EXHIBIT 10.30 A

LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

     THIS LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (the “Agreement”)
is made effective as of the 2nd day of March, 2000 (the “Effective Date”) by and
between GUILFORD PHARMACEUTICALS INC., a Delaware corporation having its
principal place of business at 6611 Tributary St., Baltimore, Maryland, U.S.A.
21224 (“Guilford”), on the one hand, PROQUEST PHARMACEUTICALS INC., a Kansas
corporation having an address at 4913 Stoneback Place, Lawrence, Kansas 66047
(“ProQuest”). Guilford and ProQuest are sometimes referred to herein
individually as a “Party” and collectively as the “Parties”. References to
Guilford and ProQuest shall include their respective Affiliates, as defined
herein.

RECITALS

     1. Pursuant to a License Agreement, dated April 2, 1999 (the “KU License”),
between ProQuest and the University of Kansas Center for Research, Inc.
(“KUCR”), ProQuest holds certain rights with respect to a proprietary compound,
PQ-1002, as further described in the attached Schedule 1 (“PQ-1002”), and
related intellectual property as further described in the attached Schedule 2,
which it is using to develop a pro-drug of propofol, currently marketed for use
as an anesthetic.

     2. Guilford possesses research, development and commercialization
capabilities sufficient to perform the activities contemplated in this
Agreement.

     3. The Parties desire to enter into this Agreement pursuant to which
(a) ProQuest shall grant to Guilford an exclusive license to PQ-1002 and certain
related compounds; and (b) Guilford agrees to develop and commercialize such
products, all on the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:

ARTICLE 1. DEFINITIONS

The following capitalized terms shall have the following meanings as used in
this Agreement:

     1.1 “Act” shall mean the U.S. Food, Drug and Cosmetic Act, as amended, and
the regulations promulgated thereunder.

     1.2 “Affiliate” shall mean a Person that, directly or indirectly, through
one or more intermediates, controls, is controlled by, or is under common
control with the Person specified.

     1.3 “Agreement Compound” shall mean (i) PQ-1002; (ii) any other compound in
ProQuest’s Control on the Effective Date or during the term of this Agreement
which is a prodrug of propofol or of a propofol analog; or (iii) any other
compound which Guilford (and/or a sublicensee of Guilford’s rights under this
Agreement) may derive from ProQuest Patent Rights or ProQuest Know-how and that
delivers (A) the propofol nucleus; or (B) a propofol analog. “Propofol analog”
as used in this Agreement shall mean any compound that is derived from or

 

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similar to the propofol nucleus and is intended or expected to have similar
pharmacological properties to propofol. “Propofol nucleus” as used in this
Agreement shall mean 2,6-di-isopropylphenol.

     1.4 “Bankruptcy Event” shall mean, with respect to a particular Party, that
voluntary or involuntary proceedings by or against such Party are instituted in
bankruptcy or under any insolvency law, or a receiver or custodian is appointed
for such, or proceedings are instituted by or against such Party for corporate
reorganization or the dissolution of such Party, which proceedings, if
involuntary, shall not have been dismissed within sixty (60) days after the date
of filing, or such Party makes an assignment for the benefit of its creditors,
or substantially all of the assets of such Party are seized or attached and not
released within sixty (60) days thereafter.

     1.5 “Commercialize” or “Commercialization” shall mean those activities
relating to the promotion, marketing and sale of any Agreement Compound.

     1.6 “Commercially Reasonable Efforts” shall mean efforts and resources
commonly used in the research-based pharmaceutical industry for a product at a
similar stage in its product life or similar market potential, taking into
account efficacy, the competitiveness of alternative products in the
marketplace, the degree of intellectual property protection available for the
product (whether to Guilford or to Third Parties), the likelihood of regulatory
approval given the regulatory structure involved, the profitability of the
product including the royalties payable to licensors of Patent Rights,
alternative products and other relevant factors. Commercially Reasonable Efforts
shall be determined on a market-by-market basis for a particular product, and it
is anticipated that the level of effort will change over time, reflecting
changes in the status of the product and the market involved. For the avoidance
of doubt, the Parties agree that Guilford (or its Affiliates or sublicensees)
may elect not to sell a Program Product in a particular country if there is no
patent covering same in such country.

     1.7 “Confidential Information” shall mean with respect to a particular
Party, non-public proprietary data, information and/or materials that are owned
or licensed in whole or in part by such Party (including, without limitation,
the terms and conditions of the KU License, and the proprietary business, patent
prosecution, process, technical information and data specified in Section 6.01
of the KU License).

     1.8 “Consent and Agreement” shall mean the Consent and Agreement, dated as
of even date hereof, as the same may be amended from time to time, among
Guilford, ProQuest and KUCR, the form of which is attached hereto and made a
part hereof as Exhibit C.

     1.9 “Controls” or “Controlled” shall mean, with respect to intellectual
property, possession of the ability to grant licenses or sublicenses without
violating the terms of any agreement or other arrangement with, or the rights
of, any Third Party.

     1.10 “Determination Date” shall mean the earlier of (i) the date on or
before sixty (60) days following Guilford’s commencement of the Infusion Study
contemplated in Section 3.2, or (ii) the date that Guilford delivers written
notice to ProQuest and the Escrow Agent as set forth in Section 5.2.

     1.11 “Develop” or “Development” shall mean those activities related to the
clinical development of an Agreement Compound including those activities related
to the obtainment of Regulatory Approvals for the clinical testing and
commercial sale of an Agreement Compound. Development activities will
specifically include (i) all activities relating to toxicology, in vitro assays,
animal models of clinical efficacy and other studies required to support a
Regulatory Filing to initiate clinical testing of an Agreement Compound and
(ii) all activities relating to clinical studies and determination of safety and
efficacy of an Agreement Compound in humans to support a Regulatory Filing to
initiate Commercialization of an Agreement Compound.

     1.12 “Effective Date” shall mean the date of this Agreement first above
written.

 

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     1.13 “Escrow Agreement” shall mean the Escrow Agreement, dated of even date
hereof, as the same may be amended from time to time, between Guilford and
ProQuest, the form of which is attached hereto and made a part hereof as
Exhibit B.

     1.14 “Europe” or “European Country” shall mean, for purposes of
Sections 3.3, 5.3(c)(ii) and 8.6, any of the following countries: Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

     1.15 “Exclusive Cooperation Field” shall mean the Development of PQ-1002 or
any other Agreement Compound, either alone or in combination with any other
compound, and irrespective of indication, formulation, or other factors, but
only in the field of human pharmaceutical or veterinary applications.

     1.16 “Exclusive License” shall mean an exclusive, worldwide,
royalty-bearing license, subject to the University of Kansas’s retained rights
under Sections 2.03 and 2.04 of the KU License.

     1.17 “FDA” shall mean the Federal Food and Drug Administration of the
United States Department of Health and Human Services or any successor agency
thereof.

     1.18 “Force Majeure” shall mean any occurrence beyond the reasonable
control of a Party that prevents or substantially interferes with the
performance by the Party of any of its obligations hereunder. Without limiting
the generality of the foregoing, any of the following: any act of God, flood,
fire, explosion, breakdown of plant, earthquake, strike, lockout, labor dispute,
casualty or accident, war, revolution, civil commotion, acts of public enemies,
blockage or embargo, injunction, law, order, proclamation, regulation,
ordinance, demand, regulatory delay, or requirement of any government or of any
subdivision, authority or representative of any such government, inability to
procure or use materials, labor, equipment, transportation, or energy sufficient
to meet manufacturing needs without the necessity of allocation, or clinical,
technical, medical, scientific, or manufacturing delays, or any other cause
whatsoever, whether similar or dissimilar to those above enumerated, provided
that in all such cases it is beyond the reasonable control of such Party, shall
constitute Force Majeure.

     1.19 “Governance Committee” shall have the meaning defined in Article 4.

     1.20 “Guilford Know-how” shall mean any and all of Guilford’s techniques
and data, including, but not limited to, the identity of and information
relating to PQ-1002 or any other Agreement Compound, inventions, practices,
methods, knowledge, skill, experience, test data including pharmacological,
toxicological, pharmacokinetic and clinical test data, analytical and quality
control data, marketing, pricing, distribution, cost, sales, manufacturing,
patent and legal data, assays and biological materials relating to PQ-1002 or
any other Agreement Compound, and any other information reasonably necessary for
Guilford to Develop and Commercialize PQ-1002 or any other Agreement Compound
and to otherwise perform its obligations under this Agreement which (i) Guilford
discloses to ProQuest under this Agreement or (ii) Guilford Controls on the
Effective Date and/or during the term of this Agreement. Guilford Know-how shall
exclude Guilford Patent Rights.

     1.21 “Guilford Patent Rights” shall mean the Patent Rights which cover a
composition of matter, use, method, process or other matter relating to any
Agreement Compound or Program Product, or derived from ProQuest Patent Rights or
ProQuest Know-how, which Patent Rights are Controlled by Guilford from and after
the Effective Date and during the term of this Agreement.

     1.22 “IND” shall mean an “Investigational New Drug Application,” as defined
in the Act, and all supplements thereto, covering an Agreement Compound.

 

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     1.23 “License Field” shall mean the research, Development or
Commercialization or any other use (including manufacture, marketing, sale or
distribution), for profit or not-for-profit, of any Agreement Compound, but only
for human pharmaceutical or veterinary applications.

     1.24 “Milestones” or “Milestone Payments” shall mean the payments to be
made to ProQuest by Guilford upon occurrence of certain events as set forth in
Article 5.

     1.25 “NDA” shall mean a “New Drug Application,” as defined in the Act, and
all supplements thereto, covering an Agreement Compound.

     1.26 “Net Sales” shall mean gross sales revenues from the sale or other
supply of Program Products by Guilford, its Affiliates, sublicensees or
non-Affiliated distributors to non-Affiliated Third Parties, less trade
discounts (including without limitation, cash discounts, prompt payment or
volume discounts, chargebacks from wholesalers, other allowances granted to
customers or wholesalers of products and payments to government agencies,
whether in cash or trade, rebates, retroactive price reductions or allowances
actually allowed or granted from the billed amount), credits or allowances
actually granted upon claims, rejections or returns of Program Products
(including pursuant to recalls), and sales, value-added and other taxes actually
paid based on sales price (when included in gross sales), but not including
taxes when assessed on income derived from such sales. In order to insure
ProQuest the full royalty payments contemplated hereunder, Guilford agrees that
in the event any Program Product is sold or otherwise transferred to an
Affiliate or a sublicensee, or to a corporation, firm or association with which
Guilford has an arrangement which could result in an artificial reduction in the
price paid by such party to Guilford for an Program Product (e.g., such
purchaser has an option to purchase Guilford’s stock, or has actual ownership of
Guilford stock, or an arrangement with Guilford involving division of profits or
special rebates or allowances respecting such Program Product) (collectively,
“Affiliated Purchasers”), the royalties to be paid hereunder for such Program
Product shall be based upon the greater of: (1) the net selling price at which
such Affiliated Purchaser resells such Program Product to the end-user; (2) the
fair market value of the Program Product being sold at that level of
distribution; or (3) the net price paid by such Affiliated Purchaser for Program
Product. Notwithstanding anything to the contrary in this Section 1.26, if a
Program Product is distributed or invoiced for a discounted price substantially
lower than customary in the trade or distributed at no cost to Affiliates or
otherwise for bona fide business, scientific or charitable reasons (including
without limitation in connection with clinical trials, compassionate sales or an
indigent program), Net Sales shall be based on the actual price received (which
may be a discounted price, or even $0, if distributed free in such bona fide
cases). In the event that Guilford, its Affiliate or its sublicensee sells a
Program Product in combination with other active ingredients or substance, the
Net Sales for purposes of royalty payments shall be based on the sales revenues
received with respect to the sales price of the component(s) consisting of such
Program Product, and if such active components are not priced separately, based
on such sales price as Guilford or its Affiliate may reasonably allocate to the
Program Product included in such combination, subject to the reasonable approval
of ProQuest.

     1.27 “Patent Rights” shall mean all patents and patent applications and
foreign counterparts thereof, in all cases in any jurisdiction in the world,
including any existing or future extensions, registrations, confirmations,
reissues, continuations, divisions, substitutions, revalidations,
continuations-in-part, re-examinations or renewals of such patent or
application, including without limitation Supplementary Protection Certificates
or the equivalent thereof.

     1.28 “Person” shall mean any individual, firm, corporation, partnership,
limited liability company, trust, unincorporated organization or other entity or
a government agency or political subdivision thereto, and shall include any
successor (by merger or otherwise) of such Person.

     1.29 “Program Patent Rights” shall mean any ProQuest Patent Rights or
Guilford Patent Rights, and includes any Patent Rights, the subject of which is
an invention conceived by either Guilford or ProQuest, or by

 

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Guilford and ProQuest jointly, or by a Third Party on behalf of Guilford and/or
ProQuest pursuant to a contractual arrangement, either solely or jointly with
Guilford and/or ProQuest, during the term of this Agreement or a 12 month period
thereafter, and related to PQ-1002 or any other Agreement Compound.

     1.30 “Program Product” shall mean a product, the manufacture, use, sale,
offer to sell or importation of which would (but for a right granted or retained
by KUCR, ProQuest, Guilford or a sublicensee or other partner of Guilford)
infringe one or more claims of a valid, issued patent included in the Program
Patent Rights if any such activities were conducted in (i) the country of sale,
(ii) the United States, or (iii) each of Germany, France and the United Kingdom.

     1.31 “ProQuest Know-how” shall mean any and all of ProQuest’s techniques,
data and other information relating to PQ-1002 or any other Agreement Compound
(including, but not limited to, the identity of and information relating to
PQ-1002 or any other Agreement Compound, inventions, practices, methods,
knowledge, skill, experience, test data including pharmacological,
toxicological, pharmacokinetic and clinical test data, analytical and quality
control data, marketing, pricing, distribution, cost, sales, manufacturing,
patent and legal data, assays and biological materials, and any other
information reasonably necessary for Guilford to Develop and Commercialize
PQ-1002 or any other Agreement Compound), which ProQuest Controls on the
Effective Date and/or during the term of this Agreement. ProQuest Know-how shall
exclude ProQuest Patent Rights.

     1.32 “ProQuest Patent Rights” shall mean Patent Rights which cover a
composition of matter, use, method, process or other matter relating to PQ-1002
or any other Agreement Compound, which is owned or Controlled by ProQuest as of
the Effective Date or during the term of this Agreement, including any joint
interest it may have from time to time in Program Patent Rights, including
without limitation the patent applications set forth on Schedule 2 attached
hereto.

     1.33 “Regulatory Approval” shall mean any approvals (including, where
necessary for the marketing, use or other distribution of a drug in a regulatory
jurisdiction, pricing and reimbursement approvals), licenses, registrations, or
authorizations or equivalents necessary for the manufacture, use, storage,
import, export, clinical testing, transport, marketing, sale and distribution of
a Program Product or Agreement Compound in a regulatory jurisdiction anywhere in
the world (including without limitation authorization or authority to distribute
a drug pursuant to laws, regulations or other permission covering the
distribution of drugs on an orphan drug, named patient compassionate sale or
similar bases).

     1.34 “Regulatory Filings” shall mean, collectively, INDs, Biologics License
Applications, Drug Master Files, NDAs and/or any other comparable filings as may
be required by any federal, state or local regulatory agency, department, bureau
or other governmental entity, in order to obtain Regulatory Approvals.

     1.35 “Royalty” shall have the meaning defined in Section 6.1 of this
Agreement.

     1.36 “Stock Purchase Agreement” shall mean the Stock Purchase Agreement,
dated as of even date herewith, as the same may be amended from time to time,
between Guilford and ProQuest, the form of which is attached hereto and made a
part hereof as Exhibit A.

     1.37 “Third Party” shall mean any Person other than Guilford or ProQuest or
their respective Affiliates, including governmental agencies and bodies.

     1.38 “Third Party Royalties” shall mean royalties payable by Guilford, its
Affiliates or sublicensees to a non-Affiliate Third Party (or multiple
non-Affiliate Third Parties) to make, have made, use, sell, offer for sale or
import Agreement Compounds where the royalty payable to such non-Affiliate Third
Party is based on Patent Rights owned or Controlled by a Third Party.

 

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     Capitalized terms not defined in this Article 1 shall have the meaning
ascribed to them as set forth in this Agreement below.

ARTICLE 2. EXCLUSIVITY AND LICENSE GRANT

     2.1 Exclusivity. Subject to the terms and conditions of this Agreement,
each of Guilford and ProQuest agrees to work exclusively with the other during
the term of this Agreement in the Exclusive Cooperation Field, and neither it
nor any of its Affiliates will directly or indirectly conduct, have conducted or
fund any research, development, regulatory, manufacturing or commercialization
activity within the Exclusive Cooperation Field, except as otherwise agreed by
the Parties or permitted in this Agreement.

     2.2 License Grant to Guilford. Subject to the terms and conditions of this
Agreement, ProQuest hereby grants to Guilford an Exclusive License, including
under the ProQuest Patent Rights, to make, have made, use, sell, offer to sell
and import PQ-1002, and to the extent any license is necessary to engage in such
activities, any other Agreement Compound in the Licensed Field (provided,
however, that Guilford shall not be entitled to practice its rights under this
Agreement with respect to an Agreement Compound other than PQ-1002 unless and
until the Parties have agreed on the appropriate Milestones, Milestone Payments
and Royalties for such Agreement Compound, as contemplated in Sections 5.3(d)
and 6.4(i) below). Guilford may sublicense, and grant the right to further
sublicense, its rights licensed from ProQuest under this Agreement. Guilford
shall provide a copy of any such sublicense agreement to ProQuest within thirty
(30) days of its effective date. Each such sublicense shall be consistent with
the terms of this Agreement, except as may otherwise by agreed in writing by the
Parties.

     2.3 Transfer of ProQuest Know-how. ProQuest represents and warrants that no
later than ten (10) days following the Effective Date, it will transfer,
disclose or otherwise make available to Guilford, or will have transferred,
disclosed or made available, all existing ProQuest Know-how for use by Guilford
to perform the “Infusion Experiment” contemplated in Section 3.2 below and
described in Schedule 3 hereto, and to otherwise Develop and Commercialize
PQ-1002. ProQuest further agrees and covenants to promptly transfer, disclose or
make available, or have transferred, disclosed or made available, all ProQuest
Know-how within its Control, or which it can disclose without breaching a
contractual obligation to a Third Party, related to any Agreement Compound
during the term of this Agreement to enable Guilford to research, Develop and
Commercialize any Agreement Compound.

ARTICLE 3. SCOPE; ALLOCATION OF RESPONSIBILITIES OF THE PARTIES

     3.1 Cooperation Undertaking; Exclusivity. During the term of this
Agreement, ProQuest agrees to cooperate with Guilford as Guilford may reasonably
request, at Guilford’s expense for ProQuest’s out-of-pocket expenses, in order
to enable or facilitate the research, Development and Commercialization by
Guilford of PQ-1002 or any other Agreement Compound in accordance with the terms
of this Agreement. Without limiting the generality of the foregoing, during the
term of this Agreement, ProQuest agrees to promptly disclose to Guilford all
ProQuest Patent Rights, and ProQuest Know-how Controlled by it or which ProQuest
can disclose to Guilford without breaching a contractual obligation to a Third
Party. ProQuest further agrees not to engage in research, Development or
Commercialization of Agreement Compound except under this Agreement.

     3.2 Infusion Study. Following mutual execution and delivery of this
Agreement, Guilford will conduct or cause to be conducted a preclinical animal
chronic infusion study with PQ-1002 in the manner set forth in Schedule 3
attached hereto (the “Infusion Study”). Guilford agrees to use Commercially
Reasonable Efforts to commence the Infusion Study as soon as practicable
following the Effective Date, but the Parties acknowledge and understand that
commencement of the Infusion Study will depend on the availability of Guilford’s
contract research

 

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organization. Guilford agrees to use Commercially Reasonable Efforts to complete
the Infusion Study and share any results thereof with ProQuest on or before the
Determination Date.

     3.3 Guilford Development and Commercialization Undertaking. During the term
of this Agreement, Guilford agrees, using Commercially Reasonable Efforts, to
conduct all Development and Commercialization of PQ-1002, whether independently
or in collaboration with one or more corporate partners as Guilford may choose
in its sole and absolute discretion. Guilford shall have the right to control
all aspects of such Development and Commercialization. Specifically, Guilford
agrees to use Commercially Reasonable Efforts to:

  (i)   commence the first human clinical trial (whether under an IND or
otherwise) of PQ-1002 no later than 18 months following the Determination Date;
and     (ii)   file the first NDA for PQ-1002 no later than the fifth
anniversary of the Determination Date.

     If Guilford in the exercise of Commercially Reasonable Efforts determines
that another Agreement Compound is a more desirable candidate for Development or
Commercialization than PQ-1002, then Guilford in its sole discretion may elect
to Develop and Commercialize such an Agreement Compound in lieu of PQ-1002, in
which event Guilford shall use Commercially Reasonable Efforts to so Develop and
Commercialize such Agreement Compound (subject to Section 2.2 above and Sections
5.3(d) and 6.4(i) below). Guilford, either directly or through any corporate
partner(s) it chooses, shall be responsible for paying all expenses associated
with the Development and Commercialization of PQ-1002 (or any other Agreement
Compound, if applicable).

     If and when PQ-1002 (or another Agreement Compound, if applicable) has been
successfully Developed, Guilford agrees to use its Commercially Reasonable
Efforts to obtain the necessary Regulatory Approvals and market it in the United
States, Europe and Japan, as well as such other regions and countries as
Guilford may deem it commercially reasonable to do so. In so doing, Guilford
shall have the right to grant one or more exclusive or non-exclusive marketing,
sales, sales agency and/or distribution rights.

     3.4 Regulatory Matters. Without limiting its rights under this Agreement,
Guilford in its sole discretion will have complete control, authority, and
responsibility for the regulatory strategies adopted for the Development and
Commercialization of any Agreement Compound. Guilford will be responsible for
and will own all Regulatory Filings and Regulatory Approvals for any Agreement
Compound, except as otherwise provided in Section 10.4(b).

     3.5 Manufacturing. Without limiting its rights under this Agreement,
Guilford in its sole discretion will have complete control, authority and
responsibility for manufacturing of an Agreement Compound, whether directly or
through Affiliates, contracted sublicensees or other Third Parties.

     3.6 Hart-Scott Rodino Antitrust Improvements Act of 1976. Each of ProQuest
and Guilford shall cooperate with one another in determining whether any filing
of notification and report forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, is required in connection with the
consummation of the transactions contemplated by this Agreement and the Stock
Purchase Agreement, and preparing and making any such filing and furnishing
information required in connection therewith. If such a filing is required, each
Party shall be responsible for preparing and making its own filing, and each
Party shall be responsible for paying its own costs and expenses associated with
making the filing. Guilford shall be responsible for the fee required to be paid
in connection with any such filing.

 

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ARTICLE 4. GOVERNANCE

     4.1 Governance Committee. The development of PQ-1002 (or another Agreement
Compound, if applicable), and the relationship between the Parties, will be
periodically reviewed by a Governance Committee which shall be composed of at
least five (5) persons, two (2) of whom shall be representatives of ProQuest,
and the remainder of which will be representatives of Guilford. Each Party
shall, no later than thirty (30) days following the Effective Date, appoint its
representatives to the Governance Committee by giving written notice to the
other Party. The Governance Committee will be chaired by one representative
designated by Guilford. Members of the Governance Committee shall serve in such
capacities, on such terms and conditions, and for such duration as shall be
determined by the Party appointing same. Each Party may designate an alternate
member to serve temporarily in the absence of a permanent member designated by
such Party. Each Party may from time to time upon prior written notice change
its representative members on the Governance Committee

     4.2 Meetings of the Governance Committee. Unless otherwise agreed by the
Parties from time to time, the Governance Committee shall hold meetings at such
times and places as shall be determined by the Parties, but in no event shall
such meetings be held less frequently than once every calendar quarter,
commencing no more than sixty (60) days following the Effective Date. Meetings
may be conducted in person or by conference telephone or video conference.
Before the conclusion of a meeting, the date and location of the next meeting
will be decided by the Parties. The Chairperson may in his/her discretion decide
that minutes of the meeting be kept, by designating any attendee to serve as
secretary of the meeting.

     4.3 Purpose of the Governance Committee. The Governance Committee shall
serve as a forum for overseeing the relationship of the Parties arising out of
this Agreement and for jointly reviewing the Development and Commercialization
of PQ-1002 (or any other Agreement Compound), and shall perform such other
functions as the Parties may agree in order to further the purposes of this
Agreement. At least quarterly at a Governance Committee meeting, Guilford will
deliver a report on the Development and Commercialization of PQ-1002 (or any
other Agreement Compound), and Guilford will (either at such meeting or as a
follow up to such meeting) provide such further information (including Guilford
Know-how) relating to the Development and Commercialization of PQ-1002 (or any
other Agreement Compound) as ProQuest may reasonably request, all subject to
Article 7 below.

     4.4 Agendas. Each Party will use Commercially Reasonable Efforts to notify
the other at least three (3) business days prior to the date of a meeting of the
Governance Committee, proposing the agenda items it wishes to discuss at such
meeting. Notwithstanding the foregoing, the Governance Committee shall be free
to consider any matter related to this Agreement.

     4.5 Independent Contractors. Subject to the terms of this Agreement, the
activities and resources of each Party shall be managed by such Party, acting
independently and in its individual capacity and the Parties shall have a
relationship of independent contractors with respect to each other. No term or
condition of this Agreement is intended to create nor shall any such term or
condition create any fiduciary duty on the part of either Party for the benefit
of the other, and shall not require either Party to expend either funds or
efforts or commit resources other than as explicitly agreed in this Agreement.

ARTICLE 5. FEES AND MILESTONES

     5.1 Payment at Signing. As payment for the entering into of this Agreement
and the Stock Purchase Agreement, Guilford shall pay simultaneously with the
execution and delivery of this contract (i) by wire transfer of immediately
available funds to the account of ProQuest the sum of Five Hundred Thousand
Dollars ($500,000) and (ii) by check or wire transfer to the Escrow Agent, the
sum of Five Hundred Thousand Dollars ($500,000) which shall be held by the
Escrow Agent in accordance with the terms of the Escrow Agreement.

 

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     5.2 Determination Date. On or before the Determination Date, Guilford shall
determine whether it desires to proceed with the Development and
Commercialization of an Agreement Compound pursuant to this Agreement and shall
provide written instructions to the Escrow Agent advising it of its decision.
The Escrow Agent shall, upon such instruction and in accordance with the terms
of the Escrow Agreement, release the escrowed funds (i) to ProQuest at a closing
to occur no later than ten (10) days after the Determination Date (the “First
Closing”) in the event that Guilford desires to proceed or (ii) to Guilford in
the event that Guilford does not desire to proceed, provided that in either
event, ProQuest shall be entitled to any interest (or other income or gains)
earned on the escrowed funds. In the event that Guilford desires to proceed, the
$500,000 payment to ProQuest (referred to in Section 5.1(i) above) shall be
applied towards the purchase of Common Stock at the First Closing, as set forth
in the Stock Purchase Agreement. In the event that Guilford does not desire to
proceed, then ProQuest shall retain such $500,000 payment and shall have no
obligation to issue Common Stock or convey other property to Guilford with
respect to such payment.

     5.3 Milestone Payments.

     (a) Development Milestones for PQ-1002. As additional consideration,
Guilford shall pay the following amounts at each Additional Closing (as defined
in the Stock Purchase Agreement) to occur after completion of the following
development milestones (each a “Milestone”) with respect to PQ-1002 (whether
Developed by Guilford or its Affiliate or sublicensee):

  (i)   $250,000 upon the Additional Closing following dosing of the first
human; and     (ii)   $750,000 upon the Additional Closing following dosing of
the first patient in a Phase II clinical trial; and     (iii)   $1 million upon
the Additional Closing following dosing of the first patient in a Phase III
clinical trial.

     Except as set forth in the Stock Purchase Agreement, all milestone payments
set forth above shall be deemed payment for the purchase of ProQuest common
stock and, in accordance with the Stock Purchase Agreement, Additional Closings
shall be held following achievement of each Milestone. The price per share
shares of Common Stock to be issued upon achievement of each Milestone shall be
a price per share equal to 110% of the price per share of Common Stock (or
conversion price per share of securities convertible into the Company’s Common
Stock) issued in the Company’s most recent “Qualified Equity Infusion” (as that
term is defined in the Stock Purchase Agreement) prior to the relevant
Additional Closing.

     (b) NDA or Equivalent Filing Milestone. Guilford shall pay to ProQuest
$2 million following submission of an NDA (or equivalent application for
Regulatory Approval) which would enable the general marketing of PQ-1002 in a
particular country. Of this $2 million, $1 million shall be paid as cash within
five (5) business days following achievement of this Milestone, and, except as
otherwise set forth in the Stock Purchase Agreement, $1 million shall be deemed
payment for the purchase of ProQuest common stock upon the achievement of this
Milestone, payable at an Additional Closing in accordance with the Stock
Purchase Agreement.

     (c) NDA or Equivalent Approval Milestone. Guilford shall pay the following
amounts in cash (which shall not be deemed payment towards a purchase of
ProQuest common stock) to ProQuest within five (5) business days following
achievement of the following Milestones for an Agreement Compound (whether by
Guilford or its Affiliates or sublicensees) in the following territories:

 

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  (i)   $5 million upon receipt of NDA clearance and any other Regulatory
Approvals needed to enable the marketing and selling of PQ-1002 generally in the
United States;     (ii)   $3 million upon receipt of all final Regulatory
Approvals needed from the first European Country to enable the marketing and
selling of PQ-1002 generally in that European Country; and     (iii)  
$1 million upon receipt of all final Regulatory Approvals needed to enable the
marketing and selling of PQ-1002 generally in Japan.

     (d) Milestone Payments for Other Agreement Compounds. If Guilford desires
to Develop any other Agreement Compound in lieu of or in addition to PQ-1002,
the Parties must first agree in writing on any Milestone Payments for the
Development of such Agreement Compound.

     (e) Notification of Milestones. No later than five (5) business days
following the achievement of each Milestone, Guilford shall notify ProQuest in
writing that such Milestone has occurred.

ARTICLE 6. ROYALTIES

     6.1 Royalties. Guilford agrees to pay ProQuest a running royalty on
worldwide Net Sales of PQ-1002 (“Royalty”) in the following amounts:

  (i)   five percent (5%) of Net Sales on the first One Hundred Million Dollars
($100,000,000) in worldwide Net Sales in any calendar year;     (ii)   seven
percent (7%) on the next One Hundred Million Dollars (i.e., between $100,000,000
and $200,000,000) in worldwide Net Sales in any calendar year; and     (iii)  
nine percent (9%) on all amounts of worldwide Net Sales in excess of Two Hundred
Million Dollars ($200,000,000) in any such calendar year.

     6.2 Third Party Royalty Credit. On a country by country basis, fifty
percent (50%) of any Third Party Royalties paid by Guilford will be creditable
against Royalties payable to ProQuest under this Agreement. Credit for Third
Party Royalties will be made on a quarterly basis; provided, however, that no
such credit shall reduce the amount of Royalties paid by Guilford for a
particular calendar quarter by more than 50%.

     6.3 Term of Royalty. Royalty will be payable on a country by country basis
until the last to expire of the patent or patents in such country covering
PQ-1002, and, in a country where no patent ever issued covering PQ-1002, then
until the last to expire of the patent or patents in the U.S., France, Germany
or the United Kingdom covering PQ-1002.

     6.4 Reports and Payments.

     (a) Cumulative Royalties. The obligation to pay Royalties under this
Article 6 shall be imposed only once (i) with respect to any sale of the same
unit of Program Product; and (ii) with respect to a single unit of Program
Product regardless of how many valid issued or, assuming they were to issue,
patent claims included in Program Patent Rights would be infringed by Third
Parties by the making, using or selling of such Program Product.

     (b) Statements and Payments. Guilford shall deliver to ProQuest within
sixty (60) days after the end of

 

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each calendar quarter, a statement certified by Guilford as accurate to the best
of its ability based on information available to Guilford, setting forth for the
previous quarter the following information on a country-by-country basis:
(i) Net Sales of Program Products; (ii) the basis for any Royalty adjustments;
and (iii) the Royalty due hereunder, which report shall be accompanied by a
remittance of the Royalty due.

     (c) Interest. If Guilford fails to pay undisputed Royalty within fifteen
(15) days of the date such Royalty is due, Guilford shall pay interest on the
amount of such overdue Royalty (from the original due date) at the rate of 10%
per annum until it is paid in full. If any disputed Royalty withheld by Guilford
is later determined to have been properly owing as of the original due date,
Guilford shall likewise pay interest on the amount of such Royalty withheld at
such interest rate from the original due date until date of payment.

     (d) Taxes. All taxes levied on account of Royalties accruing under this
Agreement shall be paid by ProQuest. If laws or regulations require withholding
of taxes from any payment by Guilford to ProQuest hereunder, the taxes will be
deducted by Guilford from remittable Royalty to ProQuest and will be paid by
Guilford to the proper taxing authority. Guilford will furnish ProQuest with the
original copies of all official receipts for such taxes. In the event of any
such withholding, the Parties agree to confer and cooperate in good faith
regarding any filings with tax authorities and other measures that may be taken
to minimize the amount of any such withholding.

     (e) Currency. All amounts payable and calculations hereunder shall be in
United States dollars, and all payments under this Article 6 shall be made to
ProQuest. As applicable, Net Sales shall be translated into United States
dollars at the rate of exchange at which United States dollars are listed in
International Financial Statistics (publisher, International Monetary Fund) or
if it is not available, The Wall Street Journal for the currency of the country
in which the sale is made at the average of the calendar quarter in which such
sales were made.

     (f) Audit. Guilford shall maintain (and shall cause its Affiliates and
sublicensees to maintain) books and records as necessary to allow the accurate
calculation of Royalties due hereunder including any records required to
calculate any Royalty adjustments hereunder. Once per year ProQuest shall have
the right to engage an independent accounting firm reasonably acceptable to
Guilford, at ProQuest’s expense, which shall have the right to examine in
confidence during normal business hours the relevant Guilford records in order
to determine and/or verify the amount of Royalty payments due hereunder. Should
such accountants representing ProQuest deem it necessary to examine the books
and records of any sublicensee of Guilford in connection with such an audit, the
parties agree to cooperate and to reasonably exercise Guilford’s right of access
under its agreement with such sublicensee, so as to minimize any disruption in
Guilford’s relations with such sublicensee. Such independent auditor will
prepare a report confirming or challenging the Royalties paid by Guilford for
any of the preceding three (3) annual periods (except any period which has
previously been subject to audit thereunder). In the event there was an
under-payment by Guilford hereunder, Guilford shall promptly make payment to
ProQuest of any short-fall (with interest specified under Section 6.4(c). In the
event that there was an over-payment by Guilford hereunder, Guilford shall
credit the excess amount against future payments. In the event any payment by
Guilford shall prove to have been incorrect by more than seven-and-a-half
percent (7.5%) to ProQuest’ detriment, Guilford will reimburse ProQuest for its
reasonable fees and costs of such independent auditor.

     (g) Record Retention. Guilford shall keep complete and accurate records in
sufficient detail to permit ProQuest to confirm the accuracy of calculations of
all payments hereunder. Such records shall be retained by Guilford for no less
than a three (3) year period following the year in which any such payments were
made hereunder, provided, however, that if there is a good faith dispute between
the parties continuing at the end of any such three (3) year period with respect
to such books and records, then the time period for RPR to maintain such books
and records under dispute shall be extended until such time as the dispute is
finally resolved.

     (h) Survival. Subsections (f) and (g) of this Section 6.4 shall survive any
termination of this Agreement for the period set forth therein.

 

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     (i) Royalty on Other Agreement Compounds. If Guilford desires to Develop
and Commercialize any other Agreement Compound in lieu of or in addition to
PQ-1002, the Parties must first agree in writing on any royalty on Net Sales of
such Agreement Compound.

ARTICLE 7. CONFIDENTIALITY, PUBLICATIONS
AND PUBLIC ANNOUNCEMENTS

     7.1 Confidentiality; Exceptions. Except to the extent expressly authorized
by this Agreement or otherwise agreed in writing, the Parties agree that, for
the term of this Agreement and for five (5) years thereafter, each Party
receiving hereunder any Confidential Information (the “Receiving Party”) of the
other Party pursuant to this Agreement (the “Disclosing Party”), and ProQuest,
with respect to ProQuest Patent Rights and ProQuest Know-how that is
Confidential Information, shall keep such Confidential Information confidential
and shall not publish or otherwise disclose or use such Confidential Information
for any purpose, except to the extent that it can be established by the
Receiving Party that such Confidential Information:

  (i)   was already known to the Receiving Party, other than under an obligation
of confidentiality, at the time of disclosure by the Disclosing Party and such
Receiving Party has documentary evidence to that effect;     (ii)   was
generally available to the public or otherwise part of the public domain at the
time of its disclosure to the Receiving Party;     (iii)   became generally
available to the public or otherwise part of the public domain after its
disclosure or development, as the case may be, other than through a breach by
the Receiving Party of this Section 7.1;     (iv)   was disclosed to the
Receiving Party, other than under an obligation of confidentiality, by a Third
Party who had no obligation to the Disclosing Party not to disclose such
information to others; or     (v)   was independently discovered or developed by
the Receiving Party without reference to any information or material disclosed
hereunder, and this is provable by documentary evidence.

 

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     7.2 Authorized Disclosure and Use.

     (a) Guilford. Guilford may disclose Confidential Information of ProQuest
received from ProQuest or a Third Party to the extent such disclosure is
reasonably necessary in filing or prosecuting patent applications, prosecuting
or defending litigation, complying with applicable governmental regulations or
conducting preclinical or clinical trials, provided that if Guilford is required
by law or regulation to make any such disclosure of ProQuest’s Confidential
Information, Guilford will, except where impracticable for necessary disclosures
(for example in the event of medical emergency), give reasonable advance notice
to ProQuest of such disclosure requirement and will where applicable use its
reasonable efforts to seek confidential treatment of such Confidential
Information required to be disclosed. In addition, Guilford shall be entitled to
disclose, under customary conditions of confidentiality similar to these
contained in this Article 7, Confidential Information of ProQuest received from
ProQuest, its Affiliate or a Third Party, in connection with Guilford’s
performance under this Agreement to Develop and Commercialize PQ-1002 or any
other Agreement Compound, for purposes of conducting discussions with potential
licensees, investors, financial institutions, potential merger or acquisition
partners or other advisers. ProQuest understands that Guilford may file this
Agreement and related agreements as exhibits to its public filings with the
Securities and Exchange Commission. Guilford agrees to consult in good faith
with ProQuest on the nature and scope of public references to ProQuest, its
shareholders, KUCR and the University of Kansas in connection with any filings
required of Guilford by law.

     (b) ProQuest. ProQuest may disclose Confidential Information of Guilford
received from Guilford or a Third Party to the extent such disclosure is
reasonably necessary in prosecuting or defending litigation or (if and after
ProQuest becomes a public company) complying with applicable securities
regulations, provided that if Guilford is required by law or regulation to make
any such disclosure of Guilford’s Confidential Information, ProQuest will,
except where impracticable for necessary disclosures, give reasonable advance
notice to Guilford of such disclosure requirement and will where applicable use
its reasonable efforts to seek confidential treatment of such Confidential
Information required to be disclosed. ProQuest agrees to consult in good faith
with Guilford on the nature and scope of public references to Guilford in
connection with any filings required of ProQuest by law. ProQuest may disclose
non-public (i) ProQuest Patent Rights and ProQuest Know-how in existence prior
to the Effective Date, and (ii) ProQuest Patent Rights and ProQuest Know-how
which come into existence from and after the Effective Date, so long as it does
not relate to Agreement Compounds, in each case under customary conditions of
confidentiality similar to those contained in this Article 7, for purposes of
conducting discussions with potential licensees, investors, financial
institutions, potential merger or acquisition partners or other advisers.

     7.3 Termination of Prior Agreement. This Agreement supersedes the
Confidentiality Agreement between ProQuest and Guilford, dated January 12, 1999.
All confidential information received by a Party from the other under that
agreement shall be deemed Confidential Information received under this Agreement
by a Receiving Party from a Disclosing Party and shall be subject to the terms
of this Article 7.

     7.4 Publications. Except as provided in this Section 7.4, ProQuest shall
not publish or otherwise disclose non-public ProQuest Patent Rights or ProQuest
Know-how relating to PQ-1002 or other Agreement Compounds in an academic,
scientific or medical publication without Guilford’s prior written consent.
Guilford shall not in any event consent without being supplied a copy of the
proposed publication or disclosure at least thirty (30) days prior to intended
submission for publication or for oral presentation. Notwithstanding the first
sentence of this Section 7.4, ProQuest may publish preclinical data relating to
PQ-1002 in existence as of the Effective Date, provided Guilford is given at
least thirty (30) days to review such manuscript or other disclosure and to
discuss any concerns with ProQuest, and provided further that ProQuest may not
publish the chemical structure of PQ-1002 (unless it has been previously
publicly disclosed through no fault of ProQuest). Subject to the other terms and
conditions of this Agreement, each Party will comply with standard academic
practice regarding authorship of scientific publications and recognition of
contribution of other parties in any publications relating to Agreement
Compounds.

 

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     7.5 Public Announcements. Except as provided in this Section 7.5 and in
Section 7.4 above, ProQuest shall not make any public announcement regarding
this Agreement, ProQuest Patent Rights or ProQuest Know-how or any Agreement
Compound without Guilford’s prior written consent. Guilford shall not in any
event consent without being supplied a copy of such public announcement and a
reasonable opportunity to review and comment prior to release of such public
announcement. Guilford may make any public announcements it deems necessary or
desirable under state and federal securities laws concerning this Agreement and
the Development and Commercialization of an Agreement Compound. ProQuest, if it
becomes and for so long as it remains a public company, may make any public
announcements it deems necessary or desirable under state and federal securities
laws concerning this Agreement. Subject to the foregoing two sentences and
Section 7.2 above, Guilford agrees to consult in good faith with ProQuest to
agree on the nature and scope of Guilford’s public references to ProQuest, its
shareholders, KUCR, and the University of Kansas, and ProQuest agrees to consult
in good faith with Guilford to agree on the nature and scope of ProQuest’s
public references to Guilford.

     7.6 Survival. Sections 7.1 and 7.2 shall survive the termination or
expiration of this Agreement for a period of five (5) years or such longer
period as is specifically contemplated therein.

ARTICLE 8. PATENTS AND OTHER INTELLECTUAL PROPERTY

     8.1 Ownership of Program Patent Rights. As between the Parties:

  (i)   All Program Patent Rights covering inventions conceived solely by
ProQuest personnel (and/or Third Parties with or on ProQuest’s behalf) pursuant
to activities undertaken under this Agreement shall be solely owned and held by
ProQuest.     (ii)   All Program Patent Rights covering inventions conceived
jointly by ProQuest personnel (and/or Third Parties on ProQuest’s behalf) and
Guilford personnel (and/or Third Parties on Guilford’s behalf or pursuant to a
sublicense or other collaboration arrangement with Guilford) whether together or
jointly with Third Parties, pursuant to activities undertaken under this
Agreement shall be jointly and equally owned by ProQuest and Guilford (and,
where appropriate, such Third Party.)     (iii)   All Program Patent Rights
covering inventions conceived solely by Guilford personnel (and/or Third Parties
with Guilford or on Guilford’s behalf) pursuant to activities undertaken under
this Agreement shall be solely owned and held by Guilford (and, where
appropriate, such Third Party).     (iv)   Each Party shall do and perform all
lawful acts, including, but not limited to the execution of papers and lawful
oaths, furnishing of data, test results and laboratory notebooks, production of
relevant employees and consultants, and the giving of testimony, reasonably
requested by the other Party to more fully perfect, affirm and record the
ownership by the respective Parties of Program Patent Rights in accordance with
this Section 8.1.

     8.2 Patent Prosecution.

     (a) ProQuest. As between the Parties during the term of this Agreement, and
subject to Section 8.6 below, ProQuest (or KUCR, pursuant to the KU License, as
amended by the Consent and Agreement) shall be responsible for and control the
preparation, filing, prosecution, maintenance and defense in opposition,
reexamination, interference and similar administrative proceedings, in the U.S.
and foreign countries (“Patent Prosecution”), of ProQuest Patent Rights in
existence on the Effective Date, and any subsequent ProQuest Patent Rights
described in Section 8.1(i) above, provided that: (i) ProQuest shall provide
Guilford sufficient time before

 

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the due date and filing thereof to review and comment on patent applications and
patents and material correspondence to and from the U.S. Patent and Trademark
Office and patent offices in foreign countries relating to such ProQuest Patent
Rights; (ii) obtain Guilford’s consent (which consent shall not to be
unreasonably withheld) in connection with material actions ProQuest may take in
the course of Patent Prosecution that would limit the scope of protection for
Agreement Compounds; “Material actions” as used in this Agreement shall include:
(1) the filing of new applications (including divisionals, continuations,
continuations-in-part, reissues and reexaminations); (2) the filing of
amendments; (3) the submission of responses to Official actions on the merits
(and not relating to procedure, such as responses to restrictions or election of
species); (4) the filing of formal papers such as declarations (including
Rule 131 and 132 declarations); (5) the filing of appeal briefs and reply
briefs; (6) the submission of summaries of interviews during which the scope of
claims was discussed; (7) the filing of responses to reasons for allowances;
(8) abandonment of claims; (9) the filing of motions and taking of positions in
patent interference proceedings; and (10) other material actions which could
affect the scope of protection for Agreement Compounds; and (iii) Guilford shall
have the right to exercise ProQuest’s rights under the KU License, as amended by
the Consent and Agreement, to review and comment in advance on the Patent
Prosecution of ProQuest Patent Rights made by the University of Kansas.

     (b) Expenses. Guilford shall reimburse ProQuest for the reasonable fees and
costs of such Patent Prosecution (including applicable reimbursement obligations
incurred by ProQuest to KUCR under the KU License) as, when and if ProQuest
incurs such expenses (or reimbursement obligations relating to such expenses),
within thirty (30) days following presentation of an invoice and reasonable
supporting documentation, provided that: (i) for the avoidance of doubt,
Guilford shall not reimburse ProQuest for any expenses or reimbursement
obligations incurred for Patent Prosecution of patents or patent applications
that do not claim a composition of matter, use, method, process or other matter
relating to Agreement Compounds; and (ii) to the extent ProQuest licenses Third
Parties under a patent and/or patent application included in ProQuest Patent
Rights for compounds other than Agreement Compounds (for example, for prodrugs
of camptothecin in the field of cancer chemotherapeutics), Guilford will only
reimburse a pro rata share of such fees and expenses for such patent and/or
patent application, based on the number of licensees under such patent and/or
patent application included in ProQuest Patent Rights.

     (c) Guilford. Guilford shall at its cost be responsible for and control the
Patent Prosecution of Program Patent Rights described in Section 8.1(ii) and
(iii) above, and such other ProQuest Patent Rights as the Parties may otherwise
agree in writing. In any such Patent Prosecution of Program Patent Rights
described in Section 8.1(ii) above, Guilford shall provide ProQuest sufficient
opportunity to review and consult in advance of any deadlines and any filings by
Guilford of patent applications and patents and material correspondence to and
from the U.S. Patent and Trademark Office and patent offices in foreign
countries relating to such Program Patent Rights. In the event Guilford elects
not pursue the Patent Prosecution within its control of any ProQuest Patent
Rights, Guilford shall give ProQuest sufficient notice to afford ProQuest the
opportunity to do so at ProQuest’s cost, in which event, ProQuest will own such
ProQuest Patent Rights, free and clear of any license to Guilford under this
Agreement.

     (d) ProQuest agrees to use commercially reasonable efforts, in consultation
with Guilford, to diligently conduct Patent Prosecution of ProQuest Patent
Rights in a manner so as to preserve and expand the scope of claims therefor to
the extent reasonably possible.

     (e) In the event that ProQuest elects not to pursue Patent Prosecution of
any ProQuest Patent Rights, ProQuest shall give Guilford sufficient notice to
afford Guilford the opportunity to do so at Guilford’s cost, in which event
Guilford will own such ProQuest Patent Rights, free and clear of any ownership
interest of ProQuest in said ProQuest Patent Rights. ProQuest will execute all
documents and do all things as Guilford may reasonably request in connection
with the exercise of Guilford’s rights under this Section.

     8.3 Enforcement of Patent Rights.

 

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     (a) Guilford. Guilford shall have the right but not the obligation, in its
own name, to enforce Program Patent Rights against any Third Party suspected of
infringing a claim of Program Patent Rights, subject, to the extent applicable,
to the terms of Article 8 of the KU License, as amended by the Consent and
Agreement. Guilford shall have exclusive control over the conduct of any such
proceedings, including the right to settle or compromise such proceedings,
subject, to the extent applicable, to the terms of Article 8 of the KU License,
as amended by the Consent and Agreement. Subject to Guilford’s right to be
reimbursed out of any award or recovery under Section 8.3(b) below, the expense
of any proceeding Guilford initiates, including lawyers’ fees and costs, shall
be borne by Guilford. ProQuest agrees to cooperate (at Guilford’s expense for
ProQuest’s out-of-pocket expenses) with Guilford in such action as Guilford may
reasonably request.

     (b) Disposition of Any Award or Recovery. Any award or recovery paid to
Guilford by a Third Party as a result of such patent infringement proceedings
(whether by way of settlement or otherwise) shall: (i) first be applied toward
reimbursement of legal fees, costs and expenses incurred by the Parties in
proportion to their out-of-pocket expenditures of such fees, costs and expenses;
and (ii) second, from the remainder, if any, Guilford shall pay to ProQuest an
amount equal to the applicable Royalty rate as applied to the remainder as
though such remainder were Net Sales of Program Products in the year in which
the award or recovery is received.

     (c) ProQuest. ProQuest shall by its own counsel and at its own expense have
the right to participate and be represented in any such proceeding that Guilford
initiates regarding ProQuest Patent Rights described in Section 8.3(a) above. In
the event that Guilford does not initiate an action to enforce Program Patent
Rights against a Third Party suspected of infringing a claim of ProQuest Patent
Rights, ProQuest may give notice to Guilford that ProQuest intends to bring such
enforcement action at ProQuest’s own expense. In such event, the Parties shall
confer, and if Guilford has a commercially reasonable basis for foregoing or
delaying such infringement proceeding, then Guilford’s decision shall govern,
provided, however, in determining whether there is a commercially reasonable
basis for Guilford’s decision, any interest (direct or indirect) held by
Guilford in the suspected infringer shall be disregarded. Any recovery made by
ProQuest from a Third Party pursuant to any infringement action ProQuest brings
as contemplated in this Section 8.3(c) will be allocated as if it were recovered
by Guilford under Section 8.3(b) above and the Consent and Agreement.

     8.4 Infringement Defense. Guilford shall defend and control any suit
against any of Guilford, Guilford’s Affiliates or sublicensees, ProQuest and/or
ProQuest’s Affiliates alleging infringement of any patent or other intellectual
property right of a Third Party arising out of the manufacture, use, sale, offer
to sell or importation of a Program Product by Guilford, Guilford’s Affiliates
or sublicensees. Guilford shall be responsible for all costs, expenses and
damages, including lawyer’s fees and costs, associated with any such suit or
action, and shall indemnify ProQuest against any losses, claims or damages
ProQuest may suffer or incur as a result of such infringement defense, provided
that (i) Guilford shall be entitled to a 50% credit (with excess credit carrying
over to future payment obligations) toward any Milestone Payments (whether for
stock of ProQuest under the Stock Purchase Agreement or otherwise) or Royalty
under Article 5 or 6 above for all such costs, expenses, damages and indemnity
reimbursement obligations actually paid by Guilford; (ii) for any item of cost,
expense, damage or reimbursement paid by Guilford, the credit described in
clause (i) shall only apply to Milestone Payments or Royalties that become due
after Guilford pays such item; and (iii) for the avoidance of doubt, any
prospective royalty obligation mandated by any settlement, judgment or award
will be treated as Third Party Royalty under Section 6.2 above.

     8.5 Cooperation Among the Parties. Subject, to the extent applicable, to
the terms of the KU License, as amended by the Consent and Agreement:
(i) neither Party shall admit the invalidity or unpatentability of any ProQuest
Patent Rights or take any other action that may diminish the scope of protection
for Agreement Compounds without the other Party’s prior written consent (such
consent not to be unreasonably withheld) in any action taken in the prosecution
of, or in the defense of an action by a Third Party alleging patent invalidity
or unpatentability of any patent application or patent included among the
ProQuest Patent Rights; (ii) with respect to Patent Prosecution conducted by
Guilford of ProQuest Patent Rights, Guilford shall provide ProQuest sufficient
time before the due date and filing thereof, to review and comment on patent
applications and patents and material correspondence to and from the U.S. Patent
and Trademark Office and foreign patent offices; (iii) the Parties agree to
cooperate with each other and to use best efforts to ensure the cooperation of
any of their respective personnel and licensee(s) or licensor(s) as might
reasonably be requested in any such matters, and shall sign any necessary legal
papers and provide the prosecuting party with useful data or other information;
(iv) the Parties will confer on what action to take with respect to the defense
of infringement proceedings naming both Guilford and ProQuest or in

 

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proceedings to enforce patents claiming the ProQuest Patent Rights against a
Third Party; (v) except to the extent Patent Prosecution rights are granted to
ProQuest in Section 8.2(a) above, if the Parties cannot agree on the course of
action to be taken in the Patent Prosecution of any Program Patent Rights or in
the defense of any Third Party infringement action, Guilford’s decisions shall
control; and (vi) each Party agrees to bring to the attention of the other Party
any patent or patent application it discovers, or has discovered, and which
relates to the subject matter of this Agreement.

     8.6 Foreign Filings. The Parties shall consult with each other concerning
the scope of filings of ProQuest Patent Rights, and ProQuest shall cause
ProQuest Patent Rights it is prosecuting under Section 8.2 above to be filed in
those countries designated by Guilford, provided that each Party shall use
Commercially Reasonable Efforts to cause ProQuest Patent Rights to be filed at
least in the United States, Europe, Canada and Japan. In the event ProQuest
elects to file ProQuest Patent Rights in countries other than those designated
by Guilford, then Guilford shall be relieved of its reimbursement obligations
under Section 8.2(b) above for such ProQuest Patent Rights in such countries;
and ProQuest shall own such ProQuest Patent Rights free and clear of any license
to Guilford under this Agreement. Guilford shall have the final discretion with
respect to the ultimate geographic scope of filing of Guilford Patent Rights.

     8.7 Patent Assignment. ProQuest will not assign its rights under any
jointly owned Program Patent Rights except with the prior written consent of
Guilford, provided that ProQuest may assign such rights without consent to an
Affiliate or other permitted assignee under this Agreement in connection with a
merger or similar reorganization or the sale of all or substantially all of its
assets, as provided in Section 13.1 below.

     8.8 No Warranty Respecting Patents. No Party makes any warranty with
respect to the validity, perfection or dominance of any Patent or other
proprietary right or with respect to the absence of right in Third Parties which
may be infringed by the manufacture, sale or other use of any Program Product.

ARTICLE 9. REPRESENTATIONS AND WARRANTIES

     9.1 Representations and Warranties of ProQuest. Except as set forth on the
Disclosure Schedule attached hereto as Schedule 4 and made a part of this
Agreement, ProQuest hereby represents and warrants to Guilford as follows:

     (a) Organization and Standing. ProQuest is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization and has the full corporate power and authority to carry on its
business as currently conducted, to enter into this Agreement and each of the
agreements contemplated hereby (collectively, the “Transaction Documents”) and
to carry out the transactions contemplated thereby.

     (b) Authorization; No Conflicts. The execution, delivery and performance by
ProQuest of each of the Transaction Documents have been duly authorized (which
authorization has not been modified or rescinded and is in full force and
effect), and will not: (a) conflict with, or violate any term or provision of
ProQuest’s organizational documents; or (b) conflict with, or result in any
material breach of, or constitute a material default under, any agreement to
which ProQuest or its assets is or are a party or by which ProQuest is bound, or
any applicable law or regulation. No other corporate action is necessary for
ProQuest to enter into each of the Transaction Documents and to consummate the
transactions contemplated thereby.

     (c) Binding Obligation. This Agreement constitutes a valid and binding
obligation of ProQuest, enforceable in accordance with its terms; and each of
the Transaction Documents to be executed by ProQuest pursuant hereto, when
executed and delivered in accordance with the provisions hereof, shall be a
valid and binding obligation of ProQuest, enforceable in accordance with its
terms except as enforceability may be limited or affected by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws and equitable principles now or hereafter in effect and affecting the
rights and remedies of creditors generally.

 

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     (d) Patent Rights. Except for the rights reserved to the University of
Kansas or KUCR under the KU License, ProQuest owns or Controls all of the
ProQuest Patent Rights set forth on Schedule 2, which constitutes a true and
complete list of all ProQuest Patent Rights in existence on the Effective Date
that relate to PQ-1002 or any other Agreement Compound. ProQuest is not aware of
any action, suit, inquiry, investigation or other fact (other than as may be
disclosed in filings or correspondence with the U.S. Patent and Trademark
Office, which materials have been made available to Guilford) which ProQuest
believes may question or threaten the validity or priority of any ProQuest
Patent Rights or Guilford’s or ProQuest’s ability to perform under this
Agreement.

     (e) ProQuest Know-how. To ProQuest’s knowledge, ProQuest has disclosed or
made available to Guilford all ProQuest Know-how in ProQuest’s possession or
Control which may adversely affect the scientific, regulatory or business
prospects of the Development and Commercialization of PQ-1002 or any other
Agreement Compound.

     (f) Infusion Study. Without limiting the generality of any of the other
representations and warranties contained in this Section 9.1, ProQuest possesses
no information which has led it to believe that the Infusion Study may result in
the generation of data adverse to the prospects of Guilford’s successful
Development and Commercialization of PQ-1002 or any other Agreement Compound.

     (g) Disclosure. To ProQuest’s knowledge, no representation or warranty by
ProQuest in this Agreement, and no ProQuest Know-how furnished to Guilford in
contemplation of this Agreement, or in connection with the transactions
contemplated hereby, contains any untrue or misleading statement or omits any
fact necessary to make the statements contained herein or therein, in light of
the circumstances under which made, not misleading as of the Effective Date.

     9.2 Representations and Warranties of Guilford. Guilford hereby represents
and warrants to ProQuest as follows:

     (a) Organization and Standing. Guilford is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
organization and has the full corporate power and authority to carry on its
business as currently conducted, to enter into each of the Transaction Documents
and to carry out the transactions contemplated thereby.

     (b) Authorization; No Conflicts. The execution, delivery and performance by
Guilford of each of the Transaction Documents have been duly authorized (which
authorization has not been modified or rescinded and is in full force and
effect), and will not: (a) conflict with, or violate any term or provision of
Guilford’s organizational documents; or (b) conflict with, or result in any
material breach of, or constitute a material default under, any agreement to
which Guilford or its assets is or are a party or by which Guilford is bound, or
any applicable law or regulation. No other corporate action is necessary for
Guilford to enter into each of the Transaction Documents and to consummate the
transactions contemplated thereby.

     (c) Binding Obligation. This Agreement constitutes a valid and binding
obligation of Guilford, enforceable in accordance with its terms; and each of
the Transaction Documents to be executed by Guilford pursuant hereto, when
executed and delivered in accordance with the provisions hereof, shall be a
valid and binding obligation of Guilford, enforceable in accordance with its
terms except as enforceability may be limited or affected by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other similar
laws and equitable principles now or hereafter in effect and affecting the
rights and remedies of creditors generally.

     9.3 Performance By Affiliates. The Parties recognize that each may perform
some or all of its obligations under this Agreement through Affiliates;
provided, however, that each Party shall remain responsible for and be guarantor
of the performance by its Affiliates of such obligations under this Agreement,
and shall cause its

 

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Affiliates to comply with the provisions of this Agreement in connection with
such performance, including without limitation those provisions which
specifically survive any termination of this Agreement.

     9.4 Disclaimer of Warranty. EXCEPT AS SET FORTH IN THIS ARTICLE 9, EACH
PARTY AS TO THE OTHER PARTY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND
WARRANTIES, EXPRESS OR IMPLIED, IN CONNECTION WITH ITS PROGRAM PATENT RIGHTS AND
KNOW-HOW, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. ANY
AGREEMENT COMPOUND OR MATERIAL PROVIDED HEREUNDER, INCLUDING, WITHOUT
LIMITATION, ALL KNOW-HOW, ARE PROVIDED “AS IS” AND “WITH ALL FAULTS.”

ARTICLE 10. TERM AND TERMINATION

     10.1 Term. This Agreement shall commence as of the Effective Date and,
unless sooner terminated as provided herein, shall continue in effect until the
latest of (a) the date on which Guilford ceases to be engaged in the Development
or Commercialization of an Agreement Compound pursuant to this Agreement and so
notifies ProQuest in writing or (b) the expiration of the last to expire of the
Program Patent Rights.

     10.2 Termination by Guilford. This Agreement may be terminated by Guilford
as provided below:

     (a) At any time during the term of this Agreement if ProQuest materially
breaches this Agreement, which breach is not cured within sixty (60) days of
written notice thereof from Guilford.

     (b) At any time during the term of this Agreement upon written notice if
ProQuest becomes and remains subject to a Bankruptcy Event.

     (c) If Guilford elects to terminate this Agreement in its sole and absolute
discretion based on the results of the Infusion Study, by giving written notice
to ProQuest to such effect on or before the Determination Date.

     (d) At any time during the term of this Agreement upon written notice given
by Guilford at least 60 days prior to the effective date of such termination.

     In the event Guilford terminates this Agreement pursuant to any of
Section 10.2(a) through (d) above, subject to Section 10.4, Guilford shall be
released from all prospective obligations under this Agreement, except for those
items that are expressly provided to survive termination.

     10.3 Termination by ProQuest. This Agreement may be terminated by ProQuest
in whole or in part as provided below:

     (a) At any time during the term of this Agreement if Guilford materially
breaches this Agreement, which breach is not cured within sixty (60) days of
written notice thereof from ProQuest.

     (b) At any time during the term of this Agreement upon written notice if
Guilford becomes and remains subject to a Bankruptcy Event.

     (c) Subject to Section 13.5, if Guilford has not, directly or through a
partner, commenced the first human clinical trial (whether under an IND or
otherwise) of PQ-1002 on or before 18 months following the Determination Date.

 

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     (d) Subject to Section 13.5, if Guilford has not, directly or through a
partner, filed the first NDA for PQ-1002 no later than the fifth anniversary of
the Determination Date.

     The Parties agree that (c) and (d) above shall not apply in the event
Guilford has decided to Develop and Commercialize an Agreement Compound other
than PQ-1002; provided, however, that if Guilford makes such a decision, the
Parties shall negotiate in good faith to replace (c) and (d) with applicable
provisions related to the new Agreement Compound.

     In the event ProQuest terminates this Agreement pursuant to any of
Sections 10.3 (a) thru (d) above, subject to Section 10.4, ProQuest shall be
released from all prospective obligations, except for those obligations that are
expressly provided to survive termination.

     10.4 Allocation of Rights Upon Termination. In the event of termination of
this Agreement for any reason, unless otherwise agreed in writing, the Parties
shall have the rights and obligations set forth in this Section 10.4:

     (a) ProQuest Patent Rights and ProQuest Know-how. Subject to
Section 10.4(d) below, and except as otherwise specifically provided in this
Agreement, Guilford shall have no further or additional right and license to use
the ProQuest Patent Rights, ProQuest Know-how or Confidential Information of
ProQuest. Notwithstanding the foregoing, Guilford shall have a limited right and
license to use such ProQuest Patent Rights, Pro-Quest Know-how or Confidential
Information solely to complete any Regulatory Filings required by law, to make
any disclosures required by law, including state and federal securities laws,
and in connection with the marketing, distribution and sale of all of its
inventory of the Program Products existing as of the date of termination of this
Agreement for a six (6) month period following such date of termination.

     (b) Transfer of Certain Information. Subject to Section 10.4(d) below,
Guilford shall within 60 days following any such termination transfer to
ProQuest all preclinical and clinical data and copies of all Regulatory Filings
and Regulatory Approvals in Guilford’s possession relating to Agreement
Compounds.

     (c) Guilford Patent Rights and Guilford Know-how. Subject to
Section 10.4(d) below, Guilford shall grant ProQuest a permanent, royalty-free,
non-exclusive worldwide license (with a right to sublicense) under Guilford
Patent Rights and Guilford Know-how: (i) to Develop and Commercialize any
Agreement Compound; and (ii) to utilize any process relating to the manufacture
of prodrugs covered by Guilford Patent Rights or Guilford Know-how, provided
that nothing herein shall be deemed to be a license by Guilford to ProQuest of
any other Patent Rights of Guilford. In such case, Guilford shall within 60 days
following any such termination disclose or make available to ProQuest Guilford
Know-how in Guilford’s Control as of such termination necessary to utilize any
such process contemplated in (ii) above. Notwithstanding Section 7.1, ProQuest
may then disclose non-public Guilford Patent Rights or Guilford Know-how
contemplated in the preceding sentence under customary conditions of
confidentiality similar to those contained in Article 7 for purposes of
conducting discussions with potential licensees, investors, financial
institutions, merger or acquisition partners or other advisers.

     (d) Termination Due to ProQuest’s Breach. In the event this Agreement is
terminated by Guilford pursuant to Section 10.2(a), the provisions of
Section 10.4(a) through (c) shall not apply, and Section 10.4(e) shall apply to
ProQuest, but not to Guilford, and without limiting any other remedies Guilford
may have against ProQuest, Guilford shall have a permanent, exclusive worldwide
license under ProQuest Patent Rights and ProQuest Know-how to Develop and
Commercialize any Agreement Compound then in Development or Commercialization,
subject to Guilford making the payments to ProQuest in the amounts and at the
times provided in Articles 5 and 6.

     (e) Return or Destruction. Subject to Section 10.4(d) above, each Receiving
Party shall promptly return to the Disclosing Party or destroy all tangible
embodiments of Confidential Information received from the Disclosing Party, and
all tangible embodiments of Program Patent Rights and Know-how, and all copies
thereof, received from the Disclosing Party. At the Disclosing Party’s request,
the Receiving Party will certify its compliance with this Section 10.4(b) in
writing to the Disclosing Party.

 

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     (f) Accrued Rights, Surviving Obligations. Unless explicitly provided
otherwise in this Agreement, termination, relinquishment or expiration of the
Agreement for any reason shall be without prejudice to any rights which shall
have accrued to the benefit to either Party prior to such termination,
relinquishment or expiration, including damages arising from any breach under
this Agreement. Such termination, relinquishment or expiration shall not relieve
any Party from obligations which are expressly indicated to survive termination
or expiration of the Agreement.

     (g) Sublicensee Rights. In the event that this Agreement and/or the rights
and licenses granted under this Agreement to Guilford are terminated, any
sublicense granted under this Agreement shall remain in full force and effect as
a direct license between ProQuest and the sublicensee under the terms and
conditions of the sublicense agreement, subject to sublicensee (i) curing any
breach by Guilford, if such termination was due to a breach by Guilford, and
(ii) agreeing in writing to be bound to ProQuest under such terms and conditions
as well as those related to indemnification and confidentiality contained in
Articles 7 and 11 hereof within thirty (30) days after ProQuest provides written
notice to sublicensee of the termination of Guilford’s rights and licenses under
this Agreement, provided that the financial terms are no less favorable to
ProQuest, and ProQuest’s obligations under such sublicense are no greater, than
currently existing under this Agreement. At the request of Guilford, ProQuest
will acknowledge to a sublicensee, ProQuest’s obligations to sublicensee under
this Section 10.4(f).

ARTICLE 11. INDEMNIFICATION

     11.1 Indemnification by Guilford. Guilford will defend and indemnify
ProQuest, its officers, directors, employees, and agents and hold them harmless
from all liability, loss, damage and cost arising out of (i) any claims of any
nature (excluding claims by Third Parties relating to patent infringement,
except to the extent and subject to the terms specifically set forth in
Section 8.4 above) arising out of the research, Development or Commercialization
of any Agreement Compound (or any Program Product or any other product that
contains an Agreement Compound) by, on behalf of or under the authority of
Guilford, or (ii) any breach of Guilford’s representations or warranties under
this Agreement.

     11.2 Indemnification by ProQuest. ProQuest will indemnify Guilford, its
officers, directors, employees, agents, and licensees and hold them harmless
from all liability, loss, damage and cost arising out of any breach of
ProQuest’s representations or warranties under this Agreement.

     11.3 Procedure. In the event it becomes aware of a claim for which
indemnification may be sought under this Article 11, the indemnified Party shall
promptly notify the other in writing of the claim. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Party in respect of which indemnity may be sought pursuant to this Article 11,
such Party (the “Indemnified Party”) shall promptly notify the other Party (the
“Indemnifying Party”) in writing and the Indemnifying Party and Indemnified
Party shall meet to discuss how to respond to any claims that are the subject
matter of such proceeding. The Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, the
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. All such fees and expenses shall be reimbursed as they are incurred. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. The Indemnifying Party shall not, without

 

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the written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which the Indemnified Party is,
or arising out of the same set of facts could have been, a party and indemnity
could have been sought hereunder by the Indemnified Party, unless such
settlement includes an unconditional release of the Indemnified Party from all
liability on claims that are the subject matter of such proceeding.

     11.4 Survival. The provisions of this Article 11 shall survive any
termination of this Agreement.

ARTICLE 12. DISPUTE RESOLUTION

     12.1 General. The Parties desire to establish the procedures in this
Article 12 to facilitate the resolution of any dispute pertaining to the rights
and obligations of the Parties under this Agreement in an expedient and
commercially reasonable manner by mutual cooperation and without resort to
litigation. Except as otherwise provided in this Agreement or agreed by the
Parties in writing, all disputes under this Agreement will be resolved as set
forth in this Article 12.

     12.2 Initial Attempts to Resolve Disputes.

     (a) Any disputes between the Parties will first be addressed either
informally between the Parties or raised in the forum of the Governance
Committee. If the matter is sufficiently urgent, either Party may request a
special meeting of the Governance Committee, in which event the Parties will use
Commercially Reasonable Efforts to convene such a special meeting at a time and
place that is mutually convenient to the Parties. If the Parties are unable to
resolve a dispute among them informally or in the Governance Committee, or the
Governance Committee could not be convened to consider the matter, during a
period of thirty (30) days following the giving of formal written notice by one
Party to the other specifically invoking the dispute resolution procedure
contained in this Article 12, then either Party may, by written notice to the
other, have such dispute referred to their respective executive officers
designated below or their successors, for attempted resolution by good faith
negotiations:

     For Guilford: Chief Executive Officer of Guilford

     For ProQuest: Chief Executive Officer of ProQuest

In the event the designated executive officers are not able to resolve any such
dispute within thirty (30) days after written notice given by one Party to the
other invoking this stage in the dispute resolution procedure under this
Article 12, either Party may by written notice to the other commence the
Arbitration process set forth in Section 12.3 below.

     (b) All negotiations pursuant to this Section 12.2 shall be treated as
compromise and settlement negotiations. Nothing said or disclosed, nor any
document produced, in the course of such negotiations which is not otherwise
independently discoverable shall be offered or received as evidence or used for
impeachment or for any other purpose in any current or future arbitration or
litigation.

     12.3 Arbitration. If a dispute has not been resolved by negotiation as
provided in Section 12.2 above, then, except as otherwise provided in this
Section 12.3, the dispute shall be determined by arbitration in Chicago,
Illinois in accordance with the Commercial Arbitration Rules of the AAA, by
three (3) arbitrators each of whom (i) has the qualifications and experience set
forth in subsection (a) of this Section 12.3 and (ii) is selected as provided in
subsection (b) of this Section 12.3. Any issue as to whether or the extent to
which the dispute is subject to the arbitration and other dispute resolution
provisions contained in this Agreement, including, but not limited to, issues
relating to the validity or enforceability of these arbitration provisions, the
applicability of any statute of limitations or other defense relating to the
timeliness of the assertion of any claim or any other matter relating to the
arbitrability of such claim, shall be decided by the arbitrators; provided,
however, that any person or entity who or which has not agreed to be bound by
the provisions of this Agreement or these arbitration provisions shall not be
bound by any

 

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arbitration award rendered by the arbitrators unless such person or entity
participates in the arbitration proceeding and does not object to being bound by
such award at or prior to the commencement of the arbitration hearing. The
arbitrators shall base their award on the terms of this Agreement, and they
shall endeavor to follow the law and judicial precedents which a U.S. District
Judge sitting in the Southern District of New York would apply in the event the
dispute were litigated in such court; provided, however, that nothing contained
herein shall be deemed to enlarge the grounds for vacating arbitral awards even
if, despite such endeavors, the arbitrators fail to correctly follow applicable
law. The arbitrators shall render their award in writing and, unless all Parties
agree otherwise, shall include an explanation in reasonable detail of the
reasons for their award. The arbitration shall be governed by the substantive
laws of the State of New York and applicable to contracts made and to be
performed therein, without regard to conflicts of law rules, and by the
arbitration law of the Federal Arbitration Act (Title 9, U.S. Code), and
judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The Parties expressly waive any putative right they
may otherwise have to seek an award of punitive damages arising out of any
dispute hereunder.

     (a) Qualifications. Each person named on any list of potential arbitrators
shall be either (i) a neutral and impartial lawyer with excellent academic and
professional credentials (x) who is or has been practicing law at least fifteen
(15) years, specializing in either general commercial litigation or general
corporate and commercial matters (or, if the dispute involves patent matters,
such as whether a product Developed and Commercialized by Guilford is an
Agreement Compound or a Program Product, then in patent law or litigation or
judging relating to patents), with experience in the field of the
pharmaceutical/biotechnology industry and (y) who has had both training and
experience as an arbitrator and is generally available to serve as an
arbitrator, or (ii) an impartial and neutral retired U.S. federal court judge or
an impartial and neutral retired judge from the highest state court who
(x) served as a judge for at least ten (10) years and (y) has had both training
and experience as an arbitrator and is generally available to serve as an
arbitrator.

     (b) Selection. Each arbitrator shall be selected as provided in this
Section 12.3 and otherwise in accordance with the AAA’s Commercial Arbitration
Rules in effect on the Effective Date.

     12.4 Expenses. All expenses and fees of the arbitrators and expenses for
hearing facilities and other expenses of the arbitration shall be borne equally
by Guilford and ProQuest unless the Parties agree otherwise or unless the
arbitrators in the award assess such expenses against one of the Parties or
allocate such expenses other than equally between Guilford and ProQuest. Each of
the Parties shall bear its own counsel fees and the expenses of its witnesses
except (i) to the extent otherwise provided in this Agreement or by applicable
law or (ii) to the extent the arbitrators in their discretion determine for any
reason to allocate such fees and expenses among the Parties in a different
manner. Any attorney or retired judge who serves as an arbitrator shall be
compensated at a rate equal to his or her current regular hourly billing rate
unless otherwise mutually agreed upon by the Parties and the arbitrator.

     12.5 Certain Terms. For purposes of this Article 12, the term “impartial”
shall mean any person who is not nor has been within the previous five (5) years
an employee or paid consultant of a Party, and does not have any other extended
familial, close social, material ownership or other relationship to a Party.

     12.6 Arbitration Confidentiality. All aspects of an arbitration conducted
pursuant to this Agreement shall be and remain confidential and all participants
shall be bound by judicially enforceable obligations of strict confidentiality
except to the extent (i) required by law, including, without limitation,
material disclosure requirements under applicable securities laws, or (ii) the
Parties agree in writing to waive in whole or part such confidentiality.

     12.7 Survival. Any duty to arbitrate under this Agreement shall survive and
remain in effect and enforceable after termination of this Agreement for any
reason.

 

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ARTICLE 13. MISCELLANEOUS

     13.1 Assignment. Neither this Agreement nor any interest hereunder shall be
assignable by either Party without the prior written consent of the other Party,
except for assignment by operation of law in connection with a merger of a Party
with or into another Person (whether or not such Party is the surviving and
controlling entity) or the sale or other transfer of all of the shares or all or
substantially of the assets of a Party to another direct or indirect
wholly-owned subsidiary of that Party. This Agreement shall be binding upon the
successors and permitted assigns of the Parties and the name of a Party
appearing herein shall be deemed to include the names of such Party’s successors
and permitted assigns to the extent necessary to carry out the intent of this
Agreement. Any assignment not in accordance with this Section 13.1 shall be
void.

     13.2 Affiliated Entities. Either Party may assign any of its rights or
obligations under this Agreement in any country to any Affiliates; provided that
such assignment shall not relieve the assigning Party of its responsibilities
for performance of its obligations under this Agreement.

     13.3 Research and Development Entities. Either Party may assign its rights
and obligations under this Agreement to an entity or entities (e.g., partnership
or corporation) that are specifically formed for financial purposes and that
finance research and development performed by such Party; provided that such
assignment shall not relieve the assigning Party of responsibility for
performance of its obligations under this Agreement.

     13.4 Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of the Agreement.

     13.5 Force Majeure. No Party shall be liable to any other Party for loss or
damages or shall have any right to terminate this Agreement for any default or
delay attributable to any Force Majeure, if the Party affected shall give prompt
notice of any such cause to the other Parties. The Party giving such notice
shall thereupon be excused from such of its obligations hereunder as it is
thereby disabled from performing for so long as it is so disabled, provided,
however, that such affected Party commences and continues to take reasonable and
diligent actions to cure such cause.

     13.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission (receipt verified), mailed by registered or certified mail (return
receipt requested), postage prepaid, or sent by express courier service, to the
parties at the following addresses (or at such other address for a Party as
shall be specified by like notice, provided, however, that notices of a change
of address shall be effective only upon receipt thereof):

                     

  If to ProQuest, addressed to:       ProQuest Pharmaceuticals Inc.        

          1617 St. Andrews Drive        

          Lawrence, Kansas 66047        

          Attention: President        

          Telecopier: (785) 832-8234        
 
                        with a copy (which shall   Shook, Hardy & Bacon LLP    
not constitute notice) to:   1010 Grand Blvd., 5th Floor

          P.O. Box 15607        

          Kansas City, Missouri 64106-0607        

          Attention: John W. Simpson        

          Telecopier: (816) 842-3190        

 

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  If to Guilford, addressed to:       Guilford Pharmaceuticals Inc.        

          6611 Tributary Street        

          Baltimore, MD 21224        

          Attention: Secretary        

          Telecopier: (410) 631-6819        
 
                        with a copy (which shall   Hogan & Hartson LLP     not
constitute notice) to:   111 S. Calvert Street

          Suite 1600        

          Baltimore, Maryland 21202        

          Attention: Michael J. Silver        

          Telecopier: (410) 539-6981        

     13.7 Amendment. No amendment, modification or supplement of any provision
of this Agreement shall be valid or effective unless made in writing and signed
by a duly authorized officer of each Party.

     13.8 Waiver. No provision of the Agreement shall be waived by any act,
omission or knowledge of any Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a duly
authorized officer of the waiving Party.

     13.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which need not contain the signature of more than one
Party but all such counterparts taken together shall constitute one and the same
agreement.

     13.10 Descriptive Headings. The descriptive headings of this Agreement are
for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

     13.11 Governing Law; Jurisdiction. For the purposes of this Agreement, the
Parties acknowledge their diversity (ProQuest being a Kansas corporation having
its principal place of business in Kansas and Guilford being a Delaware
corporation having its principal place of business in Maryland) and agree that
this Agreement shall be governed by and interpreted in accordance with the
substantive laws of the State of New York (without regard to conflict of law
principles) and the Parties hereby accept and submit to the exclusive
jurisdiction of the Federal District Court located in Kansas or the state courts
of general jurisdiction in the state of Kansas for purposes of enforcing any
this Agreement including any arbitral award hereunder.

     13.12 Severability. In the event that any clause or portion thereof in this
Agreement is for any reason held to be invalid, illegal or unenforceable, the
same shall not affect any other portion of this Agreement, as it is the intent
of the Parties that this Agreement shall be construed in such fashion as to
maintain its existence, validity and enforceability to the greatest extent
possible. In any such event, this Agreement shall be construed as if such clause
of portion thereof had never been contained in this Agreement, and there shall
be deemed substituted therefor such provision as will most nearly carry out the
intent of the Parties as expressed in this Agreement to the fullest extent
permitted by applicable law unless doing so would have the effect of materially
altering the right and obligations of the Parties in which event this Agreement
shall terminate and all the rights and obligations granted to the Parties
hereunder shall cease and be of no further force and effect.

     13.13 Entire Agreement of the Parties. This Agreement, the Stock Purchase
Agreement, the Escrow Agreement and the Consent and Agreement, including all
Appendices attached hereto and thereto, set forth all the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto and supersede and terminate all prior agreements and
understanding between the Parties. There are no

 

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covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties other than as set
forth herein and therein. No subsequent alteration, amendment, change or
addition to this Agreement, the Stock Purchase Agreement, the Escrow Agreement
and the Consent and Agreement shall be binding upon the Parties hereto unless
reduced to writing and signed by the respective authorized officers of the
Parties (and KUCR, in the case of the Consent and Agreement).

     13.14 No Trademark Rights. Expect as otherwise provided herein, no right,
express or implied, is granted by this Agreement to use in any manner the name
“ProQuest,” “Guilford,” or any other trade name or trademark of the other Party
or its Affiliates in connection with the performance of this Agreement.

     13.15 Accrued Rights; Surviving Obligations. Unless explicitly provided
otherwise in this Agreement, termination, relinquishment or expiration of the
Agreement for any reason shall be without prejudice to any rights which shall
have accrued to the benefit to any Party prior to such termination,
relinquishment or expiration, including damages arising from any breach
hereunder. Such termination, relinquishment or expiration shall not relieve any
Party from obligations which are expressly indicated to survive termination or
expiration of the Agreement.

     13.16 Schedules and Exhibits. The following Schedules and Exhibits are
attached hereto to this Agreement and made a part of this Agreement:

                  Schedule   Description

    1     Description of PQ-1002

    2     ProQuest Patent Rights

    3     Infusion Study

    4     Disclosure Schedule

              Exhibit   Description

  A   Stock Purchase Agreement

  B   Escrow Agreement

  C   Consent and Agreement

     13.17 Ambiguities. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.

 

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     IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized officers as of the date and year first above
written.

     
ProQuest:
  Guilford:
 
   
PROQUEST PHARMACEUTICALS INC.
  GUILFORD PHARMACEUTICALS INC.
 
   
By: /s/ Osborne S. Wong
  By: /s/ Thomas C. Seoh
Name: Osborne S. Wong
  Name: Thomas C. Seoh
Title: President
  Title: Senior Vice President, General Counsel

            and Secretary