28, 2003 (the "Asset
Agreement"), Merck has sold, transferred, assigned and licensed to Guilford
certain assets in the Territory (as defined in the Asset Agreement), including
the U.S. NDA for Aggrastat (R).

WHEREAS, in connection with the Asset Agreement, Guilford and an Affiliate of
Merck, Merck Sharp & Dohme (Ireland) Limited, a corporation organized and
existing under the laws of Bermuda which is engaged in business in the Republic
of Ireland ("MSD Ireland"), have entered into that certain Supply Agreement
dated as of the date hereof (the "Supply Agreement") pursuant to which MSD
Ireland will supply (or arrange for the supply) to Guilford of Supplied Product
(as defined in the Supply Agreement) on the terms and conditions set forth
therein.

WHEREAS, in connection with the Asset Agreement and the Supply Agreement,
Guilford desires, and Merck is willing, to provide certain warehousing,
distribution and other transition services during the Transition Period (as
defined in Section 2.1 hereof) with respect to MSD Ireland Image Product (as
hereinafter defined) on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

1.       DEFINITIONS

All capitalized terms in this Transition Agreement (whether used in the singular
or the plural), unless otherwise defined herein or referenced to the Supply
Agreement, shall have the meanings as set forth in the Asset Agreement. In
addition, the following terms as used in this Transition Agreement, whether used
in the singular or the plural, shall have the meanings as set forth in this
Article 1. References to "Articles", "Sections" and "subsections" in this
Transition Agreement shall be to Articles, Sections and subsections
respectively, of this Transition Agreement unless otherwise specifically
provided.

1.1     "Administrative Services" shall mean the following Transition Services:
        bookkeeping, invoicing, collections and contract administration.

1.2     "Asset Agreement" shall have the meaning given such term in the recitals
        to this Transition Agreement.

1.3      "cGMP" shall have the meaning given such term in the Supply Agreement.

1.4     "Effective Date" shall have the meaning given such term in the
        introductory paragraph to this Transition Agreement.

                                                                 EXECUTION COPY




1.5     "Gross Sales" shall mean the gross amount invoiced or recorded by Merck
        as a sale on behalf of Guilford to third parties of MSD Ireland Image
        Product shipped during the Transition Period which amount shall equal
        the sales price for such Product as determined from time to time by
        Guilford in accordance with Section 2.8 and which (i) shall not be
        reduced by promotional, trade or other discounts, credits for returned
        goods or price adjustments, rebates, chargebacks, GPO administration
        fees or allowances, and (ii) shall not include freight, sales and excise
        taxes, value-added and other taxes, insurance premiums and duties which
        are billed to customers as separate items on invoices, or allowances for
        short shipments.

1.6     "Merck" shall have the meaning given such term in the recitals to this
        Transition Agreement.

1.7     "MSD Ireland Image Product" shall have the meaning given such term in
        the Supply Agreement.

1.8     "Securities Laws" shall have the meaning given such term in the Supply
        Agreement.

1.9     "Supply Agreement" shall have the meaning given such term in the
        recitals to this Transition Agreement.

1.10    "Term" shall have the meaning given such term in Section 5 hereof.

1.11    "Transition Agreement" shall have the meaning given such term in the
        introductory paragraph to this agreement.

1.12    "Transition Period" shall mean the period from the Effective Date until
        the earlier of (a) June 30, 2004 or (b) depletion of the MSD Ireland
        Image Product inventory ordered by Guilford pursuant to the Supply
        Agreement, unless earlier terminated in accordance with Article 5.

1.13    "Transition Services" shall have the meaning given such term in Section
        2.1 hereof.

1.14    "United States" shall mean the fifty (50) states of the United States
        and the District of Columbia.

2        TRANSITION SERVICES

2.1.    Transition Services. Subject to the terms and conditions of this
        Transition Agreement, during the Transition Period, Guilford hereby
        retains Merck to provide, and Merck hereby agrees to provide (or cause a
        qualified Affiliate to provide) Guilford, certain warehousing,
        distribution and contract administration services at Merck's usual
        distribution facilities, in connection with Merck's distribution of MSD
        Ireland Image Product on behalf of Guilford in the United States
        including, without limitation, providing warehousing space at such
        facilities, providing appropriate personnel to accept and warehouse
        inventory of MSD Ireland Image Product shipped to such facilities,
        arranging for the shipping and delivery of MSD Ireland Image Product to
        customers, providing certain administrative and support services in
        connection with Guilford's sale of MSD Ireland Image Product in the
        United States and performing book keeping, collections and accounting
        functions related to such services, all as more specifically set forth
        in Schedule 2.1 attached hereto and

                                                                 EXECUTION COPY



                                       2


        made a part hereof (collectively, the "Transition Services"). The
        quantity of MSD Ireland Image Product that is the subject of the
        Transition Services is more particularly described in the Asset
        Agreement and the Supply Agreement.


2.2.    Compliance with Applicable Laws. Each party shall, and shall cause its
        respective employees to, comply, in all material respects, with all
        Applicable Laws which may be applicable to the Transition Services.

2.3.    Quality Control. Merck shall provide the Transition Services to the
        extent applicable in accordance with cGMP.

2.4.    Title and Risk of Loss. Title to all MSD Ireland Image Product purchased
        by Guilford pursuant to the Supply Agreement shall pass to Guilford in
        accordance with the Supply Agreement. The MSD Ireland Image Product
        purchased by Guilford under the Supply Agreement will be insured by
        Guilford at Guilford's expense while in Merck's possession and control
        pursuant to this Transition Agreement. Merck shall have no risk or
        liability for loss or casualty to MSD Ireland Image Product during such
        period except with respect to first party claims where Guilford has
        shown that any loss or damage to such goods has resulted from the gross
        negligence or willful misconduct by Merck in conducting the Transition
        Services, and only after Guilford's insurance carrier, after Guilford
        has in good faith asserted and prosecuted a claim for such loss or
        casualty, has denied coverage of such loss or casualty on that basis.

2.5.    Exclusivity. During the Term, Guilford shall not distribute or warehouse
        MSD Ireland Image Product except through Merck hereunder; provided, that
        in the event that at the conclusion of the Transition Period (upon
        expiration or termination in accordance with Article 5) there is
        existing in Guilford's inventory MSD Ireland Image Product, or in the
        event Guilford has ordered MSD Ireland Image Product pursuant to the
        Supply Agreement pursuant to an outstanding Firm Order, Guilford shall
        have the right to sell and distribute such MSD Ireland Image Product. As
        soon as practicable after the conclusion of the Transition Period, Merck
        shall deliver any such MSD Ireland Image Product to Guilford at
        Guilford's expense.

2.6.    Customers. In order to inform customers of the change in ownership of
        the Acquired Assets and of the arrangements between Merck and Guilford
        with respect to the Contracts and the sales, distribution and customer
        support services for the MSD Ireland Image Product during and after the
        Transition Period, (i) Merck shall deliver a notice to parties to the
        Contracts in accordance with Section 3.9 of the Asset Agreement and (ii)
        Guilford shall deliver a notice to the parties to such Contracts in a
        form approved by Merck prior to the Effective Date. Thereafter, the
        parties shall cooperate in good faith to respond to inquiries by
        contracted customers, trade customers, wholesalers and other third
        parties with respect to the transfer of the sales, distribution and
        customer support services for the Product to Guilford during the
        Transition Period

2.7.    Terms and conditions. All MSD Ireland Image Product distributed by Merck
        hereunder shall be sold under and pursuant to Merck's standard terms and
        conditions as the same may be in effect from time to time, which terms
        and conditions shall be deemed to have been adopted by Guilford with
        respect to MSD Ireland Image Product as of the Effective Date (a copy of
        the current terms and conditions has been provided to Guilford). To the
        extent that such terms and conditions (including without limitation
        their provisions regarding discounts for prompt payment and return of
        products for credit) differ from

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                                       3



        Guilford's standard terms and conditions relating to other products at
        the time of sale of any MSD Ireland Image Product, it shall be
        Guilford's responsibility to inform customers of such difference at the
        time Guilford accepts orders for such MSD Ireland Image Product and to
        inform customers of the terms and conditions that will govern the
        transaction and to inform Merck if any variation in terms or processes
        is required. Guilford will indemnify and hold Merck harmless for any
        failure to properly inform customers of the terms and conditions that
        will apply to any sale during the Transition Period. Guilford's standard
        terms and conditions will apply to any MSD Ireland Image Product for
        which orders are accepted after the Transition Period.

2.8.    Pricing of MSD Ireland Image Product. From and after the Effective Date,
        pricing of MSD Ireland Image Product shall be solely within the control
        of Guilford. During the Transition Period, Guilford may desire to change
        the price for MSD Ireland Image Product. In that event, Guilford will
        provide two (2) business days prior written notice to Merck of any
        change in price in written form detailing the new price and the
        presentation of MSD Ireland Image Product to which such price change
        shall apply. Merck will make such new price effective within two (2)
        business days of receipt of such notice. Guilford shall also have the
        ability to limit purchases in accordance with Merck's standard terms and
        conditions. Where applicable and until the effective time of a notice
        provided in accordance with this Section 2.8, any contract prices to
        specific customers (including without limitation applicable discounts,
        chargebacks, GPO administration fees and rebates) in effect immediately
        prior to the Effective Date shall continue in effect.

2.9.    Trademarks. Guilford shall not acquire any right, title or interest in
        any trademark, service mark, name, logo, design or trade dress belonging
        to Merck (or to any other person or entity under contract or license
        with Merck) by virtue of this Transition Agreement or any action or
        omission of Merck, Guilford or any other person acting pursuant to this
        Transition Agreement. The parties acknowledge and agree that the
        ownership, license and rights, title and interest in and to any and all
        intellectual property associated with the MSD Ireland Image Product
        shall be governed exclusively by the terms and conditions of the Asset
        Agreement.

2.10.   Audit and Inspection Rights. Merck shall keep complete, accurate and
        detailed records concerning Gross Sales, computation of Reconciled Net
        Sales, chargebacks, GPO administration fees, discounts and rebates,
        product returns, accounts payable and receivable, expenses incurred by
        Merck in connection with this Transition Agreement and all matters with
        respect to Transition Services. Such records shall be kept in sufficient
        detail to permit independent audit of such records. Merck shall, at
        Guilford's request and expense, make such records available upon
        reasonable notice during normal business hours for examination by
        Guilford or its independent certified public accountants or auditors
        designated by Guilford and approved by Merck, which approval shall not
        be unreasonably withheld or delayed. To the extent required in
        connection with the preparation or review of quarterly financial
        statements, Merck shall permit Guilford's independent auditors to access
        Merck's (or its Affiliate's) warehouses or other distribution facilities
        no more than twice during the Transition Period to verify inventory
        levels during normal business hours and upon reasonable advance notice.

2.11.   Insurance. During the Term, Guilford shall maintain insurance in
        accordance with Section 13.4 of the Asset Agreement.

                                                                 EXECUTION COPY

                                       4




2.12.   Territories Outside the United States. Unless otherwise agreed by the
        parties after the Effective Date, Merck shall have no obligation under
        this Transition Agreement to provide Transition Services in any area of
        the Territory other than the United States. Notwithstanding the
        foregoing, to the extent that Merck shall, after the Effective Date,
        sell MSD Ireland Image Product in any part of the Territory other than
        the United States, Merck shall, to the extent practicable, periodically
        notify Guilford of such sales in a manner consistent with the reporting
        obligations contemplated in Schedule 2.1 and shall pay to Guilford the
        Reconciled Net Sales (as defined in Schedule 2.1) associated therewith
        and shall invoice Guilford for any chargebacks, GPO administration fees,
        discounts and/or rebates accrued in connection such sales, each in
        accordance with the procedures set forth in Schedule 2.1 as if such
        sales had been made in the United States. The parties hereby acknowledge
        and agree that any sale of MSD Ireland Image Product during the
        Transition Period in any part of the Territory other than the United
        States made by Merck in accordance with this Section 2.12 shall not
        constitute a breach of Merck's post-Effective Date covenants set forth
        in Section 6.1 of the Asset Agreement. In the event that at the
        conclusion of the Transition Period there remains in the inventory of
        Merck and its Affiliates MSD Ireland Image Product in any area of the
        Territory outside of the United States, Merck shall provide Guilford
        written notice of the amount and location of such inventory, and
        Guilford shall issue a Firm Order pursuant to the Supply Agreement for
        purchase of any such remaining MSD Ireland Image Product inventory
        deliverable within thirty (30) days of the conclusion of the Transition
        Period; provided that Guilford shall only have an obligation pursuant to
        this Section 2.12 to purchase that amount of MSD Ireland Image Product
        representing the difference, if any, between (a) the amount of MSD
        Ireland Image Product inventory held by Merck and its Affiliates in
        those areas of the Territory outside of the United States on the
        Effective Date, and (b) any amounts of such inventory sold by Merck
        during the Transition Period pursuant to this Section 2.12.

3.      FEES AND PAYMENT

3.1.    Fees for Transition Services. There shall be no fees payable for
        Transition Services performed until May 1, 2004. On and after that date
        and until the end of the Transition Period, in consideration for the
        Transition Services provided hereunder, Guilford shall pay Merck 0.3%
        percent of Gross Sales subject to Transition Services.

3.2.    Expenses. Guilford shall reimburse Merck for any out-of-pocket expenses
        reasonably incurred and paid to a third party in performing its
        obligations under this Transition Agreement.

3.3.    Invoicing and Payment of Fees. Within forty-five (45) days after the end
        of each calendar month during the Term, Merck shall invoice Guilford for
        any fees due, to the extent applicable under Section 3.1, for Transition
        Services performed during such calendar month. All payments for
        Transition Services shall be made in U.S. Dollars within thirty (30)
        days after the date of invoice. Payment shall be made by corporate check
        drawn on a United States bank or remitted by wire transfer in
        immediately available funds in U.S. Dollars to a bank and account to be
        designated in writing from time to time by Merck. Any payment of fees or
        expenses not made when due shall bear interest at the lesser of (i) 1.0%
        per month or (ii) the maximum rate permitted under Applicable Laws. Any
        unpaid fees and expenses for Transition Services may also, at Merck's
        discretion and cumulatively with any other remedies available to Merck
        under
                                                                 EXECUTION COPY


                                       5



        this Transition Agreement, any other agreement or Applicable Laws, be
        set off without notice to Guilford against any amounts owed by Merck to
        Guilford.

3.4.    Guilford Responsible for Taxes. Any and all taxes (excluding income
        taxes based upon Merck's income or Merck's franchise fees or taxes)
        relating to the Transition Services provided under this Transition
        Agreement, including, without limitation, sales, use and excise taxes
        required to be paid by any federal, state or local authority shall be
        borne by Guilford. Official receipts indicating proof of payment of any
        such taxes shall be secured and made available to Merck upon request as
        evidence of payment.

4.      INDEMNITY

4.1.    Guilford shall protect, defend, indemnify and hold harmless Merck, its
        Affiliates and its and their directors, officers, shareholders,
        employees and agents, and their respective successors and permitted
        assigns from any and all claims, actions, causes of action, liabilities,
        losses, costs, damages or expenses, including reasonable attorneys' fees
        associated therewith ("Losses"), which directly or indirectly arise out
        of or relate to the Transition Services provided hereunder, unless such
        Losses result from (i) Merck's breach of this Transition Agreement, or
        (ii) the gross negligence or willful misconduct of Merck in the
        performance of its obligations under this Transition Agreement.

4.2.    Merck shall protect, defend, indemnify and hold harmless Guilford, its
        Affiliates and its and their directors, officers, shareholders,
        employees and agents, and their respective successors and permitted
        assigns, from any and all Losses which directly or indirectly arise out
        of or relate to (i) Merck's breach of this Transition Agreement or (ii)
        the gross negligence or willful misconduct of Merck in the performance
        of its obligations under this Transition Agreement; provided, however,
        that the total and aggregate liability of Merck and its Affiliates for
        any claims paid by Merck and its Affiliates under this Transition
        Agreement and the Supply Agreement shall not exceed US $20,000,000.00.

4.3.    The indemnified party agrees to give the indemnifying party (i) prompt
        written notice of any claims made for which the indemnified party knows
        or reasonably should know the indemnifying party reasonably may be
        liable under the foregoing indemnification and (ii) the opportunity to
        defend, negotiate, and settle such claims; provided, that in the event
        any such indemnifying party shall assume the defense of any such claim,
        such indemnifying party may reserve its rights as to its ultimate
        liability with respect to the claim but in such event, and until the
        indemnifying party shall assume liability for such claim as an
        indemnified claim under this Article 4, the indemnified party shall have
        the right to participate in such defense and to consent to any proposed
        settlement. The indemnified party shall provide the indemnifying party
        with all information in its possession, all authority and all assistance
        necessary to enable the indemnifying party to carry on the defense of
        such suit; provided, however, that the indemnified party reserves the
        right to retain its own counsel to defend itself in such suit.

4.4.    Neither party shall be responsible to or bound by any settlement made by
        the other party without its prior written consent, which consent shall
        not be unreasonably withheld.

4.5.    IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES OR THEIR RESPECTIVE
        DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY OR
        ITS AFFILIATES, OR THEIR RESPECTIVE DIRECTORS, OFFICERS,

                                                                 EXECUTION COPY



                                       6




        EMPLOYEES OR AGENTS, FOR ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY,
        CONSEQUENTIAL OR INCIDENTAL DAMAGES OR LOSSES OF ANY KIND, NATURE OR
        DESCRIPTION WHATSOEVER (INCLUDING BUT NOT LIMITED TO LOST PROFITS, LOST
        REVENUES AND/OR LOST SAVINGS) SUFFERED OR INCURRED BY SUCH PARTY FOR ANY
        CAUSE WHATSOEVER, REGARDLESS OF WHETHER ARISING FROM BREACH OF CONTRACT,
        WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SUCH PARTY IS
        ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE OR IF SUCH LOSS OR
        DAMAGE COULD HAVE BEEN REASONABLY FORESEEN.

4.6.    The sole and exclusive remedy for any claim arising under this
        Transition Agreement shall be a claim for indemnification under this
        Article 4.

5.      TERM AND TERMINATION

5.1.    This Transition Agreement shall be effective as of the Effective Date
        and shall continue in effect until the earlier of (a) the last day of
        the Transition Period, or (b) the termination of the Supply Agreement in
        accordance with its terms, unless earlier terminated as provided in this
        Article 5. Such effective period shall be referred to herein as the
        "Term".

5.2.    Guilford may terminate this Transition Agreement in its entirety by
        providing written notice thereof to Merck (i) any time on or after May
        1, 2004, in which case such termination shall be effective thirty (30)
        days after the date of such notice, and (ii) any time prior to May 1,
        2004, which termination shall not be effective until the inventory of
        MSD Ireland Image Product ordered by Guilford pursuant to the Supply
        Agreement and held by Merck for distribution pursuant to this Transition
        Agreement shall be no greater than thirty (30) days worth of inventory,
        determined on an average basis with reference to the relative inventory
        of each presentation of MSD Ireland Image Product held by Merck. If
        Guilford wishes to terminate this Transition Agreement with respect to
        less than all of the Transition Services, Guilford shall first obtain
        the written consent of Merck; provided, however, that to the extent
        practicable, Guilford may terminate this Transition Agreement solely
        with respect to all Administrative Services provided hereunder upon
        thirty (30) days written notice to Merck.

5.3.    This Transition Agreement may be terminated by written notice given by
        either party as follows:

        (a) If the other party shall be in breach of any material obligation
        hereunder, and has not cured such breach within thirty (30) days after
        receipt of a notice from the non-breaching party requesting the
        correction of such breach. Such termination shall be effective upon
        failure of the breaching party to cure such breach within the specified
        time period; or

        (b) Upon the filing or institution of any bankruptcy, reorganization,
        liquidation or receivership proceedings by the other party, or upon the
        failure by the other party for more than sixty (60) days to discharge
        any such actions against it. Such termination shall be effective upon
        receipt of the notice.

5.4.    Upon termination of this Transition Agreement by Merck pursuant to
        Section 5.3(a), Guilford shall pay to Merck any fees and expenses due
        for Transition Services provided prior to the effective date of such
        termination. Upon any termination or expiration of this

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                                       7



        Transition Agreement, Merck shall deliver to Guilford all MSD Ireland
        Image Product in Merck's possession in the United States on the
        effective date of such termination that was ordered by Guilford pursuant
        to the Supply Agreement (provided that such MSD Ireland Image Product
        shall be paid for as provided in the Supply Agreement), and Guilford
        shall have the right to sell and distribute such MSD Ireland Image
        Product in the Territory at its discretion notwithstanding any provision
        of this Transition Agreement or the Supply Agreement to the contrary.
        Nothing in this Section 5.4 shall be construed to require the delivery
        to Guilford of MSD Ireland Image Product at a time earlier than when
        such delivery is required under the Supply Agreement. The provisions of
        this Section 5.4 shall survive the expiration, cancellation or other
        termination of this Transition Agreement.

5.5.    The termination of this Transition Agreement shall not affect the rights
        and obligations of the parties arising prior to such termination.
        Termination under this Article 5 shall relieve and release all parties
        from any liabilities and obligations under this Transition Agreement
        other than those specifically set forth in this Article 5, those that
        survive termination in accordance with Section 6.14 and any and all
        obligations to indemnify the other party in accordance with Article 4.
        Notwithstanding any provision of the Asset Agreement or the Supply
        Agreement to the contrary, termination of this Transition Agreement
        shall not affect the rights and obligations of the parties under the
        Supply Agreement or the Asset Agreement.

6.      MISCELLANEOUS

6.1.    Force Majeure. The parties shall not be liable for the failure or delay
        in performing any obligation under this Transition Agreement (except for
        the payment of money) if and to the extent such failure or delay is due
        to (a) acts of God; (b) weather, fire or explosion; (c) war, terrorism,
        invasion, riot or other civil unrest; (d) governmental laws, orders,
        restrictions, actions, embargoes or blockades; (e) national or regional
        emergency; (f) injunctions, strikes, lockouts, labor trouble or other
        industrial disturbances; (g) shortage of adequate fuel, power,
        materials, or (h) any other event which is beyond the reasonable control
        of the affected party (each such event, a "Force Majeure"); provided
        that the party affected shall promptly notify the other of the Force
        Majeure condition and shall exert all commercially reasonable efforts at
        its cost to eliminate, cure or overcome any such causes and to resume
        performance of its obligations as soon as possible.

6.2.    Governing Law. This Transition Agreement shall be governed by,
        interpreted and construed, and all claims and disputes, whether in tort,
        contract, or otherwise be resolved in accordance with the substantive
        laws of the State of New Jersey, without reference to any rules of
        conflict of laws thereof.

6.3.    Arbitration. In the event of any controversy or claim arising out of or
        relating to this Transition Agreement, performance hereunder,
        termination hereof, or any relationship created hereby, or related in
        any way to the Transition Services, each party irrevocably submits to
        the exclusive jurisdiction of the courts of the State of New Jersey and
        the Federal courts of the United States District Court for the District
        of New Jersey for the purposes of any suit, action or other proceeding
        arising out of this Transition Agreement or transactions contemplated
        hereby. Each party irrevocably and unconditionally waives any objection
        to the laying of venue in the state and Federal courts of New Jersey as

                                                                 EXECUTION COPY


                                       8


        stated above and that any such action was brought in an inconvenient
        forum. Notwithstanding the foregoing:

        (a) In the event of a threatened disclosure in violation of this
        Transition Agreement, either party shall have the right (notwithstanding
        subsection 6.3(b) below) to seek injunctive relief from any competent
        court in the jurisdiction where the disclosure is threatened to prevent
        such disclosure pending resolution of the merits of the dispute; and

        (b) Subject to subsection 6.3(a) above, any controversy, claim or
        dispute between the parties hereto arising out of or relating to the
        performance, construction, interpretation or enforcement of this
        Transition Agreement shall be submitted to binding confidential
        arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. Section 1
        et seq. in accordance with the Rules of -- --- Commercial Arbitration of
        the American Arbitration Association or its successor. Any arbitration
        pursuant to this Transition Agreement shall be conducted in New Jersey
        by three neutral arbitrators selected by the American Arbitration
        Association. The judgment upon the award rendered in any such
        arbitration shall be final and binding upon the parties and may be
        entered in any court having jurisdiction thereof. All fees and expenses
        of the arbitrators and all other expenses of the arbitration, except for
        attorneys' fees, shall be shared equally by the parties. Each party
        shall bear its own attorneys fees.

6.4.    Consent and Waiver regarding Service of Process, Personal Jurisdiction
        and Jury Trial.

        (a) In any action, suit, arbitration or proceeding to enforce the rights
        of either party under this Transition Agreement or otherwise arising out
        of this Transition Agreement or from any acts, omissions or activities
        of either party arising from or related in any way to this Transition
        Agreement or the transactions contemplated hereby or related in any way
        to the Transition Services, each party, by execution and delivery of
        this Transition Agreement, expressly and irrevocably consents to the
        service of any complaint, summons, notice or other process relating to
        any such action, suit, arbitration or proceeding by delivery thereof to
        it by hand or by any other manner provided for in Section 6.12 hereof.
        Each party hereby expressly and irrevocably waives any claim or defense
        in any such action, suit, arbitration or proceeding based on any alleged
        lack of personal jurisdiction, improper venue, forum non conveniens or
        any similar doctrine or theory.

        (b) In any action, suit, arbitration or proceeding to enforce the rights
        of either party under this Transition Agreement or otherwise arising out
        of this Transition Agreement or from any acts, omissions or activities
        of either party arising from or related in any way to this Transition
        Agreement or the transactions contemplated hereby or related in any way
        to the Transition Services, the parties hereto, by execution and
        delivery of this Transition Agreement, expressly and irrevocably waive
        their right to a jury trial and stipulate that any such action, suit or
        proceeding shall be tried by the court (or arbitrator if the proceeding
        is under Section 6.3(b) hereof).

6.5.    Independent Contractor. The parties hereto are independent contractors.
        Nothing in this Transition Agreement is intended or shall be deemed to
        constitute a partnership, agency, franchise or joint venture
        relationship between the parties. Neither party shall enter into any
        agreements or make any commitments for the other.

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                                       9


6.6.    Confidentiality and Public Announcements. Section 10 of the Asset
        Agreement is incorporated herein and shall be a part of this Transition
        Agreement.

6.7.    Assignment. This Transition Agreement and the rights and obligations of
        the parties hereunder shall not be assignable or delegable, in whole or
        in part, without the consent of the other party, which consent shall not
        be unreasonably withheld or delayed; provided, that (i) both parties
        shall have the right to assign this Transition Agreement or delegate its
        duties in whole or in part to any Affiliate or any third party in
        connection with a valid assignment of the Supply Agreement pursuant to
        the terms thereof, and (ii) Guilford shall have the right to
        collaterally assign this Transition Agreement to the extent required in
        connection with its financing arrangements for the purpose of permitting
        its financing sources to exercise their remedies upon any default by
        Guilford. Any attempted assignment of this Transition Agreement in
        violation of this Section 6.7 shall be void. Notwithstanding the
        foregoing, the prohibition on assignment set forth in this Section 6.7
        shall not apply to any assignment that constitutes a Change of Control
        for purposes of Section 11.3 of the Supply Agreement.

6.8.    Entire Agreement. This Transition Agreement, including without
        limitation the Schedules hereto, together with the Asset Agreement and
        the other agreements contemplated thereby, constitutes the entire
        agreement between the parties hereto with respect to the subject matter
        hereof and except as expressly otherwise provided herein, supersedes and
        cancels all previous agreements, negotiations, commitments and writings
        in respect to the subject matter thereof. Notwithstanding anything to
        the contrary in the first paragraph of this Section 6.8, the Asset
        Agreement, the Supply Agreement and this Transition Agreement shall each
        stand as independent agreements between the parties, and after the
        Effective Date each of this Transition Agreement, the Supply Agreement
        and the Asset Agreement will remain in full force and effect and this
        Transition Agreement shall not be deemed superseded or amended thereby.
        Without limitation of the foregoing, the provisions of the Asset
        Agreement, the Supply Agreement and this Transition Agreement with
        respect to indemnification shall both remain independently effective
        (except that the Maximum shall be cumulative with the Maximum under the
        Supply Agreement and the Asset Agreement) and no such contracts shall be
        deemed to supersede or limit the indemnification obligations imposed by
        any other, except as may be specifically specified therein.

6.9.    Successors and Assigns. The terms and conditions of this Transition
        Agreement shall be binding upon and shall inure to the benefit of the
        parties hereto and their respective successors and permitted assigns.

6.10.   Headings. The headings of the Articles, Sections and subsections of this
        Transition Agreement are inserted for convenience only and shall not be
        deemed to constitute a part of this Transition Agreement or affect the
        construction hereof.

6.11.    Modification and Waiver. No amendment, modification or alteration of
         the terms of this Transition Agreement shall be binding unless the same
         shall be in writing and duly executed by the parties hereto, except
         that any of the terms or provisions of this Transition Agreement may be
         waived in writing at any time by the party which is entitled to the
         benefits of such waived terms or provisions. No waiver of any of the
         provisions of this Transition Agreement shall be deemed to or shall
         constitute a waiver of any other provision hereof (whether or not
         similar). No delay on the part of any party exercising any right, power
         or privilege hereunder shall operate as a waiver thereof.

                                                                 EXECUTION COPY



                                       10



6.12.   Notices. Any notices or demands required by this Transition Agreement
        shall be given in writing and shall be given by delivery in person, by
        electronic facsimile transmission, cable, telegram, telex or other
        standard forms of written telecommunications, by overnight courier or by
        registered or certified mail, postage prepaid,

        if to Merck, to:

                  Merck & Co., Inc.
                  351 North Sumneytown Pike
                  North Wales, PA 19454-2505
                  Attn:  Executive Director, USHH Business Development
                  Facsimile: 215-616-2335


                  with a copy to:

                  Bruce Hartman, Esq.
                  Legal Department UG4A-50
                  Merck & Co., Inc.
                  351 N. Sumneytown Pike
                  North Wales, PA 19454-2505
                  Facsimile:  267-305-2965


                  with a copy to:

                  Merck & Co., Inc.
                  One Merck Drive
                  P.O. Box 100
                  Whitehouse Station, NJ  08889-0100
                  Attention:  Office of the Secretary
                  Facsimile:  (908) 735-1224

        if to Guilford, to:

                  Guilford Pharmaceuticals Inc.
                  6611 Tributary Street
                  Baltimore, Maryland 21224
                  Attention:  Chief Financial Officer
                  Facsimile:  (410) 631-6899

                  with a copy to:

                  Guilford Pharmaceuticals Inc.
                  6611 Tributary Street
                  Baltimore, Maryland 21224
                  Attention:  General Counsel
                  Facsimile:  (410) 631-5598

        or at such other address for a party as shall be specified by like
        notice. The date of giving any such notice shall be the date of hand
        delivery, the date sent by electronic



                                                                 EXECUTION COPY

                                       11


        facsimile transmission, cable, telegram, telex or other standard forms
        of written communications, the day after delivery to the overnight
        courier service, and the date three days following the posting of the
        registered or certified mail.

6.13.   Counterparts. This Transition Agreement may be executed in one or more
        counterparts, each of which shall for all purposes be deemed an original
        and all of which shall constitute one and the same agreement.

6.14.   Survival of Certain Provisions. The terms, provisions, representations,
        and warranties contained in this Transition Agreement that by their
        sense and context are intended to survive the performance thereof
        (including, without limitation, Article 4 and Sections 6.2, 6.3, 6.4,
        6.6, 6.8, 6.9, 6.12, 6.14, 6.15, 6.17, 6.18 and 6.19, and the payment
        and reconciliation provisions of Schedule 2.1) by either party or both
        parties hereunder shall so survive the completion of performance,
        expiration or termination of this Transition Agreement.

6.15.   Severability. If any provision of this Transition Agreement is found
        invalid or unenforceable by a court of competent jurisdiction, the
        remainder of this Transition Agreement shall continue in full force and
        effect. The parties shall negotiate in good faith to substitute a valid,
        legal, and enforceable provision that reflects the intent of such
        invalid or unenforceable provision.

6.16.   Review by Legal Counsel. Each of the parties agrees that it has read and
        had the opportunity to review this Transition Agreement with its legal
        counsel. Accordingly, the rule of construction that any ambiguity
        contained in this Transition Agreement shall be construed against the
        drafting party shall not apply.

6.17.   Third Party Beneficiaries. Nothing in this Transition Agreement, express
        or implied, is intended to confer upon any third party, any rights,
        remedies, obligations or liabilities.

6.18.   Asset Agreement. The parties expressly acknowledge and agree that
        certain provisions of the Asset Agreement are incorporated by reference
        herein, or by their terms otherwise apply hereto and further agree that
        such provisions shall be given full effect in interpreting and enforcing
        this Transition Agreement. In the event of any inconsistency between
        this Transition Agreement and the Asset Agreement, the Asset Agreement
        shall control.

6.19.   Cumulative Remedies. Except as otherwise provided herein, no remedy
        referred to in this Transition Agreement is intended to be exclusive,
        but each shall be cumulative and in addition to any other remedy
        referred to in this Transition Agreement or otherwise available under
        law or at equity.

6.20.   Further Assurances. Each party agrees to execute such further papers,
        agreements, documents, instruments and the like as may be necessary or
        desirable to effect the purpose of this Transition Agreement and to
        carry out its provisions.


                                                                 EXECUTION COPY

                                       12



IN WITNESS WHEREOF, the undersigned have executed this Transition Agreement as
of the Effective Date.


MERCK & CO., INC.                         GUILFORD PHARMACEUTICALS INC.


By:     /s/ Raymond V. Gilmartin         By:   /s/ Craig R. Smith, M.D.
        ---------------------------            ---------------------------

Name:    Raymond V. Gilmartin            Name: Craig R. Smith, M.D.

Title: Chairman, President and           Title:   Chairman, President and
Chief Executive Officer                  Chief Executive Officer


                                                                 EXECUTION COPY

                                       13





                                  SCHEDULE 2.1

                               TRANSITION SERVICES

Merck shall provide, or shall cause subcontractors used by Merck in the ordinary
course of conducting its business to provide, the following services in the
United States during the Transition Period:

        Warehousing of the MSD Ireland Image Product at Merck.

        Distribution services for the MSD Ireland Image Product in the United
        States as customarily performed by Merck for the Product during the last
        twelve (12) months preceding the Effective Date, including but not
        limited to receiving, accepting (where required), processing and
        shipping orders for the MSD Ireland Image Product.

        Accounting for sales of MSD Ireland Image Product, including accounts
        receivable management, billing, collection and record-keeping.

        Responding promptly to all product supply inquiries (not including
        Adverse Event reports, medical inquiries, or similar inquiries which are
        governed by the Asset Agreement) regarding the MSD Ireland Image Product
        (all out of pocket costs with respect to such inquiries to be borne by
        Guilford).

        Chargebacks and GPO administration fees services and processing, and
        processing of Medicaid Rebates as provided in Article 9 of the Asset
        Agreement.

        Providing the following reports to Guilford:

                Daily sales reports;

                A monthly sales report in form reasonably satisfactory to
                Guilford within five (5) business days following the end of each
                month setting forth total Gross Sales of MSD Ireland Image
                Product by SKU in units and dollars;

                Within fifteen (15) days following the end of each calendar
                quarter, (i) with respect to the first two months of such
                calendar quarter, a report (including a breakdown by customers)
                setting forth net sales of MSD Ireland Image Product by SKU,
                itemizing all rebates, chargebacks, GPO administration fees,
                discounts, or allowances credited or paid to customers in the
                United States, and returned goods received from customers in the
                United States, and (ii) with respect to the third month of such
                calendar quarter, a report (including a breakdown by customers)
                setting forth estimated net sales of MSD Ireland Image Product
                by SKU, itemizing all rebates, chargebacks, GPO administration
                fees, discounts, or allowances credited or paid to customers in
                the United States, and returned goods received from customers in
                the United States; provided that Merck shall as soon as
                practicable and in any event within twenty-five (25) days of the
                end of each calendar quarter provide Guilford with an actual
                report of the items contemplated in subsection (ii) above; and

                                                                 EXECUTION COPY





                Within fifteen (15) days after the end of each month, an
                inventory status report by formulation and SKU, showing the
                amount of MSD Ireland Image Product in inventory at the end of
                such month in the warehouses and an accounts receivable aging
                report.

                Within five (5) business days after the end of each month, any
                information reasonably necessary to allow Guilford to create and
                support audited and unaudited quarterly financial statements
                prepared in accordance with GAAP and to meet all disclosure
                requirements of the Securities and Exchange Commission
                (including estimated net sales of MSD Ireland Image Product by
                SKU, itemizing all estimated rebates, chargebacks, GPO
                administration fees, discounts, or allowances credited or paid
                to customers in the United States, and returned goods received
                from customers in the United States).

        Making payments to Guilford as follows:

                On or before the 15th day after the end of each month (or
                portion thereof, if the Transition Period ends in the middle of
                a calendar month) during the Transition Period, Merck shall pay
                Guilford an amount equal to Reconciled Net Sales in the United
                States and provide Guilford with a statement together with
                copies of the related credit memos for such month. For purposes
                of this Transition Agreement, "Reconciled Net Sales" shall mean:

                                Gross Sales for such month in the United States;

                                less:

                                Product returns received during such month (to
                                the extent that such product returns are
                                chargeable to Guilford in accordance with
                                Article 9 of the Asset Agreement);

                                Cash discounts given in accordance with the
                                standard terms and conditions of Merck in effect
                                during such month; and

                                Bad debt/uncollectible accounts receivable
                                write-offs made in accordance with the standard
                                collection policies of Merck (provided that
                                Guilford itself reserves the right to pursue
                                collection efforts in its discretion).

        Invoicing Guilford as follows:

                On or before the 45th day after the end of each calendar quarter
                (or portion thereof, if the Transition Period ends in the middle
                of a calendar quarter) during the Transition Period, Merck shall
                invoice Guilford for all chargebacks, GPO administration fees,
                discounts and rebates accrued during such calendar quarter (to
                the extent that such chargebacks, GPO administration fees,
                discounts and rebates are payable by Guilford in accordance with
                Article 9 of the Asset Agreement) and Merck shall deduct the
                amount due to Merck as reflected on each such invoice from the
                next payment of Reconciled Net Sales to be made to Guilford in
                accordance with the foregoing paragraph; provided that with
                respect to the last invoice delivered pursuant to this
                paragraph, Guilford shall pay the amount due pursuant to such
                invoice within thirty (30) days of receipt thereof.


                                                                 EXECUTION COPY




For the avoidance of doubt, Merck shall not be liable for non-payment by
customers, provided that Merck shall have properly billed such customers.
Following the end of the Transition Period and prior to the last payment to
Guilford, Merck will classify as a bad debt any invoice that has not yet been
paid, Merck will provide Guilford with a list of accounts receivable outstanding
so that such invoices can be collected by Guilford. Within three months
following the end of the Transition Period, a final true up will be performed
and any amounts owed by Merck to Guilford, or by Guilford to Merck, will be
reconciled.



                                                                 EXECUTION COPY

EX-2.04

                                                                    EXHIBIT 2.04









                      REVENUE INTEREST ASSIGNMENT AGREEMENT

                          Dated as of October 28, 2003

                                      among

                                  ARTERY, LLC,


                                  as Assignor,

                         GUILFORD PHARMACEUTICALS INC.,

                               GPI HOLDINGS, INC.

                                       and

                            PAUL ROYALTY FUND, L.P.,
                                       and
                          PAUL ROYALTY FUND HOLDINGS II
                                  as Assignees



*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.







                                Table of Contents

                                   (continued)



                                                                                                               Page
                                                                                                               ----
                                                                                                      

ARTICLE I  DEFINITIONS............................................................................................1

         Section 1.01  Definitions................................................................................1

ARTICLE II  PURCHASE AND SALE OF ASSIGNED INTERESTS..............................................................23

         Section 2.01  Purchase and Sale.........................................................................23
         Section 2.02  Payments in Respect of the Assigned Interests.............................................24
         Section 2.03  Purchase Price............................................................................28
         Section 2.04  No Assumed Obligations....................................................................28

ARTICLE III  REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD.............................................28

         Section 3.01  Organization..............................................................................29
         Section 3.02  Corporate Authorization...................................................................29
         Section 3.03  Governmental Authorization................................................................29
         Section 3.04  Ownership.................................................................................30
         Section 3.05  Financial Statements......................................................................30
         Section 3.06  No Undisclosed Liabilities................................................................30
         Section 3.07  Solvency..................................................................................30
         Section 3.08  Litigation................................................................................30
         Section 3.09  Compliance with Laws......................................................................31
         Section 3.10  Conflicts.................................................................................31
         Section 3.11  Material Contracts........................................................................32
         Section 3.12  Intellectual Property.....................................................................32
         Section 3.13  Regulatory Approval.......................................................................33
         Section 3.14  Subordination.............................................................................33
         Section 3.15  Place of Business.........................................................................34
         Section 3.16  Broker's Fees.............................................................................34
         Section 3.17  Other Information.........................................................................34
         Section 3.18  Distribution Agreements and License Agreements............................................34
         Section 3.19  Insurance.................................................................................37
         Section 3.20  Accuracy of Reports.......................................................................37
         Section 3.21  * Representations; Closing................................................................37

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF ASSIGNEES..........................................................37

         Section 4.01  Organization..............................................................................37
         Section 4.02  Authorization.............................................................................38



                                       i


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.




                                                                                                               Page
                                                                                                               ----
                                                                                                      
         Section 4.03  Broker's Fees.............................................................................38
         Section 4.04  Conflicts.................................................................................38
         Section 4.05  Consents..................................................................................38
         Section 4.06  Tax Representation........................................................................39

ARTICLE V  COVENANTS.............................................................................................39

         Section 5.01  Consents and Waivers......................................................................39
         Section 5.02  Access; Books and Records.................................................................39
         Section 5.03  Material Contracts........................................................................40
         Section 5.04  Confidentiality; Public Announcement......................................................40
         Section 5.05  Quarterly Reports.........................................................................41
         Section 5.06  Right of First Refusal....................................................................42
         Section 5.07  Purchase Options..........................................................................43
         Section 5.08  Security Agreements.......................................................................47
         Section 5.09  Best Efforts; Further Assurance...........................................................48
         Section 5.10  Remittance to Lockbox Account.............................................................49
         Section 5.11  Additional Covenants of Assignor, GPI Holdings and Guilford...............................51
         Section 5.12  Future Agreements.........................................................................56
         Section 5.13  Guarantee.................................................................................57
         Section 5.14  Financial Statements......................................................................58

ARTICLE VI  THE CLOSING; CONDITIONS TO CLOSING AND FUNDING.......................................................58

         Section 6.01  Closing...................................................................................58
         Section 6.02  Conditions Applicable to Assignees........................................................59
         Section 6.03  Conditions Applicable to Assignor.........................................................62

ARTICLE VII  TERMINATION.........................................................................................63

         Section 7.01  Termination Date..........................................................................63
         Section 7.02  Effect of Termination.....................................................................63

ARTICLE VIII  MISCELLANEOUS......................................................................................63

         Section 8.01  Survival..................................................................................63
         Section 8.02  Specific Performance......................................................................64
         Section 8.03  Notices...................................................................................64
         Section 8.04  Successors and Assigns....................................................................66
         Section 8.05  Indemnification...........................................................................66


                                       ii



                                                                                                           
         Section 8.06  Expenses..................................................................................68
         Section 8.07  Independent Nature of Relationship........................................................68
         Section 8.08  Federal Tax...............................................................................68
         Section 8.09  Entire Agreement..........................................................................69
         Section 8.10  Amendments; No Waivers....................................................................69
         Section 8.11  Interpretation............................................................................69
         Section 8.12  Headings and Captions.....................................................................70
         Section 8.13  Counterparts; Effectiveness...............................................................70
         Section 8.14  Severability..............................................................................70
         Section 8.15  Governing Law; Jurisdiction...............................................................70
         Section 8.16  Waiver of Jury Trial......................................................................71




                                      iii




                             EXHIBITS AND SCHEDULES

EXHIBITS

Exhibit A - * Sales
Exhibit B - Financial Statements
Exhibit C - Bill of Sale
Exhibit D - Assignor-Assignee Security Agreement
Exhibit D-1 - Guilford-Assignor Security Agreement
Exhibit D-2 - Guilford-Assignee Security Agreement
Exhibit E(i) - Legal Opinion Hogan & Hartson, L.L.P.
Exhibit E(ii) - Legal Opinion of Patent Counsel
Exhibit F - LLC Agreement
Exhibit G - Certificate of Formation
Exhibit H - Management Agreement
Exhibit I - Warrant
Exhibit J - Aggrastat Net Sales Projection and Budget
Exhibit K - Pledge Agreement
Exhibits L -N-Conversion Documents
Exhibit O - Acceptable Investments

SCHEDULES
Schedule 1.01 - Applicable Percentage
Schedule 3.02 - Corporate Authorization
Schedule 3.04 - Liens
Schedule 3.06 - Liabilities
Schedule 3.08 - Litigation
Schedule 3.09 - Compliance with Laws
Schedule 3.10 - Conflicts
Schedule 3.12(a) - Registered Intellectual Property
Schedule 3.12(b) - Intellectual Property Agreements
Schedule 3.12(c) - Issues Associated with Intellectual Property Agreements
Schedule 3.12(d) - Third Party Intellectual Property Rights
Schedule 3.12(f) - Restrictions On Granting Powers Under Distribution Agreements
          and Licensing Agreements
Schedule 3.12(i) - Payments On Primary Products and Intellectual Property
Schedule 3.12(k) - Disputes
Schedule 3.15 - Place of Business
Schedule 3.17 - Other Information
Schedule 3.18(a) - Distribution Agreements and License Agreements
Schedule 3.18(a)(iii) - Notices of Intention to Terminate Distribution
          Agreements and License Agreements



*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                                       iv



Schedule 3.18(a)(iv) - Right to Receive Payments Under Distribution Agreements
         and License Agreements
Schedule 3.18(a)(v) - Required Payments Under Distribution Agreements and
         License Agreements
Schedule 3.18(b) - Correspondence and Written Communications Regarding
         Distribution Agreements and License Agreements
Schedule 3.19 - Insurance
Schedule 5.07(a) - Assignees Option Repurchase Price
Schedule 5.07(b)(i) - Assignor Option Repurchase Price
Schedule 5.07(b)(ii)(A) - Call Price
Schedule 5.07(b)(ii)(B) - Secured Financing Event Price
Schedule 5.07(c) - Payment Factors
Schedule 6.02(g) - UCC Filing Jurisdictions
Schedule 8.08 - Federal Tax-Projected Payment Schedule

#The Company has omitted certain schedules in accordance with Regulation S-K
601(b)(2). The Company will furnish the omitted schedules to the Commission
upon request.
                                       v





                      REVENUE INTEREST ASSIGNMENT AGREEMENT


                  REVENUE INTEREST ASSIGNMENT AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "Agreement") is made
and entered into as of October 28, 2003 by and among GUILFORD PHARMACEUTICALS
INC., a Delaware corporation ("Guilford"), GPI HOLDINGS, INC., a Delaware
corporation and wholly-owned subsidiary of Guilford ("GPI Holdings"), ARTERY,
LLC, a Delaware limited liability company and wholly-owned subsidiary of GPI
Holdings ("Assignor"), and PAUL ROYALTY FUND, L.P., a Delaware limited
partnership ("Fund") and PAUL ROYALTY FUND HOLDINGS II, a California general
partnership ("Holdings"), (each an "Assignee" and together, the "Assignees").

                  WHEREAS, Assignor is the owner of the Intellectual Property
(as hereinafter defined) and the Regulatory Approvals (as hereinafter defined)
with respect to the Primary Products and the other rights, assets, and
properties acquired by Assignor under the Merck Purchase Agreement and the
Assignment Documents; and

                  WHEREAS, Assignor has the right to payments under the
Management Agreement (as hereinafter defined); and

                  WHEREAS, Assignor wishes to sell, assign, convey and transfer
to Assignees, and Assignees wish to purchase from Assignor, the Assigned
Interests (as hereinafter defined), upon and subject to the terms and conditions
hereinafter set forth; and

                  NOW, THEREFORE, in consideration of the mutual covenants,
agreements representations and warranties set forth herein, the parties hereto
agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01 DEFINITIONS.

                  The following terms, as used herein, shall have the following
meanings:

                  "Acceptable Investments" shall mean the types of investments,
and subject to the applicable concentration limits, described in the GPI
Holdings, Inc. - Short Term Investment Policy attached as Exhibit O.

                  "Affiliate" shall mean, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person.

*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                  "After Acquired Products" shall mean any products acquired or
in-licensed by Guilford or any Subsidiary of Guilford after the Closing, whether
individually or as part of an acquisition, merger or other transaction, and any
product that is developed internally by Guilford or a Subsidiary of Guilford
that is competitive with either of the Primary Products.

                  "After Acquired Products Net Sales" shall mean, for any period
of determination, the aggregate gross revenues of Guilford and its Affiliates,
calculated in accordance with GAAP, with respect to the After Acquired Products,
arising from direct sales, royalties or otherwise, earned by Guilford and its
Affiliates during such period, less, in the case of direct sales only, (i)
customary cash trade discounts and rebates actually granted or paid solely in
connection with After Acquired Products sold after the Closing, (ii) allowances
and adjustments actually credited to customers for After Acquired Products that
are spoiled, damaged, outdated, obsolete, returned or otherwise recalled and are
solely in connection with After Acquired Products sold after the Closing, (iii)
allowances and adjustments actually credited to customers for a recall by a
Government Authority of any After Acquired Product sold after the Closing, (iv)
charges included as part of the aggregate sales for freight, postage, shipping
and insurance charges, to the extent invoiced, and (v) taxes, duties or other
governmental charges when included in the invoice, plus any proceeds (including
payments of whatever type and whenever received) received by Guilford and its
Affiliates from the Transfer of an After Acquired Product or the Intellectual
Property, Regulatory Approvals or related assets with respect to an After
Acquired Product. In calculating After Acquired Product Net Sales, any Transfer
from Guilford to an Affiliate shall be disregarded and the calculation shall
instead be based on the first Transfer to an unrelated third party.

                  "Aggrastat" shall mean

                  (a) the product currently known and marketed as AGGRASTAT(R),

                  (b) the active pharmaceutical ingredient tirofiban
hydrochloride,

                  (c) the formulated solutions for intravenous injection or
infusion containing tirofiban hyrdrochloride marketed under the trademark
AGGRASTAT(R),

                  (d) any formulation of or product containing or comprised of
tirofiban hyrdrochloride, or any derivative thereof (including but not limited
to any stereoisomers, either separated or combined, any hydrates, any salts, any
solvates and any crystal forms), and

                  (e) any reformulation or line extension of such product, any
product containing or comprised of the same active pharmaceutical ingredient as
such product, regardless of dosage or method of administration, and any
improvement, enhancement, refinement or modification of such product.


                                       2


                  "Aggrastat Regulatory Approvals" shall mean with respect to
Aggrastat, collectively, all INDs, NDAs and other regulatory approvals,
registrations and associated materials (including the product dossier),
including IND No. 38,899, NDA No. 20-912 (vial concentrate) and NDA No. 20-913
(pre-mixed bag) acquired from Merck, and all reports, correspondence and other
submissions related thereto and the regulatory and clinical files and data
pertaining thereto, and all information, data, know-how, formulations, assays,
goodwill or intellectual property contained in such IND and the NDAs, relating
to Aggrastat in the United States and its territories and possessions, together
with all amendments, supplements and updates thereto, and all comparable
regulatory approvals, registrations and associated materials throughout the
world.

                  "Agreement" shall have the meaning set forth in the first
paragraph hereof.

                  "Applicable Percentage" shall mean, as of any date of
determination:

                  (a) for the period from the Closing Date through and including
December 31, 2006:

                           (i) with respect to annual Primary Products Net Sales
                  earned during a calendar year after the Closing Date
                  (including 2003) of up to and including $75 million, 10% of
                  such Primary Products Net Sales for such calendar year, and in
                  addition, to the extent that Primary Products Net Sales for
                  such calendar year are less than the * Sales for such calendar
                  year, 10% of the lesser of (A) the After Acquired Products Net
                  Sales for such calendar year and (B) (x) the * Sales for such
                  calendar year less (y) the Primary Products Net Sales for such
                  calendar year, and

                           (ii) with respect to annual Primary Products Net
                  Sales earned during a calendar year after the Closing Date
                  (including 2003) in excess of $75 million, 2.5% of such excess
                  Primary Products Net Sales for such calendar year and in
                  addition, to the extent that Primary Products Net Sales for
                  such calendar year are less than the * Sales for such calendar
                  year, 2.5% of the lesser of (A) the After Acquired Products
                  Net Sales for such calendar year and (B) (x) the * Sales for
                  such calendar year less (y) the Primary Products Net Sales for
                  such calendar year, and

                  (b) for the period from January 1, 2007 through and including
December 31, 2012:

                           (i) with respect to annual Primary Products Net Sales
                  earned during a calendar year up to and including $75 million,
                  17.5% of such Primary Products Net Sales for such calendar
                  year and in addition, to the extent that Primary Products Net
                  Sales for such calendar year are less than the  *  Sales for
                  such calendar year, 17.5% of the lesser of (A) After
                  Acquired Products Net Sales for such calendar year and (B) (x)
                  the * Sales for such calendar year less (y) the Primary
                  Products Net Sales for such calendar year, and


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                                       3


                           (ii) with respect to annual Primary Products Net
                  Sales earned during a calendar year in excess of $75 million,
                  3.5% of such excess Primary Products Net Sales for such
                  calendar year and in addition, to the extent that Primary
                  Products Net Sales for such calendar year are less than the
                  * Sales for such calendar year, 3.5% of the lesser of (A) the
                  After Acquired Products Net Sales for such calendar year and
                  (B) (x) the * Sales for such calendar year less (y) the
                  Primary Products Net Sales for such calendar year.

                  Notwithstanding the foregoing:

                  (x) if, for any of calendar years 2004, 2005 or 2006, the
Primary Products Net Sales and the After Acquired Products Net Sales
collectively are less than 75% of the * Sales for such year, then the Applicable
Percentage set forth in clause (a)(i) above shall be 12.5% rather than 10% for
such calendar year, *;

                  (y) if, for any calendar year after December 31, 2006, the
Primary Products Net Sales and After Acquired Products Net Sales collectively
are less than $75 million, the Applicable Percentage set forth in clause (b)(i)
above shall be 22.5% rather than 17.5% for such calendar year, provided,
however, that if the 22.5% rate is applicable in a particular year, then
Assignees will not receive any payments pursuant to clause (b)(ii) above for
that year;

                  (z) if, for any calendar year during the Term, Primary
Products Net Sales plus After Acquired Products Net Sales for such calendar year
are less than the * Sales for Primary Products for such calendar year, then the
Applicable Percentage shall additionally include an amount equal to 2.5% of the
lesser of (i) Secondary Products Net Sales for such calendar year and (ii) (A)
* Sales for such calendar year less (B) the sum of Primary Products Net Sales
for such calendar year and After Acquired Products Net Sales for such calendar
year; and

                  The foregoing definition of the Applicable Percentage is to be
interpreted in accordance with the illustrative examples set forth on Schedule
1.01 hereto.

                  "Assigned Interests" shall mean an undivided interest in the
right to receive amounts payable to Assignor by Guilford under the Management
Agreement, without any offset or reduction for any amounts payable by Assignor
to Guilford under the Management Agreement, equal to the Applicable Percentage
of Total Net Sales and all other amounts payable in accordance with Section
2.02.

                  "Assignees" shall have the meaning set forth in the first
paragraph hereof.


* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       4


                  "Assignees Concentration Account" shall mean a segregated
account established for the benefit of Assignees and maintained at the Lockbox
Bank pursuant to the terms of the Lockbox Agreement and this Agreement.
Assignees Concentration Account shall be the account into which the funds held
in the Joint Concentration Account which are payable to Assignees pursuant to
this Agreement are swept by the Lockbox Bank in accordance with the terms of
this Agreement and the Lockbox Agreement.

                  "Assignees Indemnified Party" shall have the meaning set forth
in Section 8.05(a).

                  "Assignees Option Repurchase" shall have the meaning set forth
in Section 5.07(a).

                  "Assignees' Account" shall mean an account maintained by
Assignees at any financial institution and designated in writing by Assignees to
Assignor, as Assignees may so designate from time to time.

                  "Assignees' Consultants" shall mean, collectively, Assignees'
employees, officers, directors, legal and accounting advisors, agents or other
authorized representatives.

                  "Assignor" shall have the meaning set forth in the first
paragraph hereof.

                  "Assignor-Assignees Security Agreement" shall mean the
Security Agreement dated as of October 28, 2003 by and between Assignor and
Assignees providing for, among other things, the grant by Assignor in favor of
Assignees of a valid continuing, perfected lien on and security interest in, the
collateral described therein. "Assignor Concentration Account" shall mean a
segregated account established and maintained at the Lockbox Bank pursuant to
the terms of the Lockbox Agreement and this Agreement. Assignor Concentration
Account shall be the account into which the funds remaining in the Joint
Concentration Account after payment therefrom of the amounts payable to
Assignees pursuant to this Agreement are swept in accordance with the terms of
this Agreement.

                  "Assignor Indemnified Party" shall have the meaning set forth
in Section 8.05(b).

                  "Assignor Option Event" shall mean any one of the following
events:

                           (i)      a Change of Control; or

                           (ii)     the acquisition by Guilford of a product for
                                    more than $100 million in cash at closing;
                                    or

                           (iii)    the refinancing of all indebtedness for
                                    borrowed money in a single transaction or a
                                    series of related transactions, as such
                                    indebtedness may


                                       5


                                    exist from time to time, of Guilford and its
                                    Subsidiaries, other than leasehold debt,
                                    equipment financing and working capital
                                    revolving lines of credit.

                  "Assignor Option Repurchase" shall have the meaning set forth
in Section 5.07(b).

                  "Assignor Option Repurchase Price" shall have the meaning set
forth in Section 5.07(b).

                  "Assignor's Account" shall have the meaning set forth in
Section 2.03(b).

                  "Audit Costs" shall mean, with respect to any audit of the
books and records of Assignor with respect to amounts payable or paid under this
Agreement or any License Party Audit, the cost of such audit, including, without
limitation, all fees, costs and expenses incurred in connection therewith.

                  "Audit Reports" shall mean, with respect to a License Party
Audit, any and all reports, findings and other written information related to
such License Party Audit.

                  "Bankruptcy Event" shall mean:

                           (i)      Guilford, GPI Holdings or Assignor shall
                                    commence any case, proceeding or other
                                    action (A) under any existing or future law
                                    of any jurisdiction, domestic or foreign,
                                    relating to bankruptcy, insolvency,
                                    reorganization, relief of debtors or the
                                    like, seeking to have an order for relief
                                    entered with respect to it, or seeking to
                                    adjudicate it bankrupt or insolvent, or
                                    seeking reorganization, arrangement,
                                    adjustment, winding-up, liquidation,
                                    dissolution, composition or other relief
                                    with respect to it or its respective debts,
                                    or (B) seeking appointment of a receiver,
                                    trustee, custodian or other similar official
                                    for it or for all or any portion of its
                                    assets, or Assignor, GPI Holdings or
                                    Guilford shall make a general assignment for
                                    the benefit of its respective creditors; or

                           (ii)     there shall be commenced against Assignor,
                                    GPI Holdings or Guilford any case,
                                    proceeding or other action of a nature
                                    referred to in clause (i) above which
                                    remains undismissed, undischarged or
                                    unbonded for a period of ninety (90) days;
                                    or

                           (iii)    there shall be commenced against Assignor,
                                    GPI Holdings or Guilford any case,
                                    proceeding or other action seeking issuance
                                    of a warrant of attachment, execution,
                                    distraint or similar process against (A) all
                                    or any


                                       6


                                    major portion of its assets and/or (B)
                                    either of the Primary Products, or any
                                    significant portion of the Intellectual
                                    Property related to either of the Primary
                                    Products, which results in the entry of an
                                    order for any such relief which shall not
                                    have been vacated, discharged, stayed,
                                    satisfied or bonded pending appeal within
                                    forty-five (45) days from the entry thereof;
                                    or

                           (iv)     Assignor, GPI Holdings or Guilford shall
                                    take any action in furtherance of, or
                                    indicating its consent to, approval of, or
                                    acquiescence in, any of the acts set forth
                                    in clause (i), (ii) or (iii) above of this
                                    definition of "Bankruptcy Event";

                           (v)      Assignor, GPI Holdings or Guilford shall
                                    generally not, or shall be unable to, or
                                    shall admit in writing its inability to, pay
                                    its respective debts as they become due; or

                           (vi)     Assignor, GPI Holdings or Guilford shall be
                                    Insolvent.

                  "Bill of Sale" shall mean the Bill of Sale pursuant to which
Assignor shall assign to Assignees all of its rights and interests in and to the
Assigned Interests purchased hereunder, which Bill of Sale shall be
substantially in the form of Exhibit C.

                  "Business Day" shall mean any day other than a Saturday, a
Sunday, any day which is a legal holiday under the laws of the State of New
York, or any day on which banking institutions located in the State of New York
are required by law or other governmental action to close.

                  "Call" shall have the meaning as set forth in Section 5.07(b).

                  "Call Price" shall have the meaning as set forth in Section
5.07(b).

                  "Certificate of Formation" shall mean the certificate of
formation of Assignor, dated as of October 27, 2003, a copy of which is attached
hereto as Exhibit G.

                  "Change of Control" shall mean:

                           (i)      the acquisition by any Person or group
                                    (within the meaning of Sections 13(d)(3) or
                                    14(d)(2) of the Securities Exchange Act of
                                    1934) (other than any trustee or other
                                    fiduciary holding securities under an
                                    employee benefit plan of Guilford or any
                                    entity controlled by Guilford) of beneficial
                                    ownership of any capital stock of Guilford,
                                    if after such acquisition, such Person or
                                    group would be the "beneficial owner" (as
                                    defined in Rule 13d-3 under the Securities
                                    Exchange Act of 1934), directly or
                                    indirectly, of


                                       7


                                    securities of Guilford representing more
                                    than 50% of the combined voting power of
                                    Guilford's then outstanding securities
                                    entitled to vote generally in the election
                                    of directors; or

                           (ii)     Guilford's stockholders approve a merger or
                                    consolidation of Guilford, with any other
                                    Person, other than a merger or consolidation
                                    which would result in Guilford's voting
                                    securities outstanding immediately prior
                                    thereto continuing to represent (either by
                                    remaining outstanding or by being converted
                                    into voting securities of the surviving
                                    entity) more than 50% of the combined voting
                                    power of Guilford's voting securities or
                                    such surviving entity's voting securities
                                    outstanding immediately after such merger or
                                    consolidation; or

                           (iii)    during any period of two consecutive years,
                                    individuals who at the beginning of such
                                    period constitute the Board of Directors of
                                    Guilford (together with any new directors
                                    (other than a director designated by a
                                    Person who has entered into an agreement
                                    with Guilford to effect a transaction
                                    described in clause (i) or (ii) of this
                                    definition of "Change of Control"), whose
                                    election by such Board of Directors or
                                    nomination for election by Guilford's
                                    stockholders, as applicable, was approved by
                                    a vote of a majority of the directors then
                                    still in office who either were directors at
                                    the beginning of such period or whose
                                    election or nomination for election was
                                    previously so approved) cease for any reason
                                    to constitute at least a majority of the
                                    Board of Directors of Guilford then in
                                    office; or

                           (iv)     GPI Holdings ceases to be the sole owner of
                                    100% of the membership interests in the
                                    Assignor;

                           (v)      Guilford ceases to be the direct or indirect
                                    sole owner of 100% of the capital stock of
                                    GPI Holdings; or

                           (vi)     Assignor merges or is consolidated with any
                                    other Person.

                  "Closing" shall have the meaning set forth in Section 6.01.

                  "Closing Date" shall mean October 28, 2003.

                  "Collateral" shall mean the property included in the
definition of "Collateral" in any of the Security Agreements.


                                       8


                  "Confidential Information" shall mean, as it relates to
Assignor, Guilford, Guilford's Affiliates and the Products, the Intellectual
Property, know-how, trade secrets, confidential business information, financial
data and other like information (including ideas, research and development,
know-how, formulas, schematics, compositions, technical data, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code and object code
form), client lists and tangible or intangible proprietary information or
material. Notwithstanding the foregoing definition, Confidential Information
shall not include information that is (i) already in the public domain at the
time the information is disclosed, (ii) thereafter becomes lawfully obtainable
from other sources, (iii) is required to be disclosed in any document to be
filed with any Government Authority or (iv) is required to be disclosed under
securities laws, rules and regulations applicable to Assignor or Guilford, as
the case may be, or pursuant to the rules and regulations of the Nasdaq National
Market or any other stock exchange or stock market on which securities of
Guilford may be listed for trading.

                  "Consolidated EBITDA" shall mean for any period, the sum
(without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of the
Surviving Party and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside of the ordinary course of business), (B) Total Debt Service and (C) the
aggregate depreciation, amortization and other noncash expenses of the Surviving
Party and its Subsidiaries reducing Consolidated Net Income of the Surviving
Party for such period, determined on a consolidated basis in accordance with
GAAP (excluding any such charges constituting an extraordinary item or loss or
any charge which requires an accrual of or a reserve for cash charges for any
future period) less any noncash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for the Surviving Party
and its Subsidiaries in accordance with GAAP.

                  "Consolidated Net Income" shall mean the aggregate net income
(or loss) of the Surviving Party and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) after-tax gains or losses from the sale of
assets outside of the ordinary course of business, including sale and leaseback
transactions and sale of any stock of the Surviving Party to any Person
(excluding the disposal and replacement of obsolete equipment in the ordinary
course of business) or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains or losses, (c) the net
income (but not loss) of any Subsidiary to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by contract, operation of law or otherwise, (d) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (e) any noncash losses attributable to


                                       9


the use of a fair value methodology for recognition and measurement of
impairment of goodwill not identified with impaired assets in accordance with
Financial Accounting Standards Board Statement No. 142.

                  "Contract Party" shall mean any party to a Distribution
Agreement or License Agreement.

                  "Conversion Documents" shall mean the Certificate of
Conversion, dated October 27, 2003, relating to the conversion by GPI Polymer
Holdings, Inc., from a Delaware corporation to the Delaware limited liability
company that adopted the LLC Agreement.

                  "Daily Amount" shall have the meaning set forth in Section
2.02(a).

                  "Deposit Accounts" shall mean, collectively, the Lockbox
Account, the Joint Concentration Account, Assignor Concentration Account and
Assignees Concentration Account, each established and maintained pursuant to the
Lockbox Agreement.

                  "Discrepancy Notice" shall have the meaning set forth in
Section 2.02(h).

                  "Distribution Agreement" shall mean any existing or future
agreement (whether or not in writing) pursuant to which Guilford, or any
Affiliate or agent of Guilford, or any other Person markets or sells the
Products, whether to end-users, for redistribution by the purchaser thereof, or
otherwise, or to license distribution of the Products or the use of the
Intellectual Property.

                  "Dollars" or "US$" shall mean the freely transferable lawful
money of the United States.

                  "EBITDA to Total Debt Service Ratio" shall mean the ratio of
(a) Consolidated EBITDA for the period of four consecutive fiscal quarters (the
"Measurement Period") ending on such date, to (b) the Total Debt Service for
such Measurement Period.

                  "Excluded Liabilities and Obligations" shall have the meaning
set forth in Section 2.04.

                  "Excluded Transfer" shall mean (i) a Transfer to a Person that
is not an Affiliate of Guilford pursuant to a Distribution Agreement or License
Agreement and that (a) is entered into in the ordinary course of Guilford's or
Assignor's business, (b) does not have the effect of a complete or outright
transfer of any of the Products or substantial portion of the economic value of
any of the Products, and (c) does not entitle Guilford or any of its Affiliates
or Assignor to one or more lump sum payments in an aggregate amount in excess of
$1,000,000 in consideration of the Transfer or any related series of Transfers
or (ii) the Transfer by Guilford of all or any part of


                                       10


any After Acquired Product or any Secondary Product or the Intellectual Property
or Regulatory Approvals related thereto if, at the time of such Transfer, the
quotient, expressed as a percentage, of (A) the fair market value of the assets
proposed to be sold divided by (B) the product of the number of shares of
Guilford common stock then issued and outstanding and the average daily closing
price for such stock as quoted on the primary exchange on which such shares are
quoted (and if not so quoted or listed at any time, the average daily bid and
ask price as quoted in the pink sheets) for the ten (10) trading days prior to
the date of the Transfer is less than 50% and (iii) a Gliadel Foreign
Transaction.

                  "FDA" shall mean the United States Food and Drug
Administration.

                  "Financial Statements" shall mean the consolidated balance
sheets of Guilford and its Subsidiaries at December 31, 2001, December 31, 2002
and June 30, 2003 and the related consolidated statements of operations, cash
flows and changes in stockholders' equity of Guilford and its Subsidiaries
audited for the years ended December 31, 2001 and December 31, 2002 and
unaudited for the six months ended June 30, 2003, and the accompanying footnotes
thereto, copies of which are attached hereto as Exhibit B.

                  "Future Agreement" shall mean any distribution, licensing or
similar agreement entered into by Guilford or any Affiliate of Guilford with any
other Person after the date hereof relating to the marketing and/or sale of any
of the Products, as the same may be amended, supplemented or otherwise modified
from time to time.

                  "GAAP" shall mean generally accepted accounting principles in
the United States in effect from time to time.

                  "Gliadel" shall mean:

                  (a) the product currently known and marketed under the
trademark GLIADEL(R),

                  (b) the pharmaceutical composition comprising the
biodegradable polymer prolifeprosan 20 and the active pharmaceutical ingredient
carmustine (BCNU),

                  (c) the formulation marketed under the trademark
GLIADEL(R)Wafer,

                  (d) any formulation or product comprising or containing
prolifeprosan 20 and carmustine (BCNU), or any derivative thereof (including but
not limited to any stereoisomers, either separated or combined, any hydrates,
any salts, any solvates and any crystal forms), and

                  (e) any reformulation or line extension of such product, any
product containing or comprised of the same biodegradable polymer and the same
active pharmaceutical ingredient as


                                       11


such product, regardless of dosage or method of administration, and any
improvement, enhancement, refinement or modification of such product.

                  "Gliadel Foreign Transaction" shall mean the Transfer in whole
or in part of Gliadel, or the Intellectual Property and Regulatory Approvals
with respect to Gliadel, to a Person that is not an Affiliate of Guilford,
solely for manufacture, sale, distribution or license outside North America.

                  "Gliadel Regulatory Approvals" shall mean, collectively, all
INDs, NDAs and other regulatory approvals, registrations and associated
materials (including the product dossier) relating to Gliadel, issued by the FDA
as to Gliadel and all reports, correspondence and other submissions related
thereto and the regulatory and clinical files and data pertaining thereto, and
all information, data, know-how, formulations, assays, goodwill or intellectual
property contained in such INDs and the NDAs, relating to Gliadel together with
all amendments, supplements and updates thereto, and all comparable regulatory
approvals, registrations and associated materials throughout the world.

                  "Governmental Authority" means any government, court,
regulatory or administrative agency or commission, or other governmental
authority, agency or instrumentality, whether foreign, federal, state or local
(domestic or foreign), including, without limitation, the U.S. Patent and
Trademark Office, the FDA, the U.S. National Institute of Health or any other
government authority in any country.

                  "GPI" shall mean GPI Polymer Holdings, Inc., a Delaware
corporation.

                  "GPI Holdings" shall have the meaning set forth in the first
paragraph hereof.

                  "Guaranteed Obligations" shall have the meaning set forth in
Section 5.13(a).

                  "Guilford" shall have the meaning set forth in the first
paragraph hereof.

                  "Guilford-Assignees Security Agreement" shall mean the
Security Agreement dated as of October 28, 2003 by and between Assignees and
Guilford providing for, among other things, the grant by Guilford in favor of
Assignees of a valid continuing, perfected lien on and security interest in, the
Collateral described therein.

                  "Guilford-Assignor Security Agreement" shall mean the Security
Agreement dated as of October 28, 2003 by and between Assignor and Guilford
providing for, among other things, the grant by Guilford in favor of Assignor of
a valid continuing, perfected lien on and security interest in, the collateral
described therein.


                                       12


                  "Guilford 5% Convertible Subordinated Notes" shall mean the
notes issued by Guilford under the Subordinated Indenture.

                  "Included Products Payments" shall mean the sum of all Primary
Products Net Sales, After Acquired Products Net Sales and Secondary Products Net
Sales.

                  "IND" shall mean an investigational new drug application as
defined in 21 C.F.R. Section 312 et seq. filed with the FDA in the United States
or an equivalent application filed with a Regulatory Agency in any country
outside of the United States.

                  "Indebtedness" means with respect to any Person, (a) any
liability of such Person (1) for borrowed money, or under any reimbursement
obligation relating to a letter of credit, or (2) evidenced by a bond, note,
debenture, or similar instrument (including a purchase money obligation) given
in connection with the acquisition of any businesses, properties or assets of
any kind (other than a trade payable or a current liability arising in the
ordinary course of business), or (3) for the payment of money relating to any
obligations under any capital lease of real or personal property which has been
recorded as a capitalized lease obligation; (b) all redeemable stock issued by
such Person that is mandatorily redeemable or redeemable or required to be
repurchased at the election of the holder thereof (the amount of Indebtedness
represented by any involuntary liquidation preference plus accrued and unpaid
dividends); (c) any liability of others described in the preceding clause (a)
that the Person has guaranteed or that is otherwise its legal liability; and (d)
(without duplication) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a), (b) and (c) above.

                  "Independent Accountants" shall have the meaning set forth in
Section 2.02(h).

                  "Insolvent" shall mean, with respect to a Person, a financial
condition such that the sum of such Person's debts is greater than the fair
market value of such Person's property, when taken together on a consolidated
basis. When used with respect to Assignor or Guilford, the debts of such
entities shall include the obligations of Guilford under this Agreement and the
obligation of Assignor to make payments in respect of the Assigned Interests
pursuant to this Agreement, including any payments pursuant to Section 5.07.

                  "Intellectual Property" shall mean all trade secrets;
Know-How; Confidential Information; inventions (whether patentable or
unpatentable and whether or not reduced to practice) and all improvements
thereto; all patents, patent rights, patent applications and invention
disclosures, together with all reissuance, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof; all registered or
unregistered trademarks, trade names, service marks, including all goodwill
associated therewith; all domain names and websites; and all registered and
unregistered copyrights and all applications, in each case that are


                                       13


owned, controlled by, issued to, licensed to, licensed by or hereafter acquired
by or licensed by Assignor, Guilford or any Subsidiary of Guilford, in each case
relating to or involving the Products.

                  "Joint Concentration Account" shall mean a segregated account,
subject to a control agreement in favor of the Assignees, established for the
benefit of Assignor and Assignees and maintained at the Lockbox Bank pursuant to
the terms of the Lockbox Agreement and this Agreement. The Joint Concentration
Account shall be the account into which the Lockbox Bank sweeps the funds held
in the Lockbox Account.

                  "Know-How" means relating solely to the Products, all trade
secrets, materials, discoveries, data, processes, methods of manufacture,
devices, techniques, algorithms, flow charts, computer software programs or
applications (in both source code and object code form), schematics,
compositions, formulations, formula, specifications, uses, patterns,
compilations and other information, including, but not limited to (i) medical,
chemical, pharmacological and other scientific or clinical data or materials and
(ii) methodology and information used in the manufacture, packaging, labeling,
development, testing or analysis of the Products, that, in each case, derives
actual or potential independent economic value from not generally being known
to, and not being readily ascertainable by proper means by, other Persons who
can obtain economic value from its disclosure or use, and that is now owned,
controlled or licensed by Assignor, Guilford or any Subsidiary of Guilford, or
that is hereafter acquired or licensed by Assignor, Guilford of any Subsidiary
of Guilford during the term of this Agreement.

                  "Knowledge" shall mean, with respect to Assignor and/or
Guilford, as applicable, the knowledge of an officer of such Person relating to
a particular matter.

                  "Letter of Intent" shall mean the letter dated September 25,
2003 between Paul Capital Partners and Guilford as the same may be amended to
the date hereof.

                  "License Agreement" shall mean any existing or future
distribution, co-promotion, manufacturing, marketing or partnering agreements
entered into by Guilford relating to the Products and/or the Intellectual
Property pursuant to which Guilford or any Affiliate of Guilford grants a
license under intellectual property rights that relate to the Products or the
Intellectual Property.

                  "License Party Audit" shall have the meaning set forth in
Section 5.12(d).

                  "Licensed Intellectual Property" shall mean any intellectual
property licensed to Assignor or Guilford by a third party.

                  "Liquidity Account" shall have the meaning set forth in
Section 5.07(h).


                                       14


                  "LLC Agreement" shall mean the limited liability company
agreement of Assignor dated as of October 27, 2003, a true and correct copy of
which is attached as Exhibit F.

                  "Liens" shall mean all liens, encumbrances, security
interests, mortgages, rights to preferential payments or charges of any kind.

                  "Lockbox Account" shall mean collectively, any lockbox and
segregated lockbox account established and maintained at the Lockbox Bank
pursuant to a Lockbox Agreement and this Agreement. The Lockbox Account shall be
the account into which all payments made in respect of the sale of the Primary
Products are to be remitted.

                  "Lockbox Agreement" shall mean any agreement entered into by a
Lockbox Bank, Guilford, Assignor and Assignees, in form and substance reasonably
satisfactory to the parties thereto, pursuant to which, among other things, the
Lockbox Account, the Joint Concentration Account, Assignees Concentration
Account and Assignor Concentration Account shall be established and maintained.

                  "Lockbox Bank" shall mean JP Morgan Chase Bank or such other
bank or financial institution approved by each of Assignees and Assignor.

                  "Losses" shall mean collectively, any and all claims, damages,
losses, judgments, liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding).

                  "Management Agreement" shall mean the Management and Licensing
Agreement dated as of October 28, 2003 by and between Guilford and Assignor
providing for, among other things, a license in the Intellectual Property to
Guilford by Assignor to manufacture, use, sell, market, license and distribute
the Primary Products and the rights relating to Guilford's ability to enter into
manufacturing, licensing and distribution agreements with third parties to sell,
market, license and distribute the Primary Products, a true and correct copy of
which is attached as Exhibit H.

                  "Material Adverse Change" shall mean, with respect to Assignor
and/or Guilford, as applicable, a material adverse change in the business,
operations, assets, prospects or financial condition of the Assignor and/or
Guilford and its Subsidiaries, taken as a whole.

                  "Material Adverse Effect" shall mean (i) the effect of a
Material Adverse Change, (ii) a material adverse effect on the validity or
enforceability of any of the Transaction Documents, (iii) a material adverse
effect on the ability of the Assignor or Guilford to perform any of its
obligations under any of the Transaction Documents, (iv) a material adverse
effect on the rights or remedies of Assignees under any of the Transaction
Documents, (v) an adverse


                                       15


effect on the right of Guilford or Assignor to receive any material payments
payable under any Distribution Agreement or License Agreement or any other
material rights and remedies of Guilford or Assignor under any Distribution
Agreement or License Agreement, (vi) a material adverse effect on the right of
Assignees to receive Assigned Interests or the Applicable Percentage of Total
Net Sales or any payment due to Assignees hereunder or (vii) a material adverse
effect on the Assigned Interests, including, without limitation, any material
adverse effect on the Primary Products or the After Acquired Products or the
ability of the Guilford to manufacture, distribute, market and/or sell the
Primary Products or the After Acquired Products or on the level of anticipated
Total Net Sales.

                  "Material Contracts" shall mean any contract, agreement or
other arrangement to which either Assignor, Guilford or a Subsidiary of Guilford
is a party or any of Assignor's, Guilford's or a Subsidiary of Guilford's
respective assets or properties are bound or committed (other than the
Transaction Documents) for which breach, nonperformance, cancellation or failure
to renew could reasonably be expected to have a Material Adverse Effect.

                  "Merck" shall mean Merck & Co., Inc., a New Jersey
corporation.

                  "Merck Purchase Agreement" shall mean the Asset Transfer and
License Agreement, dated as of October 28, 2003 between Merck & Co., Inc.,
Guilford.

                  "NDA" shall mean a New Drug Application, and all amendments
and supplements thereto, for regulatory approval by the FDA as defined in 21 CFR
ss. 314.50 et seq., as such act or regulations may be amended, supplemented or
replaced from time to time.

                  "Necessary Intellectual Property" shall have the meaning set
forth in Section 3.12(a).

                  "Notice Event" means either (a) Guilford's or Assignor's
intent to cause or to take any action to cause a Bankruptcy Event, (b) Guilford
or Assignor being advised or otherwise becoming aware that a Bankruptcy Event
(including an involuntary Bankruptcy Event) has occurred or will occur shortly
or (c) the presentation to Guilford's Board of Directors or to Assignor's
manager or other governing body or to any one of Guilford's directors or
managers by an officer, member of senior management, director or manager of
either Guilford or Assignor of a proposal to commence a bankruptcy proceeding or
otherwise cause a Bankruptcy Event.

                  "Notice of Election" shall have the meaning set forth in
Section 5.06(b).

                  "Obligations" shall mean any and all obligations of Assignor
or Guilford or GPI Holdings under this Agreement and the other Transaction
Documents.

                  "Offered Interests" shall have the meaning set forth in
Section 5.06(a).


                                       16


                  "Other Interests" shall have the meaning set forth in Section
5.06(a).

                  "Owned Intellectual Property" shall have the meaning set forth
in Section 3.12(d).

                  "Patent Office" shall mean the respective patent office
(foreign or domestic) for any Patent.

                  "Patents" shall mean all current and future patents, patent
applications and patent disclosures, together with all reissuances, divisions,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof relating to the Products and/or the Intellectual Property, composition
of matter, formulation, or methods of manufacture or use thereof that are issued
or filed, including, without limitation, those identified on Schedule 3.12(a),
that, in each case, are owned, controlled by, issued to, licensed to, licensed
by or hereafter acquired by or licensed by Assignor, Guilford or any Subsidiary
of Guilford.

                  "Person" means an individual, corporation, partnership,
association, trust or other entity or organization, but not including a
government or political subdivision or any agency or instrumentality of such
government or political subdivision.

                  "Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof by and between GPI Holdings and Assignees providing for, among
other things, the grant of a security interest by GPI Holdings in favor of
Assignees of its membership interest in Assignor as security for GPI Holdings'
guarantee of Assignor's Obligations hereunder and GPI Holdings' Obligations
hereunder.

                  "Primary Products" shall mean Gliadel and Aggrastat.

                  "Primary Products Net Sales" shall mean, for any period of
determination, the aggregate gross end-user sales revenues of the Primary
Products in finished form earned during such period, as invoiced by Guilford,
its Affiliates, Contract Parties or others to end-users of the Primary Products
(provided, however, that Primary Product Net Sales with respect to sales of
Gliadel for each Territory outside North America shall instead be the aggregate
gross revenues of Guilford and its Affiliates, calculated in accordance with
GAAP, for such period with respect to Gliadel sales in such Territory for so
long as Guilford sells Gliadel in such Territory solely through third party
licensees and distributors) less (i) customary cash trade discounts and rebates
actually granted or paid solely in connection with sales after the Closing, (ii)
allowances and adjustments actually credited to customers for Primary Products
that are spoiled, damaged, outdated, obsolete, returned or otherwise recalled
and are solely in connection with Primary Products sold after the Closing, (iii)
allowances and adjustments actually credited to customers for a significant
recall by a Government Authority of any Primary Product sold after the Closing,
(iv) charges included as part of the aggregate sales for freight, postage,
shipping and insurance


                                       17


charges, to the extent invoiced, and (v) taxes, duties or other governmental
charges when included in the invoice (provided that the total of all amounts in
clauses (i) through (iv) for sales of Gliadel for any period shall not exceed
*% of the aggregate gross end-user sales revenues of Gliadel for such period
and the total of all amounts in clauses (i) through (iv) for sales of Aggrastat
for any period shall not exceed *% of the aggregate gross end-user sales
revenue of Aggrastat for such period). Primary Products Net Sales shall not
include the proceeds of any Transfer by Assignor or Guilford made in compliance
with Section 2.02(g). For the avoidance of doubt, the shipment of Primary
Products to Contract Parties or other end-users of Primary Products in
replacement for damaged or expired Primary Products for which no additional
payments are due from any Contract Party or end-user shall, together with the
initial sale of the damaged or expired Primary Products, be considered a single
sale of Primary Products.

                  "Products" shall mean the Primary Products, the After Acquired
Products and the Secondary Products, collectively.

                  "* Sales" shall mean, with respect to any calendar year during
the Term, the Primary Products Net Sales  *  by Assignor for such calendar
year, as set forth in Exhibit A hereto.

                  "Proposed Transfer" shall have the meaning set forth in
Section 5.06(a).

                  "Purchase Option Exercise Period" shall have the meaning set
forth in Section 5.07(a).

                  "Purchase Option Event" shall mean any of the following
events:

                           (i)      any Change of Control;

                           (ii)     any Bankruptcy Event;

                           (iii)    Guilford shall have at the end of any
                                    calendar month less than $20 million of
                                    Working Capital;

                           (iv)     the Transfer (other than an Excluded
                                    Transfer) by either Assignor or Guilford of
                                    (A) all or any major part of its respective
                                    interests in the Products, the Intellectual
                                    Property and the Regulatory Approvals, taken
                                    as a whole, and/or (B) all or any part of
                                    either of the Primary Products, any products
                                    or proceeds of either of the Primary
                                    Products, the Regulatory Approvals as to
                                    either Primary Product, any Intellectual
                                    Property with respect to either of the
                                    Primary Products, or any other property
                                    transferred to Assignor or Guilford pursuant
                                    to the Merck Purchase Agreement;




* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       18


                           (v)      the Transfer by Guilford or its Subsidiaries
                                    of a majority, calculated by reference to
                                    fair market value, of the consolidated
                                    assets of Guilford and its Subsidiaries;

                           (vi)     Assignor fails to pay when due any of the
                                    amounts set forth in Section 2.02(b)(ii);

                           (vii)    (A) any representation, warranty or
                                    certification made by either Assignor or
                                    Guilford in any of the Transaction Documents
                                    or in any certificate at any time given by
                                    either Assignor or Guilford in writing
                                    pursuant hereto or thereto or in connection
                                    herewith or therewith shall be inaccurate on
                                    the date as of which it was made or deemed
                                    made, and such inaccuracy would,
                                    individually or in the aggregate with other
                                    inaccuracies on the part of Assignor or
                                    Guilford, as the case may be, reasonably be
                                    expected to have a Material Adverse Effect
                                    or (B) there has occurred a breach of or
                                    default under any term, covenant, or
                                    agreement under any Transaction Document by
                                    either Assignor or Guilford, which would,
                                    individually or in the aggregate with other
                                    breaches on the part of Assignor or
                                    Guilford, as the case may be, reasonably be
                                    expected to have a Material Adverse Effect,
                                    and

                           (viii)   a Notice Event.

Notwithstanding * to the contrary, * a Transfer described in Section 2.02(g)
shall not constitute a Purchase Option Event if the Assignor has complied with
all of the provisions of Section 2.02(g).

              "Purchase Price" shall have the meaning set forth in Section 2.03.

              "Quarterly Report" shall mean, with respect to the relevant
calendar quarter of Assignor, (i) a report showing all payments made by Assignor
to Assignees under this Agreement during such quarter and showing in detail the
basis for the calculation of such payments, (ii) a reconciliation of such report
referred to in clause (i) above to all information and data deliverable to
Guilford or its Affiliates by the parties to any License Agreements or
Distribution Agreements, together with relevant supporting documentation, (iii)
a report showing, by type of Product, the amount of gross end-user sales of
Products and all deductions supporting Assignor's calculation of Primary
Products Net Sales, After Acquired Products Net Sales and Secondary Products Net
Sales, as applicable and (iv) such additional information as Assignees may
reasonably request.

              "Regulatory Agency" shall mean a Governmental Authority with
responsibility for the approval of the marketing and sale of drugs in any
country.


* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

                                       19


                  "Regulatory Approvals" shall mean, collectively, the Gliadel
Regulatory Approvals and the Aggrastat Regulatory Approvals and all INDs, NDAs
and other regulatory approvals, registrations and associated materials
(including the product dossier) issued by the FDA as to the Secondary Products
or any After Acquired Product and all reports, correspondence and other
submissions related thereto and the regulatory and clinical files and data
pertaining thereto, and all information, data, know-how, formulations, assays,
goodwill or intellectual property contained in such INDs and the NDAs, relating
to such Products together with all amendments, supplements and updates thereto
and all comparable regulatory approvals, registrations and associated materials
throughout the world.

                  "Repurchase Event" shall have the meaning set forth in Section
5.07(d).

                  "Repurchase Price" shall have the meaning set forth in Section
5.07(c).

                  "Review Materials" shall have the meaning set forth in Section
5.06(a).

                  "Secondary Products" shall mean (i) the propofol prodrug known
as AQUAVAN(TM) Injection and (ii) the neuroimmunophilin ligand capable of
regenerating nerves without being immunosuppressive currently known as GPI 1485
or NIL-A, any reformulation or line extension of either of such products, any
product containing or comprised of the same active pharmaceutical ingredient as
either of such products, regardless of the dosage or method of administration
and any improvement, enhancement, refinement or modification of either of such
products.

              "Secondary Products Net Sales" shall mean, for any period of
determination, the aggregate gross revenues of Guilford and its Affiliates,
calculated in accordance with GAAP, with respect to the Secondary Products,
arising from direct sales, royalties or otherwise, earned by Guilford and its
Affiliates during such period, less in the case of direct sales only (i)
customary cash trade discounts and rebates actually granted or paid solely in
connection with sales after the Closing, (ii) allowances and adjustments
actually credited to customers for Secondary Products that are spoiled, damaged,
outdated, obsolete, returned or otherwise recalled and are solely in connection
with Secondary Products sold after the Closing, (iii) allowances and adjustments
actually credited to customers for a recall by a Government Authority of any
Secondary Product sold after the Closing, (iv) charges included as part of the
aggregate sales for freight, postage, shipping and insurance charges, to the
extent invoiced, and (v) taxes, duties or other governmental charges when
included in the invoice, plus any proceeds (including payments of whatever type
and whenever received) received by Guilford and its Affiliates from the Transfer
of a Secondary Product or the Intellectual Property, Regulatory Approvals or
related assets with respect to a Secondary Product. In calculating Secondary
Products Net Sales, any Transfer from Guilford to an Affiliate shall be
disregarded and the calculation shall instead be based on the first Transfer to
an unrelated third party.


                                       20


                  "Secured Financing Event Price" shall have the meaning as set
forth in Section 5.07(b).

                  "Secured Financing Event Purchase" shall have the meaning as
set forth in Section 5.07(b).

                  "Security Agreements" shall mean the Guilford-Assignees
Security Agreement, the Guilford-Assignor Security Agreement and the
Assignor-Assignees Security Agreement collectively.

                  "Subordinated Indenture" shall mean the Indenture, dated as of
June 17, 2003, between Guilford Pharmaceuticals Inc. and Wachovia Bank, National
Association, with respect to the issue of Guilford's 5% Convertible Subordinated
Notes due 2008.

                  "Supply Agreement" shall mean that certain Supply Agreement by
and between Guilford and Merck Sharp & Dohme (Ireland) Limited dated as of
October 28, 2003.

                  "Subsidiary" shall mean with respect to any Person (a) any
corporation of which the outstanding capital stock having at least a majority of
votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time owned, directly or indirectly, by such Person or
(b) any other Person of which at least a majority voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.

                  "Surviving Party" shall have the meaning set forth in Section
5.07(f).

                  "Technical Agreement" shall mean the Technical Agreement,
dated as of October 28, 2003, between Merck and Guilford.

                  "Term" shall mean the term of this Agreement, which shall
commence on the date hereof and terminate on the earlier of (i) December 31,
2012 and (ii) the consummation of a Repurchase Event (other than a Secured
Financing Event Purchase).

                  "Territories" shall mean, with respect to any of the Products,
any location where Guilford or its Affiliates or any Contract Party has the
right to sell such Product.

                  "Total Debt" shall mean the aggregate (without duplication) of
(i) all outstanding Indebtedness of the Surviving Party and its Subsidiaries
relating to or in respect of (A) the borrowing of money or the obtaining of
credit, including the issuance of notes or bonds and standby letters of credit
outstanding but excluding documentary letters of credit, (B) the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business), (C) any lease of goods or other property, whether real or
personal, which is treated as an operating lease under GAAP and as a loan or
financing for U.S. income tax purposes or any


                                       21


lease under which the Surviving Party or any of its Subsidiaries is the lessee
or obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP, and (D) the Obligations to the Assignees under this
Agreement, plus (ii) all indebtedness of the type referred to in clause (i) of
another Person guaranteed by the Surviving Party or any of its Subsidiaries.

                  "Total Debt Service" shall mean the aggregate (without
duplication) of (i) Total Interest Expense plus (ii) any and all scheduled
repayments of principal during such period in respect of Total Debt of the
Surviving Party and its Subsidiaries plus (iii) all amounts payable to Assignees
during such period pursuant to Section 2.02(b)(ii).

                  "Total Debt to Total Capitalization" shall mean, on any date,
the ratio of (a) Total Debt as at such date to (b) the sum of (i) Total Debt as
at such date plus (ii) the sum of (A) the capital accounts including common
stock and preferred stock, but excluding treasury stock of the Surviving Party
plus (B) the earned surplus and capital surplus of the Surviving Party
(excluding adjustments to translate foreign assets and liabilities for changes
in foreign exchange rates made in accordance with Financial Accounting Standards
Board Statement No. 52), as determined in accordance with GAAP as of such date.

                  "Total Interest Expense" shall mean the aggregate amount of
interest required to be paid or accrued for any period by the Surviving Party
and its Subsidiaries during such period on all Indebtedness of the Surviving
Party and its Subsidiaries outstanding during all or any part of such period,
whether such interest was or is required to be reflected as an item of expense
or capitalized, including payments consisting of interest in respect of any
lease of goods or other property, whether real or personal, which is treated as
an operating lease under GAAP and as a loan or financing for U.S. income tax
purposes or any lease under which the Surviving Party or any of its Subsidiaries
is the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with GAAP and including facility fees, commitment fees,
usage fees, agency fees, balance deficiency fees, and similar fees or expenses
or in connection with borrowing of money, as determined in accordance with GAAP.

                  "Total Net Sales" shall mean, collectively, the Primary
Products Net Sales, the After Acquired Products Net Sales and the Secondary
Products Net Sales.

                  "Transaction Documents" shall mean, collectively, this
Agreement, the Bill of Sale, the Conversion Documents, the Security Agreements,
the Pledge Agreement, the Management Agreement, the LLC Agreement, the Warrant
and any Lockbox Agreement.

                  "Transfer" or "Transferred" shall mean any sale, conveyance,
assignment, disposition, license, sublicense, co-promotion agreement, or other
form of transfer.


                                       22


                  "Transfer Notice" shall have the meaning set forth in Section
5.06(a).

                  "Transition Services Agreement" shall mean the Transition
Services Agreement, dated as of October 28, 2003 between Merck and Guilford.

                  "True-Up Amount" shall have the meaning set forth in Section
2.02(e).

                  "True-Up Date" for any calendar quarter shall mean the 45th
day following the end of each such quarter, unless such date is not a Business
Day in which case the applicable date will be the immediately succeeding
Business Day.

                  "United States" shall mean the United States of America.

                  "UCC" shall mean the Uniform Commercial Code (or any similar
or equivalent legislation) as in effect in any applicable jurisdiction.

                  "Warrants" shall mean those two Warrants issued by Guilford to
Assignees in substantially the form attached hereto as Exhibit I, pursuant to
which Assignees shall have the right to purchase, in aggregate, 300,000 shares
of Guilford's common stock.

                  "Working Capital" shall mean, as to Guilford and its
Subsidiaries, on a consolidated basis, as of any date of determination, the
amount equal to (i) the total, without duplication, of such parties'
unrestricted cash, unrestricted marketable securities and other unrestricted
cash equivalents, amounts on deposit in the Liquidity Account, and accounts
receivable (less allowance for doubtful accounts as required by GAAP) minus (ii)
the total, without duplication, of (A) all Total Debt Service payable during the
next four calendar quarters and (B) all other liabilities and obligations of
such parties due on demand or within one year (whether by the terms of such
obligations or because of the occurrence of one or more events).

                                   ARTICLE II

                     PURCHASE AND SALE OF ASSIGNED INTERESTS

                  SECTION 2.01 PURCHASE AND SALE.

                  Upon the terms and subject to the conditions set forth in this
Agreement, Assignor agrees to sell, assign, transfer and convey to Assignees,
and Assignees agree to purchase from Assignor, free and clear of all Liens
(except those Liens created in favor of Assignees pursuant to the Security
Agreements and any other Transaction Document), all of Assignor's right, title
and interest in and to the Assigned Interests.


                                       23


                  SECTION 2.02 PAYMENTS IN RESPECT OF THE ASSIGNED INTERESTS.

                  Assignor shall make the following payments to Assignees in
respect of the Assigned Interests:

                  (a) Subject to the minimum payment requirements of Section
2.02(b), Assignor shall pay Assignees an amount equal to the Applicable
Percentage of Total Net Sales made during the Term. In the event that as of June
30, 2005 or June 30, 2006, Primary Products Net Sales for the first two quarters
of such year are less than fifty percent (50%) of * Sales for the same two
quarters (calculated by dividing the * Sales for the applicable calendar year by
two (2)), the Assignor shall, on or before July 20 of such year, pay to the
Assignees the additional amount that would have been paid during the first two
quarters of such year had the rate specified in clause (x) of Applicable
Percentage been applied during such quarters and the Applicable Percentage shall
be thereafter calculated at the rate specified in clause (x) of the definition
of Applicable Percentage for the remainder of that year, subject to final
adjustment in accordance with Section 2.02(e) and (i) below. In the event that
as of June 30 in any calendar year after December 31, 2006, Primary Products Net
Sales for the first two quarters of such year are less than $37.5 million, the
Assignor shall, on or before July 20 of such year, pay to the Assignees the
additional amount that would have been paid during the first two quarters of
such year had the rate specified in clause (y) of Applicable Percentage been
applied during such quarters and the Applicable Percentage shall be thereafter
calculated at the rate specified in clause (y) of the definition of Applicable
Percentage for the remainder of that year, subject to final adjustment in
accordance with Section 2.02(e) and (i) below.

                  (b) For each calendar year during the Term, Assignor shall be
required to pay Assignees the greater of: (i) the aggregate amounts payable in
accordance with Sections 2.02(a) above and (ii) the first $5 million of Included
Products Payments in 2004, the first $6.25 million of Included Products Payments
in 2005, the first $7.5 million of Included Products Payments in 2006, the first
$10 million of Included Products Payments in each of the years 2007 through 2009
and the first $12.5 million of Included Products Payments in each of the years
2010 through 2012 and if the Included Product Payments during any period are
insufficient to meet the minimum first payments required by this subsection
(b)(ii), Assignor shall pay such amounts from any other available source. For
purposes of subsection (b)(ii) above, Assignor shall be required to pay to
Assignees one quarter of each applicable annual amount during each calendar
quarter before Assignor shall be entitled to receive any portion of the Included
Products Payments during such Calendar quarter. By way of example, during the
first quarter of 2004 Assignees shall receive 100% of the first $1.25 million of
Included Products Payments, whether pursuant to the terms of Section 2.02(a) or
otherwise. Thereafter, the Assignees shall receive the Applicable Percentage of
Total Net Sales pursuant to Section 2.02(a) above from and after the date during
each calendar quarter on which the Applicable Percentage of Total Net Sales for
such quarter exceeds the minimum amount payable during such quarter under
subsection (b)(ii).


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                                       24


Assignees' right to payments under this Section 2.02(b) shall not be conditioned
on the Assignor receiving or retaining any amounts under this Section 2.02. As
to any quarter in which Assignees have not received the full quarterly portion
of the applicable minimum amount set forth in subsection (b)(ii) above, the
unpaid balance of such minimum amounts shall be added to the minimum amount
otherwise owing for the following quarter (whereupon such increased minimum
amount shall be the then applicable minimum amount).

                  (c) If Assignor, Guilford, or any Affiliate thereof receives
any amount of money as a damages award (or pursuant to a settlement agreement)
in connection with a patent infringement claim or other cause of action
involving any of the Primary Products Intellectual Property or any of the
Primary Products, (a) if for each year of the Term, Primary Products Net Sales
have equaled or exceeded * Sales, 100% of the proceeds (net of litigation costs)
shall be included in Primary Products Net Sales for each of the calendar years
in which the proceeds are received, and (b) if for any year of the Term, Primary
Products Net Sales have not equaled or exceeded * Sales, Assignor shall pay
Assignees an amount equal to 50% of the proceeds (net of litigation costs)
within thirty (30) days of each receipt of such proceeds by Assignor, Guilford
or any Affiliate thereof.

                  (d) Prior to the date on which the Lockbox Agreement is
executed by all parties thereto, the Assignor and Guilford shall cause any
payments due to Assignees under this Section 2.02 to be paid directly to
Assignees, by wire transfer, on Wednesday of every other week for the period
ending on the Friday of the immediately prior two weeks. From and after the
execution of the Lockbox Agreement pursuant to Section 5.10 and subject to the
other provisions of this Agreement, amounts payable to Assignees pursuant to
Section 2.02(a) and (b) shall be paid to Assignees first from the proceeds from
the sale of the Primary Products which are received from time to time in the
Lockbox Account, which shall be swept from the Joint Concentration Account into
Assignees Concentration Account on a daily basis (the "Daily Amount") pursuant
to Section 5.10.

                  (e) In the event that the aggregate of the Daily Amounts and
other payments on account of Total Net Sales received by Assignees during any
quarter is less or more than the amount due pursuant to Section 2.02(a), (b) and
(c), then on the applicable True-Up Date, Assignor shall pay to Assignees or
Assignees shall pay to Assignor an amount equal to such difference (the "True-Up
Amount"). All amounts payable by the Assignor to the Assignees pursuant to
clause (z) of the definition of Applicable Percentage shall be paid to Assignees
in immediately available funds within forty (40) days after the end of the
applicable calendar year.

                  (f) In the event that Assignor, Guilford or any Affiliate of
Guilford closes a Gliadel Foreign Transaction, Assignor shall pay to Assignees a
percentage of any and all proceeds (including payments of whatever type and
whenever received, but excluding future royalties payable to Assignor or
Guilford in the ordinary course of business (which shall continue to be


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                                       25


included in Primary Products Net Sales)) received by Assignor, Guilford or any
Affiliate from or with respect to such Gliadel Foreign Transaction calculated as
follows:

                           (i)      Assignor shall pay 10% of any and all
                                    proceeds received during the period from the
                                    Closing Date through and including December
                                    31, 2006, plus an additional 2.5% of any and
                                    all proceeds received in a calendar year
                                    during such period for which the Primary
                                    Products Net Sales and the After Acquired
                                    Products Net Sales for such year are less
                                    than 75% of * Sales for such year; and

                           (ii)     Assignor shall pay 17.5% of any and all
                                    proceeds received during the period from
                                    January 1, 2007 through and including
                                    December 31, 2012, plus an additional 5% of
                                    any and all proceeds received in a calendar
                                    year during such period for which Primary
                                    Products Net Sales and After Acquired
                                    Products Net Sales are less than $75
                                    million.

The base amounts payable under clauses (i) and (ii) above (10% and 17.5%,
respectively) shall be paid to Assignees upon the closing of the Gliadel Foreign
Transaction or, if later, immediately upon the receipt of proceeds by Assignor,
Guilford or an Affiliate of Guilford. Any other amounts payable under clauses
(i) and (ii) above shall be payable to Assignees no later than 30 days after the
close of the calendar year during which the proceeds were received by Assignor,
Guilford or an Affiliate of Guilford.

                  (g) In the event of the Transfer (other than an Excluded
Transfer) by Assignor or Guilford of one but not both of the Primary Products,
and/or the Regulatory Approvals and Intellectual Property related thereto, the
Assignor shall pay to the Assignees an amount equal to a percentage of the
Assignees Option Repurchase Price, calculated as of the date of payment, as
specified below:

                           (i) if a Transfer of Aggrastat, Assignor shall pay
                           Assignee an amount equal to sixty-five percent (65%)
                           of the applicable Assignees Option Repurchase Price;
                           and

                           (ii) if a Transfer of Gliadel, Assignor shall pay
                           Assignees an amount equal to thirty-five percent
                           (35%) of the applicable Assignees Option Repurchase
                           Price.

The amounts payable under clauses (i) and (ii) above shall be paid to Assignees
simultaneously with the closing of the Transfer. A payment under this Section
2.02(g) shall not constitute a repurchase of any portion of the Assigned
Interests, but shall be included in the calculation of Repurchase Price as set
forth in Section 5.07(c)(i).


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.



                                       26


                  (h) Amounts payable pursuant to clauses (a), (b), (c), (d),
(e), (f) or (g) of this Section 2.02 shall be in addition to any amounts
otherwise payable under this Agreement.

                  (i) Any payments, other than from funds paid to Assignees from
the Assignees Concentration Account, to be made by Assignor to Assignees
hereunder or under any other Transaction Document shall be made by wire transfer
of immediately available funds to Assignees' Account.

                  (j) Within three (3) years following delivery to Assignees by
Assignor of the Quarterly Report for the fourth fiscal quarter of each calendar
year during the Term, to the extent that either Assignees or Assignor has
determined that there is a discrepancy as to the amounts paid to Assignees
hereunder for such calendar year, then the Person who has made such
determination may notify the other in writing of such discrepancy indicating in
reasonable detail its reasons for such determination (the "Discrepancy Notice").
In the event that either Assignees or Assignor delivers to the other party a
Discrepancy Notice, Assignees and Assignor shall meet within ten (10) Business
Days (or such other time as mutually agreed by the parties) after the receiving
party has received a Discrepancy Notice to resolve in good faith such
discrepancy. If the discrepancy has been resolved and, as a result thereof, it
is determined that a payment is owing by Assignees to Assignor or by Assignor to
Assignees, then the party owing such payment shall promptly pay such payment to
the other party. If, within forty-five (45) days after receipt of the
Discrepancy Notice, Assignor and Assignees cannot resolve any such
discrepancies, then Assignees and Assignor shall promptly instruct their
respective firms of independent certified public accountants to select, within
five (5) Business Days thereafter, a third nationally recognized accounting firm
(the "Independent Accountants"). After offering Assignor and its representatives
and Assignees and their representatives the opportunity to present their
positions as to the disputed items, which opportunity shall not extend for more
than ten (10) calendar days after the Independent Accountants have been
selected, the Independent Accountants shall review the disputed matters and the
materials submitted by Assignor and Assignees and, as promptly as practicable,
deliver to Assignor and Assignees a statement in writing setting forth its
determination of the proper treatment of the discrepancies as to which there was
disagreement, and that determination will be final and binding upon the parties
hereto without any further right of appeal. If Assignor has delivered the
Discrepancy Notice that has resulted in the selection of the Independent
Accountants, Assignor will bear all the charges of the Independent Accountants.
If Assignees have delivered the Discrepancy Notice that has resulted in the
selection of the Independent Accountants, Assignees will bear all the charges of
the Independent Accountants unless the Independent Accountants determine that
the amounts paid to Assignees for the applicable calendar year underpaid the
Assignees by an amount equal or in excess of 7.5% of the amounts determined to
be due to Assignees for such calendar year, in which event Assignor shall bear
all of the charges of the Independent Accountants.


                                       27


                  (k) If a portion of the Assigned Interests has been
repurchased by Assignor pursuant to the provisions of Section 5.07(b)(ii)(B),
the amounts payable to Assignees under this Section 2.02, from and after the
date of payment in full of the Secured Financing Event Price shall be ratably
reduced to reflect the portion of Assigned Interests then held by the Assignees.

                  (l) Without in any manner limiting its obligations under
Section 5.13, Guilford agrees that to the extent that the Assignor does not pay
any amount due to the Assignees under this Section 2.02, Guilford will promptly
pay or cause Assignor to pay such amounts directly to the Assignees.

                  SECTION 2.03 PURCHASE PRICE.

                  (a) In full consideration for the sale of the Assigned
Interests, and subject to the terms and conditions set forth herein, Fund shall
pay to Assignor, or its designee, $31.5 million and Holdings shall pay to
Assignor, or its designee, $10.5 million (together, the "Purchase Price").

                  (b) The Purchase Price shall be paid by wire transfer of
immediately available funds to the account designated by Assignor (the
"Assignor's Account") upon, and subject to the occurrence of, the Closing.

                  SECTION 2.04 NO ASSUMED OBLIGATIONS.

                  Notwithstanding any provision in this Agreement or any other
writing to the contrary, Assignees are acquiring only the Assigned Interests and
are not assuming any liability or obligation of Assignor or Guilford of whatever
nature, whether presently in existence or arising or asserted hereafter, whether
under any Distribution Agreement, License Agreement or any other Transaction
Document or otherwise. All such liabilities and obligations shall be retained by
and remain obligations and liabilities of Assignor or Guilford (the "Excluded
Liabilities and Obligations").

                                  ARTICLE III

             REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD

                  Assignor, GPI Holdings and Guilford hereby jointly and
severally represent and warrant to Assignees the following (in each case, after
giving effect to the concurrent closing of the transactions contemplated by the
Merck Purchase Agreement):


                                       28


                  SECTION 3.01 ORGANIZATION.

                  Guilford is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and has all corporate powers
and all licenses, authorizations, consents and approvals required to carry on
its business as now conducted and as proposed to be conducted in connection with
the transactions contemplated hereby and by the other Transaction Documents.
Assignor is a limited liability company duly organized, validly existing and in
good standing under the laws of Delaware, and has all powers and all licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as proposed to be conducted in connection with the transactions
contemplated hereby and by the other Transaction Documents. GPI Holdings is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all licenses, authorizations,
consents and approvals required to carry on its business as now conducted and as
proposed to be conducted in connection with the transactions contemplated hereby
and by the other Transaction Documents.

                  SECTION 3.02 CORPORATE AUTHORIZATION.

                  Except as set forth on Schedule 3.02, each of Assignor, GPI
Holdings and Guilford has all necessary power and authority to enter into,
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform all of the obligations to be performed by it
hereunder and thereunder and to consummate the transactions contemplated
hereunder and thereunder. This Agreement and the other Transaction Documents
have been duly authorized, executed and delivered by each of Assignor, GPI
Holdings and Guilford (to the extent a party thereto) and each of this Agreement
and each other Transaction Document to which either Assignor, GPI Holdings or
Guilford is a party constitutes the valid and binding obligation of Assignor,
GPI Holdings and Guilford, as applicable enforceable against Assignor, GPI
Holdings or Guilford in accordance with their respective terms subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or general equitable
principles.

                  SECTION 3.03 GOVERNMENTAL AUTHORIZATION.

                  The execution and delivery by each of Assignor, GPI Holdings
and Guilford of this Agreement and the other Transaction Documents to which it
is a party, and the performance by Assignor, GPI Holdings and Guilford of its
respective obligations hereunder and thereunder, does not require any notice to,
action or consent by, or in respect of, or filing with, any Government
Authority, except for the filing of financing statements under the UCC and
filings with the United States Patent and Trademark Office.


                                       29


                  SECTION 3.04 OWNERSHIP.

                  (a) Assignor owns, or holds a valid license under all of the
Intellectual Property and the Regulatory Approvals with respect to the Primary
Products and all other rights, properties and assets, acquired by Assignor
pursuant to the Merck Purchase Agreement or the Conversion Documents.

                  (b) *

                  (c) GPI Holdings is the sole member of the Assignor.

                  SECTION 3.05 FINANCIAL STATEMENTS.

                  The Financial Statements are complete and accurate in all
material respects, were prepared in conformity with GAAP and present fairly in
all material respects the consolidated financial position and the consolidated
financial results of the operations of Guilford and its Subsidiaries as of the
dates and for the periods covered thereby. There has been no Material Adverse
Change since June 30, 2003.

                  SECTION 3.06 NO UNDISCLOSED LIABILITIES.

                  Except for those liabilities (a) identified in the Financial
Statements, (b) publicly disclosed and identified on Schedule 3.06, (c) incurred
by Guilford or its Subsidiaries in the ordinary course of business since June
30, 2003 or (d) described on Schedule 3.06, there are no material liabilities of
Guilford or any of its Subsidiaries taken as a whole, or Assignor separately, of
any kind whatsoever, whether accrued, contingent, absolute, determined or
determinable. Other than the Obligations under this Agreement, Assignor has no
outstanding obligations or liabilities and conducts no business other than to
own the Primary Products, and the Intellectual Property and Regulatory Approvals
related to the Primary Products, and to perform its obligations to Guilford
under the Management Agreement.

                  SECTION 3.07 SOLVENCY.

                  *

                  SECTION 3.08 LITIGATION.

                  Except as set forth on Schedule 3.08, there is no (a) action,
suit, arbitration proceeding, claim, investigation or other proceeding pending
or, to the Knowledge of either Assignor or Guilford, threatened against either
Assignor or Guilford or (b) any governmental inquiry pending or, to the
Knowledge of either Assignor or Guilford, threatened against either Assignor or
Guilford, in each case with respect to clauses (a) and (b) above, which, if
adversely


                                       30


determined, would question the validity of, or could adversely affect the
transactions contemplated by this Agreement or any of the other Transaction
Documents or could reasonably be expected to have a Material Adverse Effect.
Other than as set forth on Schedule 3.08, there is no action, suit, claim,
proceeding or investigation pending or, to the Knowledge of either Assignor or
Guilford, threatened against Assignor, Guilford or any other Person relating to
the Products, the Intellectual Property, the Regulatory Approvals or the
Assigned Interests.

                  SECTION 3.09 COMPLIANCE WITH LAWS.

                  Except as set forth on Schedule 3.09, neither Assignor nor
Guilford (a) is in violation of, has violated, or to the Knowledge of either
Assignor or Guilford, is under investigation with respect to, and, (b) has been
threatened to be charged with or been given notice of any violation of, with
respect to clauses (a) and (b) above, any law, rule, ordinance or regulation of,
or any judgment, order, writ decree, permit or license entered by any Government
Authority applicable to either Assignor, Guilford or the Assigned Interests
which could reasonably be expected to have a Material Adverse Effect.

                  SECTION 3.10 CONFLICTS.

                  (a) Except as set forth in Schedule 3.10, neither the
execution and delivery of this Agreement or any other Transaction Document nor
the performance or consummation of the transactions contemplated hereby or
thereby will: (i) contravene, conflict with, result in a breach or violation of,
constitute a default under, or accelerate the performance provided by, in any
material respects any provisions of: (A) any law, rule, ordinance or regulation
of any Government Authority, the breach or violation of which would be
reasonably expected to result in a Material Adverse Effect, or any judgment,
order, writ, decree, material permit or license of any Government Authority, to
which Assignor or Guilford or its Subsidiaries or any of their respective assets
or properties may be subject or bound; or (B) any contract, agreement,
commitment or instrument to which either Assignor or Guilford or its
Subsidiaries is a party or by which Assignor or Guilford or its Subsidiaries or
any of their respective assets or properties is bound or committed; (ii)
contravene, conflict with, result in a breach or violation of, constitute a
default under, or accelerate the performance provided by, in any respects any
provisions of the certificate of incorporation or by-laws (or other
organizational or constitutional documents) of Assignor or Guilford or its
Subsidiaries; (iii) except for the filing of the UCC-1 financing statements
required hereunder and filings with the United States Patent and Trademark
Office, require any notification to, filing with, or consent of, any Person or
Government Authority; (iv) give rise to any right of termination, cancellation
or acceleration of any right or obligation of Assignor, Guilford or its
Subsidiaries or any other Person or to a loss of any benefit relating to the
Assigned Interests; or (v) result in the creation or imposition of any Lien on
(A) the assets or properties of Assignor or Guilford or its Subsidiaries or (B)
the Assigned Interests or any other


                                       31


Collateral, other than, with respect to clauses (A) and (B) above, pursuant to
the Guilford-Assignees Security Agreement and the Guilford-Assignor Security
Agreement.

                  (b) Neither Assignor nor Guilford has granted, nor does there
exist, any Lien on any Distribution Agreement, License Agreement, the Assigned
Interests or any other Collateral other than pursuant to the Security
Agreements.

                  (c) The obligations of Guilford to Assignees under the
Transaction Documents will constitute Senior Debt (as defined in the
Subordinated Indenture).

                  SECTION 3.11 MATERIAL CONTRACTS.

                  Neither Assignor nor Guilford or its Subsidiaries is in breach
of or in default under any Material Contract, including, without limitation, the
Supply Agreement, the Merck Purchase Agreement, the Technical Agreement, the
Transition Services Agreement or any Distribution Agreement or any License
Agreement to which Assignor, Guilford or its Subsidiaries is a party which
default, individually or in the aggregate, would be reasonably expected to
result in a Material Adverse Effect. To the knowledge of either Assignor or
Guilford, nothing has occurred and no condition exists that would permit any
other party thereto to terminate any Material Contract to which either Assignor
or Guilford or its Subsidiaries is a party. Neither Assignor nor Guilford nor
any of its Subsidiaries has received any notice or, to the Knowledge of either
Assignor or Guilford, any threat of termination of any such Material Contract.
To the Knowledge of either Assignor or Guilford, no other party to a Material
Contract to which either Assignor or Guilford or its Subsidiaries is a party is
in breach of or in default under such Material Contract. All Material Contracts
to which either Assignor or Guilford or its Subsidiaries is a party are valid
and binding on Assignor and Guilford and, to the Knowledge of either Assignor or
Guilford, on each other party thereto, and are in full force and effect.

                  SECTION 3.12 INTELLECTUAL PROPERTY.

                  (a) Schedule 3.12(a) sets forth an accurate and complete list
of all (1) Patents and Patent applications and (2) trade names, common law
trademarks, common law service marks, registered trademarks, registered service
marks, and applications for trademark registrations and service mark
registrations, and (3) registered and unregistered copyrights and (4) domain
name registrations and websites in each case with respect to clauses (1), (2),
(3) and (4) above in this subsection (a)*

                  (b) * -

                  (c) *



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       32


                  (d) *

                  (e) *

                  (f) *

                  (g) *

                  (h) *

                  (i) *

                  (j) *

                  (k) *

                  (l) *

                  (m) *

                  SECTION 3.13 REGULATORY APPROVAL.

                  (a) *

                           (i) *.

                           (ii) *

                           (iii) *

                  (b) *

                  (c) *

                  (d) *

                  SECTION 3.14 SUBORDINATION.

                  (a) *

                  (b) During the Term, Assignor's obligations to pay Guilford
the Management Fee (as defined in the Management Agreement) shall be in all
respects subordinate to, and shall be paid to Guilford only after the
satisfaction in full of, Assignor's past or current payment Obligations



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       33


to Assignee, including Assignor's payment to Assignee of the Applicable
Percentage of Total Net Sales and all other Obligations set forth in this
Agreement.

                  SECTION 3.15 PLACE OF BUSINESS.

                  Assignor's principal place of business and chief executive
office are set forth on Schedule 3.15. Guilford's principal place of business
and chief executive office are set forth on Schedule 3.15.

                  SECTION 3.16 BROKER'S FEES.

                  Except for the fees to be paid to UBS Securities LLC solely by
Guilford, neither Assignor, GPI Holdings nor Guilford has taken any action which
would entitle any Person to any commission or broker's fee in connection with
the transactions contemplated by this Agreement.

                  SECTION 3.17 OTHER INFORMATION.

                  Except as set forth on Schedule 3.17, no written statement,
information, report or materials prepared by or on behalf of either Assignor or
Guilford and furnished to Assignees by or on behalf of either Assignor or
Guilford in connection with this Agreement or any Transaction Document or any
transaction contemplated hereby or thereby, no written representation, warranty
or statement made by either Assignor or Guilford in any Transaction Document,
and no schedule or exhibit hereto, in each case taken in the aggregate, contains
any untrue statement of a material fact or omits any statement of material fact
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.

                  SECTION 3.18 DISTRIBUTION AGREEMENTS AND LICENSE AGREEMENTS.

                  Except as set forth on Schedule 3.18(a), the existing
Distribution Agreements and existing License Agreements are in full force and
effect and, except for such correspondence and written communication as are
identified on Schedule 3.18(b), there has been no correspondence or other
written communication sent by or on behalf of Assignor or Guilford to, or
received by or on behalf of Assignor or Guilford from, any Contract Party, the
subject matter of which would reasonably be expected to have a Material Adverse
Effect.

                  (a) With respect to existing Distribution Agreements and
existing License Agreements:

                           (i)      Except for that which, individually or in
                                    the aggregate, would not reasonably be
                                    expected to have a Material Adverse Effect,
                                    each such Distribution Agreement and License
                                    Agreement is in full force and effect and
                                    has not been impaired, waived, altered or
                                    modified in any


                                       34


                                    respect, whether by way of any sublicense or
                                    consent or otherwise. To the Knowledge of
                                    either Assignor or Guilford, no licensee has
                                    granted a sublicense under any Distribution
                                    Agreement or any License Agreement.

                           (ii)     Except for that which, individually or in
                                    the aggregate, would not reasonably be
                                    expected to have a Material Adverse Effect,
                                    the Contract Party under each such
                                    Distribution Agreement or License Agreement
                                    has not been released, in whole or in part,
                                    from any of its obligations under such
                                    Distribution Agreement or License Agreement.

                           (iii)    Neither Guilford nor Assignor has received
                                    (A) any notice of any Contract Party's
                                    intention to terminate such Distribution
                                    Agreement or License Agreement in whole or
                                    in part or (B) except as set forth on
                                    Schedule 3.18(a)(iii), any notice requesting
                                    any amendment, alteration or modification of
                                    such Distribution Agreement, License
                                    Agreement or any sublicense or assignment
                                    thereunder which would be reasonably
                                    expected to have a Material Adverse Effect.

                           (iv)     To the Knowledge of either Assignor or
                                    Guilford, nothing has occurred and no
                                    condition exists that would adversely impact
                                    the right of either Guilford or Assignor to
                                    receive any payments payable under such
                                    Distribution Agreement or License Agreement.
                                    Other than as set forth on Schedule
                                    3.18(a)(iv), none of Assignor, Guilford, or
                                    to the Knowledge of either Assignor or
                                    Guilford, any Contract Party has taken any
                                    action or omitted to take any action, that
                                    would adversely impact the right of
                                    Assignees to receive the Assigned Interests
                                    or the Applicable Percentage of the Total
                                    Net Sales.

                           (v)      Other than as set forth on Schedule
                                    3.18(a)(v), all payments required to be made
                                    under the terms of each existing
                                    Distribution Agreement and existing License
                                    Agreement have been made. To the Knowledge
                                    of either Assignor or Guilford, no payment
                                    required to be made under the terms of any
                                    existing Distribution Agreement or existing
                                    License Agreement has been subject to any
                                    claim pursuant to any right of rescission,
                                    set-off, counterclaim or defense. Except for
                                    that which, individually or in the aggregate
                                    would not reasonably be expected to have a
                                    Material Adverse Effect, the operation of
                                    any of the terms of any existing
                                    Distribution Agreement or existing License
                                    Agreement, or the exercise of any rights
                                    thereunder, will not render such

                                       35


                                    Distribution Agreement or License Agreement
                                    unenforceable, in whole or in part.

                           (vi)     Except for that which, individually or in
                                    the aggregate, would not reasonably be
                                    expected to have a Material Adverse Effect,
                                    such Distribution Agreement or License
                                    Agreement has not been satisfied in full,
                                    discharged, canceled, terminated,
                                    subordinated or rescinded, in whole or in
                                    part. Such Distribution Agreement or License
                                    Agreement is the entire agreement between
                                    Guilford and the Contract Party thereto
                                    relating to the subject matter thereof.

                           (vii)    Except for that which, individually or in
                                    the aggregate, would not reasonably be
                                    expected to have a Material Adverse Effect,
                                    such Distribution Agreement or License
                                    Agreement is the legal, valid and binding
                                    obligation of each of Guilford and the
                                    Contract Party thereto, enforceable against
                                    Guilford and such Contract Party in
                                    accordance with its terms, subject, as to
                                    enforcement of remedies, to bankruptcy,
                                    insolvency, reorganization, moratorium or
                                    similar laws affecting creditors' rights
                                    generally and general equitable principles.
                                    The execution, delivery and performance of
                                    such Distribution Agreement or License
                                    Agreement was and is within the corporate
                                    powers of Guilford and, to the Knowledge of
                                    either Assignor or Guilford, the Contract
                                    Party thereto. Such Distribution Agreement
                                    or License Agreement was duly authorized by
                                    all necessary action on the part of, and
                                    validly executed and delivered by, Guilford
                                    and, to the Knowledge of either Assignor or
                                    Guilford, the Contract Party thereto. Except
                                    for that which, individually or in the
                                    aggregate would not reasonably be expected
                                    to have a Material Adverse Effect, there is
                                    no breach or default, or event which upon
                                    notice or the passage of time, or both,
                                    could give rise to any breach or default, in
                                    the performance of such Distribution
                                    Agreement or License Agreement by Guilford
                                    or, to the Knowledge of either Assignor or
                                    Guilford, the Contract Party thereto.

                           (viii)   Except for that which, individually or in
                                    the aggregate, would not reasonably be
                                    expected to have a Material Adverse Effect,
                                    the representations and warranties made in
                                    each existing Distribution Agreement or
                                    existing License Agreement by Guilford were
                                    as of the date made true and correct in all
                                    material respects.


                                       36


                  SECTION 3.19 INSURANCE.

                  Except as set forth in Schedule 3.19, there is in full force
and effect insurance policies maintained by Guilford with an insurance company
rated not less than A- by A.M. Best Company, Inc., with coverages and in amounts
sufficient to comply with the Supply Agreement and otherwise customary for
companies of comparable size and condition similarly situated in the same
industry as Guilford, including without limitation product liability insurance,
directors and officers insurance and insurance against litigation liability,
subject only to such exclusions and deductible items as are usual and customary
in insurance policies of such type. Guilford has named Assignor as an additional
insured party on all of its general liability and product liability insurance
policies. A schedule of Guilford's insurance policy or insurance policies is
attached hereto as Schedule 3.19.

                  SECTION 3.20 ACCURACY OF REPORTS.

                  All reports required to be filed by Guilford on or after
January 1, 2002 under the Securities Exchange Act of 1934, as amended, have been
duly filed, were in substantial compliance with the requirements of their
respective forms, were complete and correct in all material respects as of the
dates at which the information was furnished, and contained (as of such dates)
no untrue statement of a material fact nor omitted to state a material fact
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.

                  SECTION 3.21 * REPRESENTATIONS; CLOSING.

                  To the Knowledge of Guilford and Assignor,*

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF ASSIGNEES

                  Assignees represent and warrant to each of Assignor and
Guilford the following:

                  SECTION 4.01 ORGANIZATION.

                  Fund is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware. Holdings is a
general partnership duly formed and validly existing under the laws of the State
of California. Each of Fund and Holdings has all partnership powers and all
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.




* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       37


                  SECTION 4.02 AUTHORIZATION.

                  Each of the Assignees has all necessary power and authority to
enter into, execute and deliver this Agreement and to perform all of the
obligations to be performed by it hereunder. This Agreement has been duly
authorized, executed and delivered by each of the Assignees and constitutes the
valid and binding obligation of each of the Assignees, enforceable against each
of the Assignees in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general equitable principles.

                  SECTION 4.03 BROKER'S FEES.

                  Neither of the Assignees has taken any action which would
entitle any Person to any commission or broker's fee in connection with the
transactions contemplated by this Agreement.

                  SECTION 4.04 CONFLICTS.

                  Neither the execution and delivery of this Agreement or the
other Transaction Documents nor the performance or consummation of the
transactions contemplated hereby or thereby will: (i) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by, in any material respects any provisions of: (A) any
law, rule or regulation of any Government Authority, or any judgment, order,
writ, decree, permit or license of any Government Authority, to which either of
the Assignees or any of their assets or properties may be subject or bound; or
(B) any material contract, agreement, commitment or instrument to which either
of the Assignees are a party or by which either of the Assignees or any of their
assets or properties is bound or committed; (ii) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by, in any respects any provisions of organizational or
constitutional documents of either of the Assignees; or (iii) require any
notification to, filing with, or consent of, any Person or Government Authority.

                  SECTION 4.05 CONSENTS.

                  The execution and delivery by each of the Assignees of this
Agreement and the other Transaction Documents to which it is a party, and the
performance by each of the Assignees of its obligations hereunder and
thereunder, does not require any notice to, action or consent by, or in respect
of, or filing with, any Governmental Authority or Person.


                                       38


                  SECTION 4.06 TAX REPRESENTATION.

                  Each Assignee is and will continue to be a "United States
Person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended. Each Assignee will deliver to Guilford or Assignor, upon
reasonable demand by Guilford or Assignor, any form or document, including
without limitation, Internal Revenue Service Form W-9, that may be required or
reasonably requested in order to allow Guilford or Assignor to make payment
under this Agreement without any deduction or withholding for or on account of
any tax.

                                   ARTICLE V

                                   COVENANTS

                  During the Term, the following covenants shall apply:

                  SECTION 5.01 CONSENTS AND WAIVERS.

                  Each of Assignor and Guilford shall use commercially
reasonable efforts to obtain any required consents, acknowledgements,
certificates or waivers so that the transactions contemplated by this Agreement
or any other Transaction Document may be consummated and shall not result in any
default or breach or termination of any of the Distribution Agreements, the
License Agreements or any other Material Contracts; including, without
limitation, the agreements listed on Schedules 3.10 and 3.12(f).

                  SECTION 5.02 ACCESS; BOOKS AND RECORDS.

                  (a) Promptly after receipt by either Assignor or Guilford of
notice of any action, claim, investigation or proceeding (commenced or
threatened) relating to the transactions contemplated by this Agreement, any
other Transaction Document, any Distribution Agreement or any License Agreement,
Assignor and/or Guilford shall inform Assignees of the receipt of such notice
and the substance of such action, claim, investigation or proceeding and, if in
writing shall furnish Assignees with a copy of such notice and any related
materials with respect to such action, claim, investigation or proceeding.

                  (b) Guilford and Assignor shall keep and maintain, or cause to
be kept and maintained, at all times full and accurate books of account and
records adequate to correctly reflect all payments paid and/or payable with
respect to Assigned Interests and all deposits made into the applicable Deposit
Accounts.

                  (c) Assignees and any of Assignees' Consultants shall have the
right, from time to time, to visit Guilford's and/or Assignor's offices and
properties where Guilford and/or Assignor


                                       39


keeps and maintains its books and records relating or pertaining to the Assigned
Interests and the other Collateral for purposes of conducting an audit of such
books and records, and to inspect, copy and audit such books and records, during
normal business hours, and, upon five (5) Business Days written notice given by
Assignees to Guilford and/or Assignor, Guilford and/or Assignor will provide
Assignees and any of Assignees' Consultants reasonable access to such books and
records, and shall permit Assignees and any of Assignees' Consultants to discuss
the business, operations, properties and financial and other condition of
Guilford and/or Assignor or any of their Affiliates relating or pertaining to
the Assigned Interests and the other Collateral with officers of such parties,
and with their independent certified public accountants (to the extent such
independent certified accountants agree to discuss such matters with Assignees).
Assignees' visits to Guilford's or Assignor's offices pursuant to this
subsection (c) shall occur not more than two times for each company per calendar
year; provided, however, that Assignees may so visit more frequently to the
extent that there has occurred an event, a reasonably foreseeable consequence of
which is a Material Adverse Effect, and Assignees' visit or visits to Guilford's
or Assignor's offices in connection therewith are for purposes related to such
event.

                  (d) In the event any audit of the books and records of
Guilford or Assignor relating to the Total Net Sales, the Assigned Interests or
the other Collateral by Assignees and/or any of Assignees' Consultants reveals
that the amounts paid to Assignees hereunder for the period of such audit have
been understated by more than the greater of $20,000 or 7.5% of the amounts
determined to be due for the period subject to such audit, then the Audit Costs
in respect of such audit shall be borne by Guilford or Assignor; and in all
other cases, such Audit Costs shall be borne by Assignees.

                  SECTION 5.03 MATERIAL CONTRACTS.

                  Each of Assignor and Guilford shall comply with all material
terms and conditions of and fulfill all of its obligations under all the
Material Contracts including, without limitation, any Distribution Agreement or
License Agreement to which Guilford is a party.

                  SECTION 5.04 CONFIDENTIALITY; PUBLIC ANNOUNCEMENT.

                  (a) Except as set forth in Section 5.04(b), all information
furnished by Assignees to either Assignor or Guilford or by either Assignor or
Guilford to Assignees, including the Confidential Information, in connection
with this Agreement and any other Transaction Document and the transactions
contemplated hereby and thereby, as well as the terms, conditions and provisions
of this Agreement and any other Transaction Document, shall be kept confidential
by the recipient thereof, and shall be used by the recipient thereof only in
connection with this Agreement and any other Transaction Document and the
transactions contemplated hereby and thereby, except to the extent that such
information (i) is already known by the party to whom the information is
disclosed or is already in the public domain at the time the information is

                                       40


disclosed, (ii) thereafter becomes lawfully obtainable from other sources, (iii)
is required to be disclosed in any document to be filed with any Government
Authority, or (iv) is required to be disclosed under securities laws, rules and
regulations applicable to Assignor, Guilford or Assignees, as the case may be,
or pursuant to the rules and regulations of the Nasdaq Stock Market or any other
stock exchange or stock market on which securities of Guilford may be listed for
trading. Notwithstanding the foregoing, Assignor, Guilford and Assignees may
disclose such information to their partners, directors, employees, managers,
officers, investors, bankers, advisors, trustees and representatives on a
need-to-know basis, provided that such Persons shall be informed of the
confidential nature of such information and shall be obligated to keep such
information confidential pursuant to the terms of this Section 5.04(a).

                  (b) Except as required by law or the rules and regulations of
any securities exchange or trading system or the FDA or any Government Authority
with similar regulatory authority, or except with the prior written consent of
the other party (which consent shall not be unreasonably withheld), neither
party shall issue any press release or make any other public disclosure with
respect to the transactions contemplated by this Agreement or any other
Transaction Document. Except as otherwise required by law or the rules and
regulations of any securities exchange or trading system or the FDA or any
Government Authority with similar regulatory authority, (i) Assignor, Guilford
and the Assignees, on or prior to the Closing, shall agree upon the form and
content of the initial press release by Guilford with respect to the
Transaction, (ii) Assignor, Guilford and the Assignees, shall agree upon the
form of the initial SEC filings by Guilford with respect to the Transaction,
(iii) any subsequent disclosures by Guilford or Assignor with respect to the
Transaction shall, except as otherwise agreed by Assignees in writing, be
substantially consistent with the disclosures described in clauses (i) and (ii)
above, and (iv) Guilford and Assignor shall consider the good faith comments
made by Assignees in Guilford's confidential treatment request to the SEC
regarding the Transaction Documents.

                  (c) Notwithstanding anything herein to the contrary, any party
to this Agreement (and each employee, representative, or other agent of such
party) may disclose to any and all persons, without limitation of any kinds, the
tax treatment and tax structure of the transactions contemplated by this
Agreement or any other Transaction Document and all materials of any kind
(including opinions and other tax analyses) that are provided to the party
relating to such tax treatment and tax structure.

                  SECTION 5.05 QUARTERLY REPORTS.

                  (a) Assignor shall, promptly after the end of each fiscal
quarter of Assignor (but in no event later than thirty (30) days following the
end of such quarter), produce and deliver to Assignees a Quarterly Report for
such quarter, together with a certificate of a senior officer of Assignor and,
pursuant to the Management Agreement, a certificate of a senior officer of
Guilford, certifying that to the knowledge of each such officer (i) such
Quarterly Report is a true


                                       41


and complete copy and (ii) any statements and any data and information therein
prepared by Guilford and/or Assignor are true, correct and accurate in all
material respects. Guilford shall furnish to Assignor promptly all information
that Assignor may require in connection with such Quarterly Reports.

                  SECTION 5.06 RIGHT OF FIRST REFUSAL.

                  Neither Guilford, nor the Assignor, nor any Affiliates of
Guilford or the Assignor shall Transfer any rights to payment, including any
revenue or royalty interests with respect to any products (including, without
limitation, the Products) without complying with the following procedure:

                  (a) If Guilford or any Affiliates of Guilford or the Assignor
(the "Transferor") at any time during the Term desires to Transfer (each, a
"Proposed Transfer") any rights to payment, including any revenue or royalty
interests, with respect to any products, then Transferor shall give written
notice (the "Transfer Notice") to Assignees setting forth (i) the interests that
are proposed to be Transferred pursuant to such Proposed Transfer (the "Offered
Interests"), (ii) the proposed date of the closing of such Proposed Transfer,
and (iii) all of the material terms of such Proposed Transfer (the "Proposed
Terms"). Guilford and Assignor shall promptly provide to Assignee any additional
documentation, information and other diligence materials reasonably requested by
Assignees (the "Review Materials").

                  (b) Upon the receipt of any Transfer Notice, Assignees will
have the option, but not the obligation, to purchase all, but not less than all,
of all the Offered Interests, on the terms as are specified in the Transfer
Notice. Within sixty (60) days after the later of (a) Assignees' receipt of the
Transfer Notice and (b) Assignees' receipt of all Review Materials requested
under Section 5.06(a), Assignees will give a written notice (a "Notice of
Election") to Transferor stating whether Assignees elect to exercise such
option. During such sixty (60) day period, the Assignees shall also have the
exclusive right to propose and negotiate alternative terms for the Proposed
Transfer.

                  (c) If Assignees elect to purchase pursuant to the Notice of
Election, the closing of the purchase and sale of the Offered Interests to
Assignees will take place as soon as is reasonably practicable on such date and
at such time and place, in each case as Assignees may reasonably determine but
not later than thirty (30) days following Transferor's receipt of the Notice of
Election. If Assignees do not elect to purchase all of the Offered Interests
hereunder, Transferor will thereafter be free for a period of one hundred twenty
(120) days after expiration of the sixty (60) day period referred to subsection
(b) of this Section 5.06 to Transfer the Offered Interests to a transferee on
terms no more favorable to that transferee than the Proposed Terms offered to
the Assignees. If no Transfer of the Offered Interests is consummated within
such one hundred and twenty (120) day period, or if Transferor seeks to transfer
the Offered Interests to a


                                       42


transferee on terms more favorable to the proposed transferee than the Proposed
Terms offered to the Assignees, the Transferor shall again be required to comply
with all of the provisions of this Section 5.06. Failure by Assignees to give a
Notice of Election within such time period specified in subsection (b) of this
Section 5.06 will be deemed an election by Assignees not to exercise Assignees'
option to purchase all the Offered Interests.

                  SECTION 5.07 PURCHASE OPTIONS.

                  (a) In the event that a Purchase Option Event shall occur,
Assignees shall have the right, but not the obligation (the "Assignees Option
Repurchase"), exercisable from the date of the Purchase Option Event (whether or
not Assignor gives notice thereof) through the date one hundred and eighty (180)
days after its receipt of written notice from Assignor or Guilford of the
Purchase Option Event (the "Purchase Option Exercise Period"), to require
Assignor to repurchase from Assignees the Assigned Interests for a repurchase
price equal to, if the Purchase Option Event occurs and such payment is made
prior to the first anniversary of this Closing Date, $54.6 million, and if it
occurs on or after the first anniversary of the Closing Date, the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(a) (the "Assignees Option Repurchase Price"). In
the event that Assignees elect to exercise their rights to require an Assignees
Option Repurchase, then Assignor shall, within ten (10) days following
Assignor's receipt of Assignees' repurchase election notice if the Assignees
Option Repurchase is based on a Purchase Option Event described in clauses
(iii), (iv), (v), (vi) or (vii) thereof and otherwise within fifteen (15) days
following Assignor's receipt of Assignees' repurchase election notice (the
"Assignees Option Repurchase Period"), repurchase from Assignees the Assigned
Interests at the Assignees Option Repurchase Price, the payment of which shall
be made by wire transfer, in immediately available funds, to Assignees' Account
designated by Assignees in such election notice. Notwithstanding anything to the
contrary contained herein, immediately upon the occurrence of a Bankruptcy Event
or a Notice Event, the Assignees shall be deemed to have automatically and
simultaneously elected to have the Assignor repurchase from the Assignees the
Assigned Interests for the Assignees Option Repurchase Price and the Assignees
Option Repurchase Price shall be immediately due and payable without any further
action or notice by any party.

                  (b) (i)In the event that an Assignor Option Event shall occur,
Assignor shall have the option ("Assignor Option Repurchase"), exercisable
within one hundred and eighty (180) days after the Assignor Option Event, to
repurchase the Assigned Interests for a repurchase price ("Assignor Option
Repurchase Price") equal to, if the Assignor Option Event occurs and such
payment is made prior to the first anniversary of the Closing Date, $84 million,
and if it occurs on or after the first anniversary of the Closing Date, the
amount determined by reference to the date of payment by Assignor to Assignees
in accordance with Schedule 5.07(b)(i).


                                       43


                  (ii) In addition, the Assignor may, at its election and
regardless of whether there has occurred an Assignor Option Event, (A) on or
after the third anniversary of the Closing Date, repurchase the Assigned
Interests (a "Call") for a repurchase price ("Call Price") equal to the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(b)(ii)(A); and (B) at any time, if a potential
secured financing requires a security interest in any of the Intellectual
Property ("Secured Financing Event Purchase"), repurchase up to * of the
Assigned Interests for a repurchase price ("Secured Financing Event Price")
equal to, if the Secured Financing Event Purchase occurs and such payment is
made prior to the first anniversary of the Closing Date, $105 million, and if it
occurs on or after the first anniversary of the Closing Date, the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(b)(ii)(B) (initially calculated with respect to
100% of the Assigned Interests, which shall be reduced on a pro rata basis to
reflect the percentage of the Assigned Interests actually repurchased by the
Assignor). *

                  (c) The Assignees Option Repurchase Price, the Assignor Option
Repurchase Price, the Call Price and the Secured Financing Event Price (as
calculated in accordance with Schedule 5.07(b)(ii)(B) and prior to any ratable
reduction in accordance with Section 5.07(b)(ii)(B)) (collectively, the
"Repurchase Price") shall, in each case, be reduced by the sum of (i) the total
payments received and retained by the Assignees under Section 2.02(a), (b), (c),
(f) and (g) multiplied by the applicable factor specified in Schedule 5.07(c)
for each Repurchase Price and to reflect the calendar year in which each of the
applicable Section 2.02 payments was made and the calendar year in which the
Repurchase Price is paid, and (ii) the net cash gain (after deduction for the
actual exercise price and any brokerage or similar costs and expenses) from the
sale proceeds received by Assignees upon the sale of any common stock received
by Assignees upon exercise of the Warrants plus, if Assignees have not exercised
the Warrants in full or sold all of the common stock received upon the exercise
of the Warrants, an amount equal to 90% of (x) the product of (A) the number of
shares of common stock (or, if the Warrants have not been exercised in full, the
common stock issuable upon full exercise of such Warrants held by the Assignees)
on the date the Assignees elect to exercise an Assignees Option Repurchase or
the date on which the Assignor elects to exercise an Assignor Option Repurchase,
a Call or a Secured Financing Event Purchase and (B) the closing price for such
common stock on such date as quoted on the primary exchange on which such shares
are quoted (and if not so quoted or listed at any time, the average daily bid
and ask price as quoted in the pink sheets) minus (y) the exercise price paid or
payable for such common stock under the Warrants. In the event that a Secured
Financing Event Purchase is followed by another Repurchase Event, amounts
previously credited under clause (c)(i) or (ii) shall not be applied to reduce
the Repurchase Price for the subsequent Repurchase Event. Notwithstanding
anything herein or in any Schedules to the contrary, the sum of (a) any
Repurchase Price (after giving effect to the reductions set forth in the first
sentence of this Section 5.07(c)), plus (b) the amounts actually paid to
Assignees under Sections 2.02(a), (b), (c), (f) and (g), shall not exceed $147
million.



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       44


                  (d) In connection with the consummation of an Assignees Option
Repurchase, an Assignor Option Repurchase, a Call or a Secured Financing Event
Purchase pursuant to subparagraphs (a) and (b) above (each, a "Repurchase
Event"), Assignees agree that they will (i) promptly execute and deliver to
Assignor such UCC termination statements and other documents as may be necessary
to release, or evidence the relative ranking of, Assignees' Lien on the
collateral and otherwise give effect to such Repurchase Event and (ii) take such
other action or provide such other assistance as may be necessary to give effect
to the Repurchase Event.

                  (e) Assignees' failure to exercise the Assignees Option
Repurchase under Section 5.07(a) upon the occurrence of a Purchase Option Event
shall not preclude Assignees from exercising the Assignees Option Repurchase
under Section 5.07(a) upon the occurrence of a subsequent Purchase Option Event.

                  (f) Notwithstanding anything to the contrary contained in
Section 5.07(a), Assignees shall not be entitled to exercise an Assignees Option
Repurchase based upon the occurrence of an event described in clauses (i), (ii)
or (iii) of the definition of Change of Control if:

                           (i) Simultaneously with (or, as applicable in clauses
(i)(2) through (i)(5) below, thereafter) the occurrence of the Change of Control
(or, in the case of an event described in clause (ii) of the definition of
Change of Control, upon the closing of the transaction that results from the
Change of Control), the surviving entity in the Change of Control transaction,
whether Guilford or another Person (the "Surviving Party"), (1) assumes (or if
the Surviving Party is Guilford, as to its own existing obligations hereunder,
affirms and as to its additional obligations agrees to) all of the obligations
of Guilford and Assignor to Assignees hereunder and the additional undertakings
described in clauses (2) through (7) below pursuant to documentation in form and
substance reasonably acceptable to Assignees; (2) maintains (as applicable with
respect to the following specified periods) a fully-dedicated Aggrastat
salesforce of at least 25 people (on a full time equivalent basis) from and
after June 30, 2004; 45 people from and after June 30, 2005; and 75 people at
all times from and after June 30, 2006; (3) maintains sales and marketing
expenditures for Aggrastat that are not less than the amounts indicated in the
Net Sales Projections and Budget provided to Assignees by Guilford on June 25,
2003, a copy of which is attached hereto as Exhibit J; (4) maintains an EBITDA
to Total Debt Service Ratio of 1.25:1.00 and a Total Debt to Total
Capitalization Ratio of 0.5:1.0, on a pro forma basis as of the date of the
Change of Control (after giving effect to the transaction, if any, that results
from the Change of Control) and thereafter measured quarterly on the last day of
each calendar quarter on a consolidated basis; (5) achieves Primary Product Net
Sales of at least 85% of the  *  Sales  *  as projected for each year
during the Term; (6) with respect to such Surviving Party, Guilford and
Assignor, no Bankruptcy Event or Notice Event occurs at any time and such Person
does not become Insolvent at any time; and (7) such Surviving Party's ultimate
parent

* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

                                       45


unconditionally guarantees in a form comparable to Section 5.13 of this
Agreement all of the Obligations assumed or affirmed by such Surviving Party;
and

                           (ii) none of the Guilford 5% Convertible Subordinated
Notes due 2008 are accelerated, none of the holders of such notes have elected
to have such notes repurchased pursuant to a Designated Event Offer (as defined
in the Subordinated Indenture) and no other holder of Indebtedness of Guilford
or Assignor has accelerated such Indebtedness or elected to have such
Indebtedness repurchased.

                  If, at any time or from time to time, any of the provisions in
clauses (i) and (ii) of this subsection (f) are not fulfilled, then the Change
of Control shall be deemed to be a Purchase Option Event from the first date on
which any provision was not fulfilled, Assignees shall have the rights they
would otherwise have had under Section 5.07(a) of this Agreement beginning on
such date and, if the Assignees exercise an Assignees Option Repurchase, the
Assignees Option Repurchase Price shall be immediately due and payable as of the
date of such exercise.

                  (g) In the event the Assignees elect to exercise an Assignees
Option Repurchase based upon the occurrence of an event described in clauses
(i), (ii) or (iii) of the definition of Change of Control and (A) there has not
occurred any Notice Event or Bankruptcy Event and (B) none of the Guilford 5%
Convertible Subordinated Notes due 2008 are accelerated, none of the holders of
such notes have elected to have such notes repurchased pursuant to a Designated
Event Offer (as defined in the Subordinated Indenture) and no other holder of
Indebtedness of Guilford or Assignor has accelerated such Indebtedness or
elected to have such Indebtedness repurchased, the Assignor may elect by written
notice given within the Assignees Option Repurchase Period to pay the Assignees
Option Repurchase Price either (i) by the payment of one hundred percent (100%)
of the Assignees Option Repurchase Price in cash or (ii) by the payment of
seventy-five percent (75%) of the Assignees Option Repurchase Price in cash and
the remainder, as elected by Assignees in their sole discretion, either by the
issuance of (x) common stock of Guilford, covered by an effective resale
registration statement which Guilford shall covenant to maintain effective for a
period of two (2) years after the date of the issuance of such common stock to
Assignees, at a 10% discount to the current market price (determined by the
average closing market prices for the ten (10) trading days before the date of
the Assignees' election to take such stock), or (y) a secured promissory note of
Guilford and Assignor (secured at the least by the Collateral that secures the
Obligations upon the occurrence of the Closing provided for in this Agreement
and guaranteed by Guilford's ultimate parent in a form comparable to Section
5.13 of this Agreement) senior to all other debt and equity of any kind or type
of both Guilford and Assignor, payable in 12 equal quarterly installments of
principal with interest at a rate of 20% per annum (or, if lower, the highest
legal rate) payable as to principal installments and interest quarterly, each on
the last day of each calendar quarter with any unpaid interest to be compounded
monthly.


                                       46


                  (h) Notwithstanding anything to the contrary contained in
Section 5.07(a), Assignees shall not exercise an Assignees Option Repurchase
based solely upon the occurrence and continuance of an event described in clause
(iii) of the definition of Purchase Option Event if (i) on the Closing Date,
Assignor pledges to Assignees, and grants to Assignees a first priority security
interest in, a collateral account containing unrestricted cash, cash equivalents
or other Acceptable Investments in an amount equal to $11,250,000, pursuant to
security documents and control agreements acceptable to Assignees (the
"Liquidity Account"), securing the Obligations, and (ii) on the first Business
Day of each calendar quarter during the Term, Assignor makes an additional
deposit into the Liquidity Account such that the total amount on deposit equals
the first amounts payable to Assignees by Assignor from Included Product
Payments pursuant to Section 2.02(b)(ii) for each of the next eight (8) calendar
quarters, including the quarter in which such Business Day occurs. Assignees
shall be entitled to exercise all rights as secured parties with respect to the
Liquidity Account upon any default in the payment or performance of the
Obligations, including the application of amounts in the Liquidity Account to
due but unpaid Obligations. The application by Assignees of amounts in the
Liquidity Account to the payment of any due but unpaid Obligations, including
without limitation, the payment of any amounts due to Assignees from Assignor
from Included Product Payments pursuant to Section 2.02(b), shall not cure any
failure by Assignor or Guilford to make directly such payments. Upon thirty (30)
days prior written notice, Assignor may request that Assignees release their
security interest in the Liquidity Account. Upon such request, the Assignees
shall release their security interest in the Liquidity Account upon their
determination, in their reasonable discretion, that as of the date of release,
no Purchase Option Event or Notice Event has occurred and no Purchase Option
Event is reasonably expected to occur as a result of such release, including,
without limitation, an event described in clause (iii) of the definition of
Purchase Option Event. Upon the Assignees' release of their interest in the
Liquidity Account, this Section 5.07(h) shall be of no further effect. During
any period of the Term prior to the release of the Liquidity Account by
Assignees, it shall be an immediate Purchase Option Event if during any calendar
quarter, Assignor fails to pay to Assignees the minimum amounts specified in
Section 2.02(b)(ii).

                  (i) Without in any manner limiting its obligations under
Section 5.13, Guilford agrees that to the extent that Assignor does not pay any
amount due to Assignees under this Section 5.07, Guilford will promptly pay or
cause Assignor to pay such amounts.

                  SECTION 5.08 SECURITY AGREEMENTS.

                  (a) Assignor Security Agreement.

                           (i)      Except as otherwise provided in Section
                                    5.07(b)(ii)(B), Assignor shall at all times
                                    until the Obligations of Assignor are paid
                                    and performed in full grant in favor of
                                    Assignees a valid, continuing, first
                                    perfected lien on and security interest in
                                    the Assigned Interests, the Intellectual

                                       47


                                    Property with respect to the Primary
                                    Products and the other Collateral described
                                    in the Assignor-Assignees Security
                                    Agreement.

                           (ii)     Except as provided in Section
                                    5.07(b)(ii)(B), Assignor shall not grant a
                                    security interest in any of its property to
                                    any party other than the Assignees.

                  (b) Guilford Security Agreements. Guilford shall at all times
until the Obligations of Guilford and the Assignor under this Agreement and the
other Transaction Documents are paid and performed in full: (i) grant and
maintain in favor of Assignor a valid, continuing, first perfected lien on and
security interest in the Collateral described in the Guilford-Assignor Security
Agreement and (ii) grant and maintain in favor of Assignees a valid, continuing,
first perfected lien on and security interest in the collateral described in the
Guilford-Assignees Security Agreement. Notwithstanding the foregoing, if at any
time during the Term, Guilford receives a bona fide financing proposal from a
third-party institutional lender that is conditioned upon such lender obtaining
a first priority security interest in the Intellectual Property relating to the
After Acquired Products, or the receivables, payment intangibles or Distribution
Agreements or License Agreements relating to the Secondary Products or the After
Acquired Products, Assignees shall, at the closing of such new financing,
subordinate their security interest under the Guilford-Assignees Security
Agreement in such of the assets as the third party lender has required a first
priority security interest, pursuant to the terms of a written subordination
reasonably satisfactory to the Assignees and such third party lender. The
Assignees confirm and agree that Assignor may similarly subordinate its security
interest in the same assets under the Guilford-Assignor Security Agreement.
Nothing in this Section 5.08(b) or in any subordination agreement entered into
in connection therewith shall affect or reduce any of the obligations of
Assignor or Guilford to the Assignees under this Agreement or the obligations of
Guilford to Assignor under the Management Agreement.

                  SECTION 5.09 BEST EFFORTS; FURTHER ASSURANCE.

                  (a) Subject to the terms and conditions of this Agreement,
each party hereto will use its commercially reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary under applicable laws and regulations to consummate the transactions
contemplated by this Agreement and any other Transaction Document. Assignees,
Assignor and Guilford agree to execute and deliver such other documents,
certificates, agreements and other writings (including any financing statement
filings requested by Assignees) and to take such other actions as may be
reasonably necessary in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and any other Transaction Document
and to vest in Assignees good, valid and marketable rights and interests in and
to the Assigned Interests free and clear of all Liens, except those Liens
created in favor of Assignees pursuant to the Security Agreements and any other
Transaction Document.


                                       48


                  (b) Each of the parties hereto shall execute and deliver such
additional documents, certificates and instruments, and perform such additional
acts, as may be reasonably requested and necessary or appropriate to carry out
and effectuate all of the provisions of this Agreement and any other Transaction
Document and to consummate all of the transactions contemplated by this
Agreement and any other Transaction Document.

                  (c) Guilford, GPI Holdings, Assignor and Assignees shall
cooperate and provide assistance as reasonably requested by the other parties in
connection with any litigation, arbitration or other proceeding (whether
threatened, existing, initiated, or contemplated prior to, on or after the date
hereof) to which any party hereto or any of its officers, directors,
shareholders, agents or employees is or may become a party or is or may become
otherwise directly or indirectly affected or as to which any such Persons have a
direct or indirect interests, in each case relating to this Agreement, any other
Transaction Document, the Assigned Interests or any other Collateral, or the
transactions described herein or therein but in all cases excluding any
litigation brought by Guilford, GPI Holdings or Assignor against Assignees or
brought by Assignees against Guilford, GPI Holdings or Assignor.

                  SECTION 5.10 REMITTANCE TO LOCKBOX ACCOUNT.

                  (a) Within sixty (60) days after the date of this Agreement,
the parties hereto shall enter into a Lockbox Agreement in form and substance
reasonably satisfactory to the parties hereto and the Lockbox Bank, which
Lockbox Agreement will provide for, among other things, the establishment and
maintenance of a Lockbox Account, a Joint Concentration Account, an Assignor
Concentration Account and an Assignees Concentration Account in accordance with
the terms herein and therein. Any Assignees Concentration Account shall be held
solely for the benefit of Assignees, but shall be subject to the terms and
conditions of this Agreement, the Security Agreements, the Management Agreement
and the other Transaction Documents. Funds deposited into the Lockbox Account
shall be swept by the Lockbox Bank on a daily basis into the Joint Concentration
Account and immediately subsequent thereto, the Daily Amount and any other
amounts payable to the Assignees under Section 2.02 shall be swept into the
Assignees Concentration Account. Assignees shall have immediate and full access
to any funds held in the Assignees Concentration Account and such funds shall
not be subject to any conditions or restrictions whatsoever. After the Daily
Amount and any other amounts payable to the Assignees under Section 2.02 are
swept into the Assignees Concentration Account the amounts remaining in the
Joint Concentration Account shall then be swept, at the direction of Assignor,
into the Assignor Concentration Account. Assignor shall have immediate and full
access to any funds held in the Assignor Concentration Account and such funds
shall not be subject to any conditions or restrictions whatsoever other than
those of the Lockbox Bank, provided, however, that nothing herein shall (i)
affect or reduce Assignor's obligations to pay in full all amounts due to
Assignees under this Agreement, or (ii) in any manner limit the recourse of
Assignees to the assets of Assignor to satisfy the Assignor's obligations.


                                       49


                  (b) Upon execution of the Lockbox Agreement, Assignees shall
receive an opinion of counsel of Assignor as to the perfection of Assignees'
security interest in the Pledged Deposit Accounts (as defined in the
Assignor-Assignees Security Agreement).

                  (c) Assignor shall pay for all fees, expenses and charges of
the Lockbox Bank by debiting the Assignor Concentration Account.

                  (d) Each Distribution Agreement and License Agreement entered
into by Guilford shall contain a provision providing for all payments in respect
of sales of the Primary Products and in respect of royalties received from
Contract Parties to be remitted directly by the applicable party into the
Lockbox Account and Assignor and Guilford shall cause such payments to be
remitted directly by the applicable party into the Lockbox Account. Without in
any way limiting the foregoing, commencing on the later of the Closing Date and
the date on which the Lockbox Agreement is executed and at any time thereafter,
any and all payments in respect of Primary Products Net Sales received by
Assignor or Guilford shall be deposited into the Lockbox Account within five (5)
Business Days of Assignor's or Guilford's receipt thereof.

                  (e) With respect to any Distribution Agreement, License
Agreement or other sale agreement or invoice entered into or issued by Guilford
from and after the date hereof Guilford shall (i) at the time of the execution
and delivery of such Distribution Agreement, License Agreement or other sale
agreement or the issuance of any invoice, instruct any party thereto or
recipient thereof to remit to the Lockbox Account when due all applicable
payments in respect of sales of the Products and in respect of royalties that
are due and payable to Assignor or Guilford in respect of or derived from such
Distribution Agreement, License Agreement or other sale agreement or invoice
during the Term and (ii) in the case of any Distribution Agreement, License
Agreement or other sale agreement, deliver to Assignees evidence of such
instruction and of such applicable party's agreement thereto.

                  (f) Neither Assignor nor Guilford shall have any right to
terminate the Lockbox Bank without Assignees' prior written consent. Any such
consent, which Assignees may grant or withhold in their discretion, shall be
subject to the satisfaction of each of the following conditions to the
satisfaction of Assignees:

                           (i)      the successor Lockbox Bank shall be
                                    reasonably acceptable to Assignees;

                           (ii)     Assignees, Assignor, Guilford and the
                                    successor Lockbox Bank shall have entered
                                    into a lockbox agreement substantially in
                                    the form of the Lockbox Agreement initially
                                    entered into;


                                       50


                           (iii)    all funds and items in the accounts subject
                                    to the Lockbox Agreement to be terminated
                                    shall be transferred to the new accounts
                                    held at the successor Lockbox Bank prior to
                                    the termination of the then existing Lockbox
                                    Bank; and

                           (iv)     Assignees shall have received evidence that
                                    all of the applicable parties making
                                    payments in respect of sales of the Products
                                    have been instructed to remit all future
                                    payments in respect of sales of the Products
                                    to the new accounts held at the successor
                                    Lockbox Bank.

                  SECTION 5.11 ADDITIONAL COVENANTS OF ASSIGNOR, GPI HOLDINGS
AND GUILFORD

                  (a) In the event that either Assignor or Guilford becomes
aware that the making, using or selling of any Products licensed by Guilford to
a Contract Party under any of the Distribution Agreements or License Agreements
infringes or violates any third party Intellectual Property, Guilford shall
promptly use its reasonable best efforts to attempt to secure the right to use
such Intellectual Property on behalf of itself and the affected Contract Party
and shall pay all costs and amounts associated with obtaining any such license,
without any charge to the Contract Party or any reduction in the Assigned
Interests.

                  (b) Guilford shall duly perform and observe all of Guilford's
covenants and obligations under each Distribution Agreement and License
Agreement in all material respects. Upon the occurrence of a material breach of
any of the Distribution Agreements or License Agreements by any other party
thereto, which is not cured as provided therein, Guilford shall use its
commercially reasonable best efforts to seek to enforce all of its rights and
remedies thereunder. Guilford and Assignor shall duly comply with all material
terms of the Management Agreement and not suffer to exist any default
thereunder.

                  (c) Neither Assignor nor Guilford shall, without the prior
written consent of Assignees, which consent shall not be unreasonably withheld:

                           (i)      Forgive, release or compromise any amount
                                    owed to Assignor and relating to the
                                    Assigned Interests in a manner which could
                                    reasonably be expected to materially
                                    adversely affect the Assigned Interests;

                           (ii)     Waive, amend, cancel or terminate, exercise
                                    or fail to exercise, any of its material
                                    rights constituting or relating to the right
                                    to receive payment on Total Net Sales;

                           (iii)    Amend, modify, restate, cancel, supplement,
                                    terminate or waive any provision of any
                                    Distribution Agreement or License Agreement,
                                    or


                                       51


                                    grant any consent thereunder, or agree to do
                                    any of the foregoing, including, without
                                    limitation, entering into any agreement with
                                    the Contract Party under the provisions of
                                    such Distribution Agreement or License
                                    Agreement in each case which could
                                    reasonably be expected to have a Material,
                                    Adverse Effect; or

                           (iv)     Create, incur, assume or suffer to exist any
                                    Lien, or exercise any right of rescission,
                                    offset, counterclaim or defense, upon or
                                    with respect to the Assigned Interests or
                                    the other Collateral, or agree to do or
                                    suffer to exist any of the foregoing, except
                                    for (A) any Lien or agreements in favor of
                                    Assignees granted under or pursuant to this
                                    Agreement and the other Transaction
                                    Documents, (B) the Liens set forth on
                                    Schedule 3.04, and (C) the Liens described
                                    in, and subject to the conditions set forth
                                    in, Section 5.07(b)(ii)(B) and Section
                                    5.08(b).

                  (d) Assignor shall promptly provide to Assignees copies of any
material reports or other information prepared by any Contract Party it has
received pursuant to the Management Agreement that has not been previously
provided to Assignees by either Assignor, Guilford or any other Person.

                  (e) Each of Assignor, GPI Holdings and Guilford shall provide
Assignees with written notice as promptly as practicable (and in any event
within five (5) Business Days) after becoming aware of any of the following:

                           (i)      the occurrence of a Bankruptcy Event;

                           (ii)     any material breach or default by either
                                    Assignor, GPI Holdings or Guilford of any
                                    covenant, agreement or other provision of
                                    this Agreement or any other Transaction
                                    Document;

                           (iii)    any representation or warranty made or
                                    deemed made by either Assignor, GPI Holdings
                                    or Guilford in any of the Transaction
                                    Documents to which it is a party or in any
                                    certificate delivered to Assignees pursuant
                                    hereto shall prove to be untrue, inaccurate
                                    or incomplete in any material respect on the
                                    date as of which made or deemed made;

                           (iv)     the occurrence of a Purchase Option Event;

                           (v)      the occurrence of an Assignor Option Event;


                                       52


                           (vi)     any sublicense by a Contract Party of any
                                    rights licensed pursuant to any Distribution
                                    Agreement or License Agreement; or

                           (vii)    the resignation, death or removal of any
                                    Class A Manager or Class B Manager (as such
                                    terms are defined in the LLC Agreement) of
                                    Assignor.

                  (f) Promptly (but in no event later than five (5) Business
Days) after (i) receiving written or oral notice from a Contract Party, (A)
terminating the related Distribution Agreement or License Agreement, (B)
alleging any material breach of or default under such Distribution Agreement or
License Agreement by Guilford or (C) asserting the existence of any facts,
circumstances or events which alone or together with other facts, circumstances
or events could reasonably be expected (with or without the giving of notice or
passage of time or both) to give rise to a material breach of or default under
or right to terminate such Distribution Agreement or License Agreement or (ii)
either Assignor or Guilford otherwise having Knowledge of any fact, circumstance
or event which alone or together with other facts, circumstances or events could
reasonably be expected (with or without the giving of notice or passage of time
or both) to give rise to a material breach of or default under such Distribution
Agreement or License Agreement by Guilford or a right to terminate such
Distribution Agreement or License Agreement by such Contract Party, in each
case, either Assignor or Guilford shall give a written notice to Assignees
describing in reasonable detail the relevant breach, default or termination
event, including a copy of any written notice received from such Contract Party
and, in the case of any breach or default or alleged breach or default by
Guilford, describing any corrective action Guilford proposes to take.

                  (g) Guilford shall, at Guilford's sole expense, either
directly or by causing the Contract Party to do so, take any and all actions and
prepare, execute, deliver and file any and all agreements, documents or
instruments which are necessary or desirable to (A) diligently maintain the
applicable licensed Intellectual Property and the Patents and (B) diligently
defend such licensed Intellectual Property and such Patents against infringement
or interference by any other Persons, and against any claims of invalidity or
unenforceability, in any jurisdiction (including, without limitation, by
bringing any legal action for infringement or defending any counterclaim of
invalidity or action of a third party for declaratory judgment of
non-infringement or non-interference). Guilford shall not, and shall use
commercially reasonable efforts to cause the applicable Contract Party not to,
disclaim or abandon, or fail to take any action necessary or desirable to
prevent the disclaimer or abandonment of, the applicable Patents or other
Intellectual Property.

                  (h) Guilford shall use its reasonable best efforts to secure
and maintain, or, where a Contract Party is required to do so under any
Distribution Agreement or License Agreement, assist such Contract Party in
securing and maintaining, all regulatory and other governmental


                                       53


approvals, clearances, registrations and permits which may be required to
manufacture, market and/or sell any and all of the Products in accordance with
Guilford's business plans that are reasonably designed to maximize the
commercial potential of the Products.

                  (i) Neither Guilford nor Assignor shall provide samples of
Products, sell Products at reduced prices or grant credits against the purchase
prices of the Products to any person for purposes of inducing or otherwise
related to the sale of other products.

                  (j) Guilford and Assignor shall comply with all manufacturing
guidelines and processes required by the FDA.

                  (k) Guilford shall (i) maintain insurance policies with
insurance companies rated not less than "A-" by A.M. Best Company, Inc. with
coverages and in amounts sufficient to comply with the Supply Agreement and
otherwise what is customary for companies of comparable size and condition
similarly situated in the same industry as Guilford including without
limitation, product liability insurance and directors and officers insurance and
(ii) maintain each of Assignor and Assignees as an additional insured party with
respect to its general liability and product liability insurance policies.

                  (l) Neither Assignor nor Guilford nor any Affiliate of
Guilford will Transfer (other than an Excluded Transfer) (i) all or any major
part of its interests in the Products or (ii) all or any part of its interests
in either of the Primary Products to a third party purchaser or licensee, as
applicable, unless such third party purchaser or licensee, as applicable,
assumes in writing all of the obligations of Assignor or Guilford, as
applicable, hereunder, including the obligation to make all payments in respect
of the Assigned Interests to Assignees pursuant to a written assumption, in a
form reasonably satisfactory to Assignees. In the event of any such Transfer,
Assignor and Guilford shall hold any proceeds of such transfer in trust for ten
(10) business days after the consummation of such Transfer to permit the
Assignees to exercise an Assignees Option Repurchase and to be paid directly
from such proceeds. Assignor and Guilford shall give Assignees thirty (30) days
prior written notice of any such proposed Transfer.

                  (m) Neither Guilford, GPI Holdings nor Assignor will amend,
modify or terminate, or permit to be amended, modified or terminated, nor shall
Guilford, GPI Holdings or Assignor waive any rights under (i) the Certificate of
Formation (ii) the LLC Agreement, (iii) the Management Agreement, (iv) the
Guilford-Assignees Security Agreement or (v) the Guilford-Assignor Security
Agreement without the prior written consent of Assignees, which consent shall be
granted or withheld in Assignees' sole discretion. Without limiting the
foregoing, Assignor will diligently pursue all of its rights and remedies with
respect to Guilford under the Management Agreement and the Guilford-Assignor
Security Agreement.


                                       54


                  (n) Except as provided in, and subject to the conditions set
forth in, Section 5.07(b)(ii)(B), Assignor will not pledge or otherwise assign
or transfer any of its assets without the prior written consent of Assignees,
which consent shall be granted or withheld in Assignees' sole discretion.

                  (o) Assignor will comply with the procedures and records as
set forth in Article V of the LLC Agreement, a copy of which is attached hereto
as Exhibit F.

                  (p) Guilford shall cause each Contract Party under any
Distribution Agreement or License Agreement, as applicable, to provide, promptly
following the end of each calendar quarter, all information with respect to net
end-user sales (including all components of information required to calculate
Total Net Sales) under each such agreement for inclusion in the Quarterly Report
for such quarter, and Guilford shall cause such obligation to be included in
every Distribution Agreement and License Agreement it enters into following the
Closing Date.

                  (q) Assignor shall not make any dividends or distributions to
Guilford or GPI Holdings (including payment of the Management Fee (as defined in
the Management Agreement) or any distributions under the LLC Agreement) unless
and until all amounts at that time owing to Assignees under this Agreement, the
Management Agreement or any obligation under any other Transaction Document are
paid in full.

                  (r) Guilford, GPI Holdings and Assignor shall ensure that the
claims and rights of Assignees created by this Agreement and any other
Transaction Document in and to the Assigned Interests and, subject to the
provisions of Section 5.07(b)(ii)(B) and 5.08(b), any other Collateral are and
shall remain senior to any creditor of Assignor, GPI Holdings, Guilford or any
other Person.

                  (s) Assignor's obligations to pay Guilford the Management Fee
(as defined in the Management Agreement) shall be in all respects subordinate
to, and shall be paid to Guilford only after the satisfaction in full of,
Assignor's payment Obligations to Assignees, including Assignor's payment to
Assignees of the Applicable Percentage of Total Net Sales and all other
Obligations set forth in this Agreement.

                  (t) Guilford shall not incur any Indebtedness (other than
equipment financing, secured financing for an After Acquired Product, senior
bank financing (or financing provided by a financial institution on
substantially the same terms as senior bank financing) and industrial bond
financing) that is not expressly subordinated to Guilford's Obligations to
Assignees under this Agreement on terms no less favorable to Assignees than the
subordination provisions benefiting Senior Debt, as defined in the Subordinated
Indenture.


                                       55


                  (u) Guilford shall assign, and agrees to cause all of its
Affiliates to assign, to Assignor all improvements of or to the Primary Products
and the Intellectual Property related to the Primary Products that arise on or
after the Closing Date and agrees to execute and deliver, and agrees to cause
its Affiliates to execute and deliver, all instruments, documents and agreements
as are reasonably required to effectuate such assignment.

                  SECTION 5.12 FUTURE AGREEMENTS.

                  (a) Guilford shall provide Assignees, promptly after the
execution of a Distribution Agreement or License Agreement by Guilford and any
Contract Party, a copy of the executed Distribution Agreement or License
Agreement for review by Assignees.

                  (b) If Guilford, at any time and from time to time during the
term of this Agreement, proposes to materially change the form of Distribution
Agreement or License Agreement it utilizes, or proposes in connection with any
transaction or transactions with a Contract Party to materially vary the terms
of the related Distribution Agreement or License Agreement from those contained
in the prevailing form of Distribution Agreement or License Agreement, then
Guilford shall promptly provide to Assignees such revised form of Distribution
Agreement or License Agreement or, at least three (3) Business Days prior to the
execution and delivery of any Distribution Agreement or License Agreement that
includes a material deviation from the terms of the prevailing form of
Distribution Agreement or License Agreement, give written notice to Assignees
indicating that Guilford proposes to enter into such Distribution Agreement or
License Agreement and the anticipated date of execution of such proposed
Distribution Agreement or License Agreement.

                  (c) In the event that any payments under any Distribution
Agreement or License Agreement relating to a Product are calculated upon a basis
that is materially different than the basis used under the Distribution
Agreements or License Agreements in existence at such time, Guilford and
Assignor shall, in good faith, discuss with Assignees and mutually agree on the
basis of the appropriate payments to be made to Assignees in respect of any such
Distribution Agreement or License Agreement and the manner of calculating such
payments, which payments and manner of calculating payments will not be less
advantageous to Assignees than are provided under the Distribution Agreements or
License Agreements in existence at such time.

                  (d) To the extent Guilford has the right to perform or cause
to be performed inspections or audits under any of the License Agreements or
Distribution Agreements regarding payments payable and/or paid to Guilford
thereunder (each, a "License Party Audit"), Guilford shall, at the reasonable
request of Assignees, cause such License Party Audit to be promptly performed
(it being understood that it shall not be a reasonable request if, in the good
faith belief of Guilford, the requested License Party Audit would impair
Guilford's commercial relationship with the applicable Contract Party). In
conducting a License Party Audit, Guilford may engage


                                       56


its then retained internationally recognized independent public accounting firm,
or, if Guilford elects otherwise, such other internationally recognized
independent public accounting firm reasonably acceptable to Assignees. Promptly
after completion of any License Party Audit (whether or not requested by
Assignees), Guilford shall promptly deliver to Assignees an Audit Report in
respect of such License Party Audit. With respect to any License Agreement or
Distribution Agreement under which Guilford has a right to perform or cause to
be performed a License Party Audit, in the event Assignees requests Guilford to
perform a License Party Audit and such License Party Audit is in fact performed
by or on behalf of Guilford, then if the results thereof reveal that the amounts
paid to Guilford in respect of sales of any licensed Product under such License
Agreement or Distribution Agreement for the period of such License Party Audit
have been understated by more than the greater of $20,000 or 7.5% of the amounts
payable to Guilford with respect to sales of any licensed Product and determined
to be due for the applicable period of such License Party Audit, then the Audit
Costs incurred by Guilford in respect of such License Party Audit shall be borne
by Guilford. In all other cases the Audit Costs incurred by Guilford in respect
of a License Party Audit shall be borne by Assignees.

                  SECTION 5.13 GUARANTEE.

                  (a) The Guarantee. Guilford and GPI Holdings, jointly and
severally (collectively, the "Guarantor") hereby unconditionally and irrevocably
guarantees the full and prompt payment of all amounts when due which may be
owing by Assignor under this Agreement and the other Transaction Documents and
the full and prompt performance of all of the Obligations of Assignor under this
Agreement and the other Transaction Documents (collectively, the "Guaranteed
Obligations"). *

                  (b) * -

                           (i) *

                           (ii) *

                           (iii) *; or

                           (iv) *

                  *

                  (c) *. -

                  (d) *

                  (e) * -



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       57


                  (f) * -

                  (g) * -

                  (h) Senior Debt. Guilford confirms and agrees that its
Obligations under this Section 5.13 and its other Obligations to Assignees under
this Agreement and the other Transaction Documents constitute Senior Debt and
Designated Senior Debt as defined in and for the purposes of the Subordinated
Indenture.

                  SECTION 5.14 FINANCIAL STATEMENTS.

                  Guilford shall maintain, and cause Assignor to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Guilford shall deliver to Assignees the following financial
statements:

                  (a) Within sixty (60) days after the end of each calendar
quarter, copies of (i) the unaudited consolidated financial statements of
Guilford and its Subsidiaries for the prior fiscal quarter and (ii) the
unaudited financial statements of Assignor for the prior fiscal quarter; and

                  (b) Within ninety (90) days after the end of each calendar
year, copies of (i) the audited consolidated financial statements of Guilford
and its Subsidiaries for the prior calendar year and (ii) the audited financial
statements of Assignor for the prior calendar year.

                  (c) Within ten (10) days after the end of each calendar
quarter, a certificate of the chief financial officer of Guilford in a form
satisfactory to Assignees pursuant to which such officer certifies the amount of
Working Capital of Guilford as at the end of the such quarters and certifies
that Guilford maintained Working Capital of no less than $20 million at the end
of each calendar month during such quarter.

                                   ARTICLE VI

                 THE CLOSING; CONDITIONS TO CLOSING AND FUNDING

                  SECTION 6.01 CLOSING.

                  Subject to the closing conditions set forth in Sections 6.02
and 6.03, the closing of the purchase and sale of the Assigned Interests (the
"Closing") shall take place at the offices of Hogan & Hartson L.L.P., Baltimore,
MD, on the Closing Date.



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       58


                  SECTION 6.02 CONDITIONS APPLICABLE TO ASSIGNEES.

                  The obligations of Assignees to effect the Closing and the
payment of the Purchase Price shall be subject to the satisfaction of each of
the following conditions, any of which may be waived by Assignees in their sole
discretion:

                  (a) Accuracy of Representations and Warranties. The
representations and warranties of Assignor and Guilford set forth in this
Agreement and the other Transaction Documents shall be true, correct and
complete in all material respects as of the Closing Date.

                  (b) No Adverse Circumstances. There shall not have occurred or
be continuing any event or circumstance (including any development with respect
to the efficacy of the Primary Products or the licensed Intellectual Property or
the use or expected future use of the same as opposed to competing products)
that could reasonably be expected to have a Material Adverse Effect.

                  (c) Litigation. No action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignees' acquisition or future receipt of the Assigned Interests.

                  (d) Officer's Certificates.

                           (i)      Assignees shall have received at the Closing
a certificate of an executive officer of Assignor pursuant to which such officer
certifies that the conditions set forth in Sections 6.02(a), (b), (c), (m) and
(o) have been satisfied in all respects as of the Closing Date.

                           (ii)     Assignees shall have received at the Closing
a certificate of the executive officer of Guilford pursuant to which such
officer certifies that the conditions set forth in Sections 6.02(a), (b), (c),
(l) and (o) have been satisfied in all respects as of the Closing Date.

                           (iii)    Assignees shall have received at the Closing
a certificate of the executive officer of GPI Holdings pursuant to which such
officer certifies that the conditions set forth in Sections 6.02(a), (b), (c),
(n) and (o) have been satisfied in all respects as of the Closing Date.

                  (e) Legal Opinions.

                           (i)      Assignees shall have received an opinion of
                                    Hogan & Hartson, L.L.P., counsel to Assignor
                                    dated the Closing Date, in form and
                                    substance


                                       59


                                    satisfactory to Assignees and their counsel,
                                    to the effect set forth in Exhibit E(i).

                           (ii)     Assignees shall have received an opinion of
                                    patent counsel to Assignor, dated the
                                    Closing Date, in form and substance
                                    satisfactory to Assignees and their counsel,
                                    to the effect set forth in Exhibit E(ii).

                  (f) Bill of Sale. A Bill of Sale shall have been executed and
delivered by Assignor to Assignees and Assignees shall have received the same.

                  (g) Assignor-Assignees Security Agreement. The
Assignor-Assignees Security Agreement shall have been duly executed and
delivered by all the parties thereto and shall be in form of Exhibit D hereto,
together with proper financing statements (including Form UCC-1s) for filing
under the UCC and/or any other applicable law, rule, statute or regulation
relating to the perfection of a security interest in filing offices in the
jurisdictions listed on Schedule 6.02(g).

                  (h) Guilford Security Agreements. Each of the
Guilford-Assignor Security Agreement and the Guilford-Assignees Security
Agreement shall have been duly executed and delivered by all the parties thereto
and shall be in forms of Exhibits D-1 and D-2 hereto, together with proper
financing statements (including Form UCC-1s) for filing under the UCC and/or any
other applicable law, rule, statute or regulation relating to the perfection of
a security interest in filing offices in the jurisdictions listed on Schedule
6.02(g).

                  (i) Pledge Agreement. The Pledge Agreement shall have been
duly executed and delivered by all the parties thereto and shall be in form of
Exhibit K hereto, together with proper financing statements (including Form
UCC-1s) fully executed for filing under the UCC and/or any other applicable law,
rule, statute or regulation relating to the perfection of a security interest in
filing offices in the jurisdictions listed on Schedule 6.02(g).

                  (j) Management Agreement. The Management Agreement shall have
been duly executed and delivered by all the parties thereto and shall be in form
of Exhibit H hereto.

                  (k) Conversion Documents. Each Conversion Document shall have
been duly executed and delivered by all the parties thereto and filed with the
Secretary of State of the State of Delaware and shall be in forms of Exhibits
L-N hereto.

                  (l) Corporate Documents of Guilford. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of Guilford (the statements made in which shall be true and correct on
and as of the Closing Date): (i) attaching copies, certified by such officer as
true and complete, of Guilford's certificate of incorporation and by-laws or
other


                                       60


organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the board of directors of Guilford authorizing and
approving the execution, delivery and performance by Guilford of this Agreement,
the other Transaction Documents and the transactions contemplated herein and
therein; (iii) setting forth the incumbency of the officer or officers of
Guilford who have executed and delivered this Agreement and the other
Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates of the appropriate Government Authority of
the jurisdiction of formation, stating that Guilford is in good standing under
the laws of such jurisdiction.

                  (m) Corporate Documents of Assignor. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of Assignor (the statements made in which shall be true and correct on
and as of the Closing Date): (i) attaching copies, certified by such officer as
true and complete, of Assignor's certificate of formation or other
organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the management committee of Assignor authorizing and
approving the execution, delivery and performance by Assignor of this Agreement,
the other Transaction Documents and the transactions contemplated herein and
therein; (iii) setting forth the incumbency of the officer or officers of
Assignor who have executed and delivered this Agreement and the other
Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates of the appropriate Government Authority of
the jurisdiction of formation, stating that Assignor is in good standing under
the laws of such jurisdiction.

                  (n) Corporate Documents of GPI Holdings. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of GPI Holdings (the statements made in which shall be true and correct
on and as of the Closing Date): (i) attaching copies, certified by such officer
as true and complete, of GPI Holdings' certificate of incorporation and by-laws
or other organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the board of directors of GPI Holdings authorizing
and approving the execution, delivery and performance by GPI Holdings of this
Agreement, the other Transaction Documents and the transactions contemplated
herein and therein; (iii) setting forth the incumbency of the officer or
officers of GPI Holdings who have executed and delivered this Agreement and the
other Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates


                                       61


of the appropriate Government Authority of the jurisdiction of formation,
stating that GPI Holdings is in good standing under the laws of such
jurisdiction.

                  (o) Lack of Purchase Option Event. There shall not have
occurred a Purchase Option Event.

                  (p) Covenants. Each of Assignor, GPI Holdings and Guilford
shall have complied in all material respects with the covenants set forth in
this Agreement and each other Transaction Document.

                  (q) Warrants. The Warrants shall have been duly executed and
issued to Assignees.

                  (r) Merck Transaction. The asset transfer transaction
contemplated by the Merck Purchase Agreement shall simultaneously close.

                  (s) Liquidity Account. The Liquidity Account shall have been
established on terms and conditions acceptable to the Assignees.

                  SECTION 6.03 CONDITIONS APPLICABLE TO ASSIGNOR.

                  The obligations of each of Assignor and Guilford to effect the
Closing shall be subject to the satisfaction of each of the following
conditions, any of which may be waived by Assignor and Guilford in their sole
discretion:

                  (a) Accuracy of Representations and Warranties. The
representations and warranties of Assignees set forth in this Agreement shall
have been true, correct and complete as of the Closing Date.

                  (b) Litigation. No action, suit, litigation, proceeding or
investigation shall have been formally instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignees' acquisition or future receipt of the Assigned Interests.

                  (c) Officer's Certificate. Assignor shall have received at the
Closing a certificate of an officer or member of the general partner of
Assignees certifying that the conditions set forth in Sections 6.03(a) and (b)
have been satisfied, in all respects as of the Closing Date.

                  (d) Full Payment. The Purchase Price shall have been tendered
by Assignees to Assignor by wire transfer of immediately available funds to
Assignor's Account identified to Assignees on or prior to the Closing.


                                       62


                                  ARTICLE VII

                                   TERMINATION

                  SECTION 7.01 TERMINATION DATE.

                  This Agreement shall terminate on December 31, 2012; provided,
however, that if any Obligations under this Agreement remain unpaid or any
payments are required to be made by one of the parties hereunder after that
date, this Agreement shall remain in full force and effect until any and all
such payments have been made in full, and solely for that purpose. In addition,
this Agreement shall sooner terminate if Assignees or Assignor shall have
exercised their right under Sections 5.07(a), (b)(i) or (b)(ii)(A),
respectively, with the termination date in that event being the date on which
Assignor completes the repurchase in full of the Assigned Interests and pays in
full in cash the Assignees Option Repurchase Price, the Call Price, the Assignor
Option Repurchase Price or other applicable amount, as the case may be.

                  SECTION 7.02 EFFECT OF TERMINATION.

                  In the event of the termination of this Agreement pursuant to
Section 7.01, this Agreement shall forthwith become void and have no effect
without any liability on the part of any party hereto or its Affiliates,
directors, officers or stockholders other than the provisions of this Section
7.02 and Sections 5.04, 5.13, 8,01, 8.04 and 8.05 hereof, which shall survive
any termination as set forth in Section 8.01. Nothing contained in this Section
7.02 shall relieve any party from liability for any breach of this Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  SECTION 8.01 SURVIVAL.

                  (a) All representations and warranties made herein and in any
other Transaction Document, any certificates or in any other writing delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Closing and shall continue to survive
indefinitely. Notwithstanding anything in this Agreement or implied by law to
the contrary, all the agreements contained in Sections 5.04, 5.13, 8.01, 8.04
and 8.05 shall survive indefinitely following the execution and delivery of this
Agreement and the Closing and the termination of this Agreement.

                  (b) Any investigation or other examination that may have been
made or may be made at any time by or on behalf of the party to whom
representations and warranties are made shall


                                       63


not limit, diminish or in any way affect the representations and warranties in
this Agreement and the other Transaction Documents, and the parties may rely on
the representations and warranties in this Agreement and the other Transaction
Documents irrespective of any information obtained by them by any investigation,
examination or otherwise.

                  SECTION 8.02 SPECIFIC PERFORMANCE.

                  Each of the parties hereto acknowledges that the other party
will have no adequate remedy at law if it fails to perform any of its
obligations under this Agreement or any of the other Transaction Documents. In
such event, each of the parties agrees that the other party shall have the
right, in addition to any other rights it may have (whether at law or in
equity), to specific performance of this Agreement.

                  SECTION 8.03 NOTICES.

                  All notices, consents, waivers and communications hereunder
given by any party to the other shall be in writing (including facsimile
transmission) and delivered personally, by telegraph, telecopy, telex or
facsimile, by a recognized overnight courier, or by dispatching the same by
certified or registered mail, return receipt requested, with postage prepaid, in
each case addressed:

                  If to Assignees to:

                  c/o Paul Capital Management, L.L.C.
                  50 California Street
                  Suite 3000
                  San Francisco, California  94111
                  Attention:  Chief Financial Officer
                  Facsimile No.:  (415) 283-4301

                  with a copy to:

                  Walter Flamenbaum, M.D.
                  Paul Capital Partners
                  140th East 45th Street, 44th Floor
                  New York, New York 10017
                  Facsimile No.:  (646) 264-1101

                  and

                  Hale and Dorr LLP
                  60 State Street


                                       64


                  Boston, MA 02109
                  Attention:  David Redlick, Esq.
                  Facsimile No.:   (617) 526-5000

                  If to Assignor to:

                  Artery, LLC
                  222 Delaware Avenue, 10th Floor
                  Wilmington, DE 19801
                  Attention:  Dan McCollom
                  Facsimile No.:
                                  -------------------

                  with a copy to:

                  Hogan & Hartson L.L.P.
                  111 South Calvert Street
                  Baltimore, Maryland 21202
                  Attention:  Michael J. Silver, Esq.
                  Facsimile No.:  (410) 539-6981

                  If to Guilford to:

                  Guilford Pharmaceuticals Inc.
                  6611 Tributary Street
                  Baltimore, MD 21224
                  Attention:  Andrew R. Jordan, Chief Financial Officer
                  Facsimile No.:  (410) 631-6899

                  with a copy to:

                  Hogan & Hartson L.L.P.
                  111 South Calvert Street
                  Baltimore, Maryland 21202
                  Attention:  Michael J. Silver, Esq.
                  Facsimile No.:  (410) 539-6981

                  If to GPI Holdings to:

                  GPI Holdings, Inc.
                  222 Delaware Avenue, 10th Floor
                  Wilmington, DE 19801


                                       65


                  Attention:  Dan McCollom
                  Facsimile No.:

                  with a copy to:

                  Hogan & Hartson L.L.P.
                  111 South Calvert Street
                  Baltimore, Maryland 21202
                  Attention:  Michael J. Silver, Esq.
                  Facsimile No.:  (410) 539-6981

if or to such other address or addresses as Assignees, Assignor or Guilford may
from time to time designate by notice as provided herein, except that notices of
changes of address shall be effective only upon receipt. All such notices
consents, waivers and communications shall: (a) when posted by certified or
registered mail, postage prepaid, return receipt requested, be effective three
(3) Business Days after dispatch, unless such communication is sent
trans-Atlantic, in which case shall be deemed effective five (5) Business Days
after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be
effective upon receipt by the transmitting party of confirmation of complete
transmission, (c) when delivered by a recognized overnight courier or in person,
be effective upon receipt when hand delivered.

                  SECTION 8.04 SUCCESSORS AND ASSIGNS.

                  The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Assignor nor Guilford shall be entitled to assign any of its
obligations and rights hereunder or any other Transaction Documents without the
prior written consent of Assignees. *

                  SECTION 8.05 INDEMNIFICATION.

                  (a) Each of Assignor and Guilford hereby jointly and severally
indemnifies and holds Assignees and their Affiliates and any of their respective
partners, directors, managers, officers, employees and agents (each an
"Assignees Indemnified Party") harmless from and against any and all Losses
(including all Losses in connection with any product liability claims or claims
of infringement or misappropriation of any intellectual property rights of any
third parties) incurred or suffered by any Assignees Indemnified Party arising
out of any breach of any representation, warranty or certification made by
either Assignor or Guilford in any of the Transaction Documents or certificates
given by Assignor in writing pursuant hereto or thereto or any breach of or
default under any covenant or agreement by either Assignor or Guilford pursuant
to this Agreement or any Transaction Document, including any failure by either
Assignor or Guilford to satisfy any of the Excluded Liabilities and Obligations.



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       66


                  (b) Assignees hereby indemnify and hold Assignor, Guilford,
their Affiliates and any of their partners, directors, managers, officers,
employees and agents (each an "Assignor Indemnified Party") harmless from and
against any and all Losses incurred or suffered by an Assignor Indemnified Party
arising out of any breach of any representation, warranty or certification made
by Assignees in any of the Transaction Documents or certificates given by
Assignees in writing pursuant hereto or thereto or any breach of or default
under any covenant or agreement by Assignees pursuant to this Agreement or any
Transaction Document.

                  (c) If any claim, demand, action or proceeding (including any
investigation by any Government Authority) shall be brought or alleged against
an indemnified party in respect of which indemnity is to be sought against an
indemnifying party pursuant to the preceding paragraphs, the indemnified party
shall, promptly after receipt of notice of the commencement of any such claim,
demand, action or proceeding, notify the indemnifying party in writing of the
commencement of such claim, demand, action or proceeding, enclosing a copy of
all papers served, if any; provided, that, the omission to so notify such
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party under the foregoing provisions of this
Section 8.05 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. In case
any such action is brought against an indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 8.05 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In any such proceeding, an indemnified party shall have
the right to retain its own counsel, but the reasonable fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the indemnifying party has assumed the defense
of such proceeding and has failed within a reasonable time to retain counsel
reasonably satisfactory to such indemnified party or (iii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential conflicts
of interests between them based on the advice of such counsel. It is agreed that
the indemnifying party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate law firm (in addition to local counsel where
necessary) for all such indemnified parties. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such


                                       67


consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

                  SECTION 8.06 EXPENSES.

                  Each party hereto will pay all of its own fees and expenses in
connection with entering into and consummating the transactions contemplated by
this Agreement, except Guilford agrees to, within the later of 30 days after the
Closing and the presentation by Assignees of invoices or other records,
reimburse Assignees for the lesser of $375,000 and their documented out of
pocket due diligence and legal expenses.

                  SECTION 8.07 INDEPENDENT NATURE OF RELATIONSHIP.

                  (a) The relationship between Assignor and Assignees is solely
that of seller and purchaser, and neither Assignees nor Assignor has any
fiduciary or other special relationship with the other or any of their
respective Affiliates. Nothing contained herein or in any other Transaction
Document shall be deemed to constitute Assignor and Assignees as a partnership,
an association, a joint venture or other kind of entity or legal form.

                  (b) No officer or employee of Assignees will be located at the
premises of Assignor, Guilford or any of their Affiliates, except in connection
with an audit performed pursuant to Section 5.02. No officer or employee of
Assignees shall engage in any commercial activity with Assignor, Guilford or any
of their Affiliates other than as contemplated herein and in the other
Transaction Documents.

                  (c) Assignor, Guilford and/or any of its Affiliates shall not
at any time obligate Assignees, or impose on Assignees any obligation, in any
manner or respect to any Person not a party hereto.

                  (d) Neither Assignor nor Guilford is transferring to Assignees
any ownership interest in any patents, other patents or other intellectual
property of either Assignor or Guilford.

                  SECTION 8.08 FEDERAL TAX.

                  Notwithstanding the accounting treatment thereof, for United
States federal, state and local tax purposes, Guilford, Assignor and Assignees
shall treat the transactions contemplated by


                                       68


this Agreement and the other Transaction Documents as (i) purchases of the
Warrants by Assignees from Guilford for $* and (ii) loans from Assignees to
Assignor in the amount of the balance of the Purchase Price, such Warrant
purchases and loans to be made by Assignees in proportion to the respective
amounts of the Purchase Price payable by them pursuant to Section 2.03 hereof. *

                  SECTION 8.09 ENTIRE AGREEMENT.

                  This Agreement, together with the Exhibits and Schedules
hereto (which are incorporated herein by reference), and the other Transaction
Documents constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements (including the
Letter of Intent), understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein (or in the Exhibits, Schedules or other Transaction Documents)
has been made or relied upon by either party hereto. None of this Agreement, nor
any provision hereof, is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.

                  SECTION 8.10 AMENDMENTS; NO WAIVERS.

                  (a) This Agreement or any term or provision hereof may not be
amended, changed or modified except with the written consent of the parties
hereto. No waiver of any right hereunder shall be effective unless such waiver
is signed in writing by the party against whom such waiver is sought to be
enforced.

                  (b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

                  SECTION 8.11 INTERPRETATION.

                  When a reference is made in this Agreement to Articles,
Sections, Schedules or Exhibits, such reference shall be to an Article, Section,
Schedule or Exhibit to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." Neither party hereto
shall be or be deemed to be the drafter of this Agreement for the purposes of
construing this Agreement against one party or the other.



* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.


                                       69


                  SECTION 8.12 HEADINGS AND CAPTIONS.

                  The headings and captions in this Agreement are for
convenience and reference purposes only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.

                  SECTION 8.13 COUNTERPARTS; EFFECTIVENESS.

                  This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other
parties hereto.

                  SECTION 8.14 SEVERABILITY.

                  If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nevertheless be given full force
and effect.

                  SECTION 8.15 GOVERNING LAW; JURISDICTION.

                  (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

                  (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.
EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT.

                  (c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN


                                       70


SUBSECTION (b) ABOVE OF THIS SECTION 8.15 IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUIT, ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT THAT
SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER
MANNER PERMITTED BY LAW.

                  SECTION 8.16 WAIVER OF JURY TRIAL.

                  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT.


                                       71



              IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the date first
above written.



ASSIGNOR:                        ARTERY, LLC



                                 By:   /s/ Daniel McCollom
                                      ----------------------------------------
                                           Name: Daniel McCollom
                                                 -----------------------------
                                           Title: Vice President and Secretary
                                                 -----------------------------


GUILFORD:                        GUILFORD PHARMACEUTICALS INC.



                                 By:   /s/ Craig R. Smith, M.D.
                                      -----------------------------------
                                           Name:  Craig R. Smith, M.D.
                                                 ------------------------
                                           Title: Chairman, President and
                                                 ------------------------
                                                  Chief Executive Officer
                                                 ------------------------

ASSIGNEES:                       PAUL ROYALTY FUND, L.P.

                                 By:  Paul Capital Management, LLC,
                                      its General Partner

                                      By:  /s/ Walter Flamenbaum
                                          ------------------------------
                                          Name:  Walter Flamenbaum, M.D.
                                          Title: Managing Member

                                 PAUL ROYALTY FUND HOLDINGS II

                                 By:  Paul Royalty Fund II, L.P.
                                      its Managing Partner

                                      By: Paul Capital Royalty Management, LLC,
                                          its General Partner

                                          By: /s/ Walter Flamenbaum
                                              ------------------------------
                                              Name:  Walter Flamenbaum, M.D.
                                              Title: Managing Member




GPI HOLDINGS                     GPI HOLDINGS, INC.



                                 By:   /s/ Daniel McCollom
                                      --------------------------------------
                                        Name:  Daniel McCollom
                                              ------------------------------
                                        Title: Vice President and Secretary
                                              ------------------------------


                    [SIGNATURE PAGE TO ASSIGNMENT AGREEMENT]



                                       73


                         EXHIBIT A - * SALES


                                   *


*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.





SCHEDULE 5.07(A) - ASSIGNEES OPTION REPURCHASE PRICE


The Assignees Option Repurchase Price shall be the exact respective amount
specified below if payment is received by the Assignees on one of the dates
specified below (the "Calculation Dates") and if received by the Assignees on
any other date during the Term shall be an amount equal to the sum of (i) the
amount specified for the immediately prior Calculation Date and (ii) the product
of (A) the amount specified for the immediately following Calculation Date less
the amount specified for the immediately prior Calculation Date and (B) the
quotient of the number of days that payment is received after the immediately
prior Calculation Date over 365.




October 28,   October 28,  October 28    October 28,   October 28,   October 28,   October 28,   October 28,     October 28,
    2004         2005         2006          2007          2008           2009         2010          2011            2012
- -----------   -----------  ----------    -----------   -----------   -----------   -----------   -----------     -----------
                                                                                       
$63,000,000   $70,980,000  $92,274,000  $110,991,579  $141,514,263  $160,217,285+  200,271,606+  250,339,508+   $312,924,385+



+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).







SCHEDULE 5.07(B)(I) - ASSIGNOR OPTION REPURCHASE PRICE



The Assignor Option Repurchase Price shall be the exact respective amount
specified below if payment is received by the Assignees on one of the dates
specified below (the "Calculation Dates") and if received by the Assignees on
any other date during the Term shall be an amount equal to the sum of (i) the
amount specified for the immediately prior Calculation Date and (ii) the product
of (A) the amount specified for the immediately following Calculation Date less
the amount specified for the immediately prior Calculation Date and (B) the
quotient of the number of days that payment is received after the immediately
prior Calculation Date over 365.





 October 28,   October 28,   October 28,    October 28,     October 28,    October 28,    October 28,    October 28,    October 28,
     2004          2005          2006           2007            2008           2009          2010            2011           2012
 -----------   -----------   -----------    -----------     -----------    -----------    -----------    -----------    -----------
                                                                                              
$84,000,000    $84,000,000   $103,335,750   $119,956,200   $155,943,060+  $202,725,978+  $263,543,771+  $342,606,903+  $445,388,974+



+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).










SCHEDULE 5.07(B)(II)(A) - CALL PRICE



The Call Price shall be the exact respective amount specified below if payment
is received by the Assignees on one of the dates specified below (the
"Calculation Dates") and if received by the Assignees on or after any other date
on or after October 28, 2006 during the Term shall be an amount equal to the sum
of (i) the amount specified for the immediately prior Calculation Date and (ii)
the product of (A) the amount specified for the immediately following
Calculation Date less the amount specified for the immediately prior Calculation
Date and (B) the quotient of the number of days that payment is received after
the immediately prior Calculation Date over 365.





 October 28,    October 28,      October 28,      October 28,     October 28,     October 28,       October 28,
    2006           2007             2008             2009            2010            2011              2012
 -----------    -----------      -----------      -----------     -----------     -----------       -----------
                                                                                
 $109,183,594   $150,127,441+    $206,425,232+   $283,834,694+   $390,272,704+   $536,624,968+     $737,859,331+





+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).








SCHEDULE 5.07(B)(II)(B) - SECURED FINANCING EVENT PRICE



The Secured Financing Event Price shall be the exact respective amount specified
below if payment is received by the Assignees on one of the dates specified
below (the "Calculation Dates") and if received by the Assignees on any other
date during the Term shall be an amount equal to the sum of (i) the amount
specified for the immediately prior Calculation Date and (ii) the product of (A)
the amount specified for the immediately following Calculation Date less the
amount specified for the immediately prior Calculation Date and (B) the quotient
of the number of days that payment is received after the immediately prior
Calculation Date over 365.





October 28,   October 28,    October 28,    October 28,    October 28,    October 28,    October 28,   October 28,     October 28,
    2004          2005           2006           2007           2008           2009          2010           2011            2012
- -----------   -----------    -----------    -----------    -----------    -----------    -----------   -----------     -----------
                                                                                             
$105,000,000  $105,000,000   $109,183,594  $150,127,441+  $206,425,232+  $283,834,694+  $390,272,704+ $536,624,968+   $737,859,331+





+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).






SCHEDULE 5.07(C) - PAYMENT FACTORS


Payments made under Sections 2.02(a), (b), (f) and (g) shall be multiplied by
the factors specified below for each applicable Repurchase Price calculation,
and to reflect the calendar years in which the applicable payments were made and
the Repurchase Price is paid.


Assignees Option Repurchase Price:




                                     Year of Payment Under Section 2.02
                                     ----------------------------------

                        2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
                        ----   ----   ----   ----   ----   ----   ----   ----   ----   ----
                                                      
                 2003   1.00
                 2004   1.30   1.00
                 2005   1.69   1.30   1.00
Year of Payment  2006   2.20   1.69   1.30   1.00
of Repurchase    2007   2.64   2.07   1.63   1.28   1.00
Price            2008   3.37   2.64   2.07   1.63   1.28   1.00
                 2009   3.81   3.05   2.44   1.95   1.56   1.25   1.00
                 2010   4.77   3.81   3.05   2.44   1.95   1.56   1.25   1.00
                 2011   5.96   4.77   3.81   3.05   2.44   1.95   1.56   1.25  1.00
                 2012   7.45   5.96   4.77   3.81   3.05   2.44   1.95   1.56  1.25     1.00


Assignor Option Repurchase Price:




                                        Year of Payment Under Section 2.02
                                        ----------------------------------

                  2003     2004     2005     2006    2007     2008     2009     2010     2011    2012
                  ----     ----     ----     ----    ----     ----     ----     ----     ----    ----
                                                                   
         2003     1.00







                                                                      
                 2004     1.35   1.00
                 2005     1.82   1.35     1.00
                 2006     2.46   1.82     1.35     1.00
                 2007     2.86   2.20     1.69     1.30    1.00
Year of Payment  2008     3.71   2.86     2.20     1.69    1.30     1.00
of Repurchase    2009     4.83   3.71     2.86     2.20    1.69     1.30     1.00
Price            2010     6.27   4.83     3.71     2.86    2.20     1.69     1.30     1.00
                 2011     8.16   6.27     4.83     3.71    2.86     2.20     1.69     1.30     1.00
                 2012    10.60   8.16     6.27     4.83    3.71     2.86     2.20     1.69     1.30    1.00







Call Price and Secured Financing Event Price:





                                                     Year of Payment Under Section 2.02
                                                     ----------------------------------

                            2003     2004     2005     2006    2007     2008     2009     2010     2011    2012
                            ----     ----     ----     ----    ----     ----     ----     ----     ----    ----
                                                                        
                   2003     1.00+
                   2004     1.38+    1.00+
                   2005     1.89+    1.38+   1.00+
                   2006     2.60     1.89    1.38     1.00
                   2007     3.57     2.60    1.89     1.38     1.00
Year of Payment    2008     4.91     3.57    2.60     1.89     1.38    1.00
of Repurchase      2009     6.76     4.91    3.57     2.60     1.89    1.38     1.00
Price              2010     9.29     6.76    4.91     3.57     2.60    1.89     1.38     1.00
                   2011    12.78     9.29    6.76     4.91     3.57    2.60     1.89     1.38     1.00
                   2012    17.57    12.78    9.29     6.76     4.91    3.57     2.60     1.89     1.38    1.00



+ Only Applicable to a Secured Financing Event Repurchase pursuant to Section
5.07(b)(ii)(B)

EX-99.1

                                                                    EXHIBIT 99.1

GUILFORD PHARMACEUTICALS ACQUIRES U.S. RIGHTS TO AGGRASTAT(R)FROM MERCK & CO.,
INC.

BALTIMORE, Oct. 29 /PRNewswire-FirstCall/ -- Guilford Pharmaceuticals Inc.
(Nasdaq: GLFD) today announced that the Company acquired from Merck & Co., Inc.
the rights to AGGRASTAT(R) Injection (tirofiban hydrochloride) in the United
States and its territories (Puerto Rico, Virgin Islands, and Guam) for all
platelet-mediated cardiovascular diseases, including coronary artery,
cerebrovascular and peripheral vascular diseases. Launched in the United States
in 1998, AGGRASTAT(R) is currently available in 82 countries worldwide and will
continue to be marketed by Merck in all countries outside the United States and
its territories.


AGGRASTAT(R), a glycoprotein GP IIb/IIIa receptor antagonist, is used for the
treatment of acute coronary syndrome (ACS) including unstable angina, which is
characterized by chest pain when one is at rest, and non-Q-wave myocardial
infarction (MI). In these patients, AGGRASTAT(R) reduces the risk of heart
attacks by 47 percent within the first seven days and 30 percent within the
first month. AGGRASTAT(R) may also be used to treat these patients prior to
undergoing angioplasty, a procedure to open the blockages in the arteries
supplying blood to the heart muscle.


Guilford purchased the U.S. rights to AGGRASTAT(R) for $84 million and has
agreed to make certain royalty payments to Merck based on net sales until
December 2012. Guilford and Merck have entered into an exclusive supply
agreement in which Merck will continue to manufacture and supply the Active
Pharmaceutical Ingredient (API) to Guilford through 2014. Additionally, Guilford
and Merck have formed a committee to align and leverage the commercial and
clinical efforts for AGGRASTAT(R) worldwide. As part of the agreement, Guilford
haS also agreed to make commercially reasonable efforts to expand the label for
AGGRASTAT(R) in the United States through the pursuit of a percutaneous coronary
intervention (PCI) indication.


Craig R. Smith, M.D., Chairman, President and Chief Executive Officer of
Guilford, remarked, "The acquisition of AGGRASTAT(R) advances our major goal of
accelerating Guilford's transition to profitability. It also satisfies a
critical element of Guilford's ongoing strategy to expand our hospital-based
commercial portfolio and increase top line revenues. With the purchase of
AGGRASTAT(R), Guilford gains an established hospital product with extensive
clinical data and the potential for market and product growth. We believe
through an active and focused marketing effort we can increase sales of the
product in this market and build market share for AGGRASTAT(R)."


Dr. Smith continued, "To re-launch AGGRASTAT(R), we will be doubling the size of
our sales force over the next several months with plans to add additional
representatives between 2004 and 2006. This increase in commercial resources
will also enhance promotional activities for our marketed product, GLIADEL(R)
Wafer (polifeprosan 20 with carmustine implant), as well as help establish an
infrastructure for the future launch of AQUAVAN(R) Injection, pending successful
completion of clinical trials and regulatory review."


Howard C. Herrmann, M.D., Professor of Medicine and Director, Interventional
Cardiology and Cardiac Catheterization Laboratories at the University of
Pennsylvania Medical Center, stated, "Clinical results from the PRISM-PLUS
trial, which looked at the high-risk ACS population, demonstrated that
tirofiban, in combination with heparin, reduced the incidence of death and
myocardial infarction at 48 hours (66% reduction), 7 days (43% reduction) and 30
days (30% reduction). In addition, the TACTICS-TIMI 18 trial showed the benefit
of using tirofiban combined with an aggressive interventional approach when
compared to a more conservative interventional approach in ACS patients. These
two studies taken together clearly show the benefit tirofiban can provide ACS
patients, whether the patient is medically managed or undergoes percutaneous
coronary intervention."


Dr. Herrmann continued, "I have personally been involved in the clinical plan
for AGGRASTAT(R) for the past teN years and am looking forward to participating
in Guilford's clinical development activities for AGGRASTAT(R)."


To finance the acquisition, Guilford entered into a financing arrangement with
Paul Capital Partners. Paul Capital Partners, through Paul Royalty Fund, L.P.
and Paul Royalty Fund II, L.P. (the "Paul Royalty Funds") manages more than $950
million of committed capital focused on the healthcare market. Under the
arrangement, the Paul Royalty Funds is providing $42 million to be applied to
the acquisition purchase




price, and will receive a participation in future revenues from certain products
in Guilford's product portfolio (currently AGGRASTAT(R) Injection and GLIADEL(R)
Wafer) and five year warrants to purchase 300,000 shares of Guilford comMon
stock at an exercise price of $9.15.

UBS Investment Bank acted as financial advisor for Guilford in connection with
the transaction.

Conference Call

Guilford has scheduled a conference call to discuss the acquisition on
Wednesday, October 29, 2003 at 11:00 a.m., EST. To participate in the call, U.S.
residents may dial 1-888-425-2604. Participants outside the U.S. should dial
1-706-679-8253.

An audio webcast of the conference call will be broadcast live on the Company's
website at www.guilfordpharm.com, under the Investor Relations section. An audio
replay of the conference call will be available for 48 hours beginning at
approximately 2:00 p.m., EST and running until October 31st at approximately
2:00 p.m. EST. To access the reply, U.S. residents may dial 1-800-642-1687;
non-U.S. residents may dial 1-706-645-9291 and reference conference
identification number 3719197.

Important Information About AGGRASTAT(R)

AGGRASTAT(R) was approved by the Food and Drug Administration (FDA) on May 14,
1998.

AGGRASTAT(R), in combination with heparin, is indicated for the treatment of
acute coronary syndrome, including patients who are to be medically managed and
those undergoing percutaneous transluminal coronary angioplasty (PTCA) or
atherectomy.

AGGRASTAT(R) is contraindicated in patients with known hypersensitivity to any
component of the product; active internal bleeding or a history of bleeding
diathesis within the previous 30 days; or a history of intracranial hemorrhage,
intracranial neoplasm, arteriovenous malformation, or aneurysm. Other
contraindications to AGGRASTAT(R) include: a history of thrombocytopenia
following prior exposure to AGGRASTAT(R); history of stroke within 30 days or
any history of hemorrhagic stroke; major surgical procedure or severe physical
trauma within the previous month; or history, symptoms, or findings suggestive
of aortic dissection. AGGRASTAT(R) is also contraindicated in patients with:
severe hypertension (systolic blood pressure >180 mmHg and/or diastolic blood
pressure >110 mmHg); concomitant use of another parenteral GP IIb/IIIa
inhibitor; or acute pericarditis.

Bleeding is the most common complication encountered during therapy with
AGGRASTAT(R). Administration of AGGRASTAT(R) is associated with an increase in
bleeding events classified as both major and minor bleeding events, by criteria
developed by the Thrombolysis in Myocardial Infarction Study group (TIMI). Most
major bleeding associated with AGGRASTAT(R) occurs at the arterial access site
for cardiac catherterization. Fatal bleedings have been reported. AGGRASTAT(R)
should be used with caution in patients with platelet count <150,000/mm3, in
patients with hemorrhagic retinopathy, and in chronic hemodialysis patients.
Because AGGRASTAT(R) inhibits platelet aggregation, caution should be employed
when it is used with other drugs that affect hemostasis. The safety of
AGGRASTAT(R) when used in combination with thrombolytic agents has not been
established. During therapy with AGGRASTAT(R), patients should be monitored for
potential bleeding. When bleeding cannot be controlled with pressure, infusion
of AGGRASTAT(R) and heparin should be discontinued.

About GP IIb/IIIa Antagonists

Platelets are blood cells that provide an early defense from the potential
complications of vascular injury. When a blood vessel is damaged, platelets
adhere to the site and promote blood clot formation. Clot formation prevents
bleeding and recruits other cells to help heal the damage. While usually a
beneficial process, this can be harmful when a clot forms on a ruptured lipid
plaque within the coronary vasculature.

GP IIb/IIIa antagonists block the ability of platelets to aggregate, inhibiting
clot formation and reducing the potential for cardiac ischemia. Over the last
8-10 years, several large-scale, placebo-controlled clinical trials have
established the efficacy of intravenous GP IIb/IIIa inhibitors for patients with
acute coronary syndrome who are medically managed or those undergoing a
percutaneous coronary intervention (PCI).



PCI is one of the most frequent medical procedures, with approximately 650,000
procedures performed each year in the United States. When patients undergo PCI,
damage is done to the vessel wall. When this occurs, the goal is to prevent
platelets from sticking to the site, aggregating and potentially blocking the
artery.

About Guilford

Guilford Pharmaceuticals Inc. is a fully integrated pharmaceutical company
engaged in the research, development and commercialization of products that
target the hospital and neurology markets. Presently, Guilford markets one
commercial product, GLIADEL(R) Wafer, for the treatment of brain cancer (please
see www.gliadel.com for more information), and has a product pipeline, which
includes a novel anesthetic, AQUAVAN(R) Injection, and drugs for treating
Parkinson's disease and post-prostatectomy erectile dysfunction.

This press release contains forward-looking statements that involve risks and
uncertainties, including those described in the section entitled "Risk Factors"
contained in the Company's Current Report on Form 8-K filed with the SEC on June
11, 2003, that could cause the Company's actual results and experience to differ
materially from anticipated results and expectations expressed in these
forward-looking statements. Among other things, there can be no assurance that
Guilford will be successful in its sales and marketing efforts related to
AGGRASTAT(R), or in its efforts to expand the labeled indication for
AGGRASTAT(R).


CONTACT: Stacey Jurchison, Director, Corporate Communications,
Guilford Pharmaceuticals, (410) 631-5022;
jurchisons@guilfordpharm.com. www.guilfordpharm.com.