exv10w22



 




Exhibit 10.22




DISTRIBUTION AGREEMENT



     This Wholesale Distribution Agreement (this “Agreement”) is made as of
this 27th day of September 2001, between Guilford Pharmaceuticals Inc., a
Delaware corporation (“GPI’) and National Specialty Services, Inc., a Tennessee
corporation (“Wholesale Specialty Distributor”).



BACKGROUND



     GPI is a manufacturer of pharmaceutical products, including, without
limitation, the products set forth on Exhibit A attached hereto (as amended
from time to time, the “Products”).



     Wholesale Specialty Distributor is a wholesale distributor of specialty
pharmaceutical products.



     GPI wants to engage Wholesale Specialty Distributor and Wholesale
Specialty Distributor wants to be engaged by GPI to distribute the Products in
the territory set forth on Exhibit B (the “Territory”) on the terms and subject
to the conditions set forth in this Agreement.



     NOW, THEREFORE, in consideration of the forgoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:



1. APPOINTMENT OF WHOLESALE SPECIALTY DISTRIBUTOR.



     GPI appoints Wholesale Specialty Distributor as a non-exclusive
distributor of the Products in the Territory on the terms and subject to the
conditions set forth in this Agreement.



2. OBLIGATIONS OF GPI.



     2.01. PURCHASE OF PRODUCTS. GPI shall sell to Wholesale Specialty
Distributor the Products indicated on any purchase order provided by Wholesale
Specialty Distributor to GPI at the price or prices indicated on Exhibit A.



     2.02. TAXES. The parties acknowledge that the per unit prices indicated on
Exhibit A are exclusive of federal, state, and local excise, sales, use and
other taxes now or hereafter levied or imposed on the Products, the shipment,
delivery, ownership, possession, or resale of the Products, on this Agreement,
or on any activities hereunder (collectively, “Taxes”). GPI shall not have any
obligation to pay or collect Taxes on account of sales of the Products by
Wholesale Specialty



 






 





Distributor (except to the extent such Taxes are on account
of the net income of GPO. The collection and payment of Taxes (except as set
forth in the preceding sentence) shall be the obligation of Wholesale Specialty
Distributor in accordance with the terms of Section 7.03.



     2.03. SHIPMENT OF PRODUCTS. GPI shall ship the Products purchased by the
Wholesale Specialty Distributor pursuant to any purchase order to Wholesale
Specialty Distributor at the following address: 556 Metroplex Drive, Nashville,
Tennessee 37211, or such other address as Wholesaler shall indicate on the
purchase order.



     2.04. TRANSFER OF TITLE; RISK OF LOSS. Shipment of Products shall be
F.O.B. Wholesaler Specialty Distributor’s facility. Risk of loss and title to
the Products purchased by Wholesale Specialty Distributor under any purchase
order shall pass to the Wholesale Specialty Distributor upon delivery to
Wholesale Specialty Distributor at Wholesaler Specialty Distributor’s facility.



     2.05. DROP SHIPMENTS. If at any time Wholesale Specialty Distributor does
not have sufficient inventory of the Products to fill orders for the Products
from its customers or Wholesale Specialty Distributor otherwise determines that
it is in the best interests of its customers, Wholesale Specialty Distributor
may request that GPI ship the Products purchased by Wholesale Specialty
Distributor pursuant to a purchase order directly from GPI’s distribution
facility to Wholesale Specialty Distributor’s customers (each a “Drop
Shipment”). GPI may honor requests to make a Drop Shipment in its sole and
absolute discretion. Risk of loss and title to the Products in each Drop
Shipment shall remain with GPI until delivery to Wholesale Specialty
Distributor’s customers.



     2.06. SHIPMENT INSTRUCTIONS. The method of transportation and routing of
all shipments, including Drop Shipments shall be in accordance with Exhibit C.



     2.07. INVOICES. GPI shall invoice Wholesale Specialty Distributor for the
Products purchased pursuant to any applicable purchase order on the shipment
date for such Products. Delivery of all quantities of Products referred to in
GPI’ s invoice shall be deemed to have been made in full, unless within seven
(7) days from the date of receipt of the Product Wholesale Specialty
Distributor notifies GPI that it has not received the ordered quantities of the
Products.



3. OBLIGATION OF WHOLESALE SPECIALTY DISTRIBUTOR.



     3.01. SALES BY WHOLESALE SPECIALTY DISTRIBUTOR. Wholesale Specialty
Distributor shall not knowingly sell any Products to customers that sell or
intend to sell the Products outside of the Territory. Unless Wholesale
Specialty



 






 





Distributor has obtained the prior written authorization of GPI,
Wholesale Specialty Distributor shall not knowingly sell any Products to
customers who sell or intend to sell the Products on a wholesale or
distribution basis.



     3.02. PROMOTION BY WHOLESALE SPECIALTY DISTRIBUTOR. Wholesale Specialty
Distributor shall actively promote the sale and use of the Products to its
customers through methods customarily employed by Wholesale Specialty
Distributor with regard to the other products carried by Wholesale Specialty
Distributor. Wholesale Specialty Distributor shall include each new Product and
any new sizes and/or dosage forms of existing Products in any routine
distribution plan operated by Wholesale Specialty Distributor during the term
of this Agreement.



     3.03. PAYMENT BY WHOLESALE SPECIALTY DISTRIBUTOR. Wholesale Specialty
Distributor shall pay for all regular orders purchased by Wholesale Specialty
Distributor in accordance with the payment terms set forth on Exhibit D. Drop
Shipments shall be deemed to be purchases of the Products by the Wholesale
Specialty Distributor and Wholesale Specialty Distributor shall be responsible
for the payment of any invoices with respect to any Drop Shipment. All invoices
must be paid in full under the terms specified on Exhibit D.



     3.04. FINANCIAL AND CREDIT POSITION. Wholesale Specialty Distributor shall
maintain a financial condition reasonably satisfactory to GPI, and shall
substantiate such condition with annual audited consolidated financial
statements or with other documentation as reasonably requested by GPI from time
to time. If, in GPI’ s sole determination, at any time during the term of this
Agreement, the financial condition of the Wholesale Specialty Distributor
becomes impaired or unsatisfactory, GPI may require that Wholesale Specialty
Distributor pay for its purchases of Products in advance by cash payment or
require Wholesale Specialty Distributor to provide other assurances for the
payment or such Products.



     3.05. ORDERING. Wholesale Specialty Distributor shall transmit purchase
orders for the Products to GPI either direct via EDT, facsimile, or telephone.
If orders for products are placed by facsimile or telephone, they shall be
placed to the following numbers: (615) 287-2355 (facsimile); and (866) 405-9038
(telephone).



     3.06. PURCHASE OF PRODUCTS. Wholesale Specialty Distributor shall purchase
the Products exclusively from GPI according to the terms of this Agreement.
Wholesale Specialty Distributor shall not be permitted to purchase the Products
from sources other than GPI (including, but not limited to, other wholesalers)
without GPI’s prior written consent. Wholesale Specialty Distributor shall not
knowingly purchase or attempt to purchase Products that have previously been
exported or are designated for non-United States sales.



 






 



     3.07. MAINTENANCE OF INVENTORY. If requested by GPI, Wholesale Specialty
Distributor shall use commercially reasonable efforts to, from and after the
date of such request, maintain sufficient inventory of the Products to promptly
and adequately supply the demand of its customers, subject in all cases to the
manufacturing capabilities of GPI.



     3.08. SALES SUPPORT SERVICES. Wholesale Specialty Distributor shall
provide sales support services for the Products as well as the order-taking and
delivery services sufficient to meet the reasonable needs of customers for the
Products.



     3.09. SALES REPORTS. ON A MONTHLY BASIS, WHOLESALE SPECIALTY. Distributor
shall report to GPI information regarding its sales of the Products in the form
set forth on Exhibit B.



     3.10. SPECIAL CONTRACT PRICING. Wholesale Specialty Distributor shall
honor any pricing arrangements agreed to between GPI and GPI Marketed Customers
(“Special Contract Pricing”), subject to the continued validity of such Special
Contract Pricing in accordance with applicable law. Wholesale Specialty
Distributor’s Standard Policy on Chargebacks (a copy of which is incorporated
herein as Exhibit H (the “Chargeback Policy”)) will govern the administration
of the Special Contract Pricing under this Agreement.



     3.11. COMPLIANCE WITH LAWS. Wholesale Specialty Distributor shall take all
necessary precautions to prevent the Products from being possessed, used,
handled, distributed or sold by those who may not lawfully possess, use,
handle, distribute or sell the Products, and Wholesale Specialty Distributor
will fully comply with local, state, and federal laws regarding possession,
use, distribution, sale and safe handling of the Products. Wholesale Specialty
Distributor shall maintain all federal, state and local registrations necessary
for the lawful handling of the Products and shall promptly notify GPI of any
denial, revocation or suspension of any such registration.



     3.12. PROPER HANDLING AND STORAGE. Wholesale Specialty Distributor shall
handle and store the Products in a clean and orderly location, in a manner
which will assure that the proper rotation and quality of the Products are
maintained, and in compliance with all federal, state and local laws and
regulations. Wholesale Specialty Distributor shall comply with GPI criteria on
storing and shipping the Products that require special handling, as provided to
Wholesale Specialty Distributor from time to time. Wholesale Specialty
Distributor shall allow GPI TO inspect its storage facilities during normal
business hours, upon GPI providing at least seven (7) days advance notice to
Wholesaler. Wholesale Specialty Distributor shall in no way or manner be
permitted to repackage the Products.



 






 





Wholesale Specialty Distributor shall
notify GPI promptly of any changes in the appearance of any of the Products or
the packaging of the Products.



     3.13. NO SUBSTITUTIONS. Wholesale Specialty Distributor shall fill orders
for the Products only with the Products. Wholesale Specialty Distributor shall
not substitute any orders for the Products with products other than the
Products.



     3.14. CHANGE OF CONTROL. Wholesale Specialty Distributor shall notify GPI
of any change in address, at least thirty (30) days prior to the date on which
such change in address is to occur.



     3.15. ADVERSE EVENT AND PRODUCT COMPLAINT REPORTING. Wholesale Specialty
Distributor shall forward to GPI any information the Wholesale Specialty
Distributor obtains from a customer regarding Adverse Events or Product
Complaints (as each term is defined below). The customer reporting the Adverse
Event or Product Complaint shall be instructed to call a GPI representative by
calling GPI’s toll free hot line at (877) 691-6020, or such other number or
numbers provided to Wholesale Specialty Distributor by GPI. For the purposes of
this Agreement, “Adverse Event” means any adverse reaction associated with the
use of a Product in humans, whether or not considered product related and
whether or not confirmed by a health professional. The term “associated with
the use of product” is not limited to a causal relationship of the reported
event to the Product, and may include (i) an Adverse Event occurring in the
course of the use of a Product in professional practice, (ii) an adverse event
occurring from abuse of a Product, (iii) an adverse event occurring from the
withdrawal of a Product, (iv) any significant failure of expected
pharmacological action. For the purposes of this Agreement, a “Product
Complaint” means a claim or expression of displeasure, dissatisfaction or
annoyance with a Product, Product related materials or Product related
information. A Product Complaint may or may not involve a formal charge or
accusation. A Product Complaint may be related to, among other things,
identity, purity, potency, safety or quality of the product. Notwithstanding
the definition of Product Compliant, if the complaint involves a medical event
in a patient, it is regarded as an Adverse Event.



4. SPECIAL CONTRACT PRICING. From time to time, GPI may request that Wholesale
Specialty Distributor fulfill orders of the Products from its inventory to
customers for which GPI was the sole marketer of the Products (“GPI Marketed
Customers”). If GPI has quoted a GPI Marketed Customer a price for any Product
that is lower than the price for such Product set forth on Exhibit A (for such
Products), then GPI shall reimburse to Wholesale Specialty Distributor the
difference between the price quoted to the GPI Marketed Customer and the price
paid by the Wholesale Specialty Distributor for the Product, if the Wholesale
Specialty Distributor fulfills the GPI Marketed Customer’s order for the
Product out



 






 





of its inventory. Such reimbursement may, at the election of GPI,
be in the form of credits to Wholesale Specialty Distributor against future
purchases of products.



5. RECALLS. GPI shall reimburse Wholesale Specialty Distributor, consistent
with HDMA standards, for the full amount of all reasonable costs and expenses
incurred by Wholesaler in connection with Wholesale Specialty Distributor’s
performance of any recall services or assistance relating to the Products;
provided that, such recall is not due to Wholesale Specialty Distributor’s
gross negligence, willful misconduct or illegal conduct. Wholesale Specialty
Distributor will be credited for Products returned to GPI due to recalls of the
Products at the Wholesale Specialty Distributor’s purchase price for the
Products, calculated on a first-in, first-out basis. All shipping expenses for
recalled Product, both for shipments from Wholesale Specialty Distributor’s
customers to Wholesale Specialty Distributor and for shipments from Wholesale
Specialty Distributor to GPI, shall be the sole responsibility of GPI, unless
such recall is due to Wholesale Specialty Distributor’s gross negligence,
willful misconduct or illegal conduct.



6. WARRANTY; INDEMNITY; LIMITATION OF LIABILITY; INSURANCE.



     6.01. WARRANTY; DISCLAIMER OF IMPLIED WARRANTIES. GPI warrants that the
Products are manufactured and distributed in accordance with the Food, Drug and
Cosmetic Act, as amended (the “Act”) and in accordance with Exhibit F. EXCEPT
AS SET FORTH IN THE PRECEDING SENTENCE, GPI MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIM1TATION, WARRANTIES AS TO MERCHANTABILITY OR
Fitness FOR A PARTICULAR PURPOSE, With RESPECT TO ANY OF THE PRODUCTS.



     6.02. INDEMNIFICATION. GPI shall defend, indemnify, and hold harmless
Wholesale Specialty Distributor and its parent, affiliates, directors,
officers, employees and representatives from and against any and all claims,
liabilities, losses, damages, costs, and expenses (including without limitation
reasonable attorneys’ fees) arising directly or indirectly out of:



          a. injury or death to person or property alleged to have been caused by
any defect in the Products (exclusive of defects shown to be attributable to
Wholesale Specialty Distributor’s negligence or gross misconduct (but only to
the extent of such negligence or gross misconduct) or breach of this
Agreement); or



          b. the manufacture, marketing, testing, shipping, sale, possession or use
of the Products, unless such claim, liability, loss, damage, cost or expense is
shown to be attributable to Buyer’s negligence (but only to the extent of such
negligence) or breach of this Agreement; or



 






 



          c. “class of trade” pricing, if any, maintained by GPI from and after the
effective date of this Agreement, including without limitation those arising
out of Wholesale Specialty Distributor’s administration of Special Contract
Pricing or GPI Marketed Customer pricing; or



          d. any intellectual property infringement actions (including patent,
trademark, service mark, copyright trade dress, trade secret and other
proprietary rights) brought by a third party in connection with Wholesale
Specialty Distributor’s distribution and sale of Products hereunder (except to
the extent caused by Wholesale Specialty Distributor’s breach of this
Agreement, negligence or other intentional conduct) or in connection with any
marketing materials or information provided to Wholesale Specialty Distributor
by GPI. provided that, in all cases that GPI has promptly been notified in
writing of such suit, claim, or proceeding and is given full and complete
authority (including settlement authority), by Wholesale Specialty Distributor
or its directors, employees or agents, information and assistance by Wholesale
Specialty Distributor for such defense; further provided, that no admission is
made by either party without the consent of the other party and its insurers.
GPI shall not be liable for legal expenses Wholesale Specialty Distributor
incurs prior to GPI’s receipt of written notice of a claim for indemnification
by Wholesale Specialty Distributor and the express acknowledgement by Wholesale
Specialty Distributor of GPI’s authority to defend such claim, suit or
proceeding. GPI shall not be liable for legal expenses Wholesale Specialty
Distributor incurs once GPI has received notice of a claim for indemnification
and GPI has assumed the defense thereof.



     6.03. LIMITATION OF LIABILITY. EXCEPT WITH REGARD TO CLAIMS MADE BY THIRD
PARTIES, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION,
DAMAGES FOR LOST PROFITS OR LOST OPPORTUNITY COSTS, AS A RESULT OF ANY CLAIM
ASSERTED BY SUCH OTHER PARTY, WHETHER IN CONTRACT OR IN TORT, ARISING OUT OF OR
RELATED TO THIS AGREEMENT.



     6.04. INSURANCE.



     (A) During the term of this Agreement and thereafter as may be necessary
to cover claims associated with Products purchased by Wholesale Specialty
Distributor (whether before, during or after such term), GPI shall obtain, pay
for, and keep in full force and effect commercial general liability insurance,
with one or more reputable insurance carriers with a minimal rating by AM Best
of A- or its equivalent, (including coverage for product liability and personal
injury damages) with a per occurrence limit of not less than $10 million.
“National Specialty Services, Inc.” shall be designated as an additional
insured” under all such insurance policies,



 






 





and GPI shall deliver to Wholesale
Specialty Distributor certificates evidencing the existence and continuation of
such insurance at the execution of this Agreement and upon GPI’s periodic
renewal of such policy. Such insurance shall include a provision for at least
thirty (30) days prior written notice in Wholesale Specialty Distributor in the
event of cancellation or material reduction of coverage.



     (B) During the term of this Agreement and thereafter as may be necessary
to cover claims associated with the distribution of products supplied by GPI to
Wholesale Specialty Distributor (whether before, during, or after such term),
Wholesale Specialty Distributor shall obtain, pay for, and keep in full force
and effect commercial general liability insurance, with one or more reputable
insurance carriers with a minimal rating by AM Best of A- or its equivalent,
(including coverage for product liability and personal injury damages) with a
per occurrence limit of not less than $10 million. “Guilford Pharmaceuticals
Inc. “shall be designated as an “additional insured” under all such insurance
policies, and Wholesale Specialty Distributor, shall deliver to GPI
certificates evidencing the existence and continuation of such insurance at the
execution of this Agreement and upon wholesale specialty distributor’s periodic
renewal of such policy. Such insurance shall include a provision for at least
thirty (30) days prior written notice to GPI in the event of cancellation or
material reduction of coverage.



7. RETURNS; CREDITS; AND TAXES.



     7.01. RETURNS AND CREDITS. GPI will accept returns of the Products and,
where appropriate, credit Wholesale Specialty Distributor’s account, in
accordance with Exhibit G.



     7.02. TAXES. The collection and payment of all Taxes owed as a result of
the sale of any Products by Wholesale Specialty Distributor shall be the
responsibility of Wholesale Specialty Distributor.



     7.03 INVENTORY. If at any time during the term of this Agreement, GPI’s
published wholesale price for any Product is decreased, then GPI shall issue a
credit to Wholesale Specialty Distributor in an amount equal to the difference
between (a) the published wholesale acquisition price of Wholesale Specialty
Distributor’s then-current inventory of that Product as of the date Wholesaler
purchased that Product, and (b) the value of Wholesale Specialty Distributor’s
then-current inventory of that Product, determined using the decreased price
for all such inventory. For purposes of this section, “Wholesale Specialty
Distributor’s then-current inventory” shall include all inventory held in
Wholesale Specialty Distributor’s distribution centers, all Products owned by
Wholesale Specialty Distributor at any store owned or operated by a customer of
Wholesale Specialty Distributor and held by such customer on consignment, and
all Product “in transit” to or from such distribution centers on the effective
date of such price decrease. For Product owned by Wholesale



 






 





Specialty Distributor and held by customer on consignment, the amount is calculated as
the difference between (a) the lesser of the published wholesale acquisition
price or a customer chargeback contract price of Wholesale Specialty
Distributor’s then-current inventory of that Product at the customer location
and (b) the value of Wholesale Specialty Distributor’s then current inventory
of that Product at the customer’s location, determined using the new decreased
published wholesale acquisition price or customer chargeback contract price, as
applicable. Wholesale Specialty Distributor will use good-faith efforts to
notify GPI of the amount of any credit due pursuant to this section within one
hundred twenty (120) days following the effective date of such price decrease.



8. TERM



     8.01. TERM. The term of this Agreement shall commence on the date of this
Agreement and shall continue for a period of one (1) year from the date hereof
(the “Initial Term”). At the expiration of the Initial Term and each
anniversary thereafter, this Agreement shall renew automatically for successive
one-year terms (each a “Renewal Term”), unless either party notifies the other
party of its intention to terminate this Agreement at least thirty (30) days
prior to the expiration of the Initial Term or a Renewal Term, as the case may
be.



     8.02. TERMINATION. This Agreement may be terminated by the parties in the
following manner:



          a. Either party may terminate this Agreement immediately upon breach of
this Agreement by the other party if such breach remains uncured for fifteen
(15) days after written notice thereof, or the breaching party fails to
diligently pursue a cure if the breach is of a nature that it cannot be cured
in fifteen (15) days.



          b. Either party may terminate this Agreement without cause upon sixty (60)
days prior written notice thereof to the other party.



     8.03. EFFECT OF TERMINATION. Upon the termination or expiration of this
Agreement:



          a. Each party shall within thirty (30) days pay the other party all
amounts due under any invoice or credit memo; and



          b. Wholesale Specialty Distributor shall immediately return to GPI, in
accordance with any requirements of GPI, all Products in the possession of the
Wholesale Specialty Distributor and GPI shall credit the purchase price for
such Products to the amounts owed by Wholesale Specialty Distributor to GPI, if
any. The parties shall be permitted to offset amounts owed to each other
pursuant to this Section 8.03b.



 






 



          c. Section 8.03 and Sections 6 and 9.d shall survive the termination or
expiration of this Agreement until the obligations of the parties under these
Sections have been fully performed.



9. GENERAL PROVISIONS



          a. All orders are subject to acceptance and approval by GPI.



          b. Neither GPI nor Wholesale Specialty Distributor shall be liable to the
other for failing to carry out the terms of this Agreement where such failure
is the result of a strike or other labor disturbance, fire, flood, earthquake,
storm, governmental action, or other reason beyond its control.



          c. In the event there is a shortage of the Products, GPI shall have the
right and sole discretion to allocate the available Products among its
customers in a commercially reasonable manner which does not place Wholesale
Specialty Distributor at a competitive disadvantage.



          d. During the term of the Agreement, each party may find it necessary to
disclose confidential and proprietary information to the other (hereinafter
“Confidential Information”). The Confidential Information may include but is
not limited to pricing generally, Special Contract Pricing, Price quotations
for the Products by Wholesale Specialty Distributor or GPI, delivery schedules,
manufacturing schedules, sales amounts and sales figures. During the term of
this Agreement and for three (3) years thereafter, regardless of any
termination earlier than the expiration of the term of this Agreement, each
party shall maintain the Confidential Information in confidentiality and shall
not reveal the Confidential Information to third parties without the written
consent of the disclosing party, except as required by law. Each party shall
use the Confidential Information only for the purposes of this Agreement. These
restrictions shall not apply to Confidential Information that:




	 	(1)	 	is in the public domain at the time of disclosure;
	 
	 	(2)	 	after receipt, becomes part of the public domain by
publication or otherwise, except by breach of this Agreement by
the party receiving the Confidential Information;
	 
	 	(3)	 	the party receiving the Confidential Information can
establish by documenting evidence that it was in its possession
at the time of disclosure by the other party;




 






 










	 	(4)	 	the Confidential Information is in the possession of
the receiving party from third parties not under an obligation to
maintain its confidentiality;
	 
	 	(5)	 	is independently developed by or for the party
receiving the Confidential Information hereunder who have had no
access to such Confidential Information as shown by documenting
evidence; or
	 
	 	(6)	 	is required to be disclosed by law, by a judicial or
administrative order, or by a regulatory agency with appropriate
jurisdiction.





          e. This Agreement is the entire and only understanding between the parties
as to the subject matter hereof and supersedes all prior promises, agreements
or understandings between the parties. This Agreement may be changed or amended
only in a writing signed by duly authorized representatives of GPI and
Wholesale Specialty Distributor. All attachments and addenda to this Agreement
are hereby incorporated by reference.



          f. This Agreement, and any rights or obligations hereunder, shall not be
assigned by either party without the written consent of the other party, except
that either party may otherwise assign its respective rights and transfer its
respective duties to any assignee of all or substantially all of its business
(or that portion thereof to which this Agreement relates) or in the event of
its merger or consolidation or similar transaction. Either party may also sell
or assign any payments due hereunder.



          g. All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be delivered personally
or sent by facsimile transmission, nationally-recognized express courier, or
United States registered or certified mail, return receipt requested, addressed
as follows:



	 	 	 
	 	 	If to GPI, to:
	 
	 	 
	

	 	Guilford Pharmaceuticals Inc.
	

	 	6611 Tributary Street
	

	 	Baltimore, Maryland 21224
	

	 	A1TN: Kevin Conley
	

	 	Assistant Manager, Distribution & Customer Service
	

	 	Fax: 410-631-5020
	 
	 	 
	 	 	If to Wholesale Specialty Distributor:
	 
	 	 
	 	 	National Specialty Services, Inc.
	

	 	556 Metroplex Drive







 






 




	 	 	 	 
	 	 	Nashville, Tennessee 37211	 
	
	 	ATT’N:	 
	
	 	 	 
	
	 	Fax: 615-	 
	
	 	 	 







          h. This Agreement shall be construed in accordance with, and governed by,
the laws of the State of Delaware without regard to the conflicts of laws
provisions thereof.



          i. The parties shall be permitted to offset amounts owed to each other
pursuant to this Agreement.



          j. Each party shall comply with all federal, state and local laws and
regulations applicable to its operations, including but not limited to, those
dealing with employment opportunity and affirmative action including Executive
Order 11246 (Equal Opportunity), 38 U.S.C. Section 4212(a) (Affirmative Action
for Disabled Veterans and Veterans of the Vietnam Era), and 29 U.S.C. Section
793 (Affirmative Action for Workers with Disabilities), and any amendment and
applicable regulations pertaining thereto. In addition, each party shall comply
with all terms of 48 C.F.R. Section 52.244-6 (Subcontracts for Commercial Items
and Commercial Components) (including the requirement of including this
provision in subcontracts awarded under this contract), 15 U.S.C. Section 637
(d) (2) and (3) (Utilization of Small Business Concerns), and such provision is
hereby incorporated into this Agreement as if fully set forth herein. In
accordance with the provisions of 48 C.F.R. Section 52.209-6, each party
certifies that neither it nor its principals was or is debarred, suspended, or
proposed for debarment by the Federal Government. In addition, each party
represents and warrants that it complies with all federal, state, local and
other applicable laws, regulations, conventions or treaties prohibiting any
form of child labor or other exploitation of children in the manufacturing and
delivery of such party’s products or services.



          k. During the term of this Agreement, upon reasonable prior notice and
during normal business hours, either party shall be entitled to audit and
inspect those relevant records which are maintained by the other party in
direct connection with its performance under this Agreement; provided, however,
the audit or inspection shall be performed by bona tide, full-time employees of
the party conducting such audit or inspection and in no event shall any such
audit or inspection relate to any transaction or event which occurred more than
twelve months prior to the date of such audit or inspection. GPI chargeback
audits shall be governed by the additional terms and conditions contained in
the Chargeback Policy.



 






 



          l. The relationship among the parties is and shall be that of independent
contractors. This Agreement does not establish or create a partnership or joint
venture among the parties.



          m. If any part of this Agreement is determined to be invalid or declared
null and void by any court of competent jurisdiction, then such part will be
reformed, if possible, to conform to the law and, in any event, the remaining
part of this Agreement will remain in full force and effect.



     IN WITNESS WHEREOF, the parties hereto have executed this Wholesaler
AGREEMENT as of the date set forth above.



	 	 	 	 
	 	 	GUILFORD PHARMACEUTICALS INC.	 
	 
	 	 	 
	 	 	By:     /s/ David P. Wright	 
	
	 	 	 
	
	 	Name: David P. Wright	 
	
	 	 	 
	
	 	Title: EVP, Commercial Operations	 
	
	 	 	 
	 
	 	 	 
	 	 	NATIONAL SPECIALTY SERVICES, INC.	 
	 
	 	 	 
	 	 	By:     /s/ David J. Canniff	 
	
	 	 	 
	
	 	Name: David J. Canniff	 
	
	 	 	 
	
	 	Title: Vice President	 
	
	 	 	 








 








 





EXHIBIT A — PRODUCTS AND PRICES




    	 	 	 
	Product
          
	
	Price

	
	 	

	GLlADEL®
            Wafer 
	
	$10,583.04 per unit

	
	 	








 









 





EXHIBIT B — TERRITORY




United States of America






 









 








EXHIBIT C — HANDLING AND SHIPPING



GLIADEL® Wafer Specifications (NDC 61379-0100-1)



GLIADEL® is available in a single dose treatment box containing eight
individually pouched wafers. Each wafer contains 7.7 mg of carraustine
and is packaged in two aluminum foil laminate packages. The inner
pouch is sterile and is designed to maintain product sterility and
protect the product from moisture. The outer pouch is a peelable
overlap. The outside surface of the outer pouch is not sterile.



The single dose treatment box dimensions L x W x Thickness
are 6” x 53” x 1.5”.


GLIADEL® must be stored at or below
-20° C (-4° F).



A shipping container that is appropriate for dry ice and the safe
transportation of GLIADEL® Wafer such as Part No. 68-4LB manufactured
by Polyfoam Packers should be used. GPI MAKES NO REPRESENTATION OR
WARRANTY REGARDING ANY SHIPPING CONTAINER WHETHER MANUFACTURED BY
POLYFOAM PACKERS OR OTHERWISE.



GLIADEL® Wafer is fragile and must be handled with care.





 









 








EXHIBIT D — TERMS OF PAYMENT



Wholesale Specialty Distributor will be entitled to a three percent
(3%) discount if the balance is paid within thirty (30) days of the
invoice date; a two percent (2%) discount if the balance is paid
within sixty (60) days of the invoice date; and a one percent (1%)
discount if the balance is paid within ninety (90) days of the
invoice date. All balances most be paid within ninety-one (91) days
of the invoice date. Late fees will accrue at one percent (1%) per
month on unpaid balances outstanding more than ninety-one (91) days.




 









 






EXHIBIT E- SALES REPORTING CRITERIA



All sales data must be forwarded electronically to Guilford Pharmaceuticals
no later than ten (10) days past the last day of the prior month. The data can
be sent in either a Microsoft Excel or Microsoft Access Database format but
must include the following data fields:




    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	Account
          
	 	Address 	 	City 	 	ST. 	 	Zip 	 	Jan 	 	Feb 	 	Mar 	 	Q1 	 	Apr 	 	May 	 	Jun 	 	Q2 	 	Jul 	 	Aug 	 	Sep 	 	Q3 	 	Oct 	 	Nov 	 	Dec 	 	Q4
	Name 
	 	 	 	 	 	 	 	 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units 	 	Units
	











 









 








EXHIBIT F — PRODUCT WARRANTIES




See GLIADEL® Wafer package insert attached hereto.




 









 





EXHIBIT G



  
GUILFORD

    PHARMACEUT1CALS
  
Credit & Return Policy GLADEL®
    Wafer Treatments
  

	•	 	Guilford Pharmaceuticals Inc. (“GPI”) will accept for return
        GLIADEL® Wafer Treatment(s) from a licensed pharmacy, authorized
        distributor and /or wholesaler on the following conditions: GPI will only
        accept returns of complete GLIADEL®  Wafer Treatments which are in their original packaging with the lot number visible.
	 
	•	 	GPI will credit to a customer’s account amounts charged for In-dated
        GLIADEL® Wafer Treatments that have been sent to a customer in error,
        provided that the customer notifies GPI within 48 hours of receiving the
        treatment(s), that the treatment(s) were received in error, the "cold
        chain" has been maintained by the customer and the treatment(s) are
        shipped back to GPI the same day in which the "return packet"
        has been provided to the customer account by GPI. A return packet contains
        instructions, packaging materials and a cold chain maintenance verification
        letter. 
	 
	•	 	GPI will replace any GLIADEL® Wafer Treatment(s) that were damaged
        in shipment, or found to have wafers broken in more than 2 pieces,
        provided that, the customer notifies GPI’s Customer Service
        Department (1-866-405-9038) within 48 hours of opening the treatment box(es)
        that the Treatment(s) were damaged and identifies the number of damaged
        treatments and the lot numbers thereof.
	 
	•	 	GPI will replace GLIADEL® Wafer Treatment(s) that are expired,
        provided that, the treatment(s) are in their sealed original packaging
        with lot number visible, the expiration date is within 12 months
        of the date that the treatments are returned to GPI, and GPI’s Customer
        Service Department is notified before the treatments are returned to GPI.




A GLIADEL® Wafer Treatment consists of eight GLIADEL® Wafers. All returns
must be approved by GPI’s Customer Service Department Except as set forth
above, upon receipt by GPI of a
returned GLIADEL® Wafer Treatment, GPI will, at GPI’s sole discretion, either
send the customer a new GLIADEL® Wafer Treatment or credit the customer the
amount of the purchase price for the returned treatment.




 









 








EXHIBIT H — WHOLESALER’S CHARGEBACK POLICY



  
NATIONAL SPECIALTY SERVICES, INC.

STANDARD POLICY ON CHARGEBACKS




     The following represents the standard policy of National Specialty
Services, Inc. (“NSS”) pertaining to the sale of product under contract
(“chargebacks”) between NSS’ customers and supplier (“Supplier”) and the
processing and audits of chargebacks, as well as certain related matters.
Depending upon the individual facts and circumstances associated with a
Supplier’s administrative procedures for chargeback related matters (e.g. the
extent of use of EDI, electronic funds transfer, and other factors that
contribute to or detract from NSS’s ability to efficiently deal with
chargeback matters), NSS reserves the right to modify any or all of the
following terms and
conditions.



I. Chargeback Processing



  
     NSS will
    recognize and administer contracts between Suppliers and customers pursuant
    to which prices at which the customer may purchase certain products have been
    established, subject to the continued validity of such contracts in accordance
    with applicable law and Supplier’s compliance with NSS’s standard
    policy and credit considerations deemed relevant to NSS. Amounts owed to NSS
    by Suppliers relating to chargebacks shall be calculated based upon the wholesale
    acquisition price of Supplier’s product at date of sale, and shall be
    paid, or credited, as appropriate, to NSS. within seven (7) days following
    NSS’s submission of a request for such amounts. In the event that NSS
    notifies Supplier that chargeback amounts owed by Supplier to NSS exceed amounts
    owed by NSS to Supplier (a “Debit Balance”) Supplier will remit
    payment for chargebacks to NSS by check or wire transfer until such time that
    NSS notifies Supplier that it is no longer in a Debit Balance. Chargeback
    reconciliation issues shall be resolved as soon as practicable with each party
    responding to the other within sixty (60) days following receipt of documentation
    supporting those issues.
  
II. Supplier Chargeback Audits




     The Supplier shall have the right to audit NSS’ compliance with the
respective contracts in force and related chargeback matters subject to the
following terms and conditions:




	A.	 	Chargeback audits will be limited to twelve (12) months
of historical information as of the
date such audit begins.
	 
	B.	 	NSS shall have a reciprocal twelve (12) month period to
reconcile any differences that may
arise with Supplier related to chargeback issues (including
submission and other errors and
regardless of whether such issues arise as part of a Supplier
chargeback audit).
	 
	C.	 	Supplier shall notify NSS’ Controller of an intent to perform an
        audit at least thirty (30) days prior to beginning the audit, specifying
        the location to be audited and the time period to be covered. In the event
        that such timing is expected to create undue disruption in NSS’ business,
        NSS shall have the right to delay the start of the audit for up to thirty
        (30) additional days.
	 
	D.	 	Audits must be performed by bona fide, permanent employees
of Supplier,
        subject to a confidentiality agreement to be prepared by NSS and signed
        by the Supplier and such employee(s), prior to beginning the audit.
	 
	E.	 	Audits shall be performed at the NSS site that
is being audited, or such alternate sites where appropriate
records are located, as NSS may designate.







 









 







	F.	 	Audits shall be performed during the normal,
customary office hours of the NSS site that is being audited.
	 
	G.	 	The existing accounting records of the NSS site
being audited will be made available for audit, subject to
the following limitations:






	1.	 	Electronic data will not be specially created.
	 
	2.	 	NSS reserves the right to summarize and/or retract the
contents of all records
containing sensitive or competitive information.






	H.	 	NSS will bill Supplier for any direct out-of-pocket
costs incurred in conjunction with a Supplier-requested audit,
unless such audit reflects a deficiency of five percent (5.0%)
or greater of the actual amount of the invoice submitted over
the audit period. Amounts billed will be deducted from NSS’
next payment for current purchases, after completion of the
audit.
	 
	I.	 	Any Supplier claims arising from an audit must be
supported by specific audit results related to specific
transactions. Extrapolation of results from one period to
another will not be accepted.
	 
	J.	 	Any Supplier claims arising from an audit must be
submitted to NSS’ Controller within thirty (30) days of
completing the audit. All claims must be accompanied by
specific supporting details of the transactions that comprise
such claim. NSS shall then have forty-five (45) days to review
the claim and advise Supplier of its acceptance or
disagreement.





IV. Related Matters





	A.	 	NSS shall be entitled to cash discounts based on the
gross invoice price of all goods purchased from Supplier,
regardless of whether a chargeback is ultimately claimed by
NSS.
	 
	B.	 	Supplier shall provide NSS with a chargeback advance
to cover credit exposure of unsecured credit granted to
Supplier by NSS for chargeback claims and to help effect the
carrying costs involved in the chargeback process, subject to
the following terms and conditions:






	1.	 	The chargeback advance shall be not less
than an amount equal to one (1) month of
chargeback billings based on an average of the most recent
six- (6) months of billings.
	 
	2.	 	On a quarterly basis, NSS will reconcile
the amount of the advance against the six- (6)
month average billings. If the amount of the advance
exceeds the six- (6) month
average billings, NSS shall include the amount of such
excess in the next payment
made to Supplier. If the amount of the advance is less than
the six- (6) month average,
NSS will deduct the amount of such shortfall from the next
payment for current
purchases.




 









 








  
EXHIBIT I MARKETING FEE 


GPI will pay Wholesale
Specialty Distributor a quarterly marketing fee equal
to 1.25% of purchases by Wholesale Specialty Distributor. The marketing fee
will be furnished to Wholesale Specialty Distributor for conducting three (3)
marketing services campaigns per calendar year. Marketing Fee to be paid by
check within thirty (30) days from the end of then current quarter.



In order for Wholesale Specialty
Distributor to conduct such telemarketing
and direct mail campaigns, GPI shall provide to Wholesale Specialty
Distributor marketing materials and/or information regarding the Products
for Wholesale Specialty Distributor’s use. Wholesale Specialty Distributor
will use the marketing material only in the form provided by GPI. GPI hereby
grants to Wholesale Specialty Distributor permission and a license to use
such marketing materials and/or information and all trademarks, copyrights
or other intellectual property rights included in such marketing materials
and/or information for such purposes.



GPI warrants and represents that all
marketing materials and/or other
information provided to Wholesale Specialty Distributor complies with the
Federal Food, Drug and Cosmetic Act, as amended, and all other applicable
laws, rules and regulations and does not infringe on any third party’s
intellectual property right (including, but not limited to, patent,
trademark, service mark, copyright, trade dress, trade secret). GPI further
warrants and represents and shall ensure that all marketing materials and
other information submitted to Wholesale Specialty Distributor shall comply
with FDA promotional and advertising regulations and guidance documents
including but limited to the fact that said material shall be fair balanced,
accurate and complete. Furthermore, said marketing materials and information
shall not contain any claims for a product other than those specifically
approved by the FDA (or other applicable agency) or included in the
Product’s approved labeling. For prescription drug products, full
prescribing information shall be provided and be included with all promotion
and advertising where claims are being made. Also, GPI shall inform
Wholesale Specialty Distributor if any changes occur in such marketing
material and/or other information so that said marketing material(s) and
other information continue to remain compliant with applicable laws and
regulations. To the extent that there is a requirement to make submissions
of promotional and marketing material to the FDA or other applicable
agencies, GPI shall provide said material to those agency(ies).



GPI shall defend, indemnify and hold harmless Wholesale Specialty Distributor
and its parent, affiliates, directors, officers, employees and
representatives from and against any and all claims, liabilities, losses,
damages, costs, and expenses (including without limitation, reasonable
attorneys’ fees) brought by a third party and arising directly or indirectly
out of any marketing materials or other information provided by GPI
hereunder.