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March 23, 2001


Margaret M. Contessa
34 Old West Mountain Road
Ridgefield, Connecticut 06877


Dear Marge:

        I am delighted to offer you employment with Guilford Pharmaceuticals
Inc. on the following terms:

        1.      Your title will be Vice President, Human Resources. In this
                capacity you will report to and serve at the discretion of the
                Senior Vice President and Chief Financial Officer, Andrew R.
                Jordan.

        2.      In consideration of your services, the Company will provide the
                following compensation:

                a.      Salary: Your salary will be set at $17,500.00 per month
                        (for an annualized salary of $210,000.00) payable
                        semi-monthly. Your performance and salary will be
                        reviewed according to our annual review program.

                b.      Bonus: You will be eligible to receive such bonuses, if
                        any, as are payable pursuant to any employee bonus plans
                        the Board of Directors may have adopted from time to
                        time.

                c.      Signing Bonus: We recognize you have alternative
                        employment opportunities. As an inducement to
                        demonstrate our commitment to have you as part of our
                        senior management team, we are offering you a 10%
                        signing bonus, equivalent to $21,000.

                d.      Stock Options: The Company will award you options to
                        purchase 25,000 shares of its common stock, subject to
                        approval of this award by the Board of Directors and
                        subject to the terms and condition of the Company's
                        standard stock option agreement. The price of the
                        options will be the closing price of Guilford's stock on
                        the trading date immediately preceding the date such
                        options are approved by the Board of Directors (or your
                        date of



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Margaret M. Contessa
March 23, 2001
Page 2

                        employment if after the Board's approval). These options
                        will vest 50% after two years, 75% after three years,
                        and 100% after four years from the date of the grant.
                        You will be eligible to receive further stock options,
                        if any, as may be granted pursuant to any stock option
                        plan the Board of Directors may have adopted from time
                        to time.

                e.      Equity Offering: The Company will offer you 2,500 shares
                        of its common stock, subject to approval of this award
                        by the Board of Directors and further subject to the
                        terms and conditions of the Company's standard
                        restricted share agreement on the following basis:

                        i)      These shares will vest 25% per year over four
                                years.

                        ii)     In the event your employment with the Company is
                                terminated for any reason, or you are unable to
                                perform your duties for any reason, the unvested
                                shares will immediately revert to the Company.

                        All taxes related to such grants/awards under (d) and
                        (e) will be your responsibility.

        3.      In addition to the aforementioned, the company will assist in
                your relocation to the Baltimore area. Our policy and the
                subsequent discussions we had, provide guidelines for the sale
                of your Connecticut residence and the purchase of a residence in
                this area and the transition to Maryland.

                To assist you in the transition to Guilford and to defray at
                least some of your incidental moving and start up expenses
                associated with your new residence in Baltimore, we are pleased
                to provide to you an additional one month salary as a
                supplemental relocation bonus for joining our team. Should you
                terminate your employment with the Company within one year of
                your date of hire, you will be responsible for a pro rata
                reimbursement to the Company of the supplemental bonus.

                Should you voluntarily terminate your employment with the
                company within one year of your date of hire, you will be
                responsible for reimbursement to the Company of the relocation
                expenses, prorated for the term of your employment.



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Margaret M. Contessa
March 23, 2001
Page 3

        4.      Additionally, you will be eligible for the following benefits:

                a.      Insurance: The Company will offer you medical, dental,
                        vision, life, short-term, long-term disability and
                        accidental death and dismemberment insurance as is
                        generally available to its employees. You will also be
                        eligible to participate in the split dollar life
                        insurance program generally available to Vice
                        President's after one year of continued employment.

                b.      401(k) Plan: Once you meet the employment eligibility
                        requirements to participate in the Company's 401(k)
                        Plan, you will receive certain matching rights, subject
                        to the terms and conditions of such plan as may be in
                        effect from time to time. Guilford currently matches 50%
                        of the first 6% of employee salary deferral in the form
                        of newly issued Guilford Stock.

                c.      Vacation: You will be entitled to vacation in accordance
                        with our corporate vacation policy as in effect from
                        time to time (based on current rate of accrual, you will
                        accrue at an annualized rate of 20 days of Company
                        designated and discretionary vacation days, not counting
                        Company-observed holidays, during your first year of
                        employment).

        In the event your employment is terminated by the Company other than for
cause, you would be entitled to severance in the form of a continuation of your
then-current base salary for a period not to exceed twelve months. Such payments
(except those resulting from a change in control, see below) would cease upon
your commencement of paid employment or consultancy during the severance period.
During the severance period, the Company would also reimburse you for the cost
of continuation of any health, life and disability insurance coverage available
at the time of the termination of employment, provided that the Company reserves
the right to provide substantially equivalent alternative life and disability
coverage to the extent reasonably available upon conversion from full-time
employment. Such continuing coverage is conditioned upon your reasonable
cooperation in complying with any necessary application procedures. Remaining
benefits of employment, including your eligibility for any bonus program and the
vesting of unvested options would cease at termination and not continue to
accrue during the severance period.

        The Company offers certain terms in the event of a change in control of
the Company, including acceleration of vesting of unvested stock options,
indemnity for certain excise tax obligations and increased and modified
severance arrangements, pursuant to standard agreements generally available to
Vice Presidents of the Company. These terms will be extended to you upon
commencement of your hire.



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Margaret M. Contessa
March 23, 2001
Page 4



        This offer of employment at will is conditioned among other things on:

                (i)     continuing compliance with relevant requirements under
                        the Immigration Reform Act of 1986, including
                        presentation of documentation that proves your identity
                        and legal right to work in the United States;

                (ii)    your signing a Patent and Confidentiality Agreement in
                        connection with your employment by the Company; and

                (iii)   successful completion of a background investigation and
                        pre-employment physical (Including drug screen).


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Margaret M. Contessa
March 23, 2001
Page 5


        You may accept this offer by signing below and returning the original
letter to me in the enclosed envelope.

        All of us at Guilford very much look forward to welcoming you to the
Guilford team!

                                            Sincerely,



                                            Andrew R. Jordan
                                            Senior Vice President and Chief
                                            Financial Officer


I accept this offer and agree to comply with all Guilford Pharmaceuticals Inc.
corporate policies and procedures, which may be in effect from time to time.





Signature

Date









                       Guilford Pharmaceuticals Inc. Copy