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EXHIBIT 8.01
HOGAN & HARTSON L.L.P.
555 Thirteenth Street, NW
Washington, D.C. 20004
July 31, 2000
Board of Directors
Guilford Pharmaceuticals Inc.
6611 Tributary Street
Baltimore, Maryland 21224
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the
proposed merger of St. John Development Corp. ("Merger Subsidiary"), a Delaware
corporation and wholly-owned subsidiary of Guilford Pharmaceuticals Inc.
("Parent"), a Delaware corporation, with and into Gliatech Inc. (the "Company"),
a Delaware corporation, with the separate corporate existence of Merger
Subsidiary ceasing and the Company continuing as the surviving corporation (the
"Merger"). The Merger will be consummated pursuant to the Agreement and Plan of
Merger (the "Agreement"), dated as of May 29, 2000, by and among Parent, Merger
Subsidiary and the Company.
In connection with the preparation of this opinion, we have
examined and with your consent relied upon (without any independent
investigation or review thereof) the following documents (including all exhibits
and schedules thereto): (1) the Agreement; (2) the Registration Statement on
Form S-4, as amended to date, filed with the Securities and Exchange Commission
(the "Registration Statement") and the Preliminary Statement/Prospectus of
Parent and the Company; (3) representations and certifications made to us by
Parent (attached hereto as Exhibit A); (4) representations and certifications
made to us by the Company (attached hereto as Exhibit B); and (5) such other
instruments and documents related to the formation, organization and operation
of Parent, Merger Subsidiary
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July 31, 2000
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and the Company or to the consummation of the Merger and the transactions
contemplated thereby as we have deemed necessary or appropriate.1/
The Proposed Transaction
Based solely upon our review of the documents set forth above,
and upon such information as Parent, Merger Subsidiary and the Company have
provided to us (which we have not attempted to verify in any respect), and in
reliance upon such documents and information, we understand that the proposed
transaction and the relevant facts with respect thereto are as follows:
Parent is a biopharmaceutical company engaged in the
development and commercialization 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 or conditions; and (ii)
therapeutic and diagnostic products for neurological diseases and conditions.
Merger Subsidiary was organized solely for the purpose of accomplishing the
merger described below. The Company is engaged in the discovery and development
of biosurgical and therapeutic products to improve surgical outcome and to treat
neurological disorders.
For the reasons set forth in the Registration Statement, it is
proposed that pursuant to the Agreement and the laws of the State of Delaware,
Merger Subsidiary merge with and into the Company. Merger Subsidiary's separate
corporate existence will cease and the Company will be the surviving corporation
(the "Surviving Corporation"). As the Surviving Corporation, the Company will
succeed to all of the assets and liabilities of Merger Subsidiary under Delaware
corporate law.
By virtue of the Merger, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares to be cancelled pursuant to Section 3.1(b) of the Agreement) will be
converted into the right to receive the Merger Consideration, consisting of 1.38
shares of Parent Common Stock (including any Rights issued pursuant to the
Parent Rights
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1/ All capitalized terms used herein and not otherwise defined shall have the
same meaning as they have in the Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
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Guilford Pharmaceuticals Inc.
July 31, 2000
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Agreement). Fractional shares of Parent Common Stock will not be issued in the
Merger. Rather, a holder of Shares entitled to receive a fractional share of
Parent Common Stock will be entitled to receive a cash payment in lieu thereof,
which payment will equal the amount determined by multiplying (i) the fraction
of a share of Parent Common Stock to which such holder would otherwise be
entitled by (ii) the average closing price of a share of Parent Common Stock as
reported on the NASDAQ for the twenty most recent days that Parent Common Stock
has traded ending on the third trading day prior to the Effective Time. Under
Delaware General Corporation Law, no appraisal rights will be available to
holders of Shares in connection with the Merger.
Assumptions and Representations
In connection with rendering this opinion, we have assumed or
obtained representations (and, with your consent, are relying thereon, without
any independent investigation or review thereof, although we are not aware of
any material facts or circumstances contrary to or inconsistent therewith) that:
1. All information contained in each of the documents we have
examined and relied upon in connection with the preparation of this opinion is
accurate and completely describes all material facts relevant to our opinion,
all copies are accurate and all signatures are genuine. We have also assumed
that there has been (or will be by the Effective Time of the Merger) due
execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof.
2. The Merger will be consummated in accordance with
applicable state law and will qualify as a statutory merger under applicable
state law.
3. All representations made in the exhibits hereto are true,
correct, and complete in all material respects. Any representation or statement
made "to the best of knowledge" or similarly qualified is correct without such
qualification.
4. The Merger will be consummated in accordance with the
Agreement and as described in the Proxy Statement/Prospectus (including
satisfaction of all covenants and conditions to the obligations of the parties
without amendment or waiver thereof); each of Parent, Merger Subsidiary and the
Company will comply with all reporting obligations with respect to the Merger
required under the Code and the Treasury Regulations thereunder; and the
Agreement and all
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July 31, 2000
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other documents and instruments referred to therein or in the Proxy
Statement/Prospectus are valid and binding in accordance with their terms.
Opinion - Federal Income Tax Consequences
Based upon and subject to the assumptions and qualifications
set forth herein, it is our opinion that for federal income tax purposes: (1)
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code with the consequences that (a) the Company and Parent will not
recognize any gain or loss; (b) no gain or loss will be recognized by a Company
stockholder as a result of the receipt solely of shares of Parent common stock
pursuant to the Merger, except to the extent of any cash received in lieu of
fractional shares of Parent common stock; (c) a Company stockholder who receives
cash in lieu of a fractional share of Parent common stock will be treated as if
the stockholder received the fractional share and then sold the share back to
Parent and the stockholder will in general recognize gain or loss on the sale of
the fractional share equal to the difference between (w) the amount of cash
received for the fractional share and (x) the stockholder's tax basis in the
fractional share; (d) a Company stockholder's aggregate tax basis in Parent
common stock received pursuant to the merger will initially be (y) equal to the
stockholder's aggregate tax basis in the Company common stock immediately prior
to the Merger (z) reduced by the amount of basis allocable to the fractional
share, as described above; and (e) a Company stockholder's holding period for
Parent common stock received in exchange for Company common stock pursuant to
the Merger will include the holding periods of the Company common stock; and (2)
the discussion in the Registration Statement under the heading "Federal Income
Tax Consequences," to the extent such discussion describes applicable federal
income tax law, is correct in all material respects, as of the date hereof.
In addition to the assumptions set forth above, this opinion
is subject to the exceptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment
regarding the application of relevant current provisions of the Code and
interpretations of the foregoing as expressed in existing court decisions,
administrative determinations (including the practices and procedures of the
Internal Revenue Service (the "IRS") in issuing private letter rulings, which
are not binding on the IRS except with respect to the taxpayer that receives
such a ruling) and published rulings and procedures all as of the date hereof.
An opinion of counsel merely represents counsel's best judgment with respect to
the probable
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outcome on the merits and is not binding on the IRS or the courts. There can be
no assurance that positions contrary to our opinions will not be taken by the
IRS, or that a court considering the issues would not hold contrary to such
opinions. Parent has not requested a ruling from the IRS (and no ruling will be
sought) as to any of the federal income tax consequences addressed in this
opinion. Furthermore, no assurance can be given that future legislative,
judicial or administrative changes, on either a prospective or retroactive
basis, would not adversely affect the accuracy of the opinion expressed herein.
Nevertheless, we undertake no responsibility to advise you of any new
developments in the law or in the application or interpretation of the federal
income tax laws.
2. This letter addresses only the specific tax opinions set
forth above. This letter does not address any other federal, state, local or
foreign tax consequences that may result from the Merger or any other
transaction (including any transaction undertaken in connection with the
Merger).
3. We express no opinion regarding, among other things, the
tax consequences of the Merger (including the opinion set forth above) as
applied to specific stockholders of the Company that may be relevant to
particular classes of the Company shareholders, including without limitation,
financial institutions or trusts; tax-exempt entities; insurance companies;
traders that mark to market; dealers in securities or foreign currencies;
stockholders who received their Company stock through an exercise of employee
stock options or otherwise as compensation; stockholders who are foreign
corporations, foreign partnerships, or other foreign entities, or individuals
who are not citizens or residents of the U.S.; and stockholders who hold Company
stock as part of a hedge, straddle or conversion transaction.
4. Our opinion set forth herein is based upon the description
of the contemplated transactions as set forth above in the section captioned
"The Proposed Transaction," the Agreement and the Proxy Statement/Prospectus. If
the actual facts relating to any aspect of the transactions differ from this
description in any material respect, our opinion may become inapplicable. No
opinion is expressed as to any transaction other than those set forth in the
section captioned "The Proposed Transaction," the Agreement and the Proxy
Statement/Prospectus or to any transaction whatsoever, including the Merger, if
all the transactions described in the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus are not
consummated in accordance with the terms of the section captioned "The Proposed
Transaction," the Agreement and the Proxy Statement/Prospectus and without
waiver or breach of any material provision
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July 31, 2000
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thereof or if all of the representations, warranties, statements and assumptions
upon which we relied are not true and accurate at all relevant times. In the
event any one of the statements, representations, warranties or assumptions upon
which we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
This opinion letter has been provided for your use in
connection with the Registration Statement. We hereby consent to the use of the
opinion letter as an exhibit to the Registration Statement and to the use of our
name in the Registration Statement. In giving the consent, we do not thereby
admit that we are an "expert" within the meaning of the Securities Act of 1933,
as amended.
Sincerely yours,
HOGAN & HARTSON L.L.P.
