Document:

Senior Credit Facility Waiver Letter and Amend. 4/8/2005

 Exhibit 10.1 
  
 

 
  
 JPMorgan Chase Bank, N. A. 
  
 April 8, 2005 
  
 Matrix Service Company 
 Attn: Michael J. Hall,
Chief Executive Officer 
 10701 East Ute Street 
 Tulsa, OK 74116

  
 All Other Loan Parties Under the Credit 
 Agreement Described Below 
  

	 	Re:	Credit Agreement dated as of March 7, 2003 among Matrix Service Company, as “Borrower,” the Lenders described therein, and J. P. Morgan Chase Bank, N.A. (successor by
merger to Bank One, N.A. (Main Office, Chicago)), as a Lender, LC Issuer, and as Agent for the Lenders, and others, as amended (as amended, the “Credit Agreement”) 

  
 Gentlemen: 
  
 This is in regard to the above-referenced Credit Agreement. Capitalized terms not defined in this letter have the same meanings as in the Credit
Agreement. 
  
 Borrower has advised the Agent (i) about certain
aspects of Borrower’s projected quarter-end financial results (for the fiscal quarter ending February 28, 2005) that will cause Borrower to breach certain financial covenants in Section 6.27 of the Credit Agreement and that reflect financial
performance below Borrower’s previous projections and (ii) that Borrower failed to make the payment due March 7, 2005 in the amount of $1,905,853.00 due under the Hake Group Acquisition Documents, and has entered into certain amendments to
certain of the Hake Group Acquisition Documents that address such payment (the “Particular Facts”). As a result of the Particular Facts, Borrower has also breached Section 6.1(i) with respect to the fiscal year that ended May 31, 2004,
Section 6.4, Section 6.19, and Section 7.4 of the Credit Agreement, which in turn has caused Borrower to breach Section 7.15 of the Credit Agreement. Due to the circumstances described above in this paragraph, at this time there exist an
“Unmatured Default” and certain “Defaults” under the Credit Agreement (such Unmatured Default and Defaults being referred to herein as the “Specified Default”). Among other things, the Specified Default would prevent
Borrower from meeting the conditions set forth in Section 4.2 of the Credit Agreement necessary for Borrower to receive any Credit Extension and could, under certain circumstances, ripen into a Default under the Credit Agreement. 
  
 Member FDIC 

 To the extent it is affected by the Specified Default, Borrower has requested that the Required Lenders
waive the requirements of Section 4.2(i) of the Credit Agreement, which provides that no Credit Extension shall be made unless there exists no Unmatured Default and no Default, and that the Required Lenders waive certain other requirements and
provisions of the Credit Agreement and the other Loan Documents. 
  
 This is to advise that, upon execution and delivery of this waiver letter and amendment by the Loan Parties, the Agent and Lenders constituting the Required Lenders, the Lenders shall have agreed to waive (the “Waiver”) all rights
and remedies under the Credit Agreement and the other Loan Documents arising from the Specified Default, from the date hereof through the end of the Business Day on June 15, 2005 (such date and time the “Waiver Termination Date”), provided
that the Waiver shall not be effective until Borrower has paid all currently invoiced legal fees of Agent and Lenders and all currently invoiced fees of Capstone Corporate Recovery, LLC. The Waiver is limited to the Specified Default only and shall
not waive such condition as it may relate to any other Unmatured Default or Default. 
  
 By executing and delivering this letter, Borrower, Agent and the undersigned Required Lenders hereby agree as follows: 
  
 (i) as long as the Waiver is in effect and not withdrawn as provided in subparagraph (ii) below, and provided all conditions of such Revolving Loans set
forth in the Credit Agreement are met (except as specifically waived hereby), the Lenders agree to make Revolving Loans to the Borrower or participate in Facility LCs in accordance with the provisions of Section 2.19 of the Credit Agreement
(Facility LCs not to exceed $15,000,000.00 in the aggregate at any one time) from time to time prior to the Waiver Termination Date, in amounts so that at any one time the aggregate amount of all Revolving Loans and Facility LCs shall not exceed the
lesser of: 
  
 (A) an amount equal to 75% of the Borrowing Base
(provided that this amount shall be increased to 80% after the full and final closing and funding, under terms and subject to documentation acceptable to Required Lenders, of either a subordinated loan to Borrower or an offering of junior securities
by Borrower in an amount acceptable to Required Lenders), 
  
 (B)
$32,000,000.00 (provided that this amount shall be $35,000,000.00 after the full and final closing and funding, under terms and subject to documentation acceptable to Required Lenders, of either a subordinated loan to Borrower or an offering of
junior securities by Borrower in an amount acceptable to Required Lenders), or 
  
 (C) the Aggregate Revolving Loan Commitment; and 
  
 (ii) the Waiver shall be withdrawn without any further action required on the part of the Agent or any of the Lenders, and be of no force or effect, if any one of the following occurs: 
  
 (a) any Unmatured Default or Default occurs or exists other
than the Specified Default, 
  
 (b) Borrower does
not, on a weekly basis on or before the end of the Business Day on Wednesday of each week, provide to Agent a report in a form and covering such topics as are reasonably acceptable to Agent, describing the status of Borrower’s efforts to both
(1) obtain new funding in the form of both subordinated debt or equity and a replacement senior credit facility and (2) other alternatives, 
  
 Member FDIC 

 (c) Borrower does not, on a weekly basis on or before the end of the Business Day on
Wednesday of each week, provide to Agent a written 13-week cash flow projection covering the immediately subsequent thirteen (13) weeks, in a form acceptable to Agent, or 
  
 (d) Borrower does not, on a weekly basis on or before the end of the last Business Day of each week, provide
to Agent a Borrowing Base Certificate for Borrower on a consolidated basis, dated as of the last Business Day of the immediately preceding week (provided this shall not limit, affect or modify any of the obligations of Borrower described in Section
6.1(xi) of the Credit Agreement). 
  
 By executing and delivering
this waiver letter and amendment, Borrower, Agent and the undersigned Required Lenders further agree as follows: 
  
 1. Borrower shall pay to Agent, on or before the earlier of (A) the Facility Termination Date, (B) March 31, 2006 or (C) any payment in full of the Term
Loan (for purposes of clarity, “Term Loan” does not include Term Loan B) (such earlier date the “Fee Due Date”), a fee in the amount set forth below that Agent will apply ratably among the Lenders, which fee is and shall be
considered a part of and included within the Obligations. The applicable amount of the fee will be as follows: 
  

	 	(i)	if the Fee Due Date occurs prior to May 11, 2005, $166,667,00; 

  

	 	(ii)	if the Fee Due Date occurs on or after May 11 but before June 11, 2005, $333,333.00; 

  

	 	(iii)	if the Fee Due Date occurs on or after June 11, 2005 but before July 11, 2005, $500,000.00; 

  

	 	(iv)	if the Fee Due Date occurs on or after July 11, 2005 but before August 11, 2005, $666,667.00; 

  

	 	(v)	if the Fee Due Date occurs on or after August 11, 2005 but before September 11, 2005, $833,333.00; and 

  

	 	(v)	if the Fee Due Date occurs on or after September 11, 2005, $1,000,000.00. 

  
 2. As to the Specified Default, any applicable requirement for notice in Section 7.3(ii) of the Credit Agreement is hereby deemed to be satisfied;

  
 3. (a) effective as of the end of the Interest Period
applicable thereto, all Eurodollar Advances (including but not limited to the Term Loan (but excluding Term Loan B, as to which the applicable interest rate is set forth in Section 2.1.4 of the Credit Agreement)) shall be converted into
Floating Rate Advances without any further action necessary on the part of Borrower, Agent or any Lender, (b) effective as of the date of this letter and continuing until the conversion thereof to Floating Rate Advances as provided in paragraph 3(a)
above, all Eurodollar Advances shall bear interest at a rate per annum equal to .50% greater than otherwise provided in the Credit Agreement, (c) notwithstanding anything to the contrary in the Credit Agreement, Borrower shall have no further right
to convert Floating Rate Advances to Eurodollar Advances, and (d) the Pricing Schedule is hereby replaced with, and shall be, the following: 
  
 Member FDIC 

 PRICING SCHEDULE 
  

									
	 Starting Date of Applicable
 Margin,
Continuing Until
 Next Starting Date

	  	 Applicable Margin
 All Floating Rate
 Advances Except
 the Term Loan
 (bps)

	  	 Applicable
 Margin
 (Term Loan)
 (bps)

	  	Letters of
Credit Fee (bps)

	  	 Commitment Fee
 (bps)

	 11-Apr-05
	  	150	  	175	  	425	  	62.5
	 1-May-05
	  	175	  	200	  	425	  	62.5
	 1-Jun-05
	  	200	  	225	  	425	  	62.5
	 1-Jul-05
	  	225	  	250	  	425	  	62.5
	 1-Aug-05
	  	275	  	300	  	425	  	62.5
	 1-Sep-05
	  	325	  	350	  	425	  	62.5
	 1-Oct-05
	  	375	  	400	  	425	  	62.5
	 1-Nov-05
	  	425	  	450	  	425	  	62.5
	 1-Dec-05
	  	475	  	500	  	425	  	62.5
	 1-Jan-06
	  	525	  	550	  	425	  	62.5
	 1-Feb-06
	  	575	  	600	  	425	  	62.5
	 1-Mar-06 and thereafter
	  	625	  	650	  	425	  	62.5

  
 This waiver letter and
amendment shall constitute a supplement and amendment to the Credit Agreement. From and after the date hereof, references in the Credit Agreement to “this Agreement” and like terms shall be deemed to be references to the Credit Agreement
as supplemented by this waiver, and as otherwise amended, supplemented, restated or otherwise modified from time to time in accordance with the Loan Documents. References in the other Loan Documents to the Credit Agreement shall be deemed to be
references to the Credit Agreement as supplemented by this waiver letter and amendment and as further amended, supplemented, restated or otherwise modified from time to time. This waiver letter and amendment is a Loan Document executed pursuant to
the Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement. The Credit Agreement as supplemented by this waiver letter and
amendment is ratified and confirmed in all respects, and all other Loan Documents are hereby ratified and confirmed in all respects. 
  
 Except as expressly provided hereby, all of the representations, warranties, terms, covenants and conditions of the Credit Agreement and the other Loan
Documents shall remain unamended and unwaived and shall continue to be, and shall remain, in full force and effect in accordance with their respective terms, including express limitations therein relating to the date on which such representations
and warranties were made. The waiver and agreements set forth herein shall be limited precisely as provided for herein, and shall not be deemed to be a waiver of, amendment to, consent to or modification of any other term or provision of the Credit
Agreement or of any event, condition, or transaction on the part of the Borrower or any other Person which would require the consent of the Agent or any of the Lenders. 
  
 The Borrower and each Loan Party, for itself and on behalf of all its predecessors, successors, assigns, agents, employees,
representatives, officers, directors, general partners, limited partners, joint shareholders, beneficiaries, trustees, administrators, subsidiaries, affiliates, employees, servants and attorneys (collectively the “Releasing Parties”),
hereby releases and forever discharges 
  
 Member FDIC 

 Agent and each Lender and their respective successors, assigns, partners, directors, officers, agents, attorneys, and
employees from any and all claims, demands, cross-actions, controversies, causes of action, damages, rights, liabilities and obligations, at law or in equity whatsoever, known or unknown, whether past, present or future, now held, owned or possessed
by the Releasing Parties, or any of them, or which the Releasing Parties or any of them may, as a result of any actions or inactions occurring on or prior to the date hereof, hereafter hold or claim to hold under common law or statutory right,
arising, directly or indirectly out of any Loan or any of the Loan Documents or any of the documents, instruments or any other transactions relating thereto or the transactions contemplated thereby. Borrower and each Loan Party understands and
agrees that this is a full, final and complete release and agrees that this release may be pleaded as an absolute and final bar to any or all suit or suits pending or which may hereafter be filed or prosecuted by any of the Releasing Parties, or
anyone claiming by, through or under any of the Releasing Parties, in respect of any of the matters released hereby, and that no recovery on account of the matters described herein may hereafter be had from anyone whomsoever, and that the
consideration given for this release is no admission of liability. 
  
 Please indicate your approval of the terms and provisions hereof by executing this letter in the space provided below. 
  
 This letter may be executed in any number of counterparts, all of which together shall constitute a single instrument, and it shall not be necessary that
any counterpart be signed by all the parties hereto. A facsimile copy of this letter and signatures thereon shall be considered for all purposes as originals. 
  

			
	Yours very truly,
	
	J. P. MORGAN CHASE BANK, N.A., as Agent
		
	By:	 	 /s/ Hal E. Fudge

	 	 	Hal E. Fudge, First Vice President

  
 Member FDIC

			
	ACCEPTED AND AGREED TO:
	
	Borrower:
	
	MATRIX SERVICE COMPANY
		
	By:	 	 /s/ Michael J. Hall

	 	 	Michael J. Hall, Chief Executive Officer
	
	Loan Parties:
	
	MATRIX SERVICE INC., an Oklahoma
	corporation; MATRIX SERVICE INDUSTRIAL
	CONTRACTORS, INC. (formerly known
	as MATRIX SERVICE MID-CONTINENT,
	INC.), an Oklahoma corporation; MATRIX
	SERVICE, INC. CANADA, an Ontario, Canada
	corporation; HAKE GROUP, INC., a Delaware
	corporation; BOGAN, INC. (including
	Fiberspec, a division), a Pennsylvania
	corporation; MATRIX SERVICE
	SPECIALIZED TRANSPORT, INC.
	(formerly known as FRANK W. HAKE,
	INC.), a Pennsylvania corporation; HOVER
	SYSTEMS, INC., a Pennsylvania corporation;
	I & S, INC., a Pennsylvania corporation;
	MCBISH MANAGEMENT, INC.,
	a Pennsylvania corporation; MECHANICAL
	CONSTRUCTION, INC., a Delaware
	corporation; MID-ATLANTIC
	CONSTRUCTORS, INC., a Pennsylvania
	corporation; TALBOT REALTY, INC.,
	a Pennsylvania corporation; BISH
	INVESTMENTS, INC., a Delaware
	corporation; I & S JOINT VENTURE, L.L.C.,
	a Pennsylvania limited liability company
		
	By:	 	 /s/ George L. Austin

	 	 	George L. Austin, Vice President

  
 Member FDIC 

			
	Lenders:
	
	J. P. MORGAN CHASE BANK, N.A., as Agent
		
	By:	 	 /s/ Hal E. Fudge

	 	 	Hal E. Fudge, First Vice President
	
	WACHOVIA BANK, NATIONAL ASSOCIATION
		
	By:	 	 /s/ Patrick McGovern

	 	 	Patrick McGovern, Senior Vice President
	
	UMB BANK, N.A.
		
	By:	 	 /s/ Richard J. Lehrter

	 	 	Richard J. Lehrter, Community Bank President
	
	 WELLS FARGO BANK, NA
 (formerly known as
Wells Fargo Bank Texas, NA)

		
	By:	 	 /s/ Roger Fruendt

	 	 	Roger Fruendt, Senior Vice President
	
	 INTERNATIONAL BANK OF COMMERCE, successor in interest to
 LOCAL OKLAHOMA BANK,
 an Oklahoma Banking Corporation
 formerly known as LOCAL OKLAHOMA BANK, NA,

		
	By:	 	 /s/ David G. Moore

	 	 	David G. Moore, Senior Vice President

  
 Member FDICEX-10.1

GUILFORD PHARMACEUTICALS INC. EMPLOYEE RETENTION PLAN

1. Purpose and Effective Date. This Guilford Pharmaceuticals Inc. Employee Retention Plan (this
“Plan”) is effective as of the 6th day of April 2005 (the “Effective Date”). The Plan
is a discretionary retention bonus program for the benefit of those employees (“Participants”) of
Guilford Pharmaceuticals Inc. (the “Company”) who are selected for participation by the
Compensation Committee of the Company’s Board of Directors. This Plan is intended to qualify as a
compensation or bonus plan that is exempt from the application of the Employee Retirement Income
Security Act of 1974, as amended, by reason of Section 3 of such Act.

2. Definitions. Capitalized terms used in this Plan without definition shall have the meanings
given such terms in this Section 2.

a. “2005 Incentive Compensation Plan” means the incentive compensation plan adopted by the
Committee in respect of the Company’s 2005 performance.

b. “Additional Incentive Bonus” means the additional percentage of an Participant’s annual
incentive bonus that a Participant may be entitled to under this Plan.

c. “Base Salary” means a Participant’s annual base salary as in effect on the Effective Date
and with respect to any Participant who may be added after the Effective Date, such Participant’s
annual base salary on the date the Participant is added.

d. “Cause” means (i) being convicted of a crime involving fraud or theft against the Company
or of a felony involving moral turpitude, (ii) having improperly disclosed material trade secrets
or other proprietary information of the Company, other than in good faith performance of duties,
(iii) having willingly failed to, or refused to attempt in good faith to, perform material legally
assigned duties with regard to the Company (other than as a result of a Disability), or (iv) having
engaged in gross negligence or willful misconduct with regard to the Company that causes
substantial and material harm to the business and operations of the Company.

e. “Change in Control” means the occurrence of any of the following

(i) if any “person” (including, without limitation, any individual, sole proprietorship,
partnership, trust, corporation, association, joint venture, pool, syndicate, or other entity,
whether or not incorporated), or any two or more persons acting as a syndicate or group or
otherwise acting in concert with regard to the ownership of securities of the Company and thereby
deemed collectively to be a “person”) as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes, after the date hereof,
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing forty percent (40%) or more of the combined voting power
of the Company’s then outstanding securities, unless, if in a transaction in which a “person”
becomes, after the date hereof, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing less than fifty percent
(50%) of the combined voting power of the Company’s then outstanding securities, prior to the
acquisition by such person of securities of the Company which causes such person to have such
beneficial ownership, the full Board of Directors shall by at least a two-thirds vote have
specifically approved such acquisition and determined that such acquisition shall not constitute a
Change in Control for purposes of this Agreement despite such beneficial ownership;

(ii) if the Company consolidates with, or merges with or into another entity or sells,
assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets
to any person, or any entity consolidates with, or merges with or into, the Company (a
“Transaction”), in any such event pursuant to a Transaction in which the owners of outstanding
voting stock of the Company immediately prior to such Transaction do not represent at least a
majority of the voting power in the surviving entity after the Transaction in approximately in the
same proportions; or

(iii) if the shareholders of the Company approve a plan of liquidation or dissolution.

f. “Disability” means any medically determinable physical or mental impairment that can be
expected to last for a continuous period of not less than 90 consecutive days , and that renders
the Participant unable to perform the duties of his or her position with the Company. The date of
the determination of Disability is the date on which the Participant is certified as having
incurred a Disability by a physician reasonably acceptable to the Company.

g. “Good Reason” means with respect to any Participant the occurrence of any one of the
following events: (i) assignment to the Participant of any duties materially and adversely
inconsistent with the Participant’s then current position (or such other position to which he or
she may have been promoted), or any other action that results in a material and adverse change in
the Participant’s position, status, title or responsibilities, (ii) any reduction in the
Participant’s annual base salary as in effect on the Effective Date (or, if later, the date a
Participant becomes a Participant) or (iii) any change that would require the Participant’s place
of employment to be located outside a radius of 50 miles of the Participant’s then current place of
employment, and if, in the case of each of the events described by clauses (i) through (iii)
without the Participant’s consent, the Company fails to cure the event within 30 days after written
notice to the Chief Executive Officer of the Company from the Participant; provided, however, that
if the event is intentional, knowing or repeated, the Participant shall not be required to provide
written notice or an opportunity to cure.

h. “RSU,” or “RSUs” means restricted stock units of the Company granted under the Company’s
2002 Stock Award and Incentive Plan.

i. “Stay Bonus” means the amount of the cash bonus payable to a Participant in accordance with
the terms of this Plan.

3. Eligibility and Participation. Eligibility and participation shall be in the sole discretion of
the Committee, and the Chief Executive Officer of the Company will notify those employees selected
by the Committee to participate in this Plan and the tier into which each is placed. The
Participants are divided into five tiers, based on their positions within the Company and the
potential Stay Bonus payable to them as described in Section 4.

4. Stay Bonus. This Plan is designed to encourage Participants to remain with the Company and
perform in a satisfactory manner during a prescribed period that begins on the Effective Date and
ends on December 6, 2005, for Tier I and II participants, and on April 6, 2006, for Tier III, IV
and V participants (in either case, the “Stay Bonus Period”). The maximum Stay Bonus payable to
Participants who remain for the entire Stay Bonus Period is a specified percentage of Base Salary,
which differs depending on the tier in which the Participant participates. Except as otherwise
indicated in this Plan, the Stay Bonus is earned and payable based on satisfactory service (as
determined in the sole good faith judgment of the Committee) throughout the Stay Bonus Period.

a. Stay Bonus. The Stay Bonus for each tier is the specified percentage of Base Salary as
follows (each an “Applicable Percentage”):

	 	 	 	 	 
	Tier	 	Percentage of Base Salary
	Tier 1

	 	 	25	%
	 
	 	 	 	 
	Tier 2

	 	 	25	%
	 
	 	 	 	 
	Tier 3

	 	 	15	%
	 
	 	 	 	 
	Tier 4

	 	 	12.5	%
	 
	 	 	 	 
	Tier 5

	 	 	10	%

b. Service Requirements; Pro-rata Bonus for Early Termination. Except as otherwise
specified in this Plan, if (i) the Participant remains employed by the Company for the entire Stay
Bonus Period and continues to satisfy all of the conditions for participation, or (ii) a
Participant’s employment with the Company is terminated by the Company other than for cause, the
Participant dies or suffers a Disability, or the Participant terminates his or her employement with
the Company for Good Reason, (in any case, a “Terminated Participant”) then such Participant shall
receive a Stay Bonus which shall be equal to the product of the Applicable Percentage
multiplied by such Participant’s Base Salary.

c. Form of Payment. The Stay Bonus payable to a Participant shall be paid in a lump sum and
shall be subject to payroll taxes and other withholdings according to the Company’s standard
payroll practices. The payment shall be made in connection with the Company’s first regular payroll
period occurring after the conclusion of the applicable Stay Bonus Period. If a Stay Bonus is owed
to a Terminated Participant, it will be paid to the Terminated Participant in connection with the
Company’s first regular payroll period occurring after the Terminated Participant’s employment has
been terminated.

d. Additional Participants. The Committee, in its sole discretion, reserves the right to
select additional Participants who are not participants in this Plan as of the Effective Date in
order to obtain or retain their services and avoid the disruption and cost of attrition among
employees with important knowledge or skills.

e. Tier I Participants. In addition to the Stay Bonus, each Tier I Participant shall be
entitled to an Additional Incentive Bonus equal to 50% of the Tier I Participant’s annual incentive
target bonus if the Committee determines that the Tier I Participant has achieved 100% of
his or her target bonus under the Company’s 2005 Incentive Compensation Plan. The Additional
Incentive Bonus shall be payable on account of the Tier I Participant’s 2005 performance and shall
be paid in accordance with the Company’s regular 2005 Incentive Compensation Plan incentive
payments. The Additional Incentive Bonus shall not be payable if (i) there is a Change of Control,
(ii) the Tier I Participant’s employment is terminated for any reason prior to the expiration of
the performance period, or (iii) the Tier I Participant dies or suffers a Disability.

5. RSUs. Subject to the approval by the Company’s stockholders of an amendment to the Company’s
2002 Stock Award and Incentive Plan at the Company’s 2005 Annual Meeting of Stockholders, the
Committee shall grant on May 18, 2005 to each person who is a Participant on the Effective Date,
the RSUs set forth in the chart below.

	 	 	 	 	 
	Tier	 	RSUs
	Tier 1

	 	 	8,000 – 18,000*	 
	 
	 	 	 	 
	Tier 2

	 	 	8,000 – 12,000*	 
	 
	 	 	 	 
	Tier 3

	 	 	2,500	 
	 
	 	 	 	 
	Tier 4

	 	 	1,000	 
	 
	 	 	 	 
	Tier 5

	 	 	750	 

*designates that the RSUs award shall be within the specified range, at the discretion of the
Committee.

Each such RSU grant shall be on the terms and conditions set forth on Attachment A to this
Plan. Additional Participants after the Effective Date shall be entitled to receive RSU grants in
the discretion of the Committee. If the amendment referred to above is not approved, then any right
to grants of RSUs under this Plan shall be void and of no further effect.

6. Termination of Participation.

a. Events. A Participant’s participation in this Plan shall automatically terminate,
without notice to or consent by such Participant, upon the first to occur of either of the
following events with respect to such Participant: (1) termination of employment by the Company for
Cause, or (2) termination of employment by the Participant other than for Good Reason.

b. Effect of Termination for Cause or Resignation without Good Reason. In the event a
Participant’s employment is terminated by the Company for Cause or a Participant terminates his or
her employment with the Company other than for Good Reason, the Participant shall forfeit his or
her entire right to any payment under this Plan.

7. Change in Control. If there is a Change in Control of the Company, 100% of the Stay Bonus
shall vest with respect to all Participants and shall be payable immediately upon the
consummation of the transaction pursuant to which the Company undergoes the Change in Control.

8. Binding Authority. The decisions of the Committee shall be final and conclusive for all
purposes of this Plan and shall not be subject to any appeal or review.

9. Source of Payments. All Stay Bonus payments will be paid in cash from the general funds of the
Company; no separate fund will be established.

10. Amendment. This Plan may be amended by the Committee at any time and without notice to or the
consent of Participants if and so long as the rights and benefits of the Participants are not
materially and adversely affected by such amendment.

11. Severability. If any term or condition of this Plan shall be invalid or unenforceable, the
remainder of this Plan shall not be affected thereby and shall continue in effect and application
to the full extent permitted by law.

12. No Employment Rights. Neither the establishment nor the terms of this Plan shall be held or
construed to confer upon any employee the right to a continuation of employment by the Company, nor
constitute a contract of employment, express or implied. Subject to any applicable employment
agreement, the Company reserves the right to dismiss or otherwise deal with any employee, including
the Participants, to the same extent as though this Plan had not been adopted. Nothing in this Plan
is intended to alter the “at-will” status of Participants, it being understood that, except to the
extent otherwise expressly set forth to the contrary in a written employment agreement, the
employment of any Participant can be terminated at any time by either the Company or the employee
with or without notice, with or without cause.

13. Transferability of Rights. The Company shall have the right to transfer its obligations under
this Plan, with respect to one or more Participants, to any person, including any purchaser of all
or any part of the Company’s business. No Participant or spouse shall have any right to commute,
encumber, transfer or otherwise dispose of or alienate any present or future right or expectancy
that the Participant may have at any time to receive payments of benefits hereunder, which benefits
and the rights thereto are expressly declared to be non-assignable and nontransferable, except to
the extent required by law. Any attempt by a Participant to transfer or assign a benefit or any
rights granted hereunder shall (after consideration of such facts as the Company deems pertinent)
be grounds for terminating any rights of the Participant to any portion of this Plan benefits not
previously paid.

14. Extension of Plan. The Company, in the discretion of the Committee, reserves the right to
extend the terms of this Plan for such additional periods as it deems necessary to those members of
its workforce that it deems necessary. The terms and conditions under which additional Stay Bonuses
may be awarded shall be determined, if at all, upon this Plan’s extension.

15. Governing Law. This Plan shall be construed, administered and enforced according to the laws
of the State of Maryland (without giving effect to principles of conflicts of interest).

IN WITNESS WHEREOF, this Plan has been adopted by the Compensation Committee of the Board of
Directors Guilford Pharmaceuticals Inc. as of the Effective Date.

GUILFORD PHARMACEUTICALS INC.

By:      

George L. Bunting, Jr.

Chairman of the Board of Directors and

Chairman of the Compensation Committee

1

Attachment A

GUILFORD PHARMACEUTICALS INC.

FORM OF RESTRICTED STOCK UNIT AGREEMENT

Guilford Pharmaceuticals Inc., a Delaware corporation (the “Company”), hereby grants units
relating to its common stock, $.01 par value, (the “Stock”) to the Grantee named below, subject to
the vesting conditions set forth in the attachment.

Capitalized terms used in this Restricted Stock Unit Agreement without definition shall have
the meanings given to such terms in the Guilford Pharmaceuticals Inc. Employee Retention Plan.

Grant Date:      -      , 2005

Name of Grantee:

Grantee’s Social Security Number:      -     -     

Number of Restricted Stock Units Covered by Grant:

By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement.

Grantee:

(Signature)

Company:

(Signature)

Title:

Attachment

This is not a stock certificate or a negotiable instrument.

2

GUILFORD PHARMACEUTICALS INC.

FORM OF RESTRICTED STOCK UNIT AGREEMENT

	 	 	 
	Nontransferability

	 	This grant is an award of

Restricted Stock Units in the

number set forth on the cover

sheet and subject to the vesting

conditions described below

(“Restricted Stock Units”). Your

Restricted Stock Units may not be

transferred, assigned, pledged or

hypothecated, whether by

operation of law or otherwise,

nor may the Restricted Stock

Units be made subject to

execution, attachment or similar

process.
	 
	 	 
	Issuance and Vesting

	 	Subject to the terms and

conditions set forth in this

Restricted Stock Unit Agreement,

this Restricted Stock Unit grant

shall become vested 100% on April

5, 2006 (the “Vesting Date”).

This Restricted Stock Unit grant

shall be forfeited if, prior to

the Vesting Date, your employment

with the Company is terminated

for Cause or you terminate your

employment with the Company for

other than Good Reason, your

death or Disability.

The vesting of this Restricted

Stock Unit grant shall be

accelerated as to 100% of the

grant if there is a Change of

Control.
	 
	 	 
	Delivery of Shares Pursuant to

Restricted Stock Units

	 	A certificate for the shares of

Stock represented by the

Restricted Stock Units shall be

delivered to you, or to your

eligible beneficiary or your

estate, at such time as the

Restricted Stock Units become

vested; provided, that, if

required by Section 409A of the

Internal Revenue Code and the

regulations thereunder, delivery

of the shares shall not be made

earlier than six months after

your separation from service

within the meaning of Section

409A. The date that certificates

are required to be delivered to

you under this subsection is the

“Payout Date.”

If the Payout Date provided for

in the preceding paragraph would

otherwise occur during a period

in which you are: (a) subject to

a lock-up agreement restricting

your ability to sell shares of

Stock in the open market or (b)

restricted from selling shares of

Stock in the open market because

you are not then eligible to sell

under the Company’s insider

trading or similar plan as then

in effect (whether because a

trading window is not open or you

are otherwise restricted from

trading), the Payout Date will be

delayed until the first date on

which you are no longer

prohibited from selling shares of

Stock due to a lock-up agreement

or insider trading plan

restriction.
	 
	 	 
	Withholding Taxes

	 	You agree, as a condition of this

grant, that you will make

acceptable arrangements to pay

any withholding or other taxes

that may be due as a result of

the vesting of Stock acquired

under this grant. In the event

that the Company determines that

any federal, state, local or

foreign tax or withholding

payment is required relating to

the vesting of shares arising

from this grant, the Company

shall have the right to: (i)

require that you arrange for such

payments to the Company, or (ii)

withhold such amounts from other

payments due to you from the

Company. In the alternative and

only if the Company grants its

approval, you may elect to

satisfy the minimum required

withholding requirements by

forfeiting to the Company shares

of Stock acquired pursuant to

this Agreement in an amount equal

to the withholding or other taxes

due.
	 
	 	 
	Shareholder Rights

	 	You do not have any of the rights

of a shareholder with respect to

the Restricted Stock Units unless

and until the Shares relating to

the Restricted Stock Units has

been delivered to you.
	 
	 	 
	Adjustments

	 	In the event of a stock split, a

stock dividend or a similar

change in the Company stock, the

maximum number of Restricted

Stock Units covered by this grant

shall be adjusted (and rounded

down to the nearest whole

number). Your Restricted Stock

Units shall be subject to the

terms of the agreement of merger,

liquidation or reorganization in

the event the Company is subject

to such corporate activity in the

same manner as common stock of

the Company, but shall be subject

to the vesting and distribution

provisions hereof.
	 
	 	 
	Applicable Law

	 	This Agreement will be

interpreted and enforced under

the laws of the State of

Delaware, other than any

conflicts or choice of law rule

or principle that might otherwise

refer construction or

interpretation of this Agreement

to the substantive law of another

jurisdiction.
	 
	 	 
	Administration

	 	The interpretation and

construction by the Board of

Directors of the Company of any

provision of this Agreement shall

be final, binding and conclusive.
	 
	 	 

3

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