-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RBKen8L8gB+QlLXPyMoRo719bcTwD/PGQaarskUqpHKeHn8C2RIjSMTdH/Wxx7Iw 8bIQHuxawqGwaDpEwYnA2g== 0000950133-96-002457.txt : 19961113 0000950133-96-002457.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950133-96-002457 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GUILFORD PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000918066 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 521841960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23736 FILM NUMBER: 96659114 BUSINESS ADDRESS: STREET 1: 6611 TRIBUTARY ST CITY: BALTIMORE STATE: MD ZIP: 21221 BUSINESS PHONE: 4106316300 10-Q 1 GUILFORD PHARMACEUTICALS FORM 10-Q. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 ------------------ COMMISSION FILE NUMBER 0-23736 ------- GUILFORD PHARMACEUTICALS INC. (Exact name of registrant as specified in its charter) - -------------------------------------------------------------------------------- DELAWARE 52-1841960 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 6611 TRIBUTARY STREET, BALTIMORE, MARYLAND 21224 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 410-631-6300 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at November 12, 1996 Common Stock, $.01 par value 13,978,091 - ---------------------------- ------------------------------ 2 GUILFORD PHARMACEUTICALS INC. INDEX
Page (s) ---- PART I. FINANCIAL INFORMATION (UNAUDITED) Item 1. Financial Statements Consolidated Balance Sheets September 30, 1996 and December 31, 1995 3 Consolidated Statements of Operations Three months ended September 30, 1996 and 1995; Nine months ended September 30, 1996 and 1995 4 Consolidated Statement of Stockholders' Equity Nine months ended September 30, 1996 5 Consolidated Statements of Cash Flows Three months ended September 30, 1996 and 1995; Nine months ended September 30, 1996 and 1995 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-14 PART II. OTHER INFORMATION 15-16 SIGNATURES 17
2 3 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 (UNAUDITED) DECEMBER 31, 1995 ASSETS ------------------ ------------------- ------ Current assets: Cash and cash equivalents $ 28,213,811 $ 4,259,531 Short-term investments 47,168,742 11,552,038 Short-term investments - restricted 777,174 250,000 Licensing fee receivable - 555,500 Inventory 135,000 - Other current assets 336,182 291,580 --------------- -------------- Total current assets 76,630,909 16,908,649 Investments - restricted 7,230,163 3,392,284 Notes receivable from employees 29,925 85,476 Property and equipment, net 12,726,923 5,455,791 Other assets 209,577 206,202 --------------- -------------- $ 96,827,497 $ 26,048,402 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable: Trade $ 1,492,289 $ 1,149,743 Construction 290,827 489,960 Bond payable - current portion 941,176 293,469 Term loan payable - current portion 239,431 - Accrued payroll and related costs 702,512 681,000 Accrued expenses and other current liabilities 1,012,085 964,908 Accrued royalties payable 800,000 - --------------- -------------- Total current liabilities 5,478,320 3,579,080 Long-term liabilities: Bond payable, less current portion 6,823,530 4,695,508 Term loan payable, less current portion 3,208,379 - --------------- -------------- Total liabilities 15,510,229 8,274,588 Stockholders' equity: Preferred stock, par value $.01 per share Authorized 4,700,000 shares, none issued - - Series A junior participating preferred stock, par value $.01 per share. Authorized 300,000 shares, none issued - - Common stock, par value $.01 per share. Authorized 20,000,000 shares; 13,966,877 and 10,189,598 (6,793,065 pre-split) issued and outstanding at September 30, 1996 and December 31, 1995, respectively 139,668 101,896 Additional paid-in capital 90,054,175 38,088,498 Notes receivable on common stock (139,500) (139,500) Accumulated deficit (8,503,167) (19,947,437) Deferred compensation (233,908) (329,643) --------------- -------------- Total stockholders' equity 81,317,268 17,773,814 --------------- -------------- $ 96,827,497 $ 26,048,402 =============== ==============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 3 4 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 1996 1995 --------------- -------------- -------------- -------------- Revenues: Contract and license revenue $ 20,000,000 $ - $ 27,600,000 $ - Revenues under collaborative agreements 12,050 9,905 30,751 22,875 --------------- -------------- -------------- -------------- Total revenues 20,012,050 9,905 27,630,751 22,875 Operating expenses: Research and development 5,547,737 2,304,684 12,545,953 5,690,739 Research and development - Gell Pharmaceuticals Inc. 282,944 237,719 706,166 548,999 General and administrative 1,608,078 1,095,009 4,516,448 2,910,901 --------------- -------------- -------------- -------------- Total operating expenses 7,438,759 3,637,412 17,768,567 9,150,639 --------------- -------------- -------------- -------------- Income (loss) from operations 12,573,291 (3,627,507) 9,862,184 (9,127,764) Other income (expense): Interest income 767,317 199,084 1,920,776 523,374 Other income 4,985 33,942 6,061 186,864 Interest expense (157,327) (54,564) (344,751) (125,217) --------------- -------------- -------------- -------------- Net income (loss) $ 13,188,266 $ (3,449,045) $ 11,444,270 $ (8,542,743) =============== ============== ============== ============== Earnings (loss) per common and common equivalent share $ 0.86 $ (0.43) $ 0.81 $ (1.32) =============== ============== ============== ============== Weighted average common and common equivalent shares outstanding 15,378,086 8,002,796 14,214,433 6,486,681 =============== ============== ============== ==============
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 4 5 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
COMMON STOCK NOTES ------------ ADDITIONAL RECEIVABLE TOTAL NUMBER PAID-IN ON COMMON ACCUMULATED DEFERRED STOCKHOLDERS' OF SHARES AMOUNT CAPITAL STOCK DEFICIT COMPENSATION EQUITY --------- ------ ------- ----- ------- ------------ ------ BALANCE, DECEMBER 31, 1995 6,793,065 $ 67,931 38,122,463 (139,500) (19,947,437) (329,643) $ 17,773,814 Issuance of common stock in public offering at $20.00 per share, net of offering costs 2,300,000 23,000 42,880,125 42,903,125 Other issuances of common stock 218,186 2,181 7,605,660 7,607,841 Three-for-two stock split 4,655,626 46,556 (46,556) - Proceeds from Gell Pharmaceuticals relating to the put option 737,999 737,999 Amortization of deferred compensation 754,484 95,735 850,219 Net income for the period 11,444,270 11,444,270 ------------ ----------- ----------- --------- ------------ --------- ------------- BALANCE, SEPTEMBER 30, 1996 13,966,877 $ 139,668 90,054,175 (139,500) (8,503,167) (233,908) $ 81,317,268 ------------ ----------- ----------- --------- ------------ --------- -------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 6 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 13,188,266 $ (3,449,045) $ 11,444,270 $ (8,542,743) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 307,339 173,894 796,951 359,946 Noncash compensation expense 742,810 41,423 850,219 90,159 Changes in assets and liabilities: Licensing fee receivable - - 555,500 - Inventory (135,000) - (135,000) - Notes receivable 29,733 1,862 55,551 24,056 Other current assets (176,764) (29,397) (44,602) (92,405) Other assets (10,640) (1,798) (3,375) (24,917) Accounts payable (954,183) (30,897) 143,413 (412,345) Accrued expenses and other liabilities 1,335,300 256,012 868,688 494,467 -------------- ------------- ------------- ------------- Net cash provided by (used in) operating activities 14,326,861 (3,037,946) 14,531,615 (8,103,782) -------------- ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in purchases of property and equipment (1,067,192) (824,357) (8,068,083) (2,702,175) Maturities of short-term investments 21,443,054 17,873,258 41,940,675 27,321,992 Purchases of short-term investments (19,199,529) (25,896,670) (81,395,258) (32,583,471) Restricted investments (539,153) - (527,174) - -------------- ------------- ------------- ------------- Net cash provided by (used in) investing activities 637,180 (8,847,769) (48,049,840) (7,963,654) -------------- ------------- ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuances of common stock 53,177 18,037,182 50,510,966 18,204,299 Proceeds from bond and term loan issuances 2,165,571 545,507 6,458,833 2,771,892 Proceeds from Gell Pharmaceuticals relating to the put option 289,197 237,719 737,999 548,999 Principal payments on bond payable (156,862) - (235,293) - -------------- ------------- ------------- ------------- Net cash provided by financing activities 2,351,083 18,820,408 57,472,505 21,525,190 -------------- ------------- ------------- ------------- Net increase in cash and cash equivalents 17,315,124 6,934,693 23,954,280 5,457,754 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD 10,898,687 2,562,917 4,259,531 4,039,856 -------------- ------------- ------------- ------------- CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $ 28,213,811 $ 9,497,610 $ 28,213,811 $ 9,497,610 ============== ============= ============= ============= Supplemental disclosures of cash flow information: Interest paid, net of amount capitalized $ 99,771 $ 51,518 $ 316,717 $ 101,682 Noncash investing and financing activities: Collateral transferred from unrestricted to restricted investments $ 2,087,140 $ 381,855 $ 3,837,879 $ 1,940,325 Issued shares of common stock in lieu of cash bonus - 28,209 - 28,209 Issuances of common stock to executive officers - - - 233,725
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 6 7 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 (UNAUDITED) 1. BASIS OF PRESENTATION The consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K/A2 for the year ended December 31, 1995. In the opinion of the Company's management, any adjustments contained in the accompanying unaudited consolidated financial statements are of a normal recurring nature, necessary to present fairly its financial position, results of operations, changes in stockholders' equity and cash flows for the respective periods as set forth in the Index to Financial Information. Interim results are not necessarily indicative of results for the full fiscal year. On October 15, 1996, the Company's Board of Directors declared a three-for-two stock split in the form of a common stock dividend on the Company's common stock, payable November 12, 1996, to shareholders of record on October 28, 1996. All applicable common share and per common share data have been adjusted to reflect the stock split as though such split had been effective for all periods presented. 2. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Guilford Pharmaceuticals Inc. and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions have been eliminated. 7 8 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. ACCOUNTING POLICIES During the third quarter, the Company adopted or implemented the following accounting policies. INVENTORIES Inventories are stated at the lower of cost or market. At September 30, 1996 inventories consist of raw materials acquired subsequent to U.S. Food and Drug Administration ("FDA") clearance on September 23, 1996 of GLIADEL(R) wafer ("GLIADEL") for recurrent glioblastoma multiforme. DEVELOPMENT STAGE COMPANY Commencing in the second quarter of 1996, the Company has recognized revenue from various corporate partnering activities and expects that it may continue to recognize additional revenue from such sources in the future. In addition, the Company expects product sales and royalty arrangements related to future sales of GLIADEL to commence prior to the end of the first quarter of 1997. Accordingly, the Company believes it is no longer in the development stage and has removed the references and requirements of SFAS 7 (Accounting and Reporting by Development Stage Companies). 4. EARNINGS PER SHARE The computation of earnings per share was based on the weighted average number of common shares outstanding during the periods, adjusted for the Company's 3-for-2 stock split (see note 1 above) and to include, when their effect is dilutive, common stock equivalents consisting of warrants, stock options and put rights. 5. CONSULTING AGREEMENTS Effective April 18, 1996, the Company entered into two consulting agreements. Such agreements are intended to enhance the Company's ability to develop new polymer technologies and products for the delivery of chemotherapeutics in oncological indications where local tumor recurrence is likely and controlled release is expected to be more effective than current therapies. Pursuant to these agreements the Company granted options to each of two consultants to purchase up to 225,000 shares of the Company's Common Stock, valid for 10 years from issuance, with varying exercise prices and varying vesting periods based on either the passage of time or based upon the achievement of certain milestones. Certain milestones, if ever achieved, would result in accelerated vesting of up to 150,000 of the aforementioned options for each consultant based on the agreements. The Company recognized $106,000 in cash compensation and, in accordance with FAS 8 9 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 123 (Accounting for Stock Based Compensation), $711,000 in non-cash compensation expense relating to that portion of the consulting agreements recognizable during the three months ended September 30, 1996, and recognized $151,000 in cash compensation and $755,000 in non-cash compensation expense for the nine months ended September 30, 1996, relating to the aforementioned charges. The Company expects it will be required to charge varying amounts (up to an additional $2.6 million in the aggregate) of non-cash compensation expense to operations through 2001 relating to such contracts. 6. CONTRACT REVENUES Pursuant to the Company's Marketing, Sales and Distribution Rights Agreement (together with related agreements, the "RPR Agreements") with Rhone-Poulenc Rorer Pharmaceuticals Inc. ("RPR"), the Company recognized non-refundable revenues of $20.0 million for the three months ended September 30, 1996 upon FDA clearance of GLIADEL for recurrent glioblastoma multiforme and $27.5 million for the nine months ended September 30, 1996. 7. INCOME TAXES As of December 31, 1995, the Company had net operating loss ("NOL") carryforwards available in the United States for federal income tax purposes of approximately $18.1 million which will begin to expire at various dates between 2008 to 2010. NOL carryforwards are subject to ownership change limitations and may also be subject to various other limitations on the amounts to be utilized. Additionally, through December 31, 1995, the Company had foreign tax credit carryforwards of $56,000 expiring in 2000, and general business tax credit carryforwards of $209,000 expiring between 2008 and 2010. Income tax expense for the nine months ended September 30, 1996 differs from the expected rate and hence no provision is shown on the Statement of Operations for the following reasons: Computed expected tax provision (in millions) - Federal and State $3.9 Change (reduction) in valuation allowance (3.9) ----- Income tax expense - =====
Realization of net deferred tax assets related to the Company's NOL carryforwards and other items is dependent on future earnings, which are uncertain. Accordingly, a valuation allowance was established by the Company equal to its net deferred tax assets resulting in no net deferred tax assets at September 30, 1996. 9 10 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Any statements made by Guilford Pharmaceuticals Inc. (together with its subsidiaries, "Guilford" or the "Company") in this quarterly report that are forward looking are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that these forward looking statements involve risks and uncertainties that could cause the actual results to differ from predicted results. Information concerning factors that could affect such results are set forth herein and in the Company's filings with the Securities and Exchange Commission, including the Company's Current Report on Form 8-K filed on September 24, 1996 (the "September 1996 Form 8-K"). *** GENERAL Guilford is a biopharmaceutical company engaged in the development of novel products in two principal areas: (i) targeted and controlled drug delivery systems using proprietary biodegradable polymers for the treatment of cancer and other diseases and (ii) therapeutic and diagnostic products for neurological diseases and conditions. Founded in July, 1993, the Company has primarily focused its efforts to date on commercializing GLIADEL, its proprietary biodegradable polymer for delivering the chemotherapeutic agent, BCNU, for brain cancer and on developing its second product candidate, DOPASCAN(TM) injection, a radiolabeled imaging agent for the diagnosis and monitoring of Parkinson's Disease. Additionally, the Company has in-licensed certain technologies that may be useful in connection with the prevention and treatment of certain neurological diseases and conditions and has accelerated research and development activities with respect to certain of these technologies. In September 1996, the Company received marketing clearance from the FDA of GLIADEL for the treatment of recurrent glioblastoma multiforme following surgery for tumor removal. Since inception, the Company has received approximately $86 million in net cash proceeds from sales of equity securities. This amount includes $7.5 million from the sale of equity securities to the parent of RPR pursuant to the RPR Agreements. A substantial part of the Company's activities since inception has been devoted to raising capital, recruiting personnel, initiating product research programs and clinical trials, constructing and validating its GLIADEL manufacturing facility and filing an NDA for GLIADEL. The Company had 78 employees at December 31, 1995, 108 employees at June 30, 1996 and 124 employees at September 30, 1996. The Company expects to recognize revenues in the future primarily in the form of transfer prices and royalties related to the sale of GLIADEL and from existing or new corporate collaborators for the Company's existing and future product candidates. As a result of the FDA clearance of GLIADEL and anticipated sales of GLIADEL to its corporate partners, which the Company expects will begin prior to the end of the first quarter of 1997, the Company believes it is no longer in the development stage. These forward looking statements are subject to certain risks and uncertainties 10 11 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL (CONTINUED) discussed below, and there can be no assurance that the Company will recognize revenues from these sources or other sources in the future. The Company incurred net operating losses from inception through the first quarter of 1996. The Company realized net income in the second and third quarters of 1996 due to a non-refundable $7.5 million rights payment made in June 1996, and a non-refundable $20 million rights payment made in September 1996 following FDA clearance for GLIADEL, by RPR pursuant to the RPR Agreements. While the Company was profitable due to certain payments received from RPR under the RPR Agreements in both the second and third quarters of 1996, the Company's results of operations will vary significantly from quarter-to-quarter and year-to-year and will depend, in part, on the timing and receipt, if ever, of further regulatory approvals for GLIADEL, regulatory approvals for the Company's other product candidates, receipt of any future license fees, milestone payments, transfer prices and royalties related to product sales, including sales of GLIADEL, expenditures related to the Company's research and development and manufacturing efforts, and the extent and timing of costs related to the Company's patenting activities and other activities undertaken in connection with the preservation and extension of the Company's intellectual property rights. The Company expects that expenses related to research and product development, preclinical testing, clinical trials, regulatory matters, operations, manufacturing and general and administrative expenses will continue to increase as the Company seeks to commercialize GLIADEL in conjunction with its partners and to develop its other technologies and potential products. The Company's ability to achieve consistent profitability will depend, among other things, upon its ability, either alone or with others, to develop its product candidates successfully, conduct clinical trials, obtain required regulatory approvals, manufacture at reasonable cost and successfully market its product candidates and enter into collaborative arrangements and license agreements on acceptable terms. Future sales of GLIADEL are subject to certain risks, including the following. The RPR Agreements do not impose any minimum purchase requirements on the part of RPR, and there can be no assurance that RPR will be successful in marketing and selling GLIADEL. GLIADEL represents a novel approach to the treatment of brain cancer, and there can be no assurance of broad acceptance by the medical or patient communities. The Company currently relies on a single supplier for BCNU, the chemotherapeutic agent used in GLIADEL, and on a single manufacturing facility to produce GLIADEL. Inability to secure timely, sufficient, or GMP quality supply of BCNU, unforeseen plant shutdowns due to personnel or plant or equipment problems, risks associated with regulatory compliance (including the need to manufacture GLIADEL in accordance with FDA's Good Manufacturing Practice regulations), and the potential inability to meet future product demand, among others, could adversely affect the timing and extent of any future revenues 11 12 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL (CONTINUED) from GLIADEL sales. For discussion of these and other risks, see the September 1996 Form 8-K, particularly those paragraphs specifically addressing the aforementioned risks. RESULTS OF OPERATIONS Comparison of the Three and Nine Month Periods Ended September 30, 1996 and 1995. The Company recognized $20.0 million in revenues for the three months ended September 30, 1996 compared to $10,000 for the same period in 1995. The increase in revenues for the quarter is due to a $20 million one-time non-refundable rights payment from RPR pursuant to the RPR Agreements related to FDA clearance of GLIADEL. For the nine months ended September 30, 1996 revenues totaled $27.6 million compared to $23,000 for the same period in 1995. For the nine months ended September 30, 1996, in addition to the aforementioned payment, the Company received a $100,000 licensing fee payment pursuant to the Company's Licensing and Distribution Agreement with Orion Farmos related to the filing of Guilford's NDA for GLIADEL and a one-time non-refundable $7.5 million rights payment from RPR pursuant to the RPR Agreements. Research and development expenses increased to $5.8 million for the three months ended September 30, 1996 compared to $2.5 million for the same period in 1995. The increase from 1995 to 1996 is due to the expansion of the Company's research and development programs, scale-up of its manufacturing capabilities and costs associated with clinical research related to the Treatment IND for GLIADEL and Phase II(b) clinical trials for DOPASCAN(TM) injection, a $800,000 royalty payment due by the Company on the revenue received, and approximately $711,000 in non-cash compensation expense related to certain options awarded to non-employees (see note 5 of Notes to Consolidated Financial Statements). For the nine months ended September 30, 1996 research and development expenses increased to $13.3 million compared to $6.2 million for the same period in 1995. This increase was the result of the overall increase in activities as described above, including an aggregate of $1.1 million in royalty expenses incurred by the Company related to certain revenue received. These activities resulted in an increase in the number of employees, salaries and other personnel related costs and the purchase of additional laboratory supplies and consumables along with outside services including contract research and consulting services. General and administrative expenses increased to $1.6 million for the three months ended September 30, 1996 compared to $1.1 million for the same period in 1995. The increase for the three months is due to an increase in the number of employees, salaries, and other personnel related costs required to support the Company's increasing business activities, and outside services related to patent activities as well as professional fees. For the nine months ended September 30, 1996 general and administrative expenses increased to $4.5 million compared to $2.9 million for the same period in 1995. This increase was the result of the overall increase in activities as described above. 12 13 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED) Interest income increased to $767,000 for the three months ended September 30, 1996 compared to $199,100 for the same period in 1995. For the nine months ended September 30, 1996 interest income increased to $1.9 million compared to $523,000 for the same period in 1995. The increase is primarily due to an increase in the average invested capital resulting from equity offerings and from cash received pursuant to the Company's agreements with RPR. Interest expense increased to $157,000 for the three months ended September 30, 1996 compared to $55,000 for the same period in 1995. For the nine months ended September 30, 1996 interest expense increased to $345,000 compared to $125,000 for the same period in 1995. The increase in interest expense is primarily related to increased borrowings under the Company's loan agreements providing for the construction of manufacturing, administrative and research and development facilities. The Company took a non-cash charge to operations of $711,000 as compensation expense relating to certain consulting agreements recognizable during the quarter ended September 30, 1996. Such agreements are intended to enhance the Company's ability to develop new polymer technologies and products for the delivery of chemotherapeutics in oncological indications where local tumor recurrence is likely and controlled release is expected to be more effective than current therapies. The Company expects it will be required to charge varying amounts (up to an additional $2.6 million in the aggregate) of non-cash compensation expense to operations through 2001 relating to such agreements (see note 5 of Notes to Consolidated Financial Statements). LIQUIDITY AND CAPITAL RESOURCES The Company's cash and short-term investments were $83.4 million at September 30, 1996. Included in this amount is $8.0 million of restricted cash held as collateral with respect to the Company's indebtedness. The Company has incurred an accumulated deficit at September 30, 1996 of $8.5 million and may continue to incur operating losses in the future. The Company expects to fund it operations from its current working capital, interest earned on invested capital, sales of GLIADEL, collaborative or other research and development agreements, commercialization and marketing arrangements with corporate partners, and believes such sources will be adequate to fund operations over at least the next two years. However, this forward-looking statement is subject to certain risks and uncertainties, certain of which are outlined above and in the Company's September 1996 Form 8-K, that could result in the need to raise additional capital before that time to fund operations. There can be no assurance that changes in the Company's research and development plans and expenditures, costs related to the Company's patenting activities and other activities related to the preservation and extension of the Company's intellectual property rights, or other changes in the level of anticipated expenditures will not result in the earlier expenditure of the Company's capital reserves and other sources of revenue. To the extent necessary, the Company may be required to raise additional capital through a 13 14 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) combination of public and private financings. The Company's ability to raise future capital on acceptable terms is dependent on conditions in the public or private equity markets and the performance of the Company as well as the overall performance of other companies in the biopharmaceutical and biotechnology sectors. There can be no assurance that any required future financing arrangements will be available on acceptable terms, or at all. Capital expenditures of $8.1 million were incurred in the nine months ended September 30, 1996 compared to $2.7 million for the same period in 1995. These capital expenditures relate to the construction of research and development laboratories and expansion of the Company's GLIADEL manufacturing facility and administrative offices. Additionally, such expenditures included amounts used to purchase laboratory and manufacturing equipment to support the Company's activities. The Company has utilized its available borrowings under the existing $8.0 million loan agreement with Signet Bank entered into in December 1994 and will continue to finance certain in-process tenant improvements related to the construction of research and development laboratories and other related areas under an additional $4.2 million term loan obtained from Signet Bank in February, 1996. At September 30, 1996, the Company had drawn down $3.4 million under this term loan and anticipates drawing down the remainder by the end of fiscal 1996. In September 1996, the Company finalized and entered into a $5.0 million operating lease arrangement with GE Capital Corporation for the financing of certain equipment. Such financing, along with other sources, is expected to provide for the Company's equipment needs at least through the first half of 1997. At September 30, 1996, $4.2 million were available under this arrangement to lease additional equipment. Additional capital which may be required to provide for polymer product manufacturing capacity expansion is expected to be available pursuant to a loan agreement with the parent company of RPR as part of the RPR Agreements, as well as other potential sources. Under the RPR Agreements, the Company has the right to borrow up to an aggregate of $7.5 million under certain conditions for such purposes, $4.0 million available no earlier than January 2, 1997, and the remainder no earlier than 12 nor later than 18 months following funding of the initial tranche. Any principal amounts borrowed under this loan agreement are due five years from the date borrowed and will carry an interest rate equal to the lowest rate paid by the parent of RPR from time to time on its most senior indebtedness. Both principal and interest due under this agreement may, at the Company's election, be repaid by off-setting certain amounts due to the Company under the RPR Agreements While the Company expects to use the above-described sources to fund certain of its future capital and operational expenditures, it may elect to fund these expenditures through internal resources or through other sources that may be available to it. 14 15 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES PART II. - OTHER INFORMATION Item 1. Legal Proceedings: None Item 2. Changes in Securities: None Item 3. Defaults in Senior Securities: None Item 4. Submission of Matters to a Vote of Security Holders: None Item 5. Other Information: None Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits: 10.46 DOPASCAN Supply Agreement, dated July 10, 1996, by and among the Company and Nordion International Inc. and Nordion Europe S.A.* 10.47 Bulk Pharmaceutical Sales Contract, dated September 23, 1994, between the Company and Aerojet-General Corporation* 10.48 Amendments to executive officer employment letter agreements 10.49 Equipment Lease, dated September 18, 1996, between the Company and General Electric Capital Corporation. 11.1 Statement Re: Computation of Per Share Earnings 27.3 Financial Data Schedule - ----------------------------------- *Confidential Treatment has been requested with respect to certain portions of this document 15 16 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES PART II. - OTHER INFORMATION (b) Report on Form 8-K On September 24, 1996, the Company filed a current report on Form 8-K in connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, identifying important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements made by or on behalf of the Company. 16 17 GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES 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 thereunto duly authorized. Guilford Pharmaceuticals Inc. Date: November 12, 1996 /s/ Craig R. Smith, M.D. ------------------------------------------- Craig R. Smith, M.D. President and CEO Date: November 12, 1996 /s/ Andrew R. Jordan --------------------------------------------- Andrew R. Jordan Vice President and Chief Financial Officer (Principal Accounting Officer) 17 EX-10.46 2 SUPPLY AGREEMENT. 1 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION EXHIBIT 10.46 DOPASCAN SUPPLY AGREEMENT This SUPPLY AGREEMENT is dated as of July 10, 1996 by and between GUILFORD PHARMACEUTICALS INC., of 6611 Tributary Street, Baltimore, Maryland 21224 U.S.A. ("Guilford"), on the one hand, and NORDION INTERNATIONAL INC., of 447 March Road, P.O. Box 13500, Kanata, Ontario K2K 1X8 CANADA ("Nordion North America"), and its wholly-owned subsidiary NORDION EUROPE S.A., of Zoning Industriel - B-6220, Fleurus, BELGIUM ("Nordion Europe"; Nordion North America and Nordion Europe collectively, "Nordion"), jointly and severally, on the other. WHEREAS, Guilford is the exclusive worldwide licensee of patent rights relating to radiolabeled RTI-55 (or Beta-CIT) and is developing same as an imaging diagnostic for Parkinson's Disease under the name, DOPASCANTM (the "Product"); and WHEREAS, Guilford and Nordion North America are parties to a Development and Supply Agreement, dated as of October 12, 1995 (the "North American Agreement"), pursuant to which Nordion North America has validated equipment, developed the process and filed a Type II Drug Master File with the U.S. Food & Drug Administration ("FDA") in respect of and is supplying Guilford's needs in a U.S. Phase II multi-center clinical trial for the Product; and WHEREAS, Guilford seeks a third party contractor to supply Product for Phase II clinical trials to be conducted in Europe (the "European Phase II Clinical Trials"); and WHEREAS, Guilford desires to retain Nordion, and Nordion desires to be retained by Guilford, to synthesize and supply the Product for European Phase II Clinical Trials (and thereafter, subject to mutually satisfactory completion of this Agreement and a separate agreement if any on mutually acceptable terms including pricing, for Phase III Clinical Trials and/or commercial distribution in the U.S., Europe and/or elsewhere) on the terms and conditions contained herein; NOW, THEREFORE, in consideration of the mutual representations and covenants contained herein, the parties hereto agree as follows: 1. Scope of Work. (a) Nordion will, using due care and commercially reasonable best efforts, perform the work specified in this Agreement relating to equipment procurement, configuration and validation, and perform regulatory documentation respecting the supply of the Product for use in European Phase II Clinical Trials as specified in Schedule A attached hereto, utilizing the equipment specified in Schedule B attached hereto (the procurement of each piece of which is subject to the prior approval of Guilford) ("Equipment") (collectively, the "Work"), and report on and discuss the progress and results thereof from time to time at the request of Guilford during the term of this Agreement. The parties understand and 2 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION agree that the Work and the supply of Product contemplated by this Agreement are to support of Guilford's product, clinical and regulatory development plans respecting the Product, and ultimately for obtaining approval from European and other governmental authorities around the world for marketing of the Product. Nordion will comply with all applicable U.S. and European Good Laboratory Practices ("GLP"), U.S. and European Good Manufacturing Practices ("GMP") and other regulations in order for the Work and the supplied Product to meet all applicable European regulatory requirements for the conduct and completion of the European Phase II Clinical Trials. Nordion shall prepare any European equivalent of the FDA Chemistry, Manufacturing and Controls section of any filing with European regulatory authorities by for the Product. Regulatory submissions will be prepared according to European Pharmacopeia requirements and monographs. (b) Guilford will supply Nordion Europe with sufficient quantities of RTI-89 as stated in Schedule F attached hereto from time to time for Nordion Europe to timely perform the obligations under this Agreement, at no charge to Nordion Europe, F.O.B. Nordion Europe's Fleurus, Belgium manufacturing facility. 2. Schedule. Nordion shall use commercially reasonable best efforts to perform and complete the Work, and the various components thereof, on or before November 4, 1996, pursuant to the timetable set forth in Schedule A attached hereto, provided that such deadlines will be adjusted appropriately due to delay caused by Guilford or force majeure under Section 9 below. The parties agree that, in view of the Work and the importance to Guilford of the supply of Products pursuant to this Agreement, time and quality are of the essence in this Agreement. 3. Consideration. As complete and exclusive consideration for the performance of the Work set forth on Schedule A attached hereto, Guilford agrees to pay Nordion Europe the amounts set forth on Schedule C attached hereto (the "Consideration"), which shall be earned and payable in accordance with that Schedule. 4. Production and Supply. (a) During the term of this Agreement, Guilford agrees to purchase from Nordion Europe, and Nordion Europe agrees to produce and supply, Guilford's entire requirement of Product for the European Phase II Clinical Trial, which Guilford agrees will not be less than [ * ] Batches (as defined below) of [ * ] Vials (as defined below) each. Nordion Europe warrants that all such Product supplied by Nordion Europe shall meet the specifications set forth in Schedule D attached hereto as delivered at the clinical sites (the "Specifications") and further represents and warrants that the Specifications and the methodologies used to synthesize the Product for use in European Phase II Clinical Trials shall meet all European regulatory requirements in order to conduct such clinical trials and to support Guilford's (or its designee's) application for approval to market the Product in Europe. Nordion Europe will use its commercially reasonable best efforts to supply Product in the quantities, at the times and at the locations designated by Guilford in connection with the European Phase II Clinical Trials. - 2 - 3 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION (b) Guilford or its designate shall forward orders to Nordion Europe's address of Zoning Industriel - B-6220, Fleurus, Belgium, setting out the recipient, shipping address, protocol number, IND or European equivalent number, radioactive license number of the Product, quantity and other applicable instructions and information. Nordion Europe shall process such orders and ship the requested Product ex-Works Nordion Europe's facility in Fleuris, Belguim by mutually agreed routings and carriers, appropriately packaged and documented, within 48 hours of such order therefor as set forth on Schedule D attached hereto. Upon Nordion Europe's request, Guilford will obtain and provide to Nordion Europe, prior to shipment by Nordion Europe, documentation evidencing proper legal authority for the receipt and possession of the Product by the recipient. (c) Nordion Europe will manufacture and deliver to the clinical sites Product in batches ("Batches") of a minimum of [ * ] vials ("Vials"). Each Vial shall constitute one dose of Product suitable for administration at the clinical site, meeting the radioactivity (5 mCi) and other Specifications at "Reference" (i.e., noon, Central European Time on the day immediately following the day of Product synthesis). Prior to (and where appropriate, following) each shipment, Nordion Europe shall test each Batch in accordance with the protocol set forth on Schedule E attached hereto and as may be modified by Guilford from time to time and shall furnish Guilford (attention: Christina Eaton, Manager of Quality Control) immediately upon manufacture of each Batch and quality control release and shipment thereof with a certificate of analysis, batch records, accounting of materials and other documents in form and content satisfactory to Guilford, and retain all relevant records pertaining thereto as may be required by GMP regulations and European Pharmacopeia regulations. (d) Guilford shall have the right, at reasonable times and upon reasonable prior notice, to inspect Nordion Europe's development and manufacturing facilities in order to confirm Nordion Europe's compliance with GLP, GMP and other applicable European requirements for human pharmaceutical and testing protocols, conduct quality control/quality assurance audits of the Work and/or the supply of Product under this Agreement and otherwise in connection with regulatory matters relating to the conduct of the European Phase II Clinical Trials. In the event that Guilford observes a condition which causes it to believe that the Product or its method of development and production, tests, record keeping or other matters is not in compliance with GLP, GMP or other regulatory standards applicable to the development of the Product and the conduct of the European Phase II Clinical Trials, Nordion Europe and Guilford shall immediately meet (by conference telephone call or otherwise as appropriate) to discuss the concerns and any additions or modifications to bring the facilities, procedures or other matters into compliance. The parties agree to use their commercially reasonable best efforts to take all steps necessary to bring the production of the Product into full compliance with all applicable regulations and administrative requirements. In the event the parties cannot resolve the issue of compliance, a duly qualified third party expert in applicable European health regulatory requirements acceptable to both parties and bound by confidentiality, shall be engaged to resolve the issue, and the decision by such third party expert shall be binding. The cost incurred with respect to said expert shall be borne by Guilford. In the event the parties cannot agree on such an expert within 10 days, the parties agree that a qualified internal or external expert named by The Weinberg Group, Inc. of Washington, D.C. shall be accepted by the parties. (e) Nordion Europe agrees to permit European regulatory authorities and the FDA to inspect Nordion Europe's product development, manufacturing and other facilities (including the Fleurus facility) and to cooperate fully with European regulatory authorities and the FDA in connection with Guilford's conduct of the European Phase II Clinical Trials and Guilford's regulatory filings relating - 3 - 4 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION thereto, including furnishing information to the European regulatory authorities and the FDA at Guilford's, the European regulatory authorities' or the FDA's request, as the case may be. Guilford will reimburse Nordion's direct out-of-pocket expenses incurred in furnishing any such information to the European regulatory authorities and/or the FDA. (f) Without limiting any rights or remedies available to Guilford, in the event that defective Product or Product not meeting the Specifications is shipped by Nordion Europe, Guilford, at the request of Nordion Europe, shall have the right to cause such Product to be returned to Nordion Europe or destroyed, and Nordion Europe shall on 24 hours notice as requested by Guilford or its designate re-ship conforming Product, all at Nordion Europe's cost. (g) Guilford shall supply sufficient quantities of RTI-89, as set forth in Section 1.(b) above. (h) Nordion Europe will use due care in the setup, operation, calibration and maintenance of the Equipment, normal wear and tear excepted. (i) Nordion North America covenants to take all necessary and desirable actions (at its sole cost and expense) to furnish Nordion Europe with all information in Nordion North America's possession (including but not limited to production and analytical processes) regarding the Product necessary to enable Nordion Europe to meet its obligations under this Agreement. 5. Price. (a) Independent of any sums paid by Guilford to Nordion Europe with respect to the Work as set forth in Schedule A, attached hereto, Guilford shall pay to Nordion Europe during the European Phase II Clinical Trials the following purchase prices based on quantities of Product shipped as follows: (i) [ * ] per Batch; and (ii) [ * ] per Vial, if any, ordered by Guilford in excess of the minimum number of vials per Batch. Such prices shall be exclusive of any additional shipping, handling, customs and all other charges attendant to delivery of Product at the clinical sites as contemplated in this Agreement, which charges shall be for the account of Guilford. (b) Guilford agrees to pay for each quantity of shipped Product within 30 days from receipt of Nordion Europe's invoice therefor and the corresponding certificate of analysis and batch records. 6. Term. This Agreement shall commence as of the date first appearing above and (unless earlier terminated in accordance with the terms hereof) shall expire upon the earlier of (i) July 31, 1997 and (ii) completion of the Work and the European Phase II Clinical Trials. 7. Termination. (a) Prior to completion by Nordion of the Work, this Agreement may be terminated - 4 - 5 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION upon 10 days' written notice by Guilford. Upon receipt of any such termination notice, Nordion shall use its commercially reasonable best efforts to wind down the Work as quickly and economically as possible. Upon any such termination: (i) Nordion shall be entitled to all payments earned and due (or to become due) to Nordion as set forth in Schedule C attached hereto; and (ii) Guilford shall reimburse Nordion for all direct out-of-pocket expenditures relating to performance of the Work not covered by (i) above, including any cancellation fees or penalties unavoidably incurred by Nordion, against supporting documentation in reasonable detail. (b) Following completion of the Work as set forth in Schedule A attached hereto, this Agreement may be terminated upon 10 days' written notice by Guilford in the event Guilford elects for any reason in its sole discretion to terminate the European Phase II Clinical Trials; provided however, that in the event Guilford has not yet ordered the [ * ] Batch minimum requirement set forth in Section 4 hereof (and Guilford is not terminating this Agreement pursuant to subsections 7(c) or (d) below, in which case no further payments will be due under this subsection 7(b)), Guilford shall pay to Nordion Europe upon such early termination under this subsection 7(b) a sum equal to the difference, if any, between [ * ] and the amount paid or payable by Guilford to Nordion Europe hereunder for Batches ordered by Guilford pursuant to Section 4 above. (c) This Agreement may be terminated by either party upon material breach by the other and failure to cure within 30 days following written notice of demand to cure, without prejudice to any and all rights, remedies and defenses available to the parties hereto. (d) This Agreement may be terminated by either party in the event the other party (i) applies for or consents to the appointment of a receiver, conservator, trustee, liquidator, custodian or other judicial representative for itself or any substantial portion of its assets or properties; (ii) admits in writing its inability to pay its debts as they become due; (iii) makes an assignment for the benefit of its creditors; (iv) has an order for relief filed by a bankruptcy court for or against it or is adjudicated insolvent; or (v) files a voluntary petition admitting bankruptcy or an arrangement with creditors or takes advantage of any bankruptcy, insolvency, readjustment or debt, dissolution or liquidation law or statute, or files an answer admitting the material allegations of a petition filed against it in any proceeding; (vi) or a decree is entered by any court of competent jurisdiction approving a petition seeking reorganization or appointing a receiver, conservator, trustee, liquidator, custodian or other judicial representative, and such order, judgment or decree continues in effect for a period of sixty (60) consecutive days. (e) The accrued rights and obligations of the parties shall not be affected by any termination of this Agreement. Furthermore, upon termination of this Agreement for any reason by any party, and irrespective of any claims, rights or remedies either party may have against the other under this Agreement, Nordion agrees to deliver immediately to Guilford: (i) all work product (including partial results, drafts and notes, in all tangible media including electronic format, works in progress and patents, know-how and other intellectual property) created or worked on by Nordion in, and relating directly to, the performance of its obligations under this Agreement (provided that, for the avoidance of doubt, nothing herein shall be deemed to require Nordion to deliver or transfer its interest in intellectual property owned by it prior to commencement of performance under this Agreement); (ii) any inventory - 5 - 6 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION of Product or precursors thereto; (iii) any materials received from Guilford or other sources in order for Nordion to perform its obligations under this Agreement; (iv) all Equipment procured by Nordion (shipped in accordance with Guilford's instructions at Guilford's cost and risk), provided that, in the event removal of any semi-automatic dispenser purchased and commissioned by Nordion pursuant to this Agreement is not practical, the parties shall negotiate in good faith regarding a fair disposition of same; and (v) a report in reasonable detail outlining the status of the foregoing, and to do all things and execute documents as Guilford may request to transfer the Drug Master File or European equivalent to Guilford or its designate, all so that such termination or the pursuit of any such claims, rights and remedies shall not interfere with the timely development of the Product by Guilford in its absolute discretion. 8. Indemnities. (a) Each party shall indemnify and hold harmless the other and such other's directors, officers, shareholders, employees and agents ("Indemnitees") from and against all losses, costs or damage (including reasonable attorney fees and expenses, including allocated in-house legal costs) suffered or incurred by Indemnitees in respect of damage to or destruction of property, personal injury or death which may be caused by or arise from its negligence or that of its directors, officers, employees, agents, or representatives, except to the extent of the Indemnitees' negligence or willful misconduct. (b) If Nordion is subject to allegations of or sued for patent infringement or infringement of other intellectual property rights anywhere in the world with respect to its pre-clinical and clinical manufacture and distribution of the Product pursuant to the terms of this Agreement initiated by a third party asserting infringement of its rights respecting the Product, then Guilford will indemnify Nordion and hold Nordion harmless and defend against such suits. Such indemnification is conditioned upon Nordion Europe's prompt notification to Guilford of such suit. Guilford shall, at its expense and sole discretion, have control of such litigation and all matters related thereto, including settlement. (c) This Section 8 will survive any termination of this Agreement. 9. Force Majeure. Neither party shall be held liable to the other for default or delay in the performance of its obligations under this Agreement due to an act of God, accident, fire, flood, storm, riot, sabotage, explosion, strike, labor disturbance, national defense requirements, governmental law, ordinance rule or regulation, whether valid or invalid, inability to obtain electricity or other types of energy, raw materials, labor, equipment or transportation, or any other event beyond its reasonable control. Each party shall give the other immediate notice of any occurrence of any such event of force majeure and shall use its commercially reasonable best efforts to resolve any such occurrence. 10. Confidentiality. (a) Nordion acknowledges that it may be provided with and develop confidential and/or proprietary information relating to Guilford, the Product, the Work, and related matters in the course of its performance under this Agreement. During the term of this Agreement and thereafter for a period of fifteen (15) years, Nordion agrees not, either directly or indirectly, to use for its own benefit or disclose - 6 - 7 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION to any person, company or business any information received or derived from Guilford except to the extent such information: (i) was in the public domain at the time Nordion learned of such information under this Agreement; (ii) comes into the public domain through no fault of Nordion; (iii) except for information covered by Section 10 of the North American Agreement, was in Nordion's possession at the time it learned of such information under this Agreement, and this can be demonstrated with sufficient documentary evidence; (iv) is obtained by Nordion from third parties not directly or indirectly under an obligation of confidentiality to Guilford, and Nordion can so demonstrate with sufficient documentary evidence; (v) is developed independently by Nordion without reference to such information, and this can be so demonstrated with sufficient documentary evidence; or (vi) is required by law or requested by the European regulatory authorities or the FDA in connection with Guilford's development of or clinical use of the Product. (b) Nordion may provide Guilford from time to time under this Agreement with confidential and/or proprietary information relating to Nordion and its development and manufacturing processes and other matters. Guilford will keep such information (other than information subject to the exceptions set forth in Section 10(a)(i) through (vi) above, but with "Guilford" and "Nordion" substituted for each other in (i) through (v)) confidential, provided that nothing herein shall be deemed to limit Guilford from developing the Product and using the information and work commissioned by Guilford and furnished by Nordion relating to the performance of the Work and the supply of Products pursuant to this Agreement in connection with Guilford's development of the Product, conduct of the European Phase II Clinical Trials and regulatory filings with the FDA and the European and other regulatory authorities respecting the Product. (c) If either Nordion or Guilford breaches its obligations under this Section 10, the other party shall not thereby be released from its obligations under this Section 10. Confidential information disclosed by one party hereto to the other which is specific shall not be deemed to be within any of the above exceptions listed in (i) through (vi) in Section 10(a) above merely because it is embraced by more general information coming within one of the exceptions. Any combination of features disclosed to a receiving party shall not be deemed to be within any exception merely because individual features thereof fall within one of the exceptions. The provisions of this Section 10 shall survive any termination of this Agreement. 11. Non-Competition. During the term of this Agreement, Nordion will not perform development or manufacture and supply services, whether as principal, agent, third party contractor or otherwise for any company or business in a manner which directly competes with the Product. A product shall be deemed to "directly compete" with the Product only in the event it can be used or developed as an I(1,2,3) imaging diagnostic for Parkinson's Disease and involves binding to the dopamine transporter. 12. Independent Contractor. Nothing in this Agreement shall constitute Nordion as an employee or agent of Guilford and at all times Nordion shall, for all purposes, be an independent contractor. - 7 - 8 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION 13. Notices. Any notice given pursuant to this Agreement will be written and personally delivered, sent by facsimile against answerback, or mailed by registered or certified mail or via a major recognized overnight courier service, postage prepaid and return receipt requested, to the parties addressed as follows: if to Guilford: Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, Maryland 22124 Attention: John P. Brennan, Vice President, Operations Fax No.: (410) 631-6450 if to Nordion: Nordion Europe S.A. Zoning Industriel B-6220 Fleurus, Belgium ATTN: Brian P. Armstrong, Managing Director Fax No: 011-32-71-829221 with copy to: Nordion International Inc. 447 March Road, P.O. Box 13500 Kanata, Ontario K2K 1X8 CANADA Attention: David J.R. Evans, VP Technology & Business Development Fax No.: (613) 592-8121 All payments to Nordion Europe S.A., to be paid in BEF, shall be sent to David T. Drummond, General Manager, Nordion Europe S.A., Zoning Industriel, B-6220, Fleurus, Belgium. All notices shall be effective upon the day of delivery, if personally delivered or faxed against answerback; the next business day following dispatch, if sent on a business day by overnight courier; or three business days after dispatch, if mailed. 14. Governing Law; Jurisdiction. In the event that an unresolved dispute arises over the enforcement, interpretation, construction, or breach of this Agreement, it shall be litigated in the U.S. District Court for Maryland or the Maryland State Circuit Courts located in Baltimore City, Maryland, U.S.A. and Nordion hereby irrevocably submits to the exclusive jurisdiction of such courts for all purposes with respect to any legal action or proceeding in connection with this Agreement. This Agreement shall be construed in accordance with and governed by the laws of the State of Maryland - 8 - 9 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION (without regard to any rules or principles of conflicts of law that might look to any jurisdiction outside Maryland). 15. Entire Agreement. This Agreement, the Schedules attached hereto and Attachment D-1 constitute the entire understanding and agreement of the parties respecting payment by Guilford for services provided by Nordion to Guilford relating to the supply of the Product for European Phase II Clinical Trials and supersedes any and all prior agreements or arrangements, written or oral, between the parties relating thereto. The foregoing notwithstanding, this Agreement in no way shall be construed to amend, modify or supersede the North American Agreement, which remains in full force and effect in accordance with its terms. 16. Amendments; Waivers. This Agreement may not be amended or supplemented in any way except by a written document signed by the party against whom such amendment or supplement is sought to be enforced. The failure on the part of either party to enforce, or any delay in enforcing, any right, power or remedy that such party may have under this Agreement shall not constitute a waiver of any such right, power or remedy, or release the other party from any obligations under this Agreement, except by a written document signed by the party against whom such waiver or release is sought to be enforced. 17. Severability. In the event that any term of this Agreement is held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect any other portion of this Agreement, and there shall be deemed substituted therefor such term as will most fully realize the intent of the parties as expressed in this Agreement to the fullest extent permitted by applicable law, the parties hereby declaring their intent that this Agreement be construed in such fashion as to maintain its existence, validity, and enforceability to the greatest extent possible. 18. Successors and Assigns; No Assignment. This Agreement shall be binding upon the respective successors and assigns of the parties hereto and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns, provided, however that this Agreement may not be assigned by either party without the prior written consent of the other; provided further, however, that Nordion will not unreasonably withhold, delay or condition its consent in the event Guilford desires to assign this Agreement (a) in connection with the transfer or sale of all or substantially all of its assets or business or its merger or consolidation with another company or (b) in whole or in part to any corporate affiliate (such consent to be considered given hereunder in the event that within ten (10) of the receipt of Guilford's notice of its desire to assign this Agreement, Nordion does not respond in writing that it is withholding such consent). 19. Intellectual Property. All work product provided or created or inventions, improvements or developments made or invented by Nordion relating to the Product and its development, synthesis or manufacture in the course of performance under this Agreement shall be and remain the property of Guilford and work made for hire commissioned by Guilford, which shall retain all intellectual property rights therein, and Nordion will execute all documents and do all things as Guilford may reasonably request to further vest Guilford's interest in same. By way of clarification only, nothing - 9 - 10 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION herein shall be deemed or interpreted to require Nordion to deliver or transfer its interest in intellectual property owned by it prior to the date of this Agreement first written above. 20. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. 21. Headings. The headings of this Agreement are for reference only and shall not limit or otherwise affect the meaning of the terms and conditions of this Agreement. 22. FDA Validation Work. Nordion acknowledges that Guilford may want, at Guilford's sole option, to use data generated in the European Phase II Clinical Trials to support Guilford's FDA submissions/applications for marketing approval for the Product in the United States. Within twenty (20) days of the date of this Agreement first written above, Guilford and Nordion Europe will consult with each other regarding (a) performance by Nordion Europe of additional validation work to ensure compliance with FDA testing protocols for the Product in order to support any such submission of data from the European Phase II Clinical Trials to the FDA and (b) the associated additional costs to Nordion Europe of performing such validation procedures. Guilford shall, at its sole option, have ninety (90) days beginning from the end of such twenty (20) day period to require that Nordion Europe conduct such validation procedures, and Guilford shall promptly reimburse Nordion Europe's direct costs associated therewith. The precise scope of validation work and payment schedule shall be set forth in a written addendum to this Agreement signed by all the parties hereto. [Remainder of page left intentionally blank] - 10 - 11 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written. GUILFORD PHARMACEUTICALS INC. NORDION INTERNATIONAL INC. By: /s/ John P. Brennan By: /s/ David J.R. Evans --------------------------------- --------------------------------- Name: John P. Brennan Name: David J. R. Evans Title: Vice President, Operations Title: Vice President, Technology & Business Development NORDION EUROPE S.A. By: Brian P. Armstong by /s/ David R. Drummond, Attorney-in-Fact --------------------------------- Name: Brian P. Armstrong Title: Managing Director - 11 - 12 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule A [ * ] 13 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule B EQUIPMENT LIST [ * ] NOTE 1: Nordion will use commercially reasonable best efforts to reduce the acquisition costs of the [ * ] and [ * ] by using a dedicated detector system on an existing Nordion Europe [ * ] instrument, subject to the mutual agreement of Nordion and Guilford. NOTE 2: The two Miscellaneous Equipment items set forth as (e) and (f) above are firm fixed prices. The prices for all other equipment are estimates, and such final prices will be based on actual supplier invoices. Purchase of all Equipment shall be subject to the prior written consent of Guilford, and Nordion shall not be authorized to purchase any piece of Equipment under this Agreement without such prior written consent. 14 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule C PAYMENT SCHEDULE* Within 30 days of execution and delivery of Agreement [ * ]** paid in BEF Within 30 days following: Completion of Phase I due week 4 [ * ] plus the aggregate purchase price for the equipment set forth on Schedule B in excess of the initial [ * ] payment Completion of Phase II due week 12 [ * ] Completion of Phase III due week 16 [ * ] Completion of Phase IV due week 19 [ * ] Completion of Phase V due week 23 [ * ] PHASE I - This Phase of the project is complete when copies of invoices for the equipment arrive at Guilford. Payment 1, end of week 4. PHASE II- Installation and Validation. This Phase is completed with copies of the validation records are shipped to Guilford. Payment 2, end of week 12 PHASE III - Commissioning the Lab and formulation work. The work is consider complete with the delivery of a copy of the paper work and data from the three validation runs. Payment 3, end of week 16 PHASE IV - Documentation. Procedure revisions, Translations, STM, SOP's and specifications that need to be written or re-written. This Phase is completed when Guilford QC staff verifies the documentation is in place. Payment 4, end of week 19. PHASE V - Regulatory phase. This phase is completed with the filing of Type II DMF or European equivalent with the European authorities. Payment for this Phase corresponds with the delivery of the development report. Payment 5, end of week 23. * All payments shall be made in BEF and shall be remitted no later than 30 days following receipt by Guilford of a duly completed invoice in accordance with the payment schedule set forth above. ** Represents a prepayment creditable against the purchase price for Equipment (other than items (e) and (f) set forth on Schedule B) 15 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule D SPECIFICATIONS FOR PRODUCTS TEST SPECIFICATION NOTES ---- ------------- ----- Identify (HPLC) [ * ] 1 Radiochemical purity [ * ] Radioisotopic purity [ * ] 2 Radioactive concentration [ * ] Specific activity (1R)-trimethylstannyl-Beta-CT [ * ] 3 (1R)-Beta-CT [ * ] 4 (1R)-chloro-Beta-CT [ * ] 4 pH [ * ] 4 Visual Inspection [ * ] Sterility Test [ * ] [ * ] Pyrogen Test (LAL) [ * ]
NOTES. 1. [ * ] 2. [ * ] 3. [ * ] 4. [ * ] SHIPMENT INSTRUCTIONS: Priority overnight delivery by Nordion Logistics Network according to the Attachment D-1 attached hereto for delivery at each customer location at times mutually agreed by the parties. All Product will be shipped at ambient temperatures. In no event shall delivery of Product to a site occur more than 24 hours following Product synthesis and labeling unless such site is either at a location not listed on Attachment D-1 or to which delivery cannot be made in such 24 hour time period as indicated on Attachment D-1 (i.e., sites with a Delivery Time stated as later than "D+1 less than 12h00"; e.g., remote sites located in the Spanish islands). 16 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule E TESTING PROTOCOL FOR PRODUCTS PURITY OF [(1,2,3)I]Beta-CIT [ * ] STRENGTH [ * ] QUALITY [ * ] 17 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION pH [ * ] SPECIFIC ACTIVITY [ * ] STERILITY AND APYROGENICITY [ * ] STERILITY ASSAY [ * ] BACTERIAL ENDOTOXIN ASSAY (LAL TEST) [ * ] MODIFICATIONS TO THE ABOVE TESTS [ * ] 18 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Schedule F NON-RADIOACTIVE REFERENCE STANDARDS TO BE SUPPLIED BY GUILFORD [ * ] EX-10.47 3 SALES CONTRACT. 1 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION EXHBIT 10.47 BULK PHARMACEUTICAL SALES CONTRACT This CONTRACT (the "Contract"), dated September 23, 1994 between AEROJET-GENERAL CORPORATION, an Ohio corporation ("Aerojet"), and GUILFORD PHARMACEUTICALS INC., a Delaware corporation ("Buyer"). WHEREAS, Buyers desires to purchase from Aerojet and Aerojet desires to sell to Buyer bulk pharmaceuticals ("Products"). NOW, THEREFORE, in consideration of the mutual provisions herein contained and other valuable consideration, Aerojet and Buyer hereby agree as follows: Article 1: General Terms This document shall become a Contract when signed by both parties and received by Seller. This document and attached specifications ("Specifications") hereby incorporated by reference, constitute the entire agreement between the parties with respect to the sale and purchase of the Products. Article 2: Terms and Conditions of Sale 2.1 Acceptance by Buyer: Nothing contained in any other agreement or document which Buyer submits to Aerojet in connection with the purchase of Products will be deemed to be incorporated herein or to modify, supplement or explain any terms or conditions contained in this Contract, which shall exclusively govern the purchase and sale of Products. Seller accepts no term or condition not set forth herein and specifically rejects any terms or conditions of Buyer which conflict with, add to, or differ from the terms and conditions set forth herein. 2.2 Modification: No term, condition, prior course of dealing, course of performance by Aerojet, or Buyer, usage of trade, legend, purchase order, order acceptance or other document purporting to modify, vary, supplement or explain any provision of this Contract shall be effective unless in writing, which (a) specifically refers to and states that it is intended to amend this Contract and (b) is signed by representatives of both parties authorized to amend this Contract. Any reference by Aerojet to Buyer's specification and similar requirements is only to describe the products covered hereby and no warranties or other terms contained in such documents of Buyer shall have any force or effect. Catalogs, circulars and similar publications of Aerojet are issued for general information purposes only and shall not be deemed to modify any provision hereof. - 1 - 2 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION 2.3 Quantities and Prices: Aerojet hereby sells and Buyer hereby purchases the following Products, for the price specified below (exclusive of all taxes) and upon the terms and conditions stated in this Contract:
Unit Extended Quantity Product Price Price - -------- ------- ----- ----- [ * ] BCNU N/A $[ * ] - Total Price $[ * ] =
Article 3: Delivery, Acceptance, Prices and Other Charges 3.1 Delivery: Deliveries shall be made in accordance with the quantities and schedule specified in Aerojet's quotation and will be made F.O.B. Aerojet's plant. Aerojet reserves the right to make deliveries prior to the scheduled delivery date. Aerojet will deliver the Products to Buyer in accordance with the following schedule:
Quantity Product Delivery Date [ * ] BCNU [ * ]
3.2 Packing and Freight: Aerojet will pack Products for shipment to Buyer in accordance with applicable law and good shipping practices. Buyer will be responsible for arranging and paying for all freight handling, insurance and transportation expenses. Buyer shall notify Aerojet of such arrangements prior to the delivery date specified on the date of this Contract. 3.3 Acceptance and Title: Title and risk of loss with respect to Products shall pass to Buyer upon delivery to Buyer at Aerojet's plant. Buyer will be deemed to have accepted the shipment of Products 30 days after delivery to Buyer unless Buyer notifies Aerojet in writing within such 30 day period that Buyer is rejecting a shipment of Products, together with a full description of the reasons for such rejection. Buyer's rejection of a shipment of Products is limited solely to failure to meet Specifications which substantially impair the value of the Products. There shall be no revocation of acceptance. 3.4 Invoices and Payments: Buyer shall pay to Aerojet the purchase price for Products and any other amount due hereunder within (30) days after the date of the invoice. Aerojet shall issue the invoice upon delivery of the Product(s). If Buyer has not paid the invoice with thirty (30) days, Buyer shall pay interest on any unpaid amounts at the rate of 1-1/2% per month or the maximum rate allowed by law. All payments due by Buyer to Aerojet are to be paid in full without discount, set off or other reductions. All payments shall be made in U.S. dollars. 3.5 Taxes: Buyer will pay Aerojet for of all federal, state, municipal or other governmental taxes (including but not limited to sales, use, excise, value added, and like taxes but excluding any income, franchise or - 2 - 3 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION other taxes based upon the revenue or income of Aerojet), now or hereinafter in effect, which Aerojet may be required to pay or collect upon the sale of Products to Buyer hereunder; provided that, if Buyer furnished to Aerojet a resale certificate or other writing which lawfully exempts Buyer's purchase of such Products from any applicable sales, use or other taxes. Buyer will have no obligation to pay any such taxes to Aerojet. Buyer also shall pay all increases in Aerojet's cost resulting directly from any changes in governmental regulation and/or legislation after this Contract is signed by both parties and received by Aerojet. Article 4: Warranties by Aerojet 4.1 Title: Aerojet warrants that, as of the time of delivery as herein provided, title to Products will pass to Buyer free and clear of all liens, charges, encumbrances and other restrictions; provided that Aerojet hereby reserves a vendor's security interest in Products delivered hereunder to secure performance of Buyer's obligations hereunder. 4.2 Defects: Aerojet warrants to the Buyer that the Products supplied hereunder will conform to the Specifications at the time of delivery. Buyer shall provide Aerojet with written notice of any breach of the warranty set forth in this Section 4.2 within thirty (30) calendar days of the delivery. Buyer's failure to provide timely written notice to Aerojet of any alleged breach of such warranty shall fully and completely release and discharge Aerojet from any obligations or liability for that breach of warranty. Tthe foregoing warranty extends only to Buyer and to no other entity or person. THE FOREGOING WARRANTY SHALL NOT COVER AND AEROJET MAKES NO WARRANTIES WITH RESPECT TO: (A) ANY PRODUCTS THAT HAVE BEEN SUBJECT TO: (i) ABUSE, MISUSE, MISAPPLICATION, NEGLECT, ALTERATION OR ACCIDENT; OR (ii) TO ABNORMAL CONDITIONS OF USE; OR (B) ANY MATERIALS, PARTS, GOODS OR OTHER COMPONENTS NOT SUPPLIED BY AEROJET WHICH ARE USED BY BUYER IN CONNECTION WITH THE PRODUCTS. 4.3 Correction: Buyer's exclusive remedy upon any breach of the warranty in Section 4.2 shall be the replacement by Aerojet of the defective Product(s). If requested by Aerojet, Products alleged to be defective shall be returned by Buyer to Aerojet at Aerojet's expense. No Products shall be returned to Aerojet without Aerojet's prior written authorization. If Aerojet determines that any Products so returned are not covered by the warranty set forth in Section 4.2, Aerojet reserves the right to charge Buyer for all costs and expenses incurred by Aerojet in transporting, examining and handling such Products. 4.4 Limitation of Rights and Remedies: THE WARRANTIES CONTAINED IN THIS ARTICLE 4 ARE THE EXCLUSIVE WARRANTIES MADE BY AEROJET IN RESPECT OF THE PRODUCTS, AND ALL OTHER WARRANTIES RELATION THERETO, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES AGAINST INFRINGEMENT, HEREBY ARE WAIVED BY BUYER AND EXCLUDED. ANY CLAIM BY BUYER THAT THE PRODUCTS ARE DEFECTIVE MUST BE ASSERTED WITHIN NINETY (90) DAYS OF DELIVERY OR SHALL BE DEEMED WAIVED. Article 5: Safety Precaution and Buyer's Liability - 3 - 4 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION 5.1. SAFETY PRECAUTIONS: The Products may be toxic, hazardous or contain hazardous constituents, or otherwise pose risk of hazard, and Buyer has undertaken its own investigation of such matters. Buyer acknowledges that the safe use, handling, transportation and/or disposal requires qualified personnel with requisite skills, training and experience. Buyer shall provide all means appropriate to train and protest all employees, agents, and third parties from injury which may result from transportation, use, processing, incorporation into other goods or disposal of the Products. Buyer shall strictly comply with all laws and regulations affecting the Products or Buyer's sale or use thereof, including, without limitation, laws relating to product liability, protection of the environment and employee safety. 5.2 Assumption of Liability: Buyer hereby assumes responsibility for: (a) having qualified personnel with requisite skills, training and experience to work with the Products, (b) the suitability of such Products for the use intended by the Buyer; (c) identifying and issuing and following all required instructions, labeling requirements and warnings concerning the sale, use, transportation, processing, incorporation into other goods or disposal thereof and complying with all federal, state and local laws, ordinances, rules and regulations with respect thereto; and, (d) all liability to third persons with respect thereto. 5.3 Remedies: AEROJET'S TOTAL LIABILITY ON ALL CLAIMS OF ANY KIND, WHETHER AS A RESULT OF BREACH OR CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE OR PATENT INFRINGEMENT), STRICT LIABILITY OR OTHERWISE, ARISING OUT OF CONNECTED WITH, OR RESULTING FROM, THE PERFORMANCE OR NON-PERFORMANCE OF THIS CONTRACT, OR FROM THE MANUFACTURE, SALE, DELIVERY, RESALE, REPAIR OR REPLACEMENT OF USE OF ANY PRODUCTS OR THE FURNISHING OF ANY SERVICES, SHALL NOT EXCEED THE PRICE ALLOCABLE TO THE PRODUCTS OR SERVICES WHICH GIVES RISE TO THE CLAIMS, EXCEPT AS TO TITLE, ANY AND ALL LIABILITY BY AEROJET SHALL TERMINATE UPON THE EXPIRATION OF THE WARRANTY SPECIFIED IN CLAUSE 4. OTHER PROVISIONS HEREOF NOTWITHSTANDING, THE REMEDIES AVAILABLE TO BUYER UNDER THIS CONTRACT ARE THE EXCLUSIVE REMEDIES OF BUYER WITH RESPECT TO THE PRODUCTS, AND ALL OTHER REMEDIES IN RESPECT THERETO, WHICH OTHERWISE WOULD BE AVAILABLE TO BUYER, ARE WAIVED BY BUYER AND EXCLUDED. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING WITHOUT LIMITATION, NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, AND WHETHER ARISING BEFORE OR AFTER DELIVERY, SHALL AEROJET OR ITS SUPPLIERS BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR EXEMPLARY DAMAGES, INCLUDING, BUT IN NO WAY LIMITED TO, COVER, LOSS OF PROFIT OR REVENUE; LOSS OR USE OF SUPPLIES OR ANY ASSOCIATED EQUIPMENT; COST OF CAPITAL; COST OF SUBSITUTE FACILITIES OR SERVICES; DOWNTIME COSTS; COST OF PURCHASED OR REPLACEMENT SUPPLIES; CLAIMS OF CUSTOMERS OF BUYER FOR SUCH DAMAGES. ANY ACTION AGAINST AEROJET PERMITTED UNDER THIS CONTRACT AND NOT BROUGHT WITHIN 12 MONTHS AFTER THE CAUSE OF ACTION ACCRUES SHALL BE DEEMED WAIVED BY - 4 - 5 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION BUYER. IF BUYER TRANSFERS TITLE TO OR LEASES THE SUPPLIES SOLD HEREUNDER TO, OR OTHERWISE PERMITS OR ALLOWS USE BY, ANY THIRD PARTY A PROVISION AFFORDING AEROJET AND ITS SUPPLIERS THE PROTECTION OF THE PRECEDING SENTENCE. Article 6: Indemnification and Insurance 6.1 Insurance: Buyer, at its own expense, will maintain, with insurers which are rated A- or better by A.M. Best, a Pharmaceutical Products Liability insurance program in the amount of $5,000,000. Buyer will cause (a) Aerojet to be named as an additional insured under such liability insurance policy or policies, (b) such insurance to be designated as primary to any insurance which may be carried by Aerojet, and (c) such insurance to provide that it can only be canceled or materially altered upon not less than thirty (30) days notice to Aerojet. Buyer shall not asset against Aerojet and hereby waives any and all claims against Aerojet for losses, damages, liability, judgements, costs and expenses (including attorney's fees) imposed upon or incurred by Buyer as a result of or arising out of any claim covered by such insurance to the extent of such coverage and Buyer shall cause such insurance to provide that the insurer shall have no right of subrogation against Aerojet or its officers, directors, employees, agents or assigns. 6.2 Insurance Certificates: Prior to issuing the first purchase order to Aerojet and from time to time thereafter as required by Aerojet, Buyer shall furnish Aerojet with an insurance certificate(s) evidencing compliance with Section 6.1 above. 6.3 Indemnity: Notwithstanding the existence or lack of insurance, Buyer shall defend, indemnify and hold Aerojet harmless from any and all losses, claims, demands or suits by third parties, including but not limited to claims by those from Buyer's employees and customers, for bodily injury (including death) or property damage, however arising out of, or related in any way, to Buyer's possession, use, sale, distribution, processing shipment, storage or disposal of the Products or any derivative thereof, including reasonable attorney's fees and costs. Buyer shall have the duty to defend against any losses, claims, damages or suits notwithstanding any allegations about the type of extent of Aerojet's negligence. 6.4 Costs & Expenses: The indemnities in Paragraph 6.3 of this Clause include all costs and expenses reasonable required to investigate and to defend any such claim or action, any amount paid or required to be paid to settle such claim or action, or any amount finally awarded by a court as damages or otherwise in any such action, provided that nether party will have an obligation to pay or to reimburse the other party for the amount of any internal expenses (including, but not limited to, compensation paid to its employees) that it may incur in connection with its cooperation in the investigation and/or defense of such claim or action. 6.5 Limitation of Liability: IN NO EVENT SHALL AEROJET HAVE ANY LIABILITY TO BUYER HEREUNDER OR OTHERWISE FOR ANY LOSS OF PROFITS, COST OF COVER OR ANY SPECIAL CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES, HOWEVER CAUSED, WHETHER BY AEROJET'S BREACH OF ANY EXPRESS OR IMPLIED WARRANTY, NEGLIGENCE, STRICT LIABILITY UNDER LAW OR OTHERWISE. - 5 - 6 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION 6.6 Patent Indemnity: Buyer will defend, indemnify and hold Aerojet harmless, in respect of any loss, liability, damage, judgement, cost, or expense (including attorney's fees) arising from any claim of patent infringement directly or indirectly related to Buyer's use of Products by way of combination with other substances, products or components. Buyer, at its expense, will defend any claim or legal proceeding within the foregoing indemnity which is brought against Aerojet and/or Buyer and Buyer will pay any judgement finally awarded in any such legal proceeding; provided that, Aerojet promptly gives Buyer notice of such claim or legal proceeding asserted against Aerojet, furnishes a copy of all documents and instruments served upon Aerojet in connection therewith and reasonably cooperates with Buyer in such defense. 6.7 Survival: The provisions of this Clause shall survive the expiration and/or termination of this Contract. Article 7: Termination 7.1 Default: Either party will be deemed in default of its obligations under this Contract if: (a) such party fails to pay any sum of money required to be paid hereunder by such party within the (10) days after notice from the other party that such sum was not paid when due and payable; (b) such party fails to perform any other material obligation required to be performed hereunder by such party within sixty (60) days after notice from the other party that such obligation was not performed at the time herein specified for performance, or if notice is specified within sixty (60) days after such notice: (c) such party becomes insolvent, is unable to pay its debts as they become due, makes an assignments for the benefit of creditors, or files a petition in any state insolvency proceeding or in any federal bankruptcy proceeding; or (d) a receiver or liquidator is appointed for any of such party's properties or assets, or a petition is filed against such party to appoint a receiver or liquidator and such receiver or liquidator is not discharged, or such petition is not withdrawn, within ninety (90) days after such appointment or filing. 7.2 Excusable Delay in Performance: Aerojet will not be deemed in default of its obligations under this Contract if its failure to perform any such obligations arises from causes beyond its reasonable control and the time for performance of such obligation will be extended for a period equal to the number of days of such delay. Such causes include, but are not limited to, acts of God, a public enemy or government, failure to obtain any and all necessary government approvals, fires, floods, earthquakes, epidemics, quarantine restrictions, strikes, freight embargoes, unusually sever weather and the default of shippers. Aerojet will use reasonable efforts to give Buyer notice of any such cause which will or is likely to result in any delay in its performance of any of its obligations hereunder. Article 8: Miscellaneous 8.1 Headings: The headings and titles to the Articles and Sections of this Contract are inserted for convenience only and shall not be deemed a part hereof or affect the constructions or interpretation of any provision hereof. - 6 - 7 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION 8.2 Waiver: No waiver of any right or remedy in respect of any occurrence or event on one occasion shall be deemed a waiver of such right or remedy in respect of such occurrence or event on any other occasion. 8.3 Entire Contract: This Contract contains the entire agreement of the parties with respect to the subject matter hereof. 8.4 Controlling Law: All questions concerning the validity and operation of this Contract and the performance of the obligations imposed upon the parties hereunder shall be governed by the laws of the State of California, exclusive of laws relating to the conflicts of law. Any dispute arising under this Contract that is not settled by agreement of the Parties shall be submitted to the exclusive jurisdiction of the courts of the State of California. Each of Buyer and Aerojet waives its right to a jury trial in any dispute arising under this Contract. 8.5 Counterparts: This Contact has been executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts together shall constitute but one and the same instrument. 8.6 Attorney's Fees: If either Aerojet or Buyer institutes any suit against the other to enforce any right hereunder, the party prevailing in such suit will be entitled to recover from the other party an amount which the court determines is a reasonable attorney's fees. 8.7 Assignment: Neither party may assign its rights nor delegate its duty to perform all of any part of this Contract without the prior written consent of the other party. Any purported assignment or delegation in violation of this Contract will be null and void. 8.8 Notices: Any notice, communication or statement required or permitted to be given hereunder shall be in writing and deemed to have been sufficiently given:: (a) if sent by hand or overnight courier, upon delivery thereof, (b) if sent by facsimile transmission, upon confirmation of receipt of such facsimile, and (c) if sent by mail, three (3) days after having been sent by registered or certified mail, postage prepaid, return receipt requested, to the address of the respective parties below: If to Aerojet: Ms. Carolyne Montgomery Aerojet-General Corporation PO Box 13222 Sacramento, Ca 95813-6000 Telefax: (916) 351-8660 If to Guilford: Mr. John P. Brennan Vice President, Operations - 7 - 8 CERTAIN PORTIONS OF THIS EXHIBIT, DESIGNATED BY AN ASTERISK, HAVE BEEN OMITTED IN RELIANCE ON RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND A COPY OF THE UNREDACTED EXHIBIT HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSSION Guilford Pharmaceuticals Inc. 6611 Tributary Street Baltimore, MD 21224 Telefax: (410) 631-6338 8.9 Severability: If any Section, subsection, sentence or clause of this Contract shall be adjudged illegal, invalid or unenforceable in any jurisdiction, such illegality, invalidity or unenforceability shall not effect the legality, validity or enforceability of this Contract in any other jurisdiction or as a while or of any Section, subsection, sentence or clause hereof not so adjudged. In the event that any provision of this Contract shall be finally determined by a court of competent jurisdiction to be unenforceable to the maximum extent permitted by law and the parties shall abide by such court's determination. If such provision cannot be reformed, such provision shall be deemed to be severed from this Contract, but every other provision of this Contract shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Contract as of the date and year first shown hereinabove. AEROJET-GENERAL CORPORATION - --------------------------- By: /s/ Ms. Carolyne Montgomery ------------------------------- Name:Ms. Carolyne Montgomery ----------------------------- Title: Contract Manager ---------------------------- GUILFORD PHARMACEUTICALS INC. By: /s/ John P. Brennan ------------------------------- Name: John P. Brennan ---------------------------- Title: Vice President, Operations ---------------------------- - 8 - EX-10.48 4 EMPLOYMENT AGREEMENTS. 1 EXHIBIT 10.48 September 9, 1996 Craig R. Smith, M.D. 6 Blenmont Court Phoenix, Maryland 21131 Dear Craig: Reference is made to your employment letter agreement with the Company effective July 14, 1993 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to thirty-six months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event either (i) your employment with the Company is terminated other than for "cause" (as defined in the Employment Agreement) or (ii) you terminate your employment with the Company for "good reason" (as defined in the Employment Agreement). All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Andrew R. Jordan ------------------------------------- Name: Andrew R. Jordan Title: Vice President and Chief Financial Officer AGREED AND ACCEPTED: /s/ Craig R. Smith, M.D - ------------------------------ Craig R. Smith, M.D. Date: 9/12/96 ------------------------- 2 September 9, 1996 Andrew R. Jordan 100 Thicket Road Baltimore, Maryland 21212 Dear Andy: Reference is made to your employment letter agreement with the Company effective September 7, 1993 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ------------------------------------- Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Andrew R. Jordan - -------------------------- Andrew R. Jordan Date: 9/9/96 --------------------- 3 September 9, 1996 John P. Brennan 26 Montview Court Cockeysville, Maryland 21030 Dear Jack: Reference is made to your employment letter agreement with the Company effective January 17, 1994 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ----------------------------------------- Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ John P. Brennan - ------------------------------ John P. Brennan Date: 9/9/96 ------------------------- 4 September 9, 1996 Ross S. Laderman 11241 Minstrel Tune Drive Germantown, Maryland 20876 Dear Ross: Reference is made to your employment letter agreement with the Company effective January 14, 1994 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ------------------------------------------ Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Ross S. Laderman - --------------------------------- Ross S. Laderman Date: 9/12/96 ---------------------------- 5 September 9, 1996 Earl W. Henry, M.D. 14008 Fox Run Court Phoenix, Maryland 21131 Dear Earl: Reference is made to your employment letter agreement with the Company effective October 13, 1994 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ----------------------------------------- Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Earl Webb Henry, M.D. - -------------------------------- Earl Webb Henry, M.D. Date: 9/10/96 --------------------------- 6 September 9, 1996 Peter D. Suzdak, Ph.D. 1204 Meadowlark Drive Towson, Maryland 21286 Dear Peter: Reference is made to your employment letter agreement with the Company effective December 21, 1994 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from six months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ----------------------------------------- Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Peter D. Suzdak, Ph.D. - ------------------------------- Peter D. Suzdak, Ph.D. Date: 9/9/96 -------------------------- 7 September 9, 1996 Nicholas Landekic 8102 Elmberry Court, #1218 Pasadena, Maryland 21122 Dear Nick: Reference is made to your employment letter agreement with the Company effective February 6, 1995 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from nine months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ------------------------------------------ Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Nicholas Landekic - ------------------------------ Nicholas Landekic Date: 9/9/96 ------------------------- 8 September 9, 1996 Thomas C. Seoh 9316 Ravenridge Road Baltimore, Maryland 21234 Dear Thomas: Reference is made to your employment letter agreement with the Company effective February 18, 1995 (the "Employment Agreement"). At the August 20, 1996 meeting of the Company's Board of Directors, the Board resolved, effective August 20, 1996, to extend from nine months to twelve months the period under your Employment Agreement for which you are entitled to severance (in the form of a continuation of your then-current base salary) in the event your employment with the Company is terminated other than for cause. All other terms of your Employment Agreement remain unchanged. To evidence your agreement to the foregoing, please sign and date this letter agreement as specified below. Very truly yours, GUILFORD PHARMACEUTICALS INC. By: /s/ Craig R. Smith, M.D. ------------------------------------------ Name: Craig R. Smith, M.D. Title: President and Chief Executive Officer AGREED AND ACCEPTED: /s/ Thomas C. Seoh - ----------------------------- Thomas C. Seoh Date: 9/9/96 ------------------------ EX-10.49 5 LEASE AGREEMENT. 1 EXHIBIT 10.49 9400CLSGMasterLease MASTER LEASE AGREEMENT THIS MASTER LEASE AGREEMENT, dated as of September 18, 1996, ("AGREEMENT"), between GENERAL ELECTRIC CAPITAL CORPORATION, with an office at 4 NORTH PARK DRIVE, SUITE 500, HUNT VALLEY, MARYLAND 21030, (hereinafter called, together with its successors and assigns, if any, "LESSOR"), and GUILFORD PHARMACEUTICALS INC., a CORPORATION, organized and existing under the laws of the State of DELAWARE, with its mailing address and chief place of business at 6611 TRIBUTARY STREET, BALTIMORE, MARYLAND 21224 (hereinafter called "LESSEE"). WITNESSETH: I. LEASING: (a) Subject to the terms and conditions set forth below, Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the equipment ("EQUIPMENT") described in Annex A to any schedule hereto ("SCHEDULE") and this Agreement shall be effective from and after the date of execution hereof. Terms defined in a Schedule and not otherwise defined herein shall have the meanings ascribed to them in such Schedule. (b) The obligation of Lessor to purchase Equipment from the manufacturer or supplier thereof ("SUPPLIER",) and to lease the same to Lessee under any Schedule shall be subject to receipt by Lessor, prior to the Lease Commencement Date (with respect to such Equipment), of each of the following documents in form and substance satisfactory to Lessor: (i) a Schedule relating to the Equipment then to be leased hereunder; provided however, that no Schedule shall be for an amount less than $250,000.00, (ii) a Purchase Order Assignment and Consent in the form of Annex B to the applicable Schedule, unless Lessor shall have delivered its purchase order for such Equipment, (iii) evidence of insurance which complies with the requirements of Section X, and (iv) such other documents as Lessor may reasonably request. As a further condition to such obligations of Lessor, Lessee shall, upon delivery of such Equipment (but not later than the Last Delivery Date specified in the applicable Schedule) execute and deliver to Lessor a Certificate of Acceptance (in the form of Annex C to the applicable Schedule) covering such Equipment. Lessor hereby appoints Lessee its agent for inspection and acceptance of the Equipment from the Supplier. Upon execution by Lessee of any Certificate of Acceptance, the Equipment described thereon shall be deemed to have been delivered to, and irrevocably accepted by, Lessee for lease hereunder. II. TERM, RENT AND PAYMENT: (a) The rent payable hereunder and Lessee's right to use the Equipment shall commence on the date of execution by Lessee of the Certificate of Acceptance for such Equipment ("LEASE COMMENCEMENT DATE"). The term of this Agreement shall be the period specified in the applicable Schedule. If any term is extended, the word "TERM" shall be deemed to refer to all extended terms, and all provisions of this Agreement shall apply during any extended terms, except as may be otherwise specifically provided in writing. (b) Rent shall be paid to Lessor at its address stated above, except as otherwise directed by Lessor. Payments of rent shall be in the amount set forth in, and due in accordance with, the provisions of the applicable Schedule. If one or more Advance Rentals are payable, such Advance Rental shall be (i) set forth on the applicable Schedule, (ii) due upon acceptance by Lessor of such Schedule, and (iii) when received by Lessor, applied to the first rent payment and the balance, if any, to the final rental payment(s) under such Schedule. In no event shall any Advance Rental or any other rent payments be refunded to Lessee. If rent is not paid within ten days of its due date, Lessee agrees to pay a late charge of five cents ($.05) per dollar on, and in addition to, the amount of such rent but not exceeding the lawful maximum, if any. (c) So long as no default shall have occurred and be continuing under the terms of this agreement, neither Lessor nor its agents, employees, creditors, or assigns will disturb Lessee's quiet, peaceful and uninterrupted possession of the Equipment during the term of this Lease and Lessee's uninterrupted use thereof for its intended purpose. III. RENT ADJUSTMENT: (a) The periodic rent payments in each Schedule have been calculated on the assumption (which, as between Lessor and Lessee, is mutual) that the maximum effective corporate income tax rate (including any surcharge but exclusive of any minimum tax rate) for calendar-year taxpayers ("EFFECTIVE RATE") will be thirty-five percent (35%) for each year of the lease term. (b) If, solely as a result of Congressional enactment of any law (including, without limitation, any modification of, or amendment or addition to, the Internal Revenue Code of 1986 ("CODE"), the Effective Rate is higher than thirty-five percent (35%) for any year during the lease term, then Lessor shall have the right to increase such rent payments by requiring payment of a single additional sum equal to the product of (i) the Effective Rate (expressed as a decimal) for such year less .35 (or, in the event that any adjustment has been made hereunder for any previous year, the Effective Rate (expressed as a decimal) used in calculating the next previous adjustment) times (ii) the adjusted Stipulated Loss Value divided by the difference between the new Effective Tax Rate (expressed as a decimal) and one (1). The adjusted Stipulated Loss Value shall be the Stipulated Loss Value (calculated 2 as of the first rental due in the year for which such adjustment is being made) less the product of the Tax Benefits that would be allowable under Section 168 of the Code (as of the first day of the year for which such adjustment is being made and all subsequent years of the lease term). Lessee shall pay to Lessor the full amount of the additional rent payment on the later of (i) receipt of notice or (ii) the first day of the year for which such adjustment is being made. (c) Lessee's obligations under this Section III shall survive any expiration or termination of this Agreement. IV. TAXES: Except as provided in Sections III and XV(c), Lessee shall have no liability for taxes imposed by the United States of America or any State or political subdivision thereof which are on or measured by the net income of Lessor. Lessee shall report (to the extent that it is legally permissible) and pay promptly all other taxes, fees and assessments due, imposed, assessed or levied against any Equipment (or the purchase, ownership, delivery, leasing, possession, use or operation thereof), this Agreement (or any rentals or receipts hereunder), any Schedule, Lessor or Lessee by any foreign, federal, state or local government or taxing authority during or related to the term of this Agreement, including, without limitation, all license and registration fees, and all sales, use, personal property, excise, gross receipts, franchise, stamp or other taxes, imposts, duties and charges, together with any penalties, fines or interest thereon (all hereinafter called "TAXES"); provided, however, that the foregoing shall not apply to any taxes or portion thereof of which Lessee is contesting the validity. Lessee shall (i) reimburse Lessor upon receipt of written request for reimbursement for any Taxes charged to or assessed against Lessor, (ii) on request of Lessor, submit to Lessor written evidence of Lessee's payment of Taxes, (iii) on all reports or returns show the ownership of the Equipment by Lessor, and (iv) send a copy thereof to Lessor. The obligations of Lessee under this Section IV shall survive any expiration or termination of this Agreement. V. REPORTS: (a) Lessee will notify Lessor in writing, within ten (10) days after any tax or other lien shall attach to any Equipment, of the full particulars thereof and of the location of such Equipment on the date of such notification. (b) Lessee will within one hundred twenty (120) days of the close of each fiscal year of Lessee, deliver to Lessor, Lessee's complete financial statements, certified by a recognized firm of certified public accountants. Lessee will, within sixty (60) days after the date on which they are filed, deliver to Lessor all Forms 10-K and 10-Q filed with the Securities and Exchange Commission and that so long as Lessee is a reporting company under Section 13 or 15 of the Securities Exchange Act of 1934, shall be entitled to submit such Forms 10-K in lieu of the financial statements required by the immediate preceding sentence. Upon request Lessee will deliver to Lessor quarterly, within one hundred twenty (120) days of the close of each fiscal quarter of Lessee, in reasonable detail, copies of Lessee's quarterly financial report certified by the chief financial officer of Lessee (which obligation shall be met by the delivery of Lessee's Form 10-Q covering the period in question.). Upon request, Lessee will deliver to Lessor one copy of each financial statement, report, notice or proxy statement sent by Lessee to shareholders generally and one copy of each regular or periodic report, registration statement or prospectus filed by Lessee with any securities exchange or the Securities and Exchange Commission or any successor agency, such copies to be delivered to Lessor within thirty (30) days after they become available or are otherwise filed. (c) Lessee will permit Lessor at its sole cost and expense (unless Lessee is in default, in which case such costs shall be borne by Lessee) to inspect any Equipment during normal business hours. (d) Lessee will keep the Equipment at the Equipment Location (specified in the applicable Schedule) and will give Lessor prior written notice of any relocation of Equipment. Upon the written request of Lessor, Lessee will notify Lessor forthwith in writing of the location of any Equipment as of the date of such notification. (e) Lessee will promptly and fully report to Lessor in writing if any Equipment is lost or damaged (where the estimated repair costs would exceed ten percent (10%) of its then fair market value), or is otherwise involved in an accident causing personal injury or property damage estimated to exceed $50,000.. (f) Within thirty (30) days after any request by Lessor, Lessee will furnish a certificate of an authorized officer of Lessee stating that he has reviewed the activities of Lessee and that, to the best of his knowledge, there exists no default (as described in Section XII) or event which with notice or lapse of time (or both) would become such a default. VI. DELIVERY, USE AND OPERATION: (a) All Equipment shall be shipped directly from the Supplier to Lessee. (b) Lessee agrees that the Equipment will be used by Lessee solely in the conduct of its business and in a manner complying with all applicable federal, state, and local laws and regulations and any applicable insurance policies and Lessee shall not permanently discontinue use of the Equipment (unless such permanent discontinuance shall not prevent the Equipment from performing the functions for which it was originally designed, in accordance with the manufacturer's published and recommended specifications). (c) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY EQUIPMENT, OR THE INTEREST OF LESSEE HEREUNDER, NOR SHALL LESSEE REMOVE ANY EQUIPMENT FROM THE CONTINENTAL UNITED STATES, WITHOUT THE PRIOR WRITTEN CONSENT OF THE LESSOR. (d) Lessee will keep the Equipment free and clear of all liens and encumbrances other than those which result from acts of Lessor. 3 VII. SERVICE: (a) Lessee will, at its sole expense, maintain each unit of Equipment in good operating order, repair, condition and appearance in accordance with manufacturer's recommendations, normal wear and tear excepted. Lessee shall, if at any time requested by Lessor, affix in a prominent position on each unit of Equipment plates, tags or other identifying labels showing ownership thereof by Lessor. (b) Lessee will not, without the prior consent of Lessor, affix or install any accessory, equipment or device on any Equipment if such addition will impair the originally intended function or use of such Equipment. All additions, repairs, parts, supplies, accessories, equipment, and devices furnished, attached or affixed to any Equipment which are not readily removable shall be made only in compliance with applicable law, including Internal Revenue Service guidelines, shall be free and clear of all liens, encumbrances or rights of others, and shall become the property of Lessor. Lessee will not, without the prior written consent of Lessor and subject to such conditions as Lessor may impose for its protection, affix or install any Equipment to or in any other personal or real property. (c) Any alterations or modifications to the Equipment that may, at any time during the term of this Agreement, be required to comply with any applicable law, rule or regulation shall be made at the expense of Lessee. VIII. STIPULATED LOSS VALUE: Lessee shall promptly and fully notify Lessor in writing if any unit of Equipment shall be or become worn out, lost, stolen, destroyed, irreparably damaged in the reasonable determination of Lessee, or permanently rendered unfit for use from any cause whatsoever (such occurrences being hereinafter called "CASUALTY OCCURRENCES"). On the rental payment date next succeeding a Casualty Occurrence (the "PAYMENT DATE"), Lessee shall pay Lessor the sum of (x) the Stipulated Loss Value of such unit calculated as of the rental next preceding such Casualty Occurrence ("CALCULATION DATE") and (y) all rentals and other amounts which are due hereunder as of the Payment Date. Upon payment of all sums due hereunder, the term of this lease as to such unit shall terminate and (except in the case of the loss, theft or complete destruction of such unit) Lessor shall be entitled to recover possession of such unit. IX. LOSS OR DAMAGE: Lessee hereby assumes and shall bear the entire risk of any loss, theft, damage to, or destruction of, any unit of Equipment from any cause whatsoever from the time the Equipment is shipped to Lessee. X. INSURANCE: Lessee agrees, at its own expense, to keep all Equipment insured for such amounts and against such hazards as Lessor may reasonably require, including, but not limited to, insurance for damage to or loss of such Equipment and liability coverage for personal injuries, death or property damage, with Lessor named as additional insured and with a loss payable clause in favor of Lessor, as its interest may appear, irrespective of any breach of warranty or other act or omission of Lessee. All such policies shall be with companies, and on terms, reasonablly, satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence of insurance satisfactory to Lessor. No insurance shall be subject to any co-insurance clause. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss and claim for insurance, and to make adjustments with insurers and to receive payment of and execute or endorse all documents, checks or drafts in connection with payments made as a result of such insurance policies. Any reasonable expense of Lessor in adjusting or collecting insurance shall be borne by Lessee. Lessee will not make adjustments with insurers except (i) with respect to claims for damage to any unit of Equipment where the repair costs do not exceed ten percent (10%) of such unit's fair market value, or (ii) with Lessor's written consent. Said policies shall provide that the insurance may not be altered or cancelled by the insurer until after thirty (30) days' written notice to Lessor. Lessor may, at its option, apply proceeds of insurance, in whole or in part, to (i) repair or replace Equipment or any portion thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder. XI. RETURN OF EQUIPMENT: (a) Upon any expiration or termination of this Agreement or any Schedule, Lessee shall promptly, at its own cost and expense: (i) perform any testing and repairs required to place the affected units of Equipment in the same condition and appearance as when received by Lessee (reasonable wear and tear excepted) and in good working order for their originally intended purpose; (ii) if deinstallation, disassembly or crating is required, cause such units to be deinstalled, disassembled and crated by an authorized manufacturer's representative or such other service person as is satisfactory to Lessor; and (iii) return such units to a location within the continental United States as Lessor shall direct. (b) Until Lessee has fully complied with the requirements of Section XI(a) above, Lessee's rent payment obligation and all other obligations under this Agreement shall continue from month to month notwithstanding any expiration or termination of the lease term. Lessor may terminate such continued leasehold interest upon ten (10) days' notice to Lessee. XII. DEFAULT: (a) Lessor may in writing declare this Agreement in default if: Lessee breaches its obligation to pay rent or any other sum when due and fails to cure the breach within ten (10) days; Lessee breaches any of its insurance obligations herewith under Section X; Lessee breaches any of its other obligations hereunder and fails to cure that breach within thirty (30) days after written notice thereof; any representation or warranty made by or on 4 behalf of Lessee in connection with this Agreement shall be false or misleading in any material respect; Lessee or any guarantor becomes insolvent or ceases to do business as a going concern; any Equipment is knowlingly illegally used; a petition is filed by or against Lessee or any guarantor under any bankruptcy or insolvency laws (which petition against Lessee is not dismissed within 60 days of its filing); there is a revocation or anticipatory repudiation of any guarantor's obligations under any guaranty issued in connection with this Agreement; Lessee or any guarantor shall be in default under any material obligation and the applicable grace period with respect thereto shall have expired; Lessee or any guarantor shall have terminated its existence, consolidated with, merged into or conveyed or leased substantially all of its assets as an entirety to any person (such actions being referred to as an "EVENT"), unless not less than sixty (60) days prior to such Event: (x) such person is organized and existing under the laws of the United States or any state, and executes and delivers to Lessor an agreement containing an effective assumption by such person of the due and punctual performance of this Lease or guaranty thereof, as the case may be, and (y) Lessor is reasonably satisfied as to the credit worthiness of such person; if Lessee or any guarantor is a privately held corporation and effective control of Lessee's or any guarantor's voting capital stock, issued and outstanding from time to time, is not retained by the present stockholders (unless Lessee shall have provided sixty (60) days' prior written notice to Lessor of the proposed disposition of stock and Lessor shall have consented thereto in writing); or if Lessee or any guarantor is a publicly held corporation as a result of or in connection with a material change in the ownership of Lessee's or any guarantor's capital stock, Lessee's or any guarantor's debt-to-worth ratio equals or exceeds twice Lessee's or any guarantor's debt-to-worth ratio as of the date of this Lease (unless Lessor shall have given its prior written consent thereto), if Lessee or any guarantor is a natural person, any death or incompetency of Lessee or such guarantor. As used herein, "DEBT-TO-WORTH RATIO" shall mean the ratio of (x) total liabilities which, in accordance with United States generally accepted accounting principles ("GAAP") would be included in the liability side of a balance sheet, to (y) tangible net worth including the sum of the par or stated value of all outstanding capital stock, surplus and undivided profits, less any amounts attributable to goodwill, patents, copyrights, mailing lists, catalogs, trademarks, bond discount and underwriting expenses, organization expense and other intangibles, all determined in accordance with GAAP. Any provision of this Agreement to the contrary notwithstanding, Lessor may exercise all rights and remedies hereunder independently with respect to each Schedule. (b) After default, at the request of Lessor, Lessee shall comply with the provisions of Section XI(a). Lessee hereby authorizes Lessor to enter, with legal process, any premises where any Equipment is believed to be and take possession thereof. Lessee shall, without further demand, forthwith pay to Lessor as liquidated damages for loss of a bargain and not as a penalty, the Stipulated Loss Value of the Equipment (calculated as of the rental date next preceding the declaration of default), and all rentals and other sums then due hereunder. After notice of default, Lessor may terminate this Agreement as to any or all of the Equipment, provided that a termination shall occur only upon written notice by Lessor to Lessee and only as to the items of Equipment specified in any such notice. Lessor may, but shall not be required to, sell Equipment at private or public sale, in bulk or in parcels, with or without notice, and without having the Equipment present at the place of sale; or Lessor may, but shall not be required to, lease, otherwise dispose of or keep idle all or part of the Equipment; and Lessor may use Lessee's premises during reasonable hours and in a reasonable manner for any or all of the foregoing without liability for rent, costs, damages or otherwise, except to the extent caused by Lessor's gross negligence or willful misconduct. The proceeds of sale, lease or other disposition, if any, shall be applied in the following order of priorities: (1) to pay all of Lessor's costs, charges and expenses incurred in taking, removing, holding, repairing and selling, leasing or otherwise disposing of Equipment; then, (2) to the extent not previously paid by Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to reimburse to Lessee any sums previously paid by Lessee as liquidated damages; and (4) any surplus shall be retained by Lessor. Lessee shall pay any deficiency in (1) and (2) forthwith. (c) The foregoing remedies are cumulative, and any or all thereof may be exercised in lieu of or in addition to each other or any remedies at law, in equity, or under statute. Lessee waives notice of sale or other disposition (and the time and place thereof), and the manner and place of any advertising. Lessee shall pay Lessor's reasonable attorney's fees incurred in connection with the enforcement, assertion, defense or preservation of Lessor's rights and remedies hereunder, or if prohibited by law, such lesser sum as may be permitted. Waiver of any default shall not be a waiver of any other or subsequent default. XIII. ASSIGNMENT: Lessor may, without the consent of Lessee, assign this Agreement or any Schedule or any interests therein. Lessee agrees that if Lessee receives written notice of an assignment from Lessor, Lessee will pay all rent and all other amounts payable under any assigned Equipment Schedule to such assignee or as instructed by Lessor. Lessee further agrees to confirm in writing receipt of the notice of assignment as may be reasonably requested by assignee. Lessee hereby waives and agrees not to assert against any such assignee any defense, set-off, recoupment claim or counterclaim which Lessee has or may at any time have against Lessor for any reason whatsoever. XIV. NET LEASE; NO SET-OFF, ETC: This Agreement is a net lease. Lessee's obligation to pay rent and other amounts due hereunder shall be absolute and unconditional. Lessee shall not be entitled to any abatement or reductions of, or set-offs against, said rent or other amounts, including, without limitation, those arising or allegedly arising out of claims (present or future, alleged or actual, and including claims arising out of strict tort or negligence of Lessor) of Lessee against Lessor under this Agreement or otherwise. Nor shall this Agreement terminate or the obligations of Lessee be affected by reason of any defect in or damage to, or loss of possession, use or destruction of, any Equipment from whatsoever cause. It is the intention of the parties that rents and other amounts due hereunder shall continue to be payable in all events in the manner and at the times set forth herein unless the obligation to do so shall have been terminated pursuant to the express terms hereof. XV. INDEMNIFICATION: (a) Lessee hereby agrees to indemnify, save and keep harmless Lessor, its agents, employees, successors and assigns from and against any and all losses, damages, penalties, injuries, claims, actions and suits, including reasonable legal expenses, of whatsoever kind and nature, in contract 5 or tort or otherwise, unless caused by the gross negligence or willful misconduct of Lessor, and including, but not limited to, Lessor's strict liability in tort, arising out of (i) the selection, manufacture, purchase, acceptance or rejection of Equipment, the ownership of Equipment during the term of this Agreement, and the delivery, lease, possession, maintenance, uses, condition, return or operation of Equipment (including, without limitation, latent and other defects, whether or not discoverable by Lessor or Lessee and any claim for patent, trademark or copyright infringement or environmental damage) or (ii) the condition of Equipment sold or disposed of after use by Lessee, any sublessee or employees of Lessee. Lessee shall, upon request, defend any actions based on, or arising out of, any of the foregoing. (b) The Lease has been entered into on the assumption that (i) the Lease will be treated for federal income tax purposes as a true lease and the Lessor will be treated as the owner and lessor of the Equipment and the Lessee will be treated as the lessee of the Equipment, and (ii) on the Lease Commencement Date for any unit of Equipment, such unit will qualify for all of the items of deduction and credit specified in Section C of applicable Schedule ("TAX BENEFITS") in the hands of Lessor (all references to Lessor in this Section XV include Lessor and the consolidated tax payer group of which Lessor is a member). (c) If for any reason whatsoever (i) tax counsel of Lessor shall determine that Lessor is not entitled to claim on its federal income tax return all or any portion of the Tax Benefits with respect to any Equipment or (ii) any such Tax Benefit claimed on the federal income tax return of Lessor is disallowed or adjusted by the Internal Revenue Service or (iii) any such Tax Benefit is recomputed or recaptured (any such determination, disallowance, adjustment, recomputation or recapture being hereinafter called a "LOSS"), then Lessee shall pay to Lessor, as additional rent (and not as additional indemnity), such amount as shall, in the reasonable opinion of Lessor, cause Lessor's after-tax economic yields and cash flows, computed on the same assumptions, including tax rates (unless any adjustment has been made under Section III hereof, in which case the Effective Rate used in the next preceding adjustment shall be substituted), and were utilized by Lessor in originally evaluating the transaction (such yields and flows being hereinafter called the "NET ECONOMIC RETURN") to equal the Net Economic Return that would have been realized by Lessor if such Loss had not occurred. Such amount shall be payable upon demand accompanied by a statement (and if requested by Lessee, certified in writing by Lessor's nationally recognized accounting firm) describing in reasonable detail such Loss and the computation of such amount. If Lessee requests that the statement be certified by the accounting firm such certification shall be at Lessee's expense unless the amount due by Lessee, as certified by the accounting firm, is lower by twenty percent (20%) or more than the amount requested by Lessor. Anything in this paragraph to the contrary notwithstanding, Lessee shall have no obligation to pay Lessor for any such Loss to the extent that such Loss is caused by: (i) any failure by Lessor to properly or timely claim on its federal income tax return any Tax Benefits on any Equipment (unless such failure is based upon a determination by tax counsel of Lessor that Lessor is not entitled to claim such Tax Benefits with respect to such Equipment); (ii) any failure of Lessor to have sufficient taxable income to benefit from the Tax Benefits; (iii) any liability of the Lessor for any alternative minimum taxes; (iv) the status of Lessor for purposes of federal income taxes; (v) any sale or other disposition of any Equipment by Lessor other than after an event of default by Lessee; (vi) any tax election made or not made by Lessor relating to the Tax Benefits; or (vii) any event which results in a payment by Lessee in an amount equal to, or measured by, the Stipulated Loss Value to the extent that such Loss was included in Lessor's calculation of such Stipulated Loss Value. (d) All of Lessor's rights, privileges and indemnities contained in this Section XV shall survive the expiration or other termination of this Agreement and the rights, privileges and indemnities contained herein are expressly made for the benefit of, and shall be enforceable by Lessor, its successors and assigns. XVI. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR SHALL LESSOR BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor shall have no responsibility or liability to Lessee or any other person with respect to any of the following, regardless of any negligence of Lessor (i) any liability, loss or damage caused or alleged to be caused directly or indirectly by any Equipment, any inadequacy thereof, any deficiency or defect (latent or otherwise) therein, or any other circumstance in connection therewith; (ii) the use, operation or performance of any Equipment or any risks relating thereto; (iii) any interruption of service, loss of business or anticipated profits or consequential damages; or (iv) the delivery, operation, servicing, maintenance, repair, improvement or replacement of any Equipment unless such loss arises from Lessor's gross negligence or willful misconduct. If, and so long as, no default exists under this Lease, Lessee shall be, and hereby is, authorized during the term of this Lease to assert and enforce, at Lessee's sole cost and expense, from time to time, in the name of and for the account of Lessor and/or Lessee, as their interests may appear, whatever claims and rights Lessor may have against any Supplier of the Equipment. XVII. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee hereby represents and warrants to Lessor that on the date hereof and on the date of execution of each Schedule: (a) Lessee has adequate power and capacity to enter into, and perform under, this Agreement and all related documents (together, the "DOCUMENTS") and is duly qualified to do business wherever necessary to carry on its present business and operations, including the jurisdiction(s) where the Equipment is or is to be located. 6 (b) The Documents have been duly authorized, executed and delivered by Lessee and constitute valid, legal and binding agreements, enforceable in accordance with their terms, except to the extent that the enforcement of remedies therein provided may be limited under applicable bankruptcy and insolvency laws and principals of equity. (c) No approval, consent or withholding of objections is required from any governmental authority or instrumentality with respect to the entry into or performance by Lessee of the Documents except such as have already been obtained. (d) The entry into and performance by Lessee of the Documents will not: (i) violate any judgment, order, law or regulation applicable to Lessee or any provision of Lessee's Certificate of Incorporation or By-Laws; or (ii) result in any breach of, constitute a default under or result in the creation of any lien, charge, security interest or other encumbrance upon any Equipment pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument (other than this Agreement) to which Lessee is a party. (e) There are no suits or proceedings pending or to Lessee's knowledge threatened in court or before any commission, board or other administrative agency against or affecting Lessee, which if decided adversely will have a material adverse effect on the ability of Lessee to fulfill its obligations under this Agreement. (f) The Equipment accepted under any Certificate of Acceptance is and will remain tangible personal property. (g) Each financial statement delivered to Lessor has been prepared in accordance with GAAP consistently applied, and since the date of the most recent such financing statement, there has been no material adverse change. (h) Lessee is and will be at all times validly existing and in good standing under the laws of the State of its incorporation (specified in the first sentence of this Agreement). (i) The Equipment will at all times be used for commercial or business purposes. XVIII. PURCHASE OPTION: (a) So long as no default exists hereunder and the lease has not been earlier terminated, Lessee may at lease expiration, upon at least ninety (90) days' prior written notice to Lessor, purchase all (but not less than all) of the Equipment in any Schedule on an AS IS, WHERE IS BASIS without recourse to or warranty from Lessor, express or implied ("AS IS BASIS") for cash equal to its then Fair Market Value (plus all applicable sales taxes). (b) "FAIR MARKET VALUE", shall mean the price which a willing buyer (who is neither a lessee in possession nor a used equipment dealer) would pay for the Equipment in an arm's-length transaction to a willing seller under no compulsion to sell; provided , however , that in such determination: (i) the Equipment shall be assumed to be in the condition in which it is required to be maintained and returned under this Agreement; (ii) in the case of any installed Equipment, that Equipment shall be valued on an installed basis; and (iii) costs of removal from current location shall not be a deduction from such valuation. If Lessor and Lessee are unable to agree on the Fair Market Value at least sixty (60) days before lease expiration, Lessor shall appoint an independent appraiser, who is reasonably acceptable to Lessee, to determine Fair Market Value, and that determination shall be final, binding and conclusive. Lessee shall bear all costs associated with any such appraisal unless the purchase price, as determined by the appraiser, is more than twenty percent (20%) lower than the lowest price quoted by Lessor prior to the appointment of the appraiser. (c) Lessee shall be deemed to have waived this option unless it provides Lessor with written notice of its irrevocable election to exercise the same within fifteen (15) days after Fair Market Value is determined (by agreement or appraisal). XIX. MISCELLANEOUS: (A) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS LEASE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. (b) Unless and until Lessee exercises its rights under Section XVIII above, nothing herein contained shall give or convey to Lessee any right, title or interest in and to any Equipment except as a lessee. Any cancellation or termination by Lessor, pursuant to the provision of this Agreement, any Schedule, supplement or amendment hereto, or the lease of any Equipment hereunder, shall not release Lessee from any then outstanding obligations to Lessor hereunder. All Equipment shall at all times remain personal property of Lessor regardless of the degree of its annexation to any real property and shall not by reason of any installation in, or affixation to, real or personal property become a part thereof. 7 (c) Time is of the essence of this Agreement. Lessor's failure at any time to require strict performance by Lessee of any of the provisions hereof shall not waive or diminish Lessor's right thereafter to demand strict compliance therewith. Lessee agrees, upon Lessor's request, to execute any instrument necessary or expedient for filing, recording or perfecting the interest of Lessor. All notices required to be given hereunder shall be deemed adequately given if sent by registered or certified mail or by overnight delivery by a nationally recognized courier service to the addressee at its address stated herein, or at such other place as such addressee may have designated in writing and shall be deemed effective when sent. This Agreement and any Schedule and Annexes thereto constitute the entire agreement of the parties with respect to the subject matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. LESSOR ------------------ LESSEE ------------------ (d) In case of a failure of Lessee to comply with any provision of this Agreement, Lessor shall have the right, but shall not be obligated, to effect such compliance, in whole or in part; and all reasonable amouints of moneys spent and expenses and obligations incurred or assumed by Lessor in effecting such compliance shall constitute additional rent due to Lessor within five days after the date Lessor sends notice to Lessee requesting payment. Lessor's effecting such compliance shall not be a waiver of Lessee's default. (e) Any rent or other amount not paid to Lessor when due hereunder shall bear interest, both before and after any judgment or termination hereof, at the lesser of eighteen percent (18%) per annum or the maximum rate allowed by law. Any provisions in this Agreement and any Schedule which are in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform thereto. IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: GENERAL ELECTRIC CAPITAL CORPORATION GUILFORD PHARMACEUTICALS INC. BY: /S/ ANNETTE J. SCALLION BY: /S/ ANDREW R. JORDAN ------------------------ --------------------- TITLE: SPECIALIST-ACCOUNT ADMINISTRATION TITLE: VICE PRESIDENT & CHEIF FINANCIAL OFFICER ---------------------------------- ----------------------------------------
8 ADDENDUM TO SCHEDULE NO. 001 TO MASTER LEASE AGREEMENT DATED AS OF SEPT. 18, 1996 THIS ADDENDUM (this "ADDENDUM") amends and supplements the above schedule (the "SCHEDULE") to the above lease (the "LEASE"), between GENERAL ELECTRIC CAPITAL CORPORATION ("LESSOR") and GUILFORD PHARMACEUTICALS INC. ("LESSEE") and is hereby incorporated into the Schedule as though fully set forth therein. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Lease. 1. For purposes of this Schedule only, Section XVIII of the Lease is deleted in its entirety and the following is added in its stead: END OF BASIC TERM OPTIONS: At the expiration of the Basic Term (the "BASIC TERM EXPIRATION DATE"), so long as no default has occurred and is continuing hereunder and this Agreement has not been earlier terminated, Lessee shall exercise one of the following options: (a) Renewal Option. So long as no default exists hereunder and the lease has not been earlier terminated, Lessee may, upon at least ninety (90) days but not more than one hundred eighty (180) days prior written notice to Lessor, extend the term of the Lease with respect to all (but not less than all) of the Equipment in this Schedule for a period (the "RENEWAL PERIOD") and rate to be negotiated by the parties based upon the then remaining life and Fair Market Value of the Equipment and the then current money market thereof determined as of the end of the pre-extension Lease term. The term "FAIR MARKET RENTAL VALUE" shall mean the price which a willing lessee would pay for the rental of the Equipment in an arms-length transaction to a willing lessor under no compulsion to lease for a time period similar to the Renewal Period; provided, however, that in such determination: (i) the Equipment shall be assumed to be in the condition in which it is required to be maintained and returned under this Lease (ii) in the case of any installed additions to the Equipment, same shall be valued on an installed basis; and (iii) costs of removal of the Equipment from the current location shall not be a deduction from such valuation. If Lessor and Lessee are unable to agree on the Fair Market Rental Value at least 135 days before Lease expiration, Lessor shall appoint an independent appraiser (reasonably acceptable to Lessee) to determine Fair Market Rental Value, and that determination shall be final, binding and conclusive. Lessee shall bear all costs associated with any such appraisal. (b) Purchase Option. So long as no default exists hereunder and the lease has not been earlier terminated, Lessee may at lease expiration, upon at least ninety (90) days prior written notice to Lessor, purchase all (but not less than all) of the Equipment in any Schedule on an AS IS, WHERE IS BASIS without recourse to or warranty from Lessor, express or implied for cash equal to its then Fair Market Value (plus all applicable sales taxes). The term "FAIR MARKET VALUE" shall mean the price which a willing buyer (who is neither a lessee in possession nor a used equipment dealer) would pay for the Equipment in an arm's-length transaction to a willing seller under no compulsion to sell; provided , however , that in such determination: (i) the Equipment shall be assumed to be in the condition in which it is required to be maintained and returned under this Agreement; (ii) in the case of any installed Equipment, that Equipment shall be valued on an installed basis; and (iii) costs of removal from current location shall not be a deduction from such valuation. If Lessor and Lessee are unable to agree on the Fair Market Value at least seventy five (75) days before lease expiration, Lessor shall appoint an independent appraiser (reasonably acceptable to Lessee) to determine Fair Market Value, and that determination shall be final, binding and conclusive. Lessee shall bear all costs associated with any such appraisal. (c) Return of Equipment. Lessee may return all, but not less than all of the Equipment in full compliance with the terms and conditions of Section XI of the Agreement: provided however that, if Lessee elects this option, Lessee shall promptly pay to Lessor, as a contingent remarketing fee, an amount equal to Three percent (3%) of the Capitalized Lessor's Cost of the Equipment, plus all rent and all other sums due and unpaid as of the Basic Term Termination Date (including, but not limited to, any Rent then due and payable and any accrued sales and property taxes). (d) Lessee agrees that if it elects to return the equipment for the first Schedule, Lessee shall be deemed to have elected to return all other Schedules under this Agreement. 2. For purposes of this Schedule only, the following is added to the end thereof: EARLY PURCHASE OPTION: (a) Provided that the Agreement has not been terminated and no default exists hereunder, Lessee shall have the option to purchase all, but not less than all of the Equipment on the rent payment date which is thirty-six (36) months from the Basic Term Commencement Date hereunder (the "Purchase Option Date") for a purchase price equal to three hundred twenty one thousand one hundred eighty one & 33/100 ($321,181.33) (the "Option Price"). Lessor and Lessee agree that the Option Price is a reasonable prediction of the price that a willing buyer (who is neither a lessee in possession or a used equipment dealer) would pay for the Equipment on the Purchase Option Date in an arm's length transaction to a willing seller under no compulsion to sell. (b) LESSEE MAY EXERCISE SUCH OPTION ONLY BY GIVING NOTICE TO LESSOR AT LEAST 30 DAYS (BUT NOT MORE THAN 90 DAYS) PRIOR TO THE PURCHASE OPTION DATE. (c) On the Purchase Option Date, if Lessee has elected to purchase the Equipment and no default has occurred and is continuing under this Agreement or any other agreement between Lessee and Lessor: 9 (i) Lessee shall pay to Lessor any rent and other sums due and unpaid on the Purchase Option Date; and (ii) Lessee shall purchase from Lessor, and Lessor shall sell to Lessee, the Equipment on an AS IS, WHERE IS basis, without recourse to or warranty from Lessor (express or implied), for a consideration equal to the Option Price (together with any applicable sales taxes).] Except as expressly modified hereby, all terms and provisions of the Lease shall remain in full force and effect. This Addendum is not binding or effective with respect to the Lease or the Equipment until executed on behalf of Lessor and Lessee by authorized representatives of Lessor and Lessee. IN WITNESS WHEREOF, Lessee and Lessor have caused this Addendum to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: GENERAL ELECTRIC CAPITAL CORPORATION GUILFORD PHARMACEUTICALS INC. BY: BY: NAME: NAME: TITLE: TITLE: Attest: BY: NAME:
10 1008 (Renewable) LETTER OF CREDIT AGREEMENT THIS LETTER OF CREDIT AGREEMENT, dated ____________________ ("AGREEMENT"), between GUILFORD PHARMACEUTICALS INC. , a corporation organized and existing under the laws of the State of Delaware ("LESSEE"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("LESSOR"). RECITALS: WHEREAS, Lessee desires to lease from Lessor certain equipment or other property (collectively, "EQUIPMENT") pursuant to Equipment Schedule No. 001 dated as of ____________________ ("Schedule") to that certain Master Lease Agreement ("Master Lease") dated as of ________________________ (the Master Lease and the Schedule, as the same may be from time to time extended, amended, restated or otherwise modified, being hereinafter collectively referred to as the "LEASE"); and WHEREAS, Lessor is unwilling to lease the Equipment to Lessee unless and until Lessee provides Lessor with certain additional assurances in the form of a letter of credit as hereinafter described; NOW, THEREFORE, in consideration of the above premises and promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows: 1. Concurrently with the execution of this Agreement, Lessee shall, at its sole cost and expense and as additional security for the prompt payment and performance of all of its obligations (whether now existing or hereafter arising) under the Lease, deliver or cause to be delivered to Lessor an irrevocable standby letter of credit ("LETTER OF CREDIT") which shall be (i) in the amount of Five Hundred Thirty Nine Thousand One Hundred Fifty Three & 33/100 US Dollars (US $539,153.33), (ii) issued by a bank which is acceptable to Lessor in its reasonable discretion, (iii) substantially in the form of Exhibit A attached hereto (or in such other form as may be acceptable to Lessor in its sole discretion), and (iv) for an initial term of one year with automatic annual renewals thereafter (without amendment except for extension of the then current expiration date by an additional year and, provided there has been no default under this Agreement or the Lease, the reduction of the face amount of such letter of credit as set forth on the attached Exhibit B) until Lessee has received written notice from Lessor to the effect that the Letter of Credit is being released in its entirety. After all of Lessee's obligations under the Lease have been indefeasibly paid and performed in full, Lessor shall, upon the request of Lessee, release the Letter of Credit and provide Lessee with a written notice to that effect. If requested by Lessor, the Letter of Credit shall, at Lessee's sole cost and expense, be accompanied by an opinion of counsel regarding its due authorization, execution, and enforceability (which opinion shall be in form and substance, and from counsel, acceptable to Lessor in its reasonable discretion). 2. Lessee shall be in default under this Agreement and the Lease if for any reason whatsoever: (a) Lessor fails to receive the Letter of Credit in the time and manner required herein; (b) the Letter of Credit is not automatically renewed as required herein; (c) Lessor receives any notice to the effect that the Letter of Credit will not be automatically renewed as required herein; or (d) Lessee otherwise breaches any of its obligations hereunder. The foregoing events of default are in addition to, not in lieu of, those set forth in the Lease. 3. Upon the occurrence of any default under this Agreement or the Lease, or upon the filing of any petition by or against Lessee under any bankruptcy, insolvency or similar laws (which petition against Lessee is not dismissed within sixty (60) days of its filing), then in any such event and at any time thereafter Lessor shall have the right, with or without notice to or demand upon Lessee, to draw upon the Letter of Credit, by presenting to the issuer one or more sight drafts and any other necessary documents, and to receive (in a lump sum or in several sums from time to time at the sole discretion of Lessor) and retain an amount not to exceed, in the aggregate the Stipulated Loss Values. 4. If Lessor draws on the Letter of Credit, the proceeds received by Lessor therefrom shall be applied: first, towards costs and expenses (including, without limitation, reasonable attorneys' fees and disbursements) incurred by Lessor in connection with such draw or in otherwise enforcing its rights and remedies hereunder; second, towards any rent or other sums of any kind then due and unpaid by Debtor under the Lease; and third, at Lessor's option either (i) towards the Stipulated Loss Value calculated as provided in the Lease or (ii) Lessor may hold any such proceeds as additional security (commingled with its own funds and without any need to pay interest or income thereon) for any further obligations of Lessee under the Lease, including, without limitation, any rent or other sums of any kind that may become due under the Lease and/or the Stipulated Loss Value calculated as provided in the Lease. Once all obligations of Lessee under the Lease have been indefeasibly paid and performed in full, any remaining excess proceeds from the Letter of Credit shall be remitted by Lessor to Lessee. In any event, Lessee shall remain liable for any deficiency under the Lease. 5. Lessor's rights and remedies under this Agreement (including, without limitation, the right to draw upon the Letter of Credit), the Lease or otherwise are cumulative and may be exercised singularly or concurrently. Neither any failure nor delay on the part of Lessor to draw upon the Letter of Credit or to exercise any other rights or remedies shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or of any other right or remedy howsoever arising. Under no circumstances shall Lessor be deemed or construed to have waived its right to draw upon the Letter of Credit or to exercise any of its other rights or remedies unless such waiver is in writing and executed by a duly authorized representative of Lessor. A waiver of any right or remedy on any one occasion shall not operate as a waiver of such right or remedy on any future occasion or as a waiver of any other right or remedy. 11 6. LESSEE AND LESSOR HEREBY UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, THE LETTER OF CREDIT, THE LEASE, ANY DOCUMENTS RELATING HERETO OR THERETO, ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER HEREOF OR THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN THEM. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LETTER OF CREDIT, THE LEASE OR ANY DOCUMENTS RELATING HERETO OR THERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT. 7. Any notices to be given in connection herewith shall be delivered in the manner contemplated by the Lease. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior understandings (whether written, verbal, implied or otherwise) with respect thereto. None of the terms hereof may be amended, waived or otherwise modified except pursuant to a written instrument duly executed by the party to be charged. Lessor may assign its rights hereunder at any time, but Lessee may not do so without the prior written consent of Lessor. This Agreement shall be binding upon, and shall inure to the benefit of, Lessor, Lessee, and their respective successors and permitted assigns. IN WITNESS WHEREOF, Lessee and Lessor have caused their duly authorized representatives to execute and deliver this Agreement on the year and day first above written. LESSEE: LESSOR: GUILFORD PHARMACEUTICALS INC. GENERAL ELECTRIC CAPITAL CORPORATION By: By: Title: Title: Date: Date: 12 3009 (3/91) EXHIBIT A TO LETTER OF CREDIT AGREEMENT FORM OF LETTER OF CREDIT (BANK LETTERHEAD STATIONERY) GENERAL ELECTRIC CAPITAL CORPORATION 4 NORTH PARK DRIVE, SUITE 500 HUNT VALLEY, MARYLAND 21030 RE: IRREVOCABLE LETTER OF CREDIT NO._______________ FOR U.S. $____________________, DATED____________________, 19_____. Gentlemen: We hereby issue our irrevocable Letter of Credit No._______________ in favor of General Electric Capital Corporation, a New York corporation ("GE CAPITAL"), for the account of Guilford Pharmaceuticals Inc. ("CUSTOMER"). We undertake to honor from time to time your draft or drafts at sight on us not exceeding in the aggregate U.S. $____________________ when accompanied by a typewritten statement executed by GE Capital stating either (i) that the amount of the accompanying draft is due and owing by Customer to GE Capital under the terms of that certain Master Lease Agreement dated as of_________________, 1996 between customer General Electric Capital Corporation (the "Lease Agreement"), or (ii) that a petition has been filed by or against Customer under Title 11 of the United States Code or any successor law or similar law. We agree that we shall have no duty or right to inquire as to the basis upon which GE Capital has determined to present to us any draft under this Letter of Credit, and presentation of such draft as provided above, shall automatically result in payment to GE Capital. This Letter of Credit is valid until _________________________, 19_____, and drafts drawn hereunder, when accompanied by the statement referred to above, will be honored if presented to us at our office at _________________________ on or before that date. All drafts must be marked "DRAWN UNDER IRREVOCABLE LETTER OF CREDIT NO. __________, DATED ____________________, 19_____". This irrevocable Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision) and, to the extent not inconsistent therewith, the Uniform Commercial Code of the State of Maryland. 13 All of the terms and conditions of this Letter of Credit are contained herein and shall not be altered except by reduction in the amount due to corresponding payments in like amount in compliance with the aforementioned terms. There are no other conditions to this Letter of Credit. Very truly yours, By: Title: 14 GUILFORD PHARMACEUTICALS, INC. LETTER OF CREDIT AGREEMENT EXHIBIT B (% of Acquisition Cost) END OF MONTH O/S LEASE BALANCE LETTER OF CREDIT REQUIREMENT - ------------ ----------------- ---------------------------- [S] [C] [C] 0 100.00 70.0 12 85.4 60.0 24 65.6 50.0 36 44.0 32.0 48 20.6 9.0 EX-11.1 6 COMPUTATION. 1 EXHIBIT 11.1 COMPUTATION OF PER SHARE EARNINGS
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 1996 1995 -------------- ------------- -------------- ------------- Weighted average common shares outstanding 13,834,919 8,002,796 12,673,911 6,486,681 Dilutive incremental shares assumed to be outstanding 1,543,167 - 1,540,522 - related to stock options and warrants Weighted average common and common equivalent shares used in the computation of -------------- ------------- -------------- ------------- net income (loss) per share 15,378,086 8,002,796 14,214,433 6,486,681 ============== ============= ============== ============= Net income (loss) $ 13,188,266 $ (3,449,045) $ 11,444,270 $ (8,542,743) ============== ============= ============== ============= Net income (loss) per share $ 0.86 $ (0.43) $ 0.81 $ (1.32) ============== ============= ============== =============
Notes: (1) Both primary and fully diluted earnings per share are the same for the three and nine months ended September 30, 1996, under APB 15, "Earnings Per Share" EX-27.3 7 FINANCIAL DATA SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q, FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH DOCUMENT (FORM 10-Q) 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 28,213,811 0 0 0 135,000 76,630,909 14,134,594 1,407,671 96,827,497 5,478,320 10,031,909 0 0 139,668 81,317,268 96,827,497 0 27,630,751 0 17,768,567 0 0 344,751 11,444,270 0 11,444,270 0 0 0 11,444,270 .81 .81
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