<PAGE> 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
- ---------------------------- ------------------------------
<PAGE> 2
GUILFORD PHARMACEUTICALS INC.
INDEX
<TABLE>
<CAPTION>
Page (s)
----
<S> <C> <C>
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
</TABLE>
2
<PAGE> 3
GUILFORD PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
(UNAUDITED) DECEMBER 31, 1995
ASSETS ------------------ -------------------
------
<S> <C> <C>
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
=============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 4
GUILFORD PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
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
=============== ============== ============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE> 5
GUILFORD PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK NOTES
------------ ADDITIONAL RECEIVABLE TOTAL
NUMBER PAID-IN ON COMMON ACCUMULATED DEFERRED STOCKHOLDERS'
OF SHARES AMOUNT CAPITAL STOCK DEFICIT COMPENSATION EQUITY
--------- ------ ------- ----- ------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
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
------------ ----------- ----------- --------- ------------ --------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE> 6
GUILFORD PHARMACEUTICALS INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
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
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<S> <C>
Computed expected tax provision (in millions)
- Federal and State $3.9
Change (reduction) in valuation allowance (3.9)
-----
Income tax expense -
=====
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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
[ * ]
<PAGE> 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.
<PAGE> 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)
<PAGE> 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
<TABLE>
<S> <C> <C>
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) [ * ]
</TABLE>
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).
<PAGE> 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
[ * ]
<PAGE> 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
[ * ]
<PAGE> 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
[ * ]
<PAGE> 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 -
<PAGE> 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:
<TABLE>
<CAPTION>
Unit Extended
Quantity Product Price Price
- -------- ------- ----- -----
<S> <C> <C> <C>
[ * ] BCNU N/A $[ * ]
-
Total Price $[ * ]
=
</TABLE>
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:
<TABLE>
<CAPTION>
Quantity Product Delivery Date
<S> <C> <C>
[ * ] BCNU [ * ]
</TABLE>
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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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 -
<PAGE> 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
-------------------------
<PAGE> 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
---------------------
<PAGE> 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
-------------------------
<PAGE> 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
----------------------------
<PAGE> 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
---------------------------
<PAGE> 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
--------------------------
<PAGE> 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
-------------------------
<PAGE> 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
------------------------
<PAGE> 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
<PAGE> 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.
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<PAGE> 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.
<PAGE> 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.
<TABLE>
<S> <C>
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
---------------------------------- ----------------------------------------
</TABLE>
<PAGE> 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:
<PAGE> 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.
<TABLE>
<S> <C>
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION GUILFORD PHARMACEUTICALS INC.
BY: BY:
NAME: NAME:
TITLE: TITLE:
Attest:
BY:
NAME:
</TABLE>
<PAGE> 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.
<PAGE> 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:
<PAGE> 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.
<PAGE> 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:
<PAGE> 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
<PAGE> 1
EXHIBIT 11.1
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1996 1995 1996 1995
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
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)
============== ============= ============== =============
</TABLE>
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"
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 28,213,811
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 135,000
<CURRENT-ASSETS> 76,630,909
<PP&E> 14,134,594
<DEPRECIATION> 1,407,671
<TOTAL-ASSETS> 96,827,497
<CURRENT-LIABILITIES> 5,478,320
<BONDS> 10,031,909
0
0
<COMMON> 139,668
<OTHER-SE> 81,317,268
<TOTAL-LIABILITY-AND-EQUITY> 96,827,497
<SALES> 0
<TOTAL-REVENUES> 27,630,751
<CGS> 0
<TOTAL-COSTS> 17,768,567
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 344,751
<INCOME-PRETAX> 11,444,270
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,444,270
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,444,270
<EPS-PRIMARY> .81
<EPS-DILUTED> .81
</TABLE>
