exv4w04



 



EXECUTION COPY


Exhibit 4.04


Guilford Pharmaceuticals Inc.



$60,000,000 5% Convertible Subordinated Notes Due 2008



REGISTRATION RIGHTS AGREEMENT



June 17, 2003


Citigroup Global Markets Inc.

CIBC World Markerts Corp.

As Representatives of the Initial Purchasers

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013



Ladies and Gentlemen:


     Guilford Pharmaceuticals Inc., a corporation organized under the laws of
Delaware (the “Company”), proposes to issue and sell to certain purchasers (the
“Initial Purchasers”), for whom you (the “Representatives”) are acting as
representatives, $60,000,000 principal amount (plus up to an additional
$20,000,000 aggregate principal amount to cover over-allotments, if any) of its
5% Convertible Subordinated Notes due 2008 (the “Securities”), upon the terms
set forth in the Purchase Agreement between the Company and the Representatives
dated June 11, 2003 (the “Purchase Agreement”) relating to the initial
placement (the “Initial Placement”) of the Securities. The Securities will be
convertible into shares of Common Stock (as defined herein), at the conversion
price set forth in the Final Memorandum (as defined herein), as the same may be
adjusted from time to time pursuant to the Indenture (as defined herein). To
induce the Initial Purchasers to enter into the Purchase Agreement and to
satisfy a condition to your obligations thereunder, the Company agrees with you
for your benefit and the benefit of the holders from time to time of the
Securities and the Common Stock issuable upon conversion of the Securities
(including the Initial Purchasers) (each a “Holder” and, collectively, the
“Holders”), as follows:



     1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the
following meanings:



     “Act” shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.



     “Affiliate” shall have the meaning specified in Rule 405 under the Act and
the terms “controlling” and “controlled” shall have meanings correlative
thereto.



     “Broker-Dealer” shall mean any broker or dealer registered as such under
the Exchange Act.



 







 





2




     “Business Day” shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.



     “Closing Date” shall mean the date of the first issuance of the
Securities.



     “Commission” shall mean the Securities and Exchange Commission.



     “Common Stock” means the common stock, par value $0.01 per share, of the
Company, as it exists on the date of this Agreement and any other shares of
capital stock or other securities of the Company into which such Common Stock
may be reclassified or changed, together with any and all other securities
which may from time to time be issuable upon conversion of Securities.



     “Deferral Period” shall have the meaning indicated in Section 3(i) hereof.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.



     “Final Memorandum” shall mean the Final Memorandum as defined in the
Purchase Agreement.



     “Holder” shall have the meaning set forth in the preamble hereto.



     “Indenture” shall mean the Indenture relating to the Securities, dated as
of June 17, 2003, between the Company and Wachovia Bank, National Association,
as trustee, as the same may be amended from time to time in accordance with the
terms thereof.



     “Initial Placement” shall have the meaning set forth in the preamble
hereto.



     “Initial Purchasers” shall have the meaning set forth in the preamble
hereto.



     “Losses” shall have the meaning set forth in Section 5(d) hereof.



     “Majority Holders” shall mean, on any date, Holders of a majority of the
aggregate principal amount of Securities registered under a Shelf Registration
Statement; provided, however, that Holders of Common Stock issued upon
conversion of Securities shall be deemed to be Holders of the aggregate
principal amount of Securities from which such Common Stock was converted;
provided further, however, that Securities or Common Stock which have been sold
or otherwise transferred pursuant to the Shelf Registration Statement shall not
be included in the calculation of Majority Holders.



     “Managing Underwriters” shall mean the investment banker or investment
bankers and manager or managers that administer an underwritten offering, if
any, conducted pursuant to Section 6 hereof.



 






 




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     “NASD Rules” shall mean the Conduct Rules and the By-Laws of the National
Association of Securities Dealers, Inc.



     “Notice and Questionnaire” shall mean a written notice delivered to the
Company substantially in the form attached as Annex A to the Final Memorandum.



     “Notice Holder” shall mean, on any date, any Holder of Transfer Restricted
Securities that has delivered a Notice and Questionnaire to the Company on or
prior to such date.



     “Prospectus” shall mean a prospectus included in the Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or Common Stock issuable upon
conversion thereof covered by the Shelf Registration Statement, and all
amendments and supplements thereto, including any and all exhibits thereto and
any information incorporated by reference therein.



     “Purchase Agreement” shall have the meaning set forth in the preamble
hereto.



     “Registration Default Damages” shall have the meaning set forth in Section
7 hereof.



     “Securities” shall have the meaning set forth in the preamble hereto.



     “Shelf Registration Period” shall have the meaning set forth in Section
2(c) hereof.



     “Shelf Registration Statement” shall mean a “shelf” registration statement
of the Company pursuant to the provisions of Section 2 hereof which covers some
or all of the Securities and the Common Stock issuable upon conversion thereof,
as applicable, on an appropriate form under Rule 415 under the Act, or any
similar rule that may be adopted by the Commission, amendments and supplements
to such registration statement, including post-effective amendments, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.



     “Transfer Restricted Securities” means each Security and any share of
Common Stock issued or issuable upon conversion thereof until the date on which
such Security or share of Common Stock, as the case may be, (a) has been
transferred pursuant to the Shelf Registration Statement or another
registration statement covering such Security or share of Common Stock which
has been filed with the Commission pursuant to the Act, in either case after
such registration statement has become, and while such registration statement
is, effective under the Act; (b) has been transferred pursuant to Rule 144
under the Act (or any similar provision then in force); or (c) may be sold or
transferred pursuant to paragraph (k) of Rule 144 under the Act (or any
successor provision promulgated by the Commission); provided, however, that the
term shall not



 






 





4




include any share of Common Stock issuable upon conversion of a Security
previously sold or transferred pursuant to the foregoing clauses (a), (b) or
(c).


     “Trustee” shall mean the trustee with respect to the Securities under the
Indenture.



     “Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the Commission promulgated
thereunder.



     “underwriter” shall mean any underwriter of Securities or Common Stock
issuable upon conversion thereof in connection with an offering thereof under
the Shelf Registration Statement.



     2. Shelf
Registration. (a) The Company shall as promptly as practicable (but
in no event more than 90 days after the Closing Date) file with the Commission
a Shelf Registration Statement providing for the registration of, and the sale
on a continuous or delayed basis by the Holders of, all of the Transfer
Restricted Securities, from time to time in accordance with the methods of
distribution elected by such Holders, pursuant to Rule 415 under the Act or any
similar rule that may be adopted by the Commission; provided, however, that if
any Securities are issued upon exercise of the option granted to the Initial

Purchasers in the Purchase Agreement and the date on which such Securities are
issued occurs after the Closing Date, the Company will take such steps, prior
to the effective date of the Shelf Registration Statement, to ensure that such
Securities and Common Stock issuable upon conversion thereof are included in
the Shelf Registration Statement on the same terms as the Securities issued on
the Closing Date.



     (b) The Company shall use its reasonable best efforts to cause the Shelf
Registration Statement to become or be declared effective under the Act no
later than 150 days after the Closing Date.



     (c) The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required by the Act, in order to permit the Prospectus forming part thereof to
be usable by Holders for a period (the “Shelf Registration Period”) from the
date the Shelf Registration Statement is declared effective by the Commission
until the earliest of (i) the second anniversary thereof or, if later, the
second anniversary of the last date on which any Securities are issued upon
exercise of the Initial Purchasers’ option; (ii) the date on which all the
Securities and the Common Stock issuable upon conversion of the Securities may
be sold by non-Affiliates of the Company pursuant to paragraph (k) of Rule 144
(or any successor provision) promulgated by the Commission under the Act; and
(iii) the date as of which all the Securities or the Common Stock issuable upon
conversion of the Securities have been sold either under Rule 144 under the Act
(or any similar provision then in force) or pursuant to the Shelf Registration
Statement. The Company shall be deemed not to have used its reasonable best
efforts to keep the Shelf Registration Statement effective during the Shelf
Registration Period if it voluntarily takes any action that would result in
Holders of Transfer Restricted Securities not being able to offer and sell such
Securities at any time during the Shelf Registration Period, unless such action
is



 






 




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(x)  required by applicable law or otherwise undertaken by the Company in
good faith and for valid business reasons (not including avoidance of the
Company’s obligations hereunder), including the acquisition or divestiture of
assets, and (y) permitted by Section 3(i) hereof.


     (d) Each Holder of Transfer Restricted Securities must deliver a Notice
and Questionnaire to the Company at least ten Business Days prior to the
effectiveness of the Shelf Registration Statement. From and after the date the
Shelf Registration Statement is declared effective, the Company shall, as
promptly as is practicable after the date a Notice and Questionnaire is
delivered by a Holder that is not then a Notice Holder, and in any event within
ten Business Days after such date, (i) if required by applicable law, file with
the Commission a post-effective amendment to the Shelf Registration Statement
or prepare and, if required by applicable law, file a supplement to the related
Prospectus or an amendment or supplement to any document incorporated therein
by reference or file any other required document so that the Holder delivering
such Notice and Questionnaire is named as a selling holder in the Shelf
Registration Statement and the related Prospectus and so that such Holder is
permitted to deliver such Prospectus to purchasers of the Transfer Restricted
Securities in accordance with applicable law and, if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use best efforts
to cause such post-effective amendment to be declared effective under the Act
as promptly as is practicable; (ii) provide such Holder copies of any documents
filed pursuant to Section 2(d)(i) hereof; and (iii) notify such Holder as
promptly as practicable after the effectiveness under the Act of any
post-effective amendment filed pursuant to Section 2(d)(i) hereof; provided,
however, that if such Notice and Questionnaire is delivered during a Deferral
Period, the Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii) and
(iii) above upon expiration of the Deferral Period in accordance with Section
3(i) hereof. Notwithstanding anything contained herein to the contrary, the
Company shall be under no obligation to name any Holder that is not a Notice
Holder as a selling holder in the Shelf Registration Statement or related
Prospectus; provided, however, that any Holder that becomes a Notice Holder
pursuant to the provisions of this Section 2(d) (whether or not such Holder was
a Notice Holder at the time the Shelf Registration Statement was declared
effective) shall be named as a selling holder in the Shelf Registration
Statement or related Prospectus in accordance with the requirements of this
Section 2(d).



     3. Registration Procedures. The following provisions shall apply in
connection with the Shelf Registration Statement.



     (a) The Company shall:




		
	 	     (i) furnish to each of the Representatives and to counsel for
the Notice Holders, if any, not less than five Business Days prior
to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each
amendment or supplement, if any, to the Prospectus included
therein (including all documents incorporated by reference therein
after the initial filing) and shall use its best efforts to
reflect in each such document, when so filed with the Commission,
such



 






 





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	 	comments as the Representatives shall reasonably propose;
provided, however, that the foregoing shall not apply to any
amendment or supplement filed solely for the purpose of naming
additional Notice Holders as selling holders in the Shelf
Registration Statement or related Prospectus; and




		
	 	     (ii) include information regarding the Notice Holders and the
methods of distribution they have elected for their Transfer
Restricted Securities provided to the Company in Notices and
Questionnaires as necessary to permit such distribution by the
methods specified therein.



     (b) The Company shall cause the Shelf Registration Statement and the
related Prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement or such amendment or supplement, (i)
to comply in all material respects with the applicable requirements of the Act;
and (ii) not to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.



     (c) The Company shall advise the Representatives, the Notice Holders and
any underwriter that has provided in writing to the Company a telephone or
facsimile number and address for notices, and confirm such advice by notice in
writing (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction to suspend the use of the Prospectus until the Company shall
have remedied the basis for such suspension):




		
	 	     (i) when the Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective;




		
	 	     (ii) of any request by the Commission for any amendment or
supplement to the Shelf Registration Statement or the Prospectus
or for additional information;




		
	 	     (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement
or the institution or threatening of any proceeding for that
purpose;




		
	 	     (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Transfer
Restricted Securities included therein for sale in any
jurisdiction or the institution or threatening of any proceeding
for such purpose; and




		
	 	     (v) of the happening of any event that requires any change in
the Shelf Registration Statement or the Prospectus so that, as of
such date, they (A) do not contain any untrue statement of a
material fact and (B) do not omit to state a material fact
required to be stated therein or necessary to make



 






 





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	 	the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not
misleading.



     (d) The Company shall use its best efforts to prevent the issuance of any
order suspending the effectiveness of the Shelf Registration Statement or the
qualification of the securities therein for sale in any jurisdiction and, if
issued, to obtain as soon as possible the withdrawal thereof.



     (e) The Company shall furnish to each Notice Holder, without charge, at
least one copy of the Shelf Registration Statement and any post-effective
amendment thereto, including all material incorporated therein by reference,
and, if a Notice Holder so requests in writing, all exhibits thereto (including
exhibits incorporated by reference therein).



     (f) During the Shelf Registration Period, the Company shall promptly
deliver to each Initial Purchaser, each Notice Holder, and any sales or
placement agents or underwriters acting on their behalf, without charge, as
many copies of the Prospectus (including the preliminary Prospectus) included
in the Shelf Registration Statement and any amendment or supplement thereto as
any such person may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by each of the foregoing in
connection with the offering and sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto.



     (g) Prior to any offering of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, the Company shall arrange for the
qualification of the Transfer Restricted Securities for sale under the laws of
such jurisdictions as any Notice Holder shall reasonably request and shall
maintain such qualification in effect so long as required; provided, however,
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not then so qualified or to take any action that
would subject it to service of process in suits, other than those arising out
of the Initial Placement or any offering pursuant to the Shelf Registration
Statement, in any jurisdiction where it is not then so subject.



     (h) Upon the occurrence of any event contemplated by subsections (c)(ii)
through (v) above, the Company shall promptly (or within the time period
provided for by Section 3(i) hereof, if applicable) prepare a post-effective
amendment to the Shelf Registration Statement or an amendment or supplement to
the related Prospectus or file any other required document so that, as
thereafter delivered to the purchasers of the securities included therein, the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.



     (i) Upon the occurrence or existence of any pending corporate development
or any other material event that, in the good faith judgment of the Company
(not including avoidance of the Company’s obligations hereunder), makes it
appropriate to suspend the availability of the Shelf Registration Statement and
the related Prospectus,



 






 




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the Company shall give notice (without notice of the nature or details of
such events) to the Notice Holders that the availability of the Shelf
Registration Statement is suspended and, upon receipt of any such notice, each
Notice Holder agrees not to sell any Transfer Restricted Securities pursuant to
the Shelf Registration Statement until such Notice Holder’s receipt of copies
of the supplemented or amended Prospectus provided for in Section 3(i) hereof,
or until it is advised in writing by the Company that the Prospectus may be
used, and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such Prospectus. The
period during which the availability of the Shelf Registration Statement and
any Prospectus is suspended (the “Deferral Period”) shall not exceed 30 days in
any three-month period or for three periods not to exceed an aggregate of 60
days in any twelve-month period.


     (j) Not later than the effective date of the Shelf Registration Statement,
the Company shall provide CUSIP numbers for the Securities and the Common Stock
registered under the Shelf Registration Statement and provide the Trustee with
printed certificates for the Securities.



     (k) The Company shall comply with all applicable rules and regulations of
the Commission and shall make generally available to its security holders an
earnings statement satisfying the provisions of Section 11(a) of the Act as
soon as practicable after the effective date of the Shelf Registration
Statement and in any event no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company’s first fiscal quarter commencing after the effective date
of the Shelf Registration Statement.



     (l) The Company shall cause the Indenture to be qualified under the Trust
Indenture Act in a timely manner.



     (m) The Company shall cause all Common Stock issued or issuable upon
conversion of the Securities to be listed on each securities exchange or
quotation system on which the Common Stock is then listed no later than the
date the applicable Shelf Registration Statement is declared effective and, in
connection therewith, to make such filings as may be required under the
Exchange Act and to have such filings declared effective as and when required
thereunder.



     (n) The Company may require each Holder of Transfer Restricted Securities
to be sold pursuant to the Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of such
Transfer Restricted Securities as the Company may from time to time reasonably
require for inclusion in the Shelf Registration Statement. The Company may
exclude from the Shelf Registration Statement the Transfer Restricted
Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.



     (o) The Company shall enter into customary agreements (including, if
requested, an underwriting agreement in customary form) and take all other
appropriate actions in order to expedite or facilitate the registration or the
disposition of the Transfer Restricted Securities, and in connection therewith,
if an underwriting agreement is



 






 




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entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 5 hereof.


     (p) The Company shall:




		
	 	     (i) make reasonably available for inspection by the Holders
of Transfer Restricted Securities to be registered thereunder, any
underwriter participating in any disposition pursuant to the Shelf
Registration Statement, and any attorney, accountant or other
agent retained by the Holders or any such underwriter all relevant
financial and other records and pertinent corporate documents of
the Company and its subsidiaries;




		
	 	     (ii) cause the Company’s officers, directors, employees,
accountants and auditors to supply all relevant information
reasonably requested by the Holders or any such underwriter,
attorney, accountant or agent in connection with the Shelf
Registration Statement as is customary for similar due diligence
examinations;




		
	 	     (iii) in connection with any underwritten offering conducted
pursuant to Section 6, make such representations and warranties to
the Holders of Transfer Restricted Securities registered
thereunder and the underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in
primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement;




		
	 	     (iv) in connection with any underwritten offering conducted
pursuant to Section 6, obtain opinions of counsel to the Company
and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily
covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and
underwriters;




		
	 	     (v) in connection with any underwritten offering conducted
pursuant to Section 6, obtain “comfort” letters and updates
thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired or to be acquired by the Company for which financial
statements and financial data are, or are required to be, included
in the Shelf Registration Statement), addressed to each selling
Holder of Transfer Restricted Securities registered thereunder and
the underwriters, if any, in customary form and covering matters
of the type customarily covered in “comfort” letters in connection
with primary underwritten offerings; and



 






 






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	 	     (vi) in connection with any underwritten offering conducted
pursuant to Section 6, deliver such documents and certificates as
may be reasonably requested by the Majority Holders or the
Managing Underwriters, if any, including those to evidence
compliance with Section 3(i) hereof and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company.



The actions set forth in clauses (iii), (iv), (v) and (vi) of this paragraph
(p) shall be performed at (A) the effectiveness of the Shelf Registration
Statement and each post-effective amendment thereto; and (B) each closing under
any underwriting or similar agreement as and to the extent required thereunder.



     (q) The Company shall use its best efforts if the Securities have been
rated prior to the initial sale of such Securities, to confirm such ratings
will apply to the Securities covered by the Shelf Registration Statement.



     (r) In the event that any Broker-Dealer shall underwrite any Transfer
Restricted Securities or participate as a member of an underwriting syndicate
or selling group or “assist in the distribution” (within the meaning of the
NASD Rules) thereof, whether as a Holder of such Transfer Restricted Securities
or as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, the Company shall assist such Broker-Dealer in
complying with the NASD Rules.



     (s) The Company shall use its reasonable best efforts to take all other
steps necessary to effect the registration of the Transfer Restricted
Securities covered by the Shelf Registration Statement.



     4. Registration Expenses. The Company shall bear all expenses incurred in
connection with the performance of its obligations under Sections 2 and 3
hereof and shall reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel (which shall be a nationally recognized
law firm experienced in securities matters designated by the Majority Holders)
to act as counsel for the Holders in connection therewith.



     5.
Indemnification and Contribution. (a) The Company agrees to indemnify and
hold harmless each Holder of Transfer Restricted Securities covered by the
Shelf Registration Statement, each Initial Purchaser, the directors, officers,
employees, Affiliates and agents of each such Holder or Initial Purchaser and
each person who controls any such Holder or Initial Purchaser within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Shelf Registration Statement as originally filed
or in any amendment thereof, or in any preliminary Prospectus or the
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission



 






 





11


to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any preliminary
Prospectus or the Prospectus, in the light of the circumstances under which
they were made) not misleading, and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the party claiming indemnification specifically for inclusion therein. This
indemnity agreement shall be in addition to any liability that the Company may
otherwise have.


     The Company also agrees to indemnify as provided in this Section 5(a) or
contribute as provided in Section 5(d) hereof to Losses of each underwriter, if
any, of Transfer Restricted Securities registered under the Shelf Registration
Statement, its directors, officers, employees, Affiliates or agents and each
person who controls such underwriter on substantially the same basis as that of
the indemnification of the Initial Purchasers and the selling Holders provided
in this paragraph (a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 3(o)
hereof.



     (b) Each Holder of Transfer Restricted Securities covered by the Shelf
Registration Statement (including each Initial Purchaser that is a Holder, in
such capacity) severally and not jointly agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the Shelf
Registration Statement and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
shall be acknowledged by each Notice Holder that is not an Initial Purchaser in
such Notice Holder’s Notice and Questionnaire and shall be in addition to any
liability that any such Notice Holder may otherwise have.



     (c) Promptly after receipt by an indemnified party under this Section 5 or
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 5, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses;
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be
entitled to appoint counsel (including local counsel) of the indemnifying
party’s choice at the indemnifying party’s expense to represent the indemnified
party in any action for which indemnification is



 






 





12


sought (in which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel, other than local
counsel if not appointed by the indemnifying party, retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party’s election to appoint counsel (including local counsel) to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest; (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.


     (d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 5 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party shall
have a joint and several obligation to contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending loss, claim, liability,
damage or action) (collectively “Losses”) to which such indemnified party may
be subject in such proportion as is appropriate to reflect the relative
benefits received by such indemnifying party, on the one hand, and such
indemnified party, on the other hand, from the Initial Placement and any sales
of Transfer Restricted Securities under the Shelf Registration Statement which
resulted in such Losses; provided, however, that in no case shall any Initial
Purchaser be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, as set forth in
the Final Memorandum, nor shall any underwriter be responsible for any amount
in excess of the underwriting discount or commission applicable to the Transfer
Restricted Securities purchased by such underwriter under the Shelf
Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations.



 






 





13


Benefits received by the Company shall be deemed to be equal to the total
net proceeds from the Initial Placement (before deducting expenses) as set
forth in the Final Memorandum. Benefits received by the Initial Purchasers
shall be deemed to be equal to the total purchase discounts and commissions as
set forth on the cover page of the Final Memorandum, and benefits received by
any other Holders shall be deemed to be equal to the value of receiving
Transfer Restricted Securities registered under the Act. Benefits received by
any underwriter shall be deemed to be equal to the total underwriting discounts
and commissions, as set forth on the cover page of the Prospectus forming a
part of the Shelf Registration Statement which resulted in such Losses.
Relative fault shall be determined by reference to, among other things, whether
any untrue or any alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information provided by
the indemnifying party, on the one hand, or by the indemnified party, on the
other hand, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5, each person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Shelf Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).


     (e) The provisions of this Section 5 shall remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the indemnified persons referred to in this Section 5,
and shall survive the sale by a Holder of Transfer Restricted Securities
covered by the Shelf Registration Statement.



     6.
Underwritten Registrations. (a) If any of the Transfer Restricted
Securities covered by the Shelf Registration Statement are to be sold in an
underwritten offering, the Managing Underwriters shall be selected by the
Majority Holders, subject to the consent of the Company (which shall not be
unreasonably withheld).



     (b) No person may participate in any underwritten offering pursuant to the
Shelf Registration Statement unless such person (i) agrees to sell such
person’s Transfer Restricted Securities on the basis reasonably provided in any
underwriting arrangements approved by the persons entitled hereunder to approve
such arrangements; and (ii) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements.



 






 





14


     7. Registration Defaults. If any of the following events shall occur,
then the Company shall pay liquidated damages (the “Registration Default
Damages”) to the Holders of Transfer Restricted Securities in respect of the
Transfer Restricted Securities as follows:



     (a) if the Shelf Registration Statement is not filed with the Commission
on or prior to the 90th day following the Closing Date, then commencing on the
91st day after the Closing Date, Registration Default Damages shall accrue on
the Transfer Restricted Securities at a rate of .25% per annum for the first 90
days from and including such 91st day and .50% per annum thereafter; or



     (b) if the Shelf Registration Statement is not declared effective by the
Commission on or prior to the 150th day following the Closing Date, then
commencing on the 151st day after the Closing Date, Registration Default
Damages shall accrue on the Transfer Restricted Securities at a rate of .25%
per annum for the first 90 days from and including such 151st day and .50% per
annum thereafter; or



     (c) if the Shelf Registration Statement has been declared effective but
ceases to be effective (without being succeeded immediately by a replacement
Shelf Registration Statement filed and declared effective) or usable for the
offer and sale of Transfer Restricted Securities for a period of time
(including any Deferral Period) which exceeds 30 days in the aggregate in any
90-day period or 60 days in the aggregate in any 12-month period during the
Shelf Registration Period, then commencing on the day the Shelf Registration
Statement ceases to be effective or usable, Registration Default Damages shall
accrue on the Transfer Restricted Securities at a rate of .25% per annum for
the first 90 days from and including such date on which the Shelf Registration
Statement ceases to be effective or usable and .50% per annum thereafter; or



     (d) if the aggregate duration of Deferral Periods in any period exceeds
the number of days permitted in respect of such period pursuant to Section 3(i)
hereof, then commencing on the day the aggregate duration of Deferral Periods
in any period exceeds the number of days permitted in respect of such period,
Registration Default Damages shall accrue on the Transfer Restricted Securities
at a rate of .25% per annum for the first 90 days from and including such date
and .50% per annum thereafter;



provided, however, that (1) upon the filing of the Shelf Registration Statement
(in the case of paragraph (a) above), (2) upon the effectiveness of the Shelf
Registration Statement (in the case of paragraph (b) above), (3) upon the
effectiveness of the Shelf Registration Statement which had ceased to remain
effective (in the case of paragraph (c) above), or (4) upon the termination of
the Deferral Period that caused the limit on the aggregate duration of Deferral
Periods in a period set forth in Section 3(i) to be exceeded (in the case of
paragraph (d) above), Registration Default Damages shall cease to accrue.



     8. No Inconsistent Agreements. The Company has not entered into, and
agrees not to enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders herein or that otherwise
conflicts with the provisions hereof.



 






 





15


     9. Amendments and Waivers. The provisions of this Agreement may not be
amended, qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the Company has
obtained the written consent of the Holders of a majority of the aggregate
principal amount of the Transfer Restricted Securities outstanding; provided,
however, that, with respect to any matter that directly or indirectly affects
the rights of any Initial Purchaser hereunder, the Company shall obtain the
written consent of each such Initial Purchaser against which such amendment,
qualification, supplement, waiver or consent is to be effective; provided
further, however, that no amendment, qualification, supplement, waiver or
consent with respect to Section 7 hereof shall be effective as against any
Holder of Transfer Restricted Securities unless consented to in writing by such
Holder; and provided further, that the provisions of this Article 9 may not be
amended, qualified, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the Company has
obtained the written consent of the Initial Purchasers and each Holder.



     10. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier or air courier guaranteeing overnight delivery:



     (a) if to a Holder, at the most current address given by such holder to
the Company in accordance with the provisions of the Notice and Questionnaire,
which address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture;



     (b) if to the Initial Purchasers or the Representatives, initially at the
address or addresses set forth in the Purchase Agreement; and



     (c) if to the Company, initially at its address set forth in the Purchase
Agreement.



     All such notices and communications shall be deemed to have been duly
given when received.



     The Initial Purchasers or the Company by notice to the other parties may
designate additional or different addresses for subsequent notices or
communications.



     11. Remedies. Each Holder, in addition to being entitled to exercise all
rights provided to it herein, in the Indenture or in the Purchase Agreement or
granted by law, including recovery of liquidated or other damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive in any action for specific performance the defense
that a remedy at law would be adequate.



     12. Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their respective successors and assigns,
including, without the need for an express assignment or any consent by the
Company thereto,



 






 





16


subsequent Holders of Securities, and the indemnified persons referred to
in Section 5 hereof. The Company hereby agrees to extend the benefits of this
Agreement to any Holder of Securities, and any such Holder may specifically
enforce the provisions of this Agreement as if an original party hereto.


     13. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.



     14. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.



     15. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed in the State of New York. The parties hereto each hereby
waive any right to trial by jury in any action, proceeding or counterclaim
arising out of or relating to this Agreement.



     16. Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.



     17. Securities Held by the Company, etc. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities or the
Common Stock issuable upon conversion thereof is required hereunder, Securities
or the Common Stock issuable upon conversion thereof held by the Company or its
Affiliates (other than subsequent Holders of Securities or the Common Stock
issuable upon conversion thereof if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or Common
Stock) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.



 






 





     If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company and the several Initial Purchasers.




	 	 	 	 	 	 	 
	 	 	
Very truly yours,
	 	 	 	 	 	 	 
	 	 	
Guilford Pharmaceuticals Inc.
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Craig R. Smith, M.D.


	 	 	 	 	Name: Craig R. Smith, M.D.

Title: Chairman, President and
	 	 	 	 	 	 	    Chief Executive Officer



The foregoing Agreement is hereby confirmed and

accepted as of the date first above written.



Citigroup Global Markets Inc.

CIBC World Markets Corp.



	 	 	 	 
	By:	 	
Citigroup Global Markets Inc.
	 	 	 
	By	 	
/s/ A. Scott Daniel


Name: A. Scott Daniel

Title: Director	 



For themselves and the other several

Initial Purchasers named in Schedule I

to the Purchase Agreement