Document:

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                                                                    EXHIBIT 10.1

                                LOOP CENTRAL TWO
                                 HOUSTON, TEXAS

                                  OFFICE LEASE

                         ENCYSIVE PHARMACEUTICALS, INC.
                                     Tenant

                                November 18, 2004

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                                TABLE OF CONTENTS

                                  OFFICE LEASE
                                LOOP CENTRAL TWO
                                 HOUSTON, TEXAS

<TABLE>
<CAPTION>
SECTION                                                                                                        PAGE
-------                                                                                                        ----
<S>      <C>                                                                                                   <C>
1.       BASIC LEASE PROVISIONS...................................................................................1
2.       DEMISE...................................................................................................2
3.       TERM.....................................................................................................2
4.       RENT.....................................................................................................2
5.       SECURITY DEPOSIT.........................................................................................6
6.       USE OF PREMISES..........................................................................................6
7.       RULES AND REGULATIONS....................................................................................6
8.       SERVICES PROVIDED........................................................................................6
9.       LEASEHOLD IMPROVEMENTS; ALTERATIONS......................................................................8
10.      CONDITION OF PREMISES....................................................................................9
11.      SURRENDER...............................................................................................10
12.      DAMAGE OR DESTRUCTION...................................................................................10
13.      EMINENT DOMAIN..........................................................................................12
14.      WAIVER OF CERTAIN CLAIMS................................................................................12
15.      INSURANCE; WAIVER OF SUBROGATION........................................................................13
16.      LANDLORD'S RIGHT OF ACCESS..............................................................................14
17.      RIGHTS RESERVED TO LANDLORD.............................................................................14
18.      ABANDONMENT.............................................................................................15
19.      TRANSFER OF LANDLORD'S INTEREST; LIABILITY OF LANDLORD..................................................15
20.      TRANSFER OF TENANT'S INTEREST...........................................................................16
21.      DEFAULT: LANDLORD'S RIGHTS AND REMEDIES.................................................................17
22.      INDEMNIFICATION; COUNTERCLAIMS..........................................................................19
23.      HOLDING OVER............................................................................................20
24.      SUBORDINATION...........................................................................................20
25.      ESTOPPEL CERTIFICATE....................................................................................21
26.      RELOCATION OF TENANT....................................................................................21
27.      NOTICES AND DEMANDS.....................................................................................21
28.      CONSTRUCTION OF LEASE...................................................................................22
29.      REAL ESTATE BROKERS.....................................................................................22
30.      ENVIRONMENTAL COMPLIANCE................................................................................23
31.      MISCELLANEOUS...........................................................................................24
32.      SIGNAGE.................................................................................................26
33.      LIMITATION OF LIABILITY.................................................................................26
</TABLE>

<PAGE>
EXHIBITS
--------
Exhibit A    -  Floor Plan
Exhibit B    -  Rules and Regulations
Exhibit C    -  Workletter
Exhibit D    -  Form of Tenant Estoppel Certificate
Exhibit E    -  Operating Expense Exclusions
Exhibit F    -  Janitorial Cleaning Specifications
Rider No. 1  -  Extension Options
Rider No. 2  -  Arbitration Procedures

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                                  OFFICE LEASE

         Lease made in Houston, Texas as of the 18th day of November, 2004.

                                       1.
                             BASIC LEASE PROVISIONS

         1.01 Landlord and Address:

              W9/LWS II Real Estate Limited Partnership
              101 Constitution Avenue, NW
              Washington, DC 20001
              Attn: Bari S. Nichols

              Tenant and Current Address:
              Encysive Pharmaceuticals Inc.
              6700 West Loop South, Suite 400
              Houston, Texas 77401

         1.02 Guarantor(s) and Current Address(es):

              N/A

              ---------------------

              ---------------------

         1.03 Premises: Suites No. 700 and 800, comprising all of the seventh
(7th) and eighth (8th) floors of the Building (as hereinafter defined), as shown
on the floor plan attached hereto as Exhibit A.

         1.04 Term: Thirty-six (36) months, as may be extended pursuant to Rider
1 attached hereto and incorporated herein for all purposes.

         1.05 Commencement Date: January 1, 2005.

         1.06 Expiration Date: December 31, 2007.

         1.07 Monthly Base Rent: Monthly Base Rent shall be payable in the
following amounts during the periods indicated:

<Table>
<Caption>
              LEASE YEAR                       BASE RENT PER SQUARE FOOT                 MONTHLY BASE RENT
----------------------------------------  ------------------------------------  ------------------------------------
<S>                                       <C>                                   <C>
                   1                                    $16.00                              $54,306.67
----------------------------------------  ------------------------------------  ------------------------------------
                   2                                    $16.75                              $56,852.29
----------------------------------------  ------------------------------------  ------------------------------------
                   3                                    $17.50                              $59,397.92
----------------------------------------  ------------------------------------  ------------------------------------
</Table>

The foregoing notwithstanding, Monthly Base Rent shall be abated for the first
four (4) months of the Term. Notwithstanding anything to the contrary in this
Lease, Tenant shall be entitled to a reimbursement of Seven Dollars and 50/100
($7.50) per square foot of Rentable Area of the Premises, for its costs of
Leasehold Improvements (as hereinafter defined) in the Premises. Subject to the
provisions of Paragraph 3 of the Workletter attached as Exhibit C to this Lease,
Tenant shall be reimbursed by Landlord for the Leasehold Improvement expenses in
the form of a credit against Monthly Base Rent in an amount of Nine Thousand
Sixty-Eight and 79/100 ($9,068.79) per month beginning in month five (5) of the
Term and continuing through month thirty-six (36) of the Term. As used herein,
"Lease Year" shall mean the twelve (12) month period commencing on the
Commencement Date and each successive twelve (12) month period thereafter
commencing on each anniversary of the Commencement Date.

         1.08 Rentable Area of Premises: 40,730 rentable square feet.

         1.09 Rentable Area of Building: 197,603 rentable square feet

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         1.10 Tenant's Share: 20.61%.

         1.11 Security Deposit: None

         1.12 Leasing Broker:

              Lincoln Property Company Commercial, Inc.
              4888 Loop Central Drive, Suite 860
              Houston, Texas 77081

         1.13 Landlord's Management Agent and Address:

              Lincoln Property Company
              4888 Loop Central Drive, Suite 860
              Houston, Texas 77081

         or such other Management Agent as Landlord may designate from time to
time.

The words identified in this Section 1 shall have the meanings ascribed to them
in this Section 1 for all purposes of this Lease.

                                       2.
                                     DEMISE

         Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the Premises in the building commonly known as LOOP CENTRAL TWO, HOUSTON, TEXAS
(which, together with the land parcel on which it is situated and all
appurtenances thereto are referred to herein as the "Building") for the Term and
upon the terms, covenants and conditions set forth in this Lease. This Lease
shall be in full force and effect from the date it is signed and delivered by
Landlord and Tenant. Landlord and Tenant covenant as a material part of the
consideration for this Lease to keep and perform each and all of the terms,
covenants and conditions by it to be kept and performed. This Lease is made upon
the condition of such performance.

                                       3.
                                      TERM

         The term of this Lease shall commence on the Commencement Date and
expire on the Expiration Date unless sooner terminated as provided in this
Lease, or extended pursuant to Rider No. 1.

                                       4.
                                      RENT

         4.01 DEFINITIONS. For purposes of this Lease, the following terms shall
have the meanings ascribed to them in this Section 4.01:

              (a) "Adjustment Year" shall mean each calendar year or part
thereof during the Term.

              (b) "Base Year" shall mean the calendar year 2005.

              (c) "Operating Expenses" shall mean and include all amounts,
expenses and costs of whatever nature that Landlord incurs because of or in
connection with the ownership, control, operation, repair, management,
replacement or maintenance of the Building, any parking areas and garages
serving the Building, the land on which such improvements are located, any
present or future associated underground or elevated pedestrian tunnels or
walkways, all additional facilities which may be added to the Property, and all
machinery, equipment, landscaping, fixtures and other facilities, including
personal property, as may now or hereafter exist in or on the Building (the
"Property"). Operating Expenses shall be determined in accordance with generally
accepted accounting principles consistently applied and shall include, but shall
not be limited to, the following:

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     1.   Wages, salaries, fees, related taxes, insurance costs, benefits
          (including amounts payable under medical, pension and welfare plans
          and any amounts payable under collective bargaining agreements) and
          reimbursement of expenses of and relating to all personnel engaged in
          operating, repairing, managing, replacing and maintaining the
          Property; provided that if any person is engaged in connection with
          other properties, an equitable allocation of such Operating Expenses
          shall be made among the Property and such other properties.

     2.   All supplies and materials, including sales tax imposed in connection
          with the purchase thereof.

     3.   Legal and accounting fees and expenses incurred with respect to the
          Property (except for legal fees incurred in connection with the
          negotiation or the collection of amounts due under leases).

     4.   Cost of all utilities for the Building, including, without limitation,
          water, sewer, power, fuel, heating, lighting, air conditioning and
          ventilating.

     5.   Fees and other charges payable under or in respect of all maintenance,
          repair, janitorial, scavenger and other service agreements for or
          pertaining to the Property.

     6.   Cost of all insurance relating to the Building, or the ownership, its
          occupancy or operations thereof and the Property.

     7.   Cost of repairs and maintenance of the Property, excluding only such
          costs which are paid by the proceeds of insurance, by Tenant or by
          other third parties (other than payment by Tenant or other tenants of
          the Building of Expense Adjustment or similar reimbursement of
          Building costs and expenses).

     8.   Amortization of the cost (plus interest at the then current market
          rate on the unamortized portion of such cost from time to time) of
          purchasing and installing capital investment items (including
          "retrofitting" or capital replacements) that are for the purpose of
          reducing costs includible in the definition of Operating Expenses (but
          only to the extent of savings achieved) or that may be required by
          governmental or quasi governmental authority as a result of federal,
          state, county or municipal laws, ordinances, codes, regulations or
          other legal requirements that become effective after the Commencement
          Date or new promulgations or interpretations of existing laws, codes,
          ordinances or regulations which become effective after the
          Commencement Date. All such costs shall be amortized, in equal monthly
          installments, over the reasonable life of the capital investment
          items, with the reasonable life and amortization schedule being
          determined in accordance with generally accepted accounting
          principles.

     9.   Management fees and reimbursed expenses of Landlord's Management Agent
          and administrative expenses not borne by the Landlord's Management
          Agent, not to exceed what is commonly charged for managing comparable
          office buildings in the Bellaire/West Loop area of Houston, Texas.

     10.  Fees and charges under any declaration of covenants, easements or
          restrictions affecting the Building.

Notwithstanding the foregoing, Operating Expenses shall not include those items
listed on Exhibit E attached hereto and incorporated herein by this reference.

If at any time the Building is not fully occupied or Landlord is not supplying
services to all rentable areas of the Building during an entire calendar year
(including the Base Year), then Landlord may adjust actual Operating Expenses to
Landlord's estimate of that amount which would have been paid or incurred by the
Landlord as Operating Expenses had the Building been ninety-five percent (95%)
occupied or serviced, and the Operating Expenses as so adjusted shall be deemed
to be the actual Operating Expenses for such calendar year. If Landlord does not
furnish during any Adjustment Year any particular work or service (the cost of
which, if performed by Landlord, would constitute an Operating Expense) to a
tenant which has

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undertaken to perform such work or service in lieu of the performance thereof by
Landlord, then Operating Expenses shall be deemed to be increased by an amount
equal to the additional expense which would reasonably have been incurred during
such Adjustment Year by Landlord if it had, at its cost, furnished such work or
service to such tenant. The provisions of the preceding sentences will apply
only to those Operating Expenses that either vary with occupancy or by reason of
one or more tenants not receiving goods or services the cost of which
constitutes all or part of such Operating Expenses.

              (d) Notwithstanding anything to the contrary contained herein, for
the purposes of calculating Expense Adjustment for any Adjustment Year, the
"Controllable Operating Expenses" (hereinafter defined) component of Operating
Expenses for such Adjustment Year shall not exceed the "Controllable Operating
Expenses" component of Operating Expenses for the Base Year by more than seven
percent (7%) on a cumulative, compounded basis. As used herein, "Controllable
Operating Expenses" shall mean all Operating Expenses except (i) wages and
salaries referred to and described in Sections 4.01(c)(1) to the extent of
increases in minimum wage required by federal or state law, (ii) utilities
referred to and described in Section 4.01(c)(4), (iii) insurance referred to and
described in Section 4.01(c)(6), (iv) Taxes, and (v) fees for management
services referred to and described in Section 4.01(c)(9).

              (e) "Taxes" shall mean and include all federal, state and local
government taxes, assessments and charges of any kind or nature (other than
later charges or penalties) whether general, special, ordinary or extraordinary,
paid by Landlord in a calendar year with respect to the Property; provided, real
estate taxes and special assessments (except as provided below) shall be
included in Taxes for a calendar year only to the extent such taxes and
assessments are paid during such calendar year, regardless of when assessed.
Taxes shall include, without limitation, real estate and transit district taxes
and assessments, sales and use taxes (except to the extent included in Operating
Expenses), ad valorem taxes, personal property taxes, any lease or lease
transaction tax and all taxes, assessments and charges in lieu of, substituted
for, or in addition to, any or all of the foregoing taxes, assessments and
charges. Notwithstanding any provision of this Section 4.01(e) to the contrary,
Taxes shall not include any federal, state or local governmental income,
franchise, capital stock, inheritance or estate taxes, except to the extent such
taxes are in lieu of or a substitute of any of the taxes, assessments and
charges previously described in this Section 4.01(e).

              Taxes shall also include the amount of all fees, costs and
expenses (including, without limitation, attorneys' fees and court costs) paid
or incurred by Landlord each calendar year in seeking or obtaining any refund or
reduction of Taxes or for contesting or protesting any imposition of Taxes,
whether or not successful and whether or not attributable to Taxes assessed,
paid or incurred in such calendar year. If any special assessment payable in
installments is levied against all or any part of the Property, then at the
Landlord's reasonable discretion, Taxes for the calendar year in which such
assessment is levied and for each calendar year thereafter shall include only
the amount of any installments of such assessment plus interest thereon paid or
payable during such calendar year (without regard to any right to pay, or
payment of, such assessment in a single payment). If the Building is not
assessed as fully improved for any calendar year or part thereof, Landlord may
make an adjustment to the amount of Taxes for each such calendar year to reflect
the amount of Taxes which would have been assessed if the Building had been
assessed as fully improved, and the amount of any such adjustment shall be
included on the amount of Taxes for such calendar year.

         4.02 PAYMENT OF RENT. Tenant shall pay to Landlord's Management Agent,
or such other person or entity or at such other place as Landlord may from time
to time direct in writing, all amounts due Landlord from Tenant hereunder,
including, without limitation, Monthly Base Rent, Expense Adjustment and Tax
Adjustment (Expense Adjustment and Tax Adjustment being defined hereinafter and
referred to collectively as "Adjustments", and all amounts due hereunder being
referred to collectively as "Rent"). Except as specifically provided in this
Lease, Rent shall be paid without abatement, deduction or setoff of any kind, it
being the intention of the parties that, to the full extent permitted by law,
Tenant's covenant to pay Rent shall be independent of all other covenants
contained in this Lease, including Tenant's continued occupancy of the Premises.
Tenant's obligation hereunder to pay Rent accruing during the Term (whether or
not the amount thereof is determined or determinable as of the date of
termination or expiration of this Lease) shall survive the termination of this
Lease.

                                       4
<PAGE>
         4.03 PAYMENT OF MONTHLY BASE RENT. Monthly Base Rent shall be payable
monthly, in advance, on the first day of each calendar month during the Term,
except that Monthly Base Rent for the first full calendar month of the Term for
which Monthly Base Rent is due shall be paid concurrently with the execution of
this Lease by Tenant. If the Term commences on a day other than the first day of
a calendar month, then Monthly Base rent for such month will be prorated on a
per diem basis based on a 30 day month and the excess of the installment of
Monthly Base Rent paid concurrently with the execution of this Lease by Tenant
over such prorated amount for the first calendar month of the Term shall be
applied against Monthly Base Rent for the first full calendar month of the Term.

         4.04 EXPENSE AND TAX ADJUSTMENT. In addition to Monthly Base Rent,
Tenant shall pay with respect to each Adjustment Year (i) an amount equal to
Tenant's Share of Operating Expenses for the Adjustment Year in excess of
Operating Expenses for the Base Year ("Expense Adjustment") and (ii) an amount
equal to Tenant's Share of Taxes for the Adjustment Year in excess of Taxes for
the Base Year ("Tax Adjustment"). As to any Adjustment Year which does not begin
on January 1st or does not end on December 31st, Expense Adjustment and Tax
Adjustment with respect to such Adjustment Year shall be prorated on a per diem
basis.

         Expense Adjustment and Tax Adjustment with respect to each Adjustment
Year shall be paid in monthly installments in advance on the first day of each
calendar month during such Adjustment Year in amounts sufficient to satisfy
payment of the Expense Adjustment and Tax Adjustment for such Adjustment Year as
reasonably estimated by Landlord from time to time prior to or during any
Adjustment Year and communicated to Tenant by written notice ("Estimated Expense
Adjustment" and "Estimated Tax Adjustment", respectively). If Landlord does not
deliver such a notice (an "Estimate") prior to the commencement of any
Adjustment Year, Tenant shall continue to pay Estimated Expense Adjustment and
Estimated Tax Adjustment as provided in the most recently received Estimate (or
Updated Estimate, as defined below) or the latest determined Expense Adjustment
or Tax Adjustment, whichever is greater, until the Estimate for such Adjustment
Year is delivered to Tenant. If, during any Adjustment Year, Landlord reasonably
determines that Taxes or Operating Expenses for such Adjustment Year have
increased or will increase, Landlord may deliver to Tenant an updated Estimate
("Updated Estimate") for such Adjustment Year. Monthly installments of Estimated
Expense Adjustment and Estimated Tax Adjustment paid subsequent to Tenant's
receipt of the Estimate or Updated Estimate for any Adjustment Year shall be in
the amounts provided in such Estimate or Updated Estimate, as the case may be.
In addition, Tenant shall pay to Landlord within twenty (20) days after receipt
of such Estimate or Updated Estimate, the amount, if any, by which the aggregate
installments of the Estimated Expense Adjustment and Estimated Tax Adjustment
provided in such Estimate or Updated Estimate, as the case may be, with respect
to prior months in such Adjustment Year exceed the aggregate installments of the
Estimated Expense Adjustment and Estimated Tax Adjustment paid by Tenant with
respect to such prior months.

         Within ninety (90) days after the end of each Adjustment Year, or as
soon thereafter as practicable, Landlord shall send to Tenant a statement (the
"Final Adjustment Statement") showing (i) the calculation of the Expense
Adjustment and Tax Adjustment for such Adjustment Year, (ii) the aggregate
amount of the Estimated Expense Adjustment and Estimated Tax Adjustment
previously paid by Tenant for such Adjustment Year; and (iii) the amount, if
any, by which the aggregate amount of the installments of Estimated Expense
Adjustment paid by Tenant with respect to such Adjustment Year exceeds or is
less than the Expense Adjustment for such Adjustment Year and the amount, if
any, by which the aggregate amount of the installments of Estimated Tax
Adjustment paid by Tenant with respect to such Adjustment Year exceeds or is
less than the Tax Adjustment for such Adjustment Year. Landlord shall have the
right to bill Tenant separately for Expense Adjustment and Tax Adjustment in
which event the provisions hereof shall apply to each as a separate Final
Adjustment Statement. Tenant shall pay the amount of any deficiency to Landlord
within twenty (20) days after the sending of such statement. Any excess shall,
at Landlord's option, either be credited against payments past or next due under
this Lease or refunded by Landlord, provided Tenant is not then in default under
this Lease.

         On reasonable advance notice, which Tenant shall give during the sixty
(60) day period following the receipt by Tenant of the Final Adjustment
Statement with respect to each Adjustment Year, Landlord will make available to
Tenant Landlord's books and records

                                       5
<PAGE>
maintained with respect to the Operating Expenses or Taxes, as applicable, for
such Adjustment Year. If Tenant wishes to contest any item within any Final
Adjustment Statement, Tenant shall do so in a written notice ("Contest Notice")
received by Landlord within sixty (60) days following the date Landlord makes
such books and records available to Tenant. The Contest Notice shall specify in
detail the item or items being contested and the specific grounds therefor.
However, the giving of a Contest Notice shall not relieve Tenant from the
obligation to pay any deficiency in such statement in accordance with this
Section 4.04. If Tenant timely gives a Contest Notice to Landlord, any dispute
with respect to any item or items in such Final Adjustment Statement, including
any calculations therein, shall be submitted to an independent certified public
accountant or firm of certified public accountants mutually agreed upon by
Landlord and Tenant ("CPA") whose decision shall be binding on the parties.
Tenant shall pay on demand all fees of the CPA with respect to any such dispute,
unless the amount of the Expense Adjustment or Tax Adjustment, as applicable, as
provided in such Final Adjustment Statement exceeds the amount of Expense
Adjustment or Tax Adjustment as finally determined by the CPA by more than 5%.
Notwithstanding anything else in this Section 4.04 to the contrary, if Tenant
fails to give a Contest Notice within said sixty (60) day period or fails to pay
any deficiency in such statement in accordance with this Section 4.04, whether
or not contested, Tenant shall have no further right to contest any item or
items in such Final Adjustment Statement and Tenant shall be deemed to have
accepted such Final Adjustment Statement.

                                       5.
                                SECURITY DEPOSIT

         No security deposit shall be required of the original named Tenant
under this Lease.

                                       6.
                                 USE OF PREMISES

         6.01 Tenant shall use and occupy the Premises solely for general office
purposes in connection with the operation of Tenant's customary business and any
incidental uses related thereto, and for no other use or purpose.

         6.02 Tenant shall not commit, or suffer to be committed, any annoyance,
waste, nuisance, act or thing against public policy, or which may disturb the
quiet enjoyment of Landlord or any other tenant or occupant of the Building.
Tenant agrees not to deface or damage the Building in any manner.

                                       7.
                              RULES AND REGULATIONS

         Tenant agrees to observe the reservations and rights reserved to
Landlord in this Lease. Tenant shall comply, and shall cause its employees,
agents, clients, customers, guests and invitees to comply, with the rules and
regulations attached hereto as Exhibit B, and such reasonably revised or
additional rules and regulations adopted by Landlord during the Term and applied
generally to all office tenants of the Building. Any violation by Tenant or any
of its employees, agents, clients, customers, guests or invitees of any of the
rules and regulations so adopted by Landlord shall be a Default by Tenant under
this Lease (after a reasonable opportunity afforded to Tenant to cure) and may
be restrained by court injunction; but whether or not so restrained, Tenant
acknowledges and agrees that it shall be and remain liable for all damages,
loss, costs and expense resulting from any violation by Tenant or such other
persons of any of said rules and regulations. Nothing in this Lease contained
shall be construed to impose upon Landlord any duty or obligation to enforce
said rules and regulations or the terms, covenants and conditions of any other
lease against any other tenant or any other persons, and Landlord shall not be
liable to Tenant for violation of the same by any other tenant, its employees,
agents, guests, invitees, licensees, customers, clients, family members, or by
any other person.

                                       8.
                                SERVICES PROVIDED

         8.01 Landlord shall furnish the following services in a manner
reasonably considered to be standard for comparable office buildings in the
Bellaire/West Loop area of Houston, Texas:

                                       6
<PAGE>
              (a) Cooled or heated air in season to provide a temperature
condition required, in Landlord's reasonable judgment, for comfortable occupancy
of the Premises under normal business operations and in the absence of the use
of equipment which affects the temperature or humidity which would otherwise be
maintained in the Premises, daily from 8:00 A.M. to 6:00 P.M. (Saturdays 8:00
A.M. to 1:00 P.M.) ("Business Hours"), Sundays and Holidays (as defined below)
excepted. After-hours HVAC shall be furnished by Landlord, upon reasonable prior
notice, at the rate of $30.00 per hour, which rate shall remain in effect during
the entire 36 month initial Term. If the use of heat generating equipment in the
Premises affects the temperatures otherwise maintained by the air conditioning
system for normal business operations, and thereby requires, in the reasonable
judgment of Landlord, the modification of the air conditioning or ventilation
systems (including installation of supplementary air conditioning units in the
Premises), Landlord may elect to perform such modification, and the reasonable
cost thereof shall be paid by Tenant to Landlord at the time of completion of
such modification. Any increased expense in maintaining or operating the system
resulting, in Landlord's reasonable opinion, from such modification shall be
paid by Tenant. In addition, Tenant shall, at Tenant's expense, perform all
maintenance on any supplementary air conditioning units installed in accordance
with this Section 8.01(a) unless, in the exercise of its right hereby expressly
reserved, Landlord elects to perform any part or all of such maintenance at
Tenant's expense. Tenant agrees to keep and cause to be kept closed all windows
in the Premises and at all times to cooperate fully with Landlord in the
operation of said system and to abide by all reasonable regulations and
requirements which Landlord may prescribe to permit the proper functioning and
protection of said heating, ventilation and air conditioning systems. For
purposes of this Lease, "Holidays" means those federal or state holidays
observed by national banks in Houston, Texas.

              (b) Washroom facilities, not within the Premises (unless Tenant
leases an entire floor), for use by Tenant in common with other tenants in the
Building.

              (c) Janitor service in and about the Building and the Premises,
Saturdays, Sundays and Holidays excepted, in accordance with the specifications
set forth in Exhibit F attached hereto.

              (d) Passenger elevator service in common with other tenants and
occupants 24 hours per day 7 days a week, which service may be reduced during
non-Business Hours. Landlord shall provide limited freight elevator service at
such times as Landlord shall reasonably determine.

              (e) Electric lighting service for all public portions of the
Building.

              (f) Sufficient electrical panel, riser and transformer capacity to
support a connected load of 5.6 watts per square foot of Rentable Area of
Premises (excluding lighting and Building HVAC). Without Landlord's prior
written consent, Tenant shall not be entitled to employ lighting in the Premises
which consumes electrical current in excess of building standard nor utilize any
office equipment that consumes more than 0.5 kilowatts per hour per square foot
contained within the Premises at rated capacity or requires a voltage other than
120 volts single phase.

              (g) Replacement of fluorescent light bulbs in any fluorescent
light fixtures which are located in the Premises and which contain the building
standard light fixture.

              (h) Equipment and personnel to limit access to the Building after
normal business hours. Landlord shall furnish to Tenant without charge, one (1)
access card for each 250 square feet of Rentable Area of the Premises.

         8.02 Tenant agrees that compliance with any mandatory or voluntary
energy conservation measures or other legal requirements instituted by any
appropriate governmental authority shall not be considered a violation of any
terms of this Lease and shall not entitle Tenant to terminate this Lease or
require abatement or reduction of Rent hereunder.

         8.03 Tenant acknowledges that it shall be responsible for making
arrangements for and shall pay the cost of the installation, repair and
maintenance of its own telephone system. At no time shall Tenant permit the use
of electricity consumed in the Premises to exceed the capacity of feeders to the
Building or the risers or wiring installation. Landlord does not warrant or

                                       7
<PAGE>
represent that such capacity shall be adequate for Tenant's purposes. Tenant
shall reimburse Landlord for the cost of Tenant's excessive use or consumption
of heating or air conditioning or excessive use or consumption of electrical
services in violation of Section 8.01(f) above as may be separately metered or
reasonably computed.

         8.04 Landlord shall in no event be obligated to furnish any services or
utilities, other than those specified in Section 8.01. If Landlord elects to
furnish services or utilities requested by Tenant in addition to those specified
in Section 8.01 (including utility services at times other than those
specified), Tenant shall pay to Landlord Landlord's then prevailing rates for
such services and utilities within ten (10) days after receipt of Landlord's
invoices therefor. If Tenant shall fail to make any such payment, Landlord may,
without notice to Tenant, and in addition to Landlord's other remedies under
this Lease, discontinue any or all of the additional services. Except as set for
the below, no failure to furnish or discontinuance of any service pursuant to
this Section 8 shall result in any liability of Landlord to Tenant or be deemed
to be a constructive eviction or a disturbance of Tenant's use of the Premises.
The foregoing notwithstanding, in the event Landlord fails to furnish an
Essential Service (hereinafter defined) to the Premises for a period of 5
consecutive business days after receipt of written notice from Tenant, Tenant is
not able to conduct business in or utilize the Premises for the purposes for
which they were let in the absence of the Essential Service(s), and the
interruption is not the result of the negligence or willful misconduct of Tenant
or Tenant's agents, employees, invitees or licensees or due to a casualty (which
is otherwise covered by Section 12 of this Lease), and if the restoration of the
Essential Service(s) in question is within Landlord's reasonable control, then,
as Tenant's sole and exclusive remedy for the failure of such Essential
Service(s), Monthly Base Rent and Adjustments under this Lease shall abate as to
the portion(s) of the Premises so affected beginning on the 6th day after and
continuing until all Essential Services are restored or the Premises are
otherwise rendered usable again. In the event Landlord fails to furnish an
Essential Service (hereinafter defined) to the Premises for a period of 120
consecutive business days after receipt of written notice from Tenant, Tenant is
not able to conduct business in or utilize the Premises for the purposes for
which they were let in the absence of the Essential Service(s), and the
interruption is not the result of the negligence or willful misconduct of Tenant
or Tenant's agents, employees, invitees or licensees or due to a casualty (which
is otherwise covered by Section 12 of this Lease), and if the restoration of the
Essential Service(s) in question is within Landlord's reasonable control, then,
as Tenant's sole and exclusive remedy for the failure of such Essential
Service(s), Tenant shall have the right to terminate this Lease by giving
written notice to Landlord within 15 days after the expiration of the 120 day
period; provided, however, Tenant's notice and right to terminate this Lease
shall be overridden and of no force of effect if all Essential Services are
restored within 10 days after Landlord's receipt of the notice. "Essential
Services" are defined as electrical power, air-conditioning and heating to the
Premises; the service of at least one elevator to the floors on which the
Premises are located; and water to all lavatories on the 7th and 8th floors of
the Building.

                                       9.
                       LEASEHOLD IMPROVEMENTS; ALTERATIONS

         9.01 [This Section 9 governs leasehold improvements and alterations
performed subsequent to the initial build-out of the Premises which is
separately covered under the Workletter attached as Exhibit C to this Lease]
Tenant shall not, without Landlord's prior written consent, permit any
alteration, improvement, addition or installation in or to the Premises (all of
which is collectively referred to as "Work"), including installation of
telephone, computer or internal sound or paging systems or other similar
systems, or the performance of any decorating, painting and other similar work
in the Premises. In the event Landlord consents to any Work, Landlord reserves
the right to cause such Work to be performed by contractors and subcontractors
designated by Landlord. Tenant shall pay the cost of preparation of the plans
for the Work, all permit fees and the fees of said contractors and
subcontractors. Except with respect to the Work described in the Workletter, if
any, or Work performed by Landlord's designated contractor as general
contractor, Tenant shall pay Landlord's designated contractor a supervision fee
equal to 5% of the total cost of such Work, which shall include Landlord's costs
for reviewing plans. Before commencement of any Work or delivery of any
materials into the Premises or the Building, Tenant shall furnish to Landlord,
for its prior written approval, architectural plans and specifications certified
by a licensed architect or engineer reasonably acceptable to Landlord, and such
other documentation as Landlord shall reasonably request.

                                       8
<PAGE>
Tenant agrees to hold Landlord, its beneficiaries and their respective agents,
partners, officers, servants and employees forever harmless against all claims
and liabilities of every kind, nature and description which may arise out of or
in any way be connected with any such Work. At the request of Landlord, Tenant
will deliver a written indemnity against claims or damages to tenants or
occupants of any other premises affected by such Work. Tenant shall pay
Landlord's reasonable out-of-pocket third party costs of reviewing plans and
materials submitted to Landlord for approval if, due to the nature or complexity
of the Work, a third party engineer is required to review such plans and
materials. Tenant shall pay the cost of all such Work and the cost of decorating
and altering the Premises and the Building occasioned by any such Work. Landlord
shall have the right to require Tenant to deliver to Landlord cash or other
security in an amount and form acceptable to Landlord to be held in escrow by
Landlord to assure prompt payment for the cost of any such Work. All
alterations, improvements, additions and installations to or in the Premises
shall become part of the Premises at the time of installations.

         9.02 In the event that Landlord permits Tenant to hire its own
contractors for the performance of any Work, then in addition to the provisions
of Section 9.01, the following shall apply: (i) prior to the commencement of the
Work or the delivery of any materials to the Building, Tenant shall submit to
Landlord for Landlord's approval, the names and addresses of all contractors,
contracts, necessary permits and licenses, certificates of insurance (including,
without limitation, Worker's compensation, comprehensive general liability and
adequacy of design insurance) and instruments of indemnification and waivers of
lien against any and all claims, costs, expenses, damages and liabilities which
may arise in connection with the Work, all in such form and amount as shall be
satisfactory to Landlord; (ii) all such Work shall be done only by union
contractors or mechanics approved by Landlord (which approval shall not be
unreasonably withheld) and at such time and in such manner as Landlord may from
time to time designate; (iii) upon completion of any Work, Tenant shall furnish
Landlord with as-built plans, contractors' affidavits, full and final waivers of
lien, receipted bills covering all labor and materials expended and used in
connection with such Work; and (iv) all such Work shall comply with all
insurance requirements, all laws, ordinances, rules and regulations of all
governmental authorities, and all collective bargaining agreements applicable to
the Building, and shall be done in a good and workmanlike manner and with the
use of good grades and new materials.

         9.03 Without limitation of the provisions of Section 9.01, Tenant
agrees not to suffer or permit any lien of any mechanic or materialman to be
placed or filed against the Premises or the Building. In case any such lien
shall be filed, Tenant shall, within ten (10) business days of such filing,
satisfy and release such lien of record. If Tenant shall fail to have such lien
satisfied and released of record within such ten (10) business day period,
Landlord may, on behalf of Tenant, without being responsible for making any
investigation as to the validity of such lien and without limiting or affecting
any other remedies Landlord may have, pay the same and Tenant shall pay Landlord
on demand the amount so paid by Landlord.

         9.04 Subject to the rules and regulations, Tenant, at any time Tenant
is not in default hereunder, may remove from the Premises its movable trade
fixtures and personal property. Tenant shall repair any damage to the Premises
caused by such removal, failing which Landlord may remove the same and repair
the Premises and Tenant shall pay the cost thereof to Landlord on demand.

                                      10.
                              CONDITION OF PREMISES

         10.01 No agreements or representations, except such as are expressly
contained herein and in the Workletter attached hereto, if any, have been made
to Tenant respecting the condition of the Premises. By taking possession, Tenant
conclusively waives all claims relating to the condition of the Premises and
accepts the Premises as being free from defects and in good, clean and sanitary
order, condition and repair, and agrees to keep the Premises in such condition.

         10.02 Subject to Sections 12 and 13, Tenant shall, at its own expense,
keep the Premises clean and safe and in as good repair and condition as when all
of the work described in the Workletter was completed (or as to subsequent Work,
as and when such Work was completed) and shall promptly and adequately repair
all damage to the Premises and the Building caused by Tenant or any of its
employees, agents, guests or invitees, including replacing or repairing all
damaged or broken glass, fixtures and appurtenances resulting from any such
damage, under the

                                       9
<PAGE>
supervision and with the approval of Landlord. If Tenant does not adequately
make such repairs or replacements and such failure continues after receipt of
written notice thereof from Landlord and a reasonable opportunity to remedy such
failure, Landlord may, but need not, make such repairs and replacements and
Tenant shall pay Landlord the reasonable cost thereof on demand.

         10.03 Landlord, subject to Sections 12 and 14, shall be obligated to
maintain and make necessary repairs to the structural elements of the Building,
the public corridors, common areas, public washrooms and lobby of the Building,
the parking facilities, the exterior windows, and roof of the Building, and
subject to the provisions of Sections 12 and 14, the electrical, plumbing,
heating, ventilation and air conditioning systems of the Building to the
standard of comparable buildings in the Bellaire/West Loop area of Houston,
Texas.

         10.04 In the event that, during the Term, a governmental authority
notifies Landlord or Tenant in writing that the Premises must be altered,
modified or improved in order to be in compliance with the requirements of the
American with Disabilities Act ("ADA") in effect on the Commencement Date, and
such required alteration, modification or improvement is not being required as a
result of Tenant's use of the Premises or as a result of any improvement to the
Premises made by or on behalf of Tenant since Landlord's delivery of the
Premises to Tenant for construction, such alteration, modification or
improvement shall promptly be undertaken by Landlord at the sole cost of
Landlord. Notwithstanding Section 9 of this Lease, Landlord shall be obligated,
at its sole cost, for delivery of the Premises with all ADA and life safety
requirements in compliance with applicable law, including, but not limited to,
replacement of light fixtures and installing new ceiling tiles in the Premises,
and providing parawedge fixtures throughout the Premises.

                                      11.
                                   SURRENDER

         11.01 At the termination of this Lease, by lapse of time or otherwise,
Tenant shall surrender possession of the Premises to Landlord and deliver all
keys to the Premises and all locks therein to Landlord and make known to the
Landlord the combination of all combination locks in the Premises, and shall,
subject to Sections 12 and 13, return the Premises and all equipment and
fixtures of the Landlord therein to Landlord in broom clean condition and in as
good condition as when Tenant originally took possession, ordinary wear and tear
excepted, failing which Landlord may restore the Premises and such equipment and
fixtures to such condition and the Tenant shall pay the reasonable cost thereof
to Landlord on demand.

         11.02 Upon termination of this Lease or of Tenant's right to possession
of the Premises, by lapse of time or otherwise, all installations, additions,
partitions, hardware, light fixtures, floor coverings, non-trade fixtures and
improvements, temporary or permanent, whether placed there by Tenant or
Landlord, shall be Landlord's property and shall remain upon the Premises, all
without compensation, allowance or credit to Tenant; provided, however, that if
prior to any such termination or within thirty (30) days thereafter Landlord so
directs by notice, Tenant, at Tenant's sole expense, shall promptly remove such
of the installations, additions, partitions, hardware, light fixtures, floor
coverings, non-trade fixtures and improvements in or to the Premises by or on
behalf of Tenant as are designated in such notice and repair any damage to the
Premises caused by such removal, failing which Landlord may remove the same and
repair the Premises, and Tenant shall pay the reasonable cost thereof to
Landlord on demand.

         11.03 All obligations of Tenant under this Section 11 shall survive the
termination of this Lease, by lapse of time or otherwise.

                                      12.
                             DAMAGE OR DESTRUCTION

         12.01 If, during the Term, more than twenty percent (20%) of either of
the Premises or the Building is damaged by fire or other casualty, cause,
condition or thing whatsoever, so as to render the Premises untenantable,
Landlord may, by written notice to Tenant given within sixty (60) days after
such damage, terminate this Lease. Such termination shall become effective as of
the date of such damage if the Premises are substantially untenantable. Unless
this Lease is terminated, if the Premises are made partially or wholly
untenantable as aforesaid, Landlord, subject to the provisions of this Section
12, shall restore the same at Landlord's expense with

                                       10
<PAGE>
reasonable promptness. If, as a result of a fire or other casualty, the Premises
are made partially or wholly untenantable, and if Landlord fails to commence
such restoration within sixty (60) days after Landlord is able to take
possession of the damaged space in the Premises and fails to reasonably
diligently complete the restoration of the Premises, Tenant may terminate this
Lease by giving notice thereof to Landlord (i) not later than seventy-five (75)
days after Landlord is able to take possession if Landlord has not theretofore
commenced such restoration or (ii) prior to the substantial completion of such
restoration, if Landlord commences such restoration within said sixty (60) day
period, but fails to complete the restoration of the Premises within two hundred
seventy (270) days after the date of such damage, and such termination shall be
effective as of the fifth (5th) day after receipt of said notice by Landlord. In
the event of termination of this Lease, Monthly Base Rent and Adjustments shall
be prorated on a per diem basis and paid only to the effective date of such
termination. If all of the Premises are untenantable but this Lease is not
terminated, all Monthly Base Rent and Adjustments shall abate from the date of
the fire or other casualty until the Premises are ready for occupancy and
reasonably accessible to Tenant. If part of the Premises is untenantable,
Monthly Base Rent and Adjustments shall be prorated on a per diem basis and
apportioned in accordance with the part of the Premises which is usable by
Tenant from the date of the fire or other casualty until the damaged part is
ready for Tenant's occupancy. In all cases, with respect to Landlord's
obligations under this Section 12, such obligations shall be adjusted and all
time periods extended by the period on account of delay caused by adjustment of
insurance loss, strikes, governmental approvals, labor difficulties or any cause
beyond Landlord's reasonable control.

         The following provision shall apply if, as an economic concession set
forth in this Lease, Landlord has granted Tenant a credit against Monthly Base
Rent or Adjustments, or both, or has granted Tenant an abatement period with
respect to Monthly Base Rent or Adjustments, or both (such credits or the amount
of Monthly Base Rent or Adjustments which would have accrued but for such
abatement period being hereinafter referred to as "Rent Concession"): In the
event that, pursuant to any provision of this Lease, Monthly Base Rent or
Adjustments abate, in whole or in part, by reason of the occurrence of a fire or
other casualty ("Casualty Abatement") and this Lease is not terminated, then to
the extent that the period of any Casualty Abatement coincides with any period
that a Rent Concession would otherwise have been applicable, the Rent Concession
or such portion thereof as would otherwise have been applicable if the Casualty
Abatement had not occurred ("Rent Concession Balance") will be deferred until
the Casualty Abatement period expires and the Rent Concession Balance will be
effective and applied at the rate set forth in this Lease during the period
immediately following the expiration of the Casualty Abatement, provided that if
the Casualty Abatement does not apply to all Monthly Base Rent or Adjustments
then the Rent Concession Balance will apply to the full extent possible to that
portion of the Monthly Base Rent or Adjustments, or both, which is not abated
during the Casualty Abatement period. Notwithstanding the foregoing, (a) the
Rent Concession Balance will not be applicable to the extent it exceeds the
amount of rent loss insurance proceeds recovered by Landlord with respect to the
Casualty Abatement, (b) Tenant will not be entitled to any cash refund or credit
against any other amounts due Landlord by reason of the foregoing provision and
(c) the Term will not be extended by reason of the applicability of the
foregoing provision.

         12.02 If Landlord repairs and restores the Premises as provided in
Section 12.01 above, Landlord shall repair or restore any decorations (excluding
personal property), alterations or improvements to the Premises installed or
approved by Landlord. Tenant shall be responsible for repair and replacement of
trade fixtures, furnishings, equipment, personal property or leasehold
improvements belonging to Tenant. Notwithstanding any provision of this Section
12 to the contrary, but subject to Tenant's termination rights under this
Section 12, Landlord shall not be obligated to make any restorations or repairs
to the Premises, the cost of which would exceed the proceeds of insurance
received by Landlord with respect thereto.

         12.03 Notwithstanding anything to the contrary in this Section, but
subject to Tenant's termination rights under this Section 12, Landlord shall not
have any obligation whatsoever to repair, reconstruct or restore the Premises or
the Building when the damage resulting from any casualty covered under this
Section occurs during the last twelve (12) months of the Term or any extension
thereof.

                                       11
<PAGE>
                                      13.
                                 EMINENT DOMAIN

         13.01 In the event that the whole or a substantial part of the Premises
shall be condemned or taken in any manner for any public or quasi-public use (or
sold under threat of such taking), and as a result thereof, the remainder of the
Premises cannot be used for the same purpose as prior to such taking, this Lease
shall terminate as of the date possession is taken.

         13.02 If less than ten percent (10%) of the Premises shall be so
condemned or taken (or sold under threat thereof) and after such taking the
Premises can be used for the same purposes as prior thereto, this Lease shall
cease only as to the part so taken as of the date possession shall be taken by
such authority, and Tenant shall pay full Rent up to that date (with appropriate
refund by Landlord of such Rent attributable to the part so taken as may have
been paid in advance for any period subsequent to the date possession is taken)
and thereafter Monthly Base Rent and Adjustments shall be equitably adjusted to
reflect the reduction in the Premises by reason of such taking. Landlord shall,
at its expense, make all necessary repairs or alterations to the Building so as
to constitute the remaining Premises a complete architectural unit, provided
that Landlord shall not be obligated to undertake any such repairs or
alterations if the cost thereof exceeds the award resulting from such taking.

         13.03 If part of the Building shall be so condemned or taken (or sold
under threat thereof), or if any adjacent property or street shall be condemned
or improved by a public or quasi-public authority in such a manner as to alter
the use of any part of the Premises or the Building and, in the reasonable
opinion of Landlord, the Building or any part thereof should be altered,
demolished or restored in such a way as to materially alter the Premises, either
party may terminate this Lease by notifying the other of such termination within
sixty (60) days following the taking of possession by such public or
quasi-public authority, and this Lease shall expire on the date specified in the
notice of termination, which shall be not less than sixty (60) days after the
giving of such notice, as fully and completely as if such date were the date
hereinbefore set forth as the expiration of the Term, and the Monthly Base Rent
and Adjustments hereunder shall be apportioned as of such date.

         13.04 Landlord shall be entitled to receive the entire award, including
the damages for the property taken and damages to the remainder, with respect to
any condemnation proceedings affecting the Building. Tenant agrees not to make
any claim against Landlord or the condemning authority for any portion of such
award or compensation, whether attributable to the value of any unexpired
portion of the Term, the loss of profits, goodwill, leasehold improvements or
otherwise, Tenant irrevocably assigning any and all such claims to Landlord.
Nothing herein shall be construed, however, to preclude Tenant from prosecuting
a separate claim directly against the condemning authority for moving expenses
and damage to, and cost of removal of, trade fixtures, furniture and other
personal property belonging to Tenant; provided, however, that Tenant shall make
no claim which shall diminish or adversely affect any award claimed or received
by Landlord.

                                      14.
                            WAIVER OF CERTAIN CLAIMS

         14.01 To the extent not expressly prohibited by law, Tenant releases
Landlord, and its agents, partners, officers, servants and employees, from, and
waives, all claims for damages to person or property sustained by Tenant or by
any occupant of the Premises, resulting directly or indirectly from fire or
other casualty, cause or any existing or future condition, defect, matter or
thing in the Premises, the Building or any part thereof, or from any equipment
or appurtenance therein, or from any accident in or about the Building, or from
any act or neglect of any tenant or other occupant of the Building or of any
other person, except for matters caused by the negligence or willful misconduct
of Landlord.

         14.02 To the extent not expressly prohibited by law, and except for
claims and liabilities caused by the negligence or willful misconduct of
Landlord, Tenant agrees to hold harmless and indemnify Landlord, all Mortgagees
and all of their respective agents, partners, officers, servants and employees,
against claims and liabilities, including reasonable attorneys' fees, for
injuries to all persons and damage to or theft or misappropriation or loss of
property occurring in or about the Premises arising from Tenant's occupancy of
the Premises or the conduct of its business, or

                                       12
<PAGE>
from activity, work, or thing done, permitted or suffered by Tenant, its
employees, agents, guests or invitees in or about the Premises, or from any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease or due to any other act or omission of Tenant, its agents or employees.
Landlord may, at its option, repair such damage or replace such loss, and Tenant
shall upon demand by Landlord reimburse Landlord for all reasonable costs of
such repairs, replacement and damages in excess of amounts, if any, paid to
Landlord under insurance covering such damages. In the event any action or
proceeding is brought against Landlord, any Mortgagee or any of their respective
agents, beneficiaries, partners, officers, servants or employees by reason of
any such claims, then, upon notice from Landlord, Tenant covenants to defend
such action or proceeding by counsel reasonably satisfactory to Landlord.

         14.03 If any damage to the Building or any equipment or appurtenance
therein, whether belonging to Landlord or to other tenants in the Building,
results from any act or neglect of Tenant, its agents, employees, guests or
invitees, Tenant shall be liable therefor and Landlord may, at Landlord's
option, repair such damage, and Tenant shall, upon demand by Landlord, reimburse
Landlord the reasonable total cost of such repairs and damages to the Building.
If Landlord elects not to repair such damage, Tenant shall promptly repair such
damages at its own cost and in accordance with the provisions of Section 9 as if
such repair constituted Work under such Section. If Tenant occupies space in
which there is exterior glass, then Tenant shall be responsible for the damage,
breakage or repair of such glass, except to the extent such loss or damage is
recoverable under Landlord's insurance, if any.

                                      15.
                        INSURANCE; WAIVER OF SUBROGATION

         15.01 Tenant shall procure and maintain at its own cost policies of
commercial general public liability and property damage insurance with
contractual liability coverage for the agreements of indemnity provided for
under this Lease and a broad form general liability endorsement to afford
protection with such limits as may be reasonably requested by Landlord from time
to time (which as of the date hereof shall be not less than $2,000,000 under a
combined single limit of coverage) insuring Landlord and its respective agents,
partners, officers, servants and employees and Tenant from all claims, demands
or action for injury to or death of any person or persons and for damage to
property made by, or on behalf of, any person or persons, firm or corporation,
arising from, related to or connected with the Premises. The insurance shall be
issued by companies and be in form and substance satisfactory to Landlord and
any Mortgagee of the Building and shall, if requested by Landlord or any
Mortgagee, include any Mortgagee and its respective agents and employees as
additional insureds. The aforesaid insurance policies shall provide that they
shall not be subject to cancellation except after at least thirty (30) days'
prior written notice to Landlord and all such Mortgagees (unless such
cancellation is due to non-payment of premiums, in which event ten (10) days'
prior written notice shall be required). Copies of insurance certificates,
together with satisfactory evidence of payment of the premium thereon, shall be
deposited with Landlord prior to the commencement of the Term and renewals
thereof not less than thirty (30) days prior to the end of the term of each such
coverage.

         15.02 Tenant shall carry insurance of the type typically referred to as
"all risk" insurance, including water damage, insuring its interest in the
tenant improvements in the Premises (to the extent not covered by Landlord's
property insurance) and its interest in all its personal property and trade
fixtures located on or within the Building, without limitation, its office
furniture, equipment and supplies.

         15.03 Notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant each hereby waive all rights of action against the
other for loss or damage to the Premises, or the Building and property of
Landlord and Tenant in the Building, which loss or damage is insured or is
required pursuant to this Lease to be insured by valid and collectible insurance
policies, EVEN IF SUCH LOSS OR DAMAGE IS CAUSED BY THE NEGLIGENCE OR OTHER
TORTIOUS CONDUCT, ACTS OR OMISSIONS OF THE RELEASED PARTY OR THE RELEASED
PARTY'S DIRECTORS, EMPLOYEES, OFFICERS, AGENTS, OR INVITEES OR THE RELEASED
PARTY WOULD BE STRICTLY LIABLE FOR SUCH LOSS OR DAMAGE UNDER APPLICABLE LAW, to
the extent of the proceeds collected or collectible under such insurance
policies, subject to the condition that this

                                       13
<PAGE>
waiver shall be effective only when the waiver is permitted by such insurance
policies or when, by the use of good faith effort, such waiver could have been
permitted in the applicable insurance policies. The policies of insurance
required to be maintained by Tenant under the terms of this Lease shall contain
waiver of subrogation clauses in form and content satisfactory to Landlord.

         15.04 Tenant shall not conduct or permit to be conducted by its
employees, agents, guests or invitees any activity, or place any equipment in or
about the Premises or the Building that will in any way increase the cost of
fire insurance or other insurance on the Building. If any increase in the cost
of fire insurance or other insurance is stated by any insurance company or by
the applicable Insurance Rating Bureau, if any, to be due to any activity or
equipment of Tenant in or about the Premises or the Building, such statement
shall be conclusive evidence that the increase in such cost is due to such
activity or equipment and, as a result thereof, Tenant shall be liable for the
amount of such increase. Tenant shall reimburse Landlord for such amount upon
written demand from Landlord and any such sums shall be considered additional
Rental payable hereunder. Tenant, at its sole expense, shall comply with any and
all requirements of any insurance organization or company necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises and the Building.

                                      16.
                           LANDLORD'S RIGHT OF ACCESS

         16.01 Landlord and its contractors and representatives shall have the
right to enter the Premises at all reasonable times to perform janitorial and
cleaning services and, after 24 hour prior oral notice (except in the case of
emergencies when such prior notice as is reasonably practicable shall be given),
to inspect the same, to make repairs, alterations and improvements, to maintain
the Premises and the Building, specifically including, but without limiting the
generality of the foregoing, to make repairs, additions or alterations within
the Premises to mechanical, electrical and other facilities serving other
premises in the Building, to post such reasonable notices as Landlord may desire
to protect its rights, to exhibit the Premises to Mortgagees and purchasers,
and, during the three hundred sixty-five (365) days prior to the expiration of
the Term, to exhibit the Premises to prospective tenants. In the event the
Premises are vacant, Landlord may place upon the doors or in the windows of the
Premises any usual or ordinary "To Let", "To Lease", or "For Rent" signs. Tenant
shall permit Landlord to erect, use, maintain and repair pipes, cables, conduit,
plumbing, vents and wires, in, to and through the Premises to the extent
Landlord may now or hereafter deem necessary or appropriate for the property
operation, maintenance and repair of the Building and any portion of the
Premises so long as Landlord does not unreasonably interfere with Tenant's use
of the Premises.

         16.02 Landlord shall also have the right to take all material into the
Premises that may be required for the purposes set forth in the foregoing
Section 16.01 without the same constituting a constructive eviction of Tenant,
in whole or in part, and Rent shall not abate (except as provided in Sections 12
or 14) while said repairs, alterations, improvements or additions are being
made, by reason of loss or interruption of business of Tenant, or otherwise. If
Tenant shall not be personally present to open and permit entry into the
Premises, at any time, when for any reason entry therein shall be necessary or
desirable, Landlord or Landlord's agents may enter the Premises by a master key,
or may forcibly enter the same, without rendering Landlord or such agents liable
therefor (if during such entry Landlord or Landlord's agents shall accord
reasonable care to Tenant's property), and without in any manner affecting the
obligations and covenants of this Lease.

         16.03 In exercising its rights under this Section 16, Landlord will use
reasonable efforts to minimize any interference with Tenant's use or occupancy
of the Premises, provided that Landlord will not be obligated to provide
overtime labor or perform work after regular Building hours.

                                      17.
                           RIGHTS RESERVED TO LANDLORD

         Landlord shall have the following rights, exercisable without notice
and without liability to Tenant for damage or injury to property, person or
business (all claims for damage being

                                       14
<PAGE>
hereby waived and released by Tenant) and without effecting an eviction or
disturbance of Tenant's use or possession or giving rise to any claim for
set-offs or abatement of Rent:

              (a) To change the name or street address of the Building provided
that Landlord pays Tenant's reasonable costs for replacement stationery and
similar business materials which contain the name or address of the Building;

              (b) To install and maintain signs on the exterior and interior of
the Building;

              (c) To reasonably approve all sources furnishing sign painting and
lettering, towels, coffee cart service, vending machines or toilet supplies used
or consumed on the Premises and the Building; and Tenant shall be permitted at
Tenant's sole cost, to install vending machines in the Premises for use solely
by Tenant's employees;

              (d) To have pass keys to the Premises;

              (e) To grant to anyone the exclusive right to conduct any business
or render any service in the Building, provided such exclusive right shall not
operate to interfere with, or exclude Tenant from, the use expressly permitted
by this Lease;

              (f) To make repairs, additions or alterations to the Building
which may change, eliminate or remove common areas, parking areas, if any, or
the method of ingress to or egress from the Building and such areas, to convert
common areas into leasable areas, or otherwise alter, repair or reconstruct the
common areas or change the use thereof, to change the arrangement or location of
entrances or passageways, doors and doorways, corridors, elevators, stairs,
toilets or other public parts of the Building, and to close entrances, doors,
corridors, elevators, plaza or other facilities, and to perform any acts related
to the safety, protection, preservation, reletting, sale or improvement of the
Premises or the Building. Landlord will use commercially reasonable efforts to
perform all repair, maintenance, management and other services performed in the
Building in a manner so as not to unreasonably interfere with Tenant's business.

              (g) To have access to all mail chutes or boxes according to the
rules of the United States Postal Service;

              (h) To require all persons entering or leaving the Building during
such hours as Landlord may from time to time reasonably determine to identify
themselves to security personnel by registration or otherwise, and to establish
their right to enter or leave and to exclude or expel any peddler, solicitor or
beggar at any time from the Premises or the Building;

              (i) To close the Building at 6:00 p.m. on weekdays, 1:00 p.m. on
Saturdays, and all day on Sundays and Holidays, or at such other reasonable
times as Landlord may determine, subject, however, to Tenant's right to
admittance under such regulations as shall be prescribed from time to time by
Landlord in its reasonable discretion (provided, however, that Landlord shall do
nothing that materially interferes with Tenant's access to the Premises or
Tenant's business operations conducted within the Premises, and Landlord shall
at all times during the Term make available to Tenant the number of parking
spaces set forth in this Lease.

                                      18.
                                   ABANDONMENT

         Intentionally deleted.

                                      19.
                        TRANSFER OF LANDLORD'S INTEREST;
                              LIABILITY OF LANDLORD

         Upon any sale, assignment or transfer of the Building by Landlord,
other than merely as security, Tenant agrees to look solely to the purchaser,
assignee or transferee with respect to all matters in connection with this Lease
and, upon such purchaser's, assignee's or transferee's assumption of the
obligations of Landlord under this Lease, the transferor Landlord shall be
released from any further obligations hereunder.

                                       15
<PAGE>
                                      20.
                          TRANSFER OF TENANT'S INTEREST

         20.01 Tenant shall not sell, assign, encumber, mortgage or transfer
this Lease or any interest therein, sublet or permit the occupancy or use by
others of the Premises or any part thereof, or allow any transfer hereof or any
lien upon Tenant's interest by operation of law or otherwise (collectively, a
"Transfer") without the prior written consent of Landlord, which consent, if
Landlord does not exercise its rights of a recapture set forth below, shall not
be unreasonably withheld, delayed or conditioned. Any Transfer which is not in
compliance with the provisions of this Section 20, shall, at the option of
Landlord, be void and of no force or effect. Tenant shall, by written notice in
the form specified in the following sentence, advise Landlord of Tenant's
intention on a stated date (which shall not be less than sixty (60) days after
date of Tenant's notice) to sublet, assign, mortgage or transfer any part or all
of the Premises or its interest therein for the balance or any part of the Term,
and, in the case of sublease, Landlord shall have the right, to be exercised by
giving written notice to Tenant within thirty (30) days after receipt of
Tenant's notice, to recapture the space described in Tenant's notice and such
recapture notice shall, if given, cancel and terminate this Lease with respect
to the space therein described as of the date stated in Tenant's notice.
Tenant's notice shall state the name and address of the proposed subtenant,
assignee, pledgee, mortgagee or transferee, and a true and complete copy of the
proposed sublease, assignment, pledge, mortgage or other conveyance and all
related documentation, executed by both parties, shall be delivered to Landlord
with said notice. If Tenant's notice shall cover all of the space hereby
demised, and Landlord shall elect to give the aforesaid recapture notice with
respect thereto, then the Term shall expire and end on the date stated in
Tenant's notice as fully and completely as if the date had been herein
definitely fixed for the expiration of the Term. If, however, this Lease is
terminated pursuant to the foregoing with respect to less than the entire
Premises, the Monthly Base Rent and Adjustments then in effect shall be adjusted
on the basis of the number of rentable square feet retained by Tenant in
proportion to the original Rentable Area of Premises, and this Lease as so
amended shall continue thereafter in full force and effect. In such event,
Tenant shall pay the reasonable cost of erecting demising walls and public
corridors and making other required modifications to physically separate the
portion of the Premises remaining subject to this Lease from the rest of the
Premises. If Landlord, upon receiving Tenant's notice that it intends to sublet
any such space, shall not exercise its right to recapture the space described in
Tenant's notice, Landlord will not unreasonably withhold its consent to Tenant's
subletting the space covered by its notice. Without limiting Landlord's right to
reasonably withhold such consent, the withholding of such consent in connection
with an assignment or sublease will be deemed reasonable if:

              (1) In the reasonable judgment of Landlord, the subtenant or
assignee (A) is of a character or engaged in a business or proposes to use the
Premises in a manner which is not in keeping with the standards of Landlord for
the Building or (B) has an unfavorable credit standing;

              (2) Either the area of the Premises to be sublet or the remaining
area of the Premises is not regular in shape with appropriate means of ingress
or egress suitable for normal renting purposes;

              (3) Tenant is in default under this Lease.

As a condition to Landlord's execution of a document memorializing Landlord's
consent to any Transfer, Tenant shall pay Landlord's reasonable attorneys' fees
incurred in connection with the handling of any tenant request for consent under
this Section 20.

         20.02 If Tenant individually, or as debtor or debtor in possession or
if a trustee in bankruptcy acting on behalf of Tenant pursuant to the Bankruptcy
Code, 11 U.S.C. 101 et seq., shall sublet or assign the Premises or any part
thereof or assign any interest in this Lease at a rental rate (or additional
consideration) in excess of the then current Monthly Base Rent and Adjustments
per rentable square foot, fifty percent (50%) of said excess Rent (or additional
consideration) net of any expenses Tenant has reasonably incurred in subleasing
or assigning the space, shall be and become the property of Landlord and shall
be paid to Landlord as it is received by Tenant. If Tenant shall sublet the
Premises or any part thereof, Tenant shall be responsible for all actions and
neglect of the subtenant and its officers, partners, employees, agents, guests
and invitees as if such subtenant and such persons were employees of Tenant.

                                       16
<PAGE>
Nothing in this Section 20.02 shall be construed to relieve Tenant from the
obligation to obtain Landlord's prior written consent to any proposed sublease.

         20.03 The consent by Landlord to any Transfer shall not be construed as
a waiver or release of Tenant from liability for the performance of all
covenants and obligations to be performed by Tenant under this Lease, and Tenant
shall remain liable therefor, nor shall the collection or acceptance of Rent
from any assignee, subtenant or occupant constitute a waiver or release of
Tenant from any of its obligations or liabilities under this Lease. Any consent
given pursuant to this Section 20 shall not be construed as relieving Tenant
from the obligation of obtaining Landlord's prior written consent to any
subsequent assignment or subletting.

         20.04 If Tenant is a partnership, a withdrawal or change, whether
voluntary, involuntary or by operation of law or in one or more transactions, of
partners owning a controlling interest in Tenant shall be deemed a voluntary
assignment of this Lease and subject to the provisions of this Section 20. If
Tenant is a corporation, any dissolution, merger, consolidation or other
reorganization of Tenant, or the sale, transfer or redemption of a controlling
interest of the capital stock of Tenant in one or more transactions, shall be
deemed a voluntary assignment of this Lease and subject to the provisions of
this Section 20. However, the preceding sentence shall not apply to corporations
the stock of which is traded through a national or regional exchange or
over-the-counter. Neither this Lease nor any interest herein nor any estate
created thereby shall pass by operation of law or otherwise to any trustee,
custodian or receiver in bankruptcy of Tenant or any assignee for the assignment
of the benefit of creditors of Tenant. The foregoing notwithstanding, Tenant
shall have the right, upon 30 days prior written notice to Landlord, to (i)
assign or sublet all or part of the Premises to any related corporation or other
entity which controls Tenant, is controlled by Tenant or is under common control
with Tenant provided that such assignment or sublease would not violate any
exclusive or restriction to which Landlord is bound under the terms of any other
lease of space in the Project, or (ii) assign this Lease to a successor
corporation or other entity into which or with which Tenant is merged or
consolidated or which acquires all or substantially all of the ownership
interests in Tenant or Tenant's assets and property, provided that such
successor corporation or other entity assumes all of the obligations and
liabilities of Tenant, including this Lease, and shall have assets,
capitalization and net worth at least equal to the assets, capitalization and
net worth of Tenant as of the date of this Lease as determined by generally
accepted accounting principles. For the purpose of this Section 20.04, "control"
shall mean ownership of more than 50% of all the voting stock or legal and
equitable interest in such corporation or entity. In no event shall any such
assignment or sublease release Tenant from liability under this Lease.

                                      21.
                     DEFAULT: LANDLORD'S RIGHTS AND REMEDIES

         21.01 The occurrence of any one or more of the following matters
constitutes a default ("Default") by Tenant under this Lease:

              (a) Failure by Tenant to pay, within five (5) business days after
written notice from Landlord, any rent or any other amounts due and payable by
Tenant under this Lease;

              (b) Failure by Tenant to observe or perform any of the covenants
in this Lease in respect to assignment and subletting;

              (c) Failure by Tenant to cure forthwith, after notice thereof from
Landlord or another tenant acquiring knowledge thereof, any hazardous condition
that Tenant has created in violation of law or of this Lease;

              (d) Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease, if such failure shall continue
for thirty (30) days after written notice thereof to Tenant by Landlord;
provided, however, if the nature of the default is such that it cannot be cured
with the exercise of all reasonable efforts within the 30-day period, the
failure to cure within such 30-day period shall not be a Default provided that
Tenant undertakes the curative action within the 30-day period and thereafter
diligently and continuously proceeds with reasonable diligence and in good faith
to effect the remedy as soon as practicable using all reasonable efforts;
provided, however, that in no event shall Tenant's total cure period, in the
aggregate, exceed 60 days;

                                       17
<PAGE>
              (e) The levy upon execution or the attachment by legal process of
the leasehold interest of Tenant, or the filing or creation of a lien in respect
of such leasehold interest;

              (f) Tenant or any guarantor of this Lease becomes insolvent or
bankrupt or admits in writing its inability to pay its debts as they mature,
makes an assignment for the benefit of creditors, or applies for or consents to
the appointment of a trustee or receiver for itself or for all or a part of its
property;

              (g) Proceedings for the appointment of a trustee, custodian or
receiver of Tenant or any guarantor of this Lease or for all or a part of
Tenant's or such guarantor's property are filed against Tenant or such guarantor
and are not dismissed within sixty (60) days;

              (h) Proceedings in bankruptcy, or other proceedings for relief
under any law for the relief of debtors, are instituted by or against tenant or
any guarantor of this Lease, and, if instituted against Tenant or such
guarantor, are allowed against either or are consented to by either or are not
dismissed within sixty (60) days thereof;

              (i) Tenant shall repeatedly default in the timely payment of Rent
or any other charges required to be paid, or shall repeatedly default in
keeping, observing or performing any other covenant, agreement, condition or
provision of this Lease, whether or not Tenant shall timely cure any such
payment or other default. For the purposes of this subsection, the occurrence of
similar defaults three times during any twelve month period shall constitute a
repeated default.

Any notice periods provided for under this Section 21.01 shall run concurrently
with any statutory notice periods, and any notice given hereunder may be given
simultaneously with or incorporated into any such statutory notice.

         21.02 If a Default occurs, Landlord shall have the following rights and
remedies, which shall be distinct, separate and cumulative, and which may be
exercised by Landlord concurrently or consecutively in any combination and with
or without notice or demand, and which shall not operate to exclude or deprive
Landlord of any other right or remedy which Landlord may have in law or equity:

              (a) Landlord may terminate this Lease by giving to Tenant notice
of Landlord's intention to do so, in which event the Term shall end, and all
right, title and interest of Tenant hereunder shall expire, on the date stated
in such notice;

              (b) Landlord may terminate the right of Tenant to possession of
the Premises without terminating this Lease by giving notice to Tenant that
Tenant's right of possession shall end on the date stated in such notice,
whereupon the right of Tenant to possession of the Premises or any part thereof
shall cease on the date stated in such notice but Tenant's obligations under
this Lease shall continue in full force and effect; and

              (c) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal or
equitable remedy, including injunctive relief and recovery of all moneys due or
to become due from Tenant under any of the provisions of this Lease.

         21.03 If Landlord exercises either of the remedies provided for in
subparagraphs (a) and (b) of Section 21.02, Landlord may, without additional
notice and without court proceedings, re-enter and repossess the Premises and
remove all persons and property therefrom and Tenant hereby agrees to surrender
possession of the Premises and waives any claim arising by reason thereof or by
reason of issuance of any distress warrant or writ of sequestration and agrees
to hold Landlord harmless from any such claim. Notwithstanding any rule or
provision of law to the contrary, in the event Landlord shall, for the purpose
of re-entering or regaining possession of the Premises, or for the purpose of
excluding Tenant therefrom, as authorized by law and/or the terms of this Lease,
change the lock(s) to the Premises, Landlord shall not be obligated to provide
Tenant with the key(s) to the Premises unless and until Tenant shall wholly and
completely remedy any event of default occurring on the part of Tenant
hereunder. Further, the

                                       18
<PAGE>
provisions of this Lease pertaining to Tenant's waiver of notice and demand in
the event of the exercise of any right or remedy by Landlord hereunder shall
supersede the provisions of the Texas Property Code, as then amended, pertaining
to the affixation of notice on the door of the Premises advising of any lock out
and/or disclosing the time at which, and/or perform from whom, the key(s) to the
Premises may be obtained, and Tenant hereby waives the requirement of any such
notice. If Landlord elects to terminate this Lease, it may treat the Default as
an entire breach of this Lease and Tenant shall immediately become liable to
Landlord for damages equal to the total of (i) the cost of recovering, reletting
(including without limitation the cost of lease commissions attributable to the
unexpired portion of the Term of this Lease), and remodeling the Premises, (ii)
all unpaid Rent and other amounts earned or due through such termination, (iii)
the unamortized cost to Landlord, computed and determined in accordance with
generally accepted accounting principles, of any tenant improvements provided by
Landlord at its expense, (iv) the value of any other concessions or inducements
granted to Tenant under or in connection with this Lease, plus (v) the total
Rent and other amounts to be paid by Tenant hereunder for the remainder of the
full Term. If Landlord elects to terminate Tenant's right to possession of the
Premises without terminating this Lease, Landlord shall use reasonable efforts
to rent the Premises (or portions thereof) for the account of Tenant to any
person or persons for such rent and for such terms and conditions as Landlord
reasonably deems appropriate and Tenant shall be liable to Landlord for the
amount, if any, by which the Rent for the unexpired balance of the Term exceeds
the net amount, if any, received by Landlord less the costs of repossession,
reletting, remodeling, and other expenses incurred by Landlord in reletting the
Premises. Such sum or sums shall be paid by Tenant in monthly installments on
the first day of each month of the Term. In no case shall Landlord be liable for
failure to relet the Premises or to collect the rent due under such reletting,
and in no event shall Tenant be entitled to any excess rents received by
Landlord.

         21.04 All property removed from the Premises by Landlord pursuant to
any provisions of this Lease or of law shall be handled, removed or stored by
Landlord at the cost, expense and risk of Tenant, and Landlord shall in no event
be responsible for the value, preservation or safekeeping thereof. Tenant shall
pay Landlord upon demand for all expenses incurred by Landlord in such removal
and storage.

         21.05 Tenant shall pay all costs, charges and expenses, including court
costs and reasonable attorneys' fees incurred by Landlord in enforcing Tenant's
obligations under this Lease, in the exercise by Landlord of any of its remedies
in the event of a default, in any litigation, negotiations or transactions in
which Tenant causes Landlord, without Landlord's fault, to become involved or
concerned, or in consideration of any request for approval of or consent to any
action by Tenant which is prohibited by this Lease or which may be done only
with Landlord's approval or consent, whether or not such approval or consent is
given.

         21.06 All of Landlord's rights and remedies under this Lease shall be
cumulative with and in addition to any and all rights and remedies which
Landlord may have at law or equity. Any specific remedy provided for in any
provision of this Lease shall not preclude the concurrent or consecutive
exercise of a remedy provided for in any other provision hereof.

                                      22.
                         INDEMNIFICATION; COUNTERCLAIMS

         22.01 If any person not a party to this Lease shall institute an action
against Tenant or arising out of any act or omission of Tenant, in which
Landlord, any Mortgagee or any of their respective beneficiaries, partners,
officers, employees, agents or servants (collectively, "Indemnified Persons")
shall be made a party, Tenant shall indemnify and hold harmless all such
Indemnified Persons from all liabilities by reason thereof, including reasonable
attorneys' fees and other costs incurred by the Indemnified Persons in such
action.

         22.02 Tenant hereby waives any right to plead any counterclaim, offset
or affirmative defense in any action or proceedings brought by Landlord against
Tenant pursuant to any forcible detainer statute or otherwise, for the recovery
of possession based upon the non-payment of Rent or any other Default. This
shall not, however, be construed as a waiver of Tenant's right to assert any
claim in a separate action brought by Tenant against Landlord. Tenant agrees to
pay all Rent without offset or reduction of any kind whatsoever. Tenant waives
trial by jury in any action brought by Landlord under or in respect of this
Lease.

                                       19
<PAGE>
                                      23.
                                  HOLDING OVER

         If Tenant retains possession of the Premises or any part thereof after
the termination of the Term or any extension thereof, by lapse of time or
otherwise, Tenant, unless Landlord otherwise elects, shall become a tenant at
sufferance and shall pay Landlord monthly rent, at one hundred fifty percent
(150%) of the rate of Monthly Base Rent and Adjustments in effect for the month
immediately preceding said holding over, computed on a per month basis, for each
month or part thereof (without reduction for any such partial month) that Tenant
thus remains in possession. Tenant agrees to indemnify and hold Landlord
harmless from and against any and all losses, costs, damages, expenses, claims
and liabilities incurred or sustained by Landlord as a result of retention of
possession of the Premises by Tenant. The provisions of this Section 23 do not
exclude Landlord's right of reentry or any other right hereunder.

                                      24.
                                  SUBORDINATION

         24.01 Landlord may have heretofore encumbered or may hereafter encumber
with a mortgage or trust deed the Building, or any interest therein, and may
have heretofore sold and leased back or may hereafter sell and lease back the
land on which the Building is located, and may have heretofore encumbered or may
hereafter encumber the leasehold estate under such lease with a mortgage or
trust deed. (Any such mortgage or trust deed is herein called a "Mortgage" and
the holder of any such mortgage or the beneficiary under any such trust deed is
herein called a "Mortgagee". Any such lease of the underlying land is herein
called a "Ground Lease", and the lessor under any such lease is herein called a
"Ground Lessor". Any Mortgage which is a first lien against the Building, the
land on which the Building is located, the leasehold estate of the lessor under
a Ground Lease (if the property is not then subject to an unsubordinated
mortgage) is herein called a "First Mortgage" and the holder or beneficiary of
or Ground Lessor under any First Mortgage is herein called a "First Mortgagee").
This Lease is, or shall be, subject and subordinate to any First Mortgage now or
hereafter encumbering the Building. This provision shall be self-operative, and
no further instrument of subordination shall be required to effectuate such
subordination.

         24.02 If requested by a First Mortgagee, Tenant will either (i)
subordinate its interest in this Lease to said First Mortgage, and to any and
all advances made thereunder and to the interest thereon, and to all renewals,
replacements, supplements, amendments, modifications and extensions thereof, or
(ii) make certain of Tenant's rights and interest in this Lease superior
thereto, and Tenant will promptly execute and deliver such agreement or
agreements as may be reasonably required by such Mortgagee or Ground Lessor;
provided, however, Tenant covenants it will not subordinate this Lease to any
Mortgage or Ground Lease other than a First Mortgage (including a Ground Lease
defined as a First Mortgage hereunder) without the prior written consent of the
First Mortgagee.

         24.03 It is further agreed that (a) if any Mortgage shall be
foreclosed, or if any Ground Lease be terminated, (i) the liability of the
Mortgagee or purchaser at such foreclosure sale or the liability of a subsequent
owner designated as Landlord under this Lease shall exist only so long as such
Mortgagee, purchaser or owner is the owner of the Building or the land on which
the Building is located, and such liability shall not continue or survive after
further transfer of ownership; and (ii) upon request of the Mortgagee, if the
Mortgage shall be foreclosed, Tenant will attorn, as Tenant under this Lease, to
the purchaser at any foreclosure sale under any Mortgage or upon request of the
Ground Lessor, if any Ground Lease shall be terminated, Tenant will attorn as
Tenant under this Lease to the Ground Lessor, and Tenant will execute such
instruments as may be necessary or appropriate to evidence such attornment; (b)
this Lease may not be modified or amended so as to reduce the Rent or shorten
the Term provided hereunder, or so as to adversely affect in any other respect
to any material extent the rights of the Landlord or its successor, nor shall
this lease be cancelled or surrendered, without the prior written consent, in
each instance, of the First Mortgagee; and (c) Tenant waives the provisions of
any statute or rule of law, now or hereafter in effect, that may give or purport
to give Tenant any right to terminate or otherwise adversely affect Landlord's
interest in this Lease or reduce or limit the obligations of Tenant hereunder in
the event of the prosecution or completion of any such foreclosure proceeding.
No Mortgagee or any purchaser at a foreclosure sale shall be liable for any act
or omission of the Landlord which occurred prior to such sale or conveyance, nor
shall

                                       20
<PAGE>
Tenant be entitled to any offset against or deduction from Rent due after such
date by reason of any act or omission of the Landlord prior to such date.
Further, Tenant agrees that no Mortgagee shall be bound by the prepayment of
Rent made in excess of ninety (90) days before the date on which such payment is
due. Notwithstanding anything the contrary contained herein, Tenant's
subordination of its interest in this Lease to a First Mortgage is conditioned
upon Landlord procuring from any First Mortgage a written non-disturbance
agreement in commercially reasonable form in which such Mortgagee agrees not to
disturb Tenant's possession of the Premises so long as Tenant is not in default
or breach of this Lease.

         24.04 Should any prospective First Mortgagee require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, in the
reasonable judgment of Tenant, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are required
therefor and deliver the same to Landlord within ten (10) days following the
request therefor. Should any prospective Mortgagee or Ground Lessor require
execution of a short form of lease for recording (containing, among other
customary provisions, the names of the parties, a description of the Premises
and the Term of this Lease), Tenant agrees to execute such short form of lease
and deliver the same to Landlord within ten (10) days following the request
therefor.

         24.05 If Tenant fails within ten (10) days after written demand
therefor to execute and deliver any instruments as may be necessary or proper to
effectuate any of the covenants of Tenant set forth above in this Section,
Tenant hereby makes, constitutes and irrevocably appoints Landlord as its
attorney-in-fact (such power of attorney being coupled with an interest) to
execute and deliver any such instruments for and in the name of Tenant.

                                      25.
                              ESTOPPEL CERTIFICATE

         Concurrently with the execution and delivery of this Lease and
thereafter from time to time, upon not less than twenty (20) days' prior written
request by Landlord, Tenant will, and Tenant will cause any subtenant, licensee,
concessionaire or other occupant of the Premises to, promptly complete, execute
and deliver to Landlord or any party or parties designated by Landlord a tenant
estoppel certificate substantially in the form attached hereto as Exhibit D or
such other substantially similar form as may be required by Landlord's lender or
a future purchaser of the Building. Any purchaser or Mortgagee of any interest
in the Building shall be entitled to rely on said statement. Failure to give
such a statement within thirty (30) days after said written request shall be
deemed a Default by Tenant under this Lease.

                                      26.
                              RELOCATION OF TENANT

         Intentionally deleted.

                                      27.
                               NOTICES AND DEMANDS

         27.01 All notices, demands, approvals, consents, requests for approval
or consent or other writings in this Lease provided to be given, made or sent by
either party hereto to the other ("Notice") shall be in writing and shall be
deemed to have been fully given, made or sent when made by personal service or
two (2) business days after deposit in the United States mail, certified or
registered and postage prepaid and properly addressed as follows:

         To Landlord: Landlord's Management Agent at the address set forth in
Section 1.13 with a copy to Lincoln Property Company, 101 Constitution Avenue,
NW, Washington, DC 20001, Attention: Ms. Bari Nichols; and a copy to Piper
Rudnick, 203 North LaSalle Street, Suite 1800, Chicago, Illinois 60601-1293,
Attention: Shepard Gould, Esq.

         To Tenant:        (i)      If any Notice is to be given Tenant prior to
                                    occupancy, to the address set forth in
                                    Section 1.02 with a copy to Porter & Hedges,
                                    L.L.P., 700 Louisiana, 35th Floor, Houston,
                                    Texas, Attn: Jack G. Wise, Esq.

                                       21
<PAGE>
                           (ii)     If any Notice is to be given Tenant after
                                    occupancy, to the Premises; provided,
                                    however, if the Premises shall have been
                                    vacated, Notice may be posted on the door to
                                    the Premises with a copy to Porter & Hedges,
                                    L.L.P., 700 Louisiana, 35th Floor, Houston,
                                    Texas, Attn: Jack G. Wise, Esq.

The address to which any Notice should be given, made or sent to either party
may be changed by written notice given by such party as above provided.

         27.02 Tenant agrees to give any First Mortgagee, by registered or
certified mail, a copy of any notice or claim of default served upon the
Landlord by Tenant, provided that prior to such notice Tenant has been notified
in writing (by way of service on Tenant of a copy of an assignment of Landlord's
interest in leases, or otherwise) of the address of such First Mortgagee. Tenant
further agrees that if Landlord shall have failed to cure such default within
twenty (20) days after such notice to Landlord (or if such default cannot be
cured or corrected within that time, then such additional time as may be
necessary if Landlord has commenced within such twenty (20) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default), then the First Mortgagee shall have an additional thirty (30) days
within which to cure or correct such default (or if such default cannot be cured
or corrected within that time, then such additional time as may be necessary if
such First Mortgagee has commenced within such thirty (30) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default, including the time necessary to obtain possession if possession is
necessary to cure or correct such default) before Tenant may exercise any right
or remedy which it may have on account of any such default by Landlord.

         27.03 Any notice, demand, request or consent to be made by or required
of Landlord, may be made and given by Landlord's Management Agent with the same
force and effect as if made and given by Landlord.

                                      28.
                              CONSTRUCTION OF LEASE

         28.01 The language in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning and neither strictly for nor
against either Landlord or Tenant. Section and Subsection headings in this Lease
are for convenience only and are not to be construed as part of this Lease or in
any way defining, limiting, amplifying, construing, or describing the provisions
hereof. Time is of the essence of this Lease and every term, covenant and
condition hereof, the words "Landlord" and "Tenant", as herein used, shall
include the plural as well as the singular. The neuter gender includes the
masculine and feminine. In the event there is more than one person or entity
which executes this Lease as Tenant, the obligations to be performed and
liability of all such persons and entities shall be joint and several. All of
the covenants of Tenant hereunder shall be deemed and construed to be
"conditions" as well as "covenants" as though the words specifically expressing
or importing conditions were used in each separate instance. Landlord and Tenant
agree that in the event any term, covenant or condition herein contained (other
than with respect to the payment of Rent) is held to be invalid or void by any
court of competent jurisdiction, the invalidity of any such term, covenant or
condition shall in no way affect any other term, covenant or condition herein
contained.

         28.02 This Lease contains and embodies the entire agreement of the
parties hereto, and no representation, inducements or agreements, oral or
otherwise, not contained in this Lease shall be of any force or effect. This
Lease may not be modified in whole or in part in any manner other than by an
instrument in writing duly signed by both parties hereto.

                                      29.
                               REAL ESTATE BROKERS

         Tenant represents and warrants unto Landlord that Tenant has directly
dealt with and only with Landlord's Management Agent and the Leasing Broker(s),
if any, identified in Section 1.12 of this Lease as broker in connection with
this Lease, and agrees to indemnify and hold harmless Landlord from and against
any and all claims or demands, damages, liabilities and expenses of any type or
nature whatsoever arising by reason of the incorrectness or breach of the
aforesaid representation or warranty. Landlord shall pay, and agrees to
indemnify and hold

                                       22
<PAGE>
harmless Tenant from and against any claim by, Landlord's Management Agent and
the Leasing Broker(s) for its commission arising out of the execution and
delivery of this Lease.

                                      30.
                            ENVIRONMENTAL COMPLIANCE

         During the Term of this Lease, Tenant shall fully comply with any laws
or rules and regulations promulgated thereunder relating to the Premises and
Tenant's use thereof, including, but not limited to, Occupational Safety and
Health Act, 29 U.S.C. Sections 651, et seq.; the Toxic Substances Control Act,
15 U.S.C. Sections 2601, et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq.; the Clean Air Act, 42 U.S.C. Sections 7901, et
seq.; the Clean Water Act, 33 U.S.C. Sections 1251, et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the 1986
Superfund Amendments and Reauthorization Act, 42 U.S.C. Sections 9601, et seq.;
the National Environmental Policy Act, 42 U.S.C. Sections 4231, et seq.; the
Refuse Act, 33 U.S.C. Sections 407, et seq.; the Safe Drinking Water Act, 42
U.S.C. Sections 300(f), et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 11001, et seq.; or any other federal,
state or local law, ordinance or regulation promulgated under any of those
statutes and any amendments thereto, as well as applicable Department of
Transportation regulations. Tenant shall notify Landlord immediately if Tenant
receives any notice of non-compliance with any laws or rules and regulations
promulgated thereunder, including, but not limited to, those enumerated above.

         Tenant shall not cause or permit its business in the Premises to be
used to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process hazardous substances, or other dangerous or toxic
substances, or solid waste, except in compliance with all applicable federal,
state and local laws or regulations. Tenant shall notify Landlord immediately if
Tenant learns of any non-compliance or of any facts (such as the existence of
any release or the threat of release of hazardous substances at, on, from or
beneath the surface of the Premises) which could give rise to a claim of
non-compliance with such laws or rules and regulations promulgated thereunder.

         During the Term of this Lease, Tenant shall obtain, shall fully comply
with, and shall maintain in full force and effect, all governmental licenses,
permits, registrations and approvals (federal, state, local, county and foreign)
necessary to conduct its business in the Premises including, but not limited to,
those required by the statutes enumerated in the first paragraph of this Section
30. During the Term of this Lease, Tenant shall keep a copy of all such permits
at the Premises and shall make the same available at all times for Landlord's
inspection. Tenant warrants and represents that if during the Term of this
Lease, any violations are recorded or any notices are received with respect to
any of such licenses, permits, registrations and approvals or if a proceeding is
commenced or threaten to revoke or limit any of them, Tenant shall notify
Landlord immediately.

         In addition to all other indemnities under this Lease, Tenant hereby
assumes for itself and for its successors and assigns any and all environmental,
health and safety liabilities or obligations relating to the Tenant Work in the
Premises and or Tenant's use and occupancy of Premises, including, but not
limited to, any liabilities or obligations in breach of the obligations imposed
under this Section on Tenant and its successors and assigns. Tenant, for itself
and its successors and assigns, shall indemnify, defend and hold Landlord, its
successors, assigns, owners and affiliates harmless from and against any claims,
demands, liabilities and damages (including, but not limited to, attorneys' fees
and court costs) arising out of or in connection with any environmental
contamination or pollution of the Premises, or the existence on, or removal
from, the Premises of any hazardous substance provided that any such
contaminant, pollutant or hazardous substance was introduced into the Premises
by Tenant or its agents, employees, invitees, contractors or any other party
acting on behalf of Tenant or for whom Tenant is responsible. The obligations of
this Section shall survive the expiration or termination of this Lease.

         Landlord represents that to the best of its knowledge, no part of the
Building or Premises (including the walls, ceilings, structural steel, flooring
or pipes) is wrapped, insulated or fireproofed with any asbestos,
asbestos-containing material or other hazardous material and that there has
never been environmental pollution to the Land. If any hazardous substances
prohibited by law are found on the Premises and the presence of the materials
has not been

                                       23
<PAGE>
caused by Tenant or by Tenant's use of the Premises, Landlord shall, at its sole
cost, remove and clean up the material as required by law which obligations
shall survive the termination of this Lease.

                                      31.
                                  MISCELLANEOUS

         31.01 BENEFIT. Subject to the provisions of Sections 19 and 20 hereof,
all terms, covenants and conditions of this Lease shall be binding upon and
inure to the benefit of and shall apply to the respective heirs, executors,
administrators, successors, assigns and legal representatives of Landlord and
Tenant.

         31.02 EXECUTION AND DELIVERY. The execution of this Lease by Tenant and
delivery of the same to Landlord or Landlord's Management Agent do not
constitute a reservation of or option to lease the Premises or an agreement by
Landlord to enter into a lease, and this Lease shall become effective only if
and when Landlord executes and delivers a counterpart hereof to Tenant;
provided, however, the execution and delivery by Tenant of this Lease to
Landlord or Landlord's Management Agent shall constitute an irrevocable offer by
Tenant to lease the Premises on the terms and conditions herein contained, which
offer may not be withdrawn or revoked for twenty (20) days after such execution
and delivery. If Tenant is a corporation, it shall deliver to Landlord
concurrently with the delivery to Landlord of an executed Lease, certified
resolutions of Tenant's directors authorizing execution and delivery of this
Lease and the performance by Tenant of its obligations hereunder. If Tenant is a
partnership, it shall deliver to Landlord concurrently with the delivery to
Landlord of an executed Lease, a certified copy of its partnership agreement or
other satisfactory evidence of execution and performance authority. Tenant shall
not record this Lease but Tenant may execute a memorandum of Lease, in form
mutually approved by Landlord and Tenant, at Tenant's sole cost.

         31.03 DEFAULT UNDER OTHER LEASE. Intentionally deleted.

         31.04 APPLICABLE LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Texas.

         31.05 LATE CHARGES. At the option of Landlord, Landlord may impose a
late payment fee equal to ten percent (10%) of the amount due if any payment of
Rent is paid more than five (5) business days after its due date. In addition,
any amount due hereunder shall bear interest after default in the payment
thereof at the annual rate of two percent (2%) above the prime rate of interest
as announced by Chase Bank N.A. ("Chase") from time to time, or if the use of
the prime rate is discontinued by Chase, such other similar rate as may
thereafter be announced from time to time by Chase or any other major bank in
Houston, Texas selected by Landlord as a measure of the cost to its borrowers of
short-term commercial loans, until said past due amount shall be paid by Tenant
to Landlord or, in the absence of any such rate, 10% per year, provided that in
no event shall such interest rate exceed the maximum nonusurious rate of
interest at which Tenant may legally contract in Texas.

         31.06 NON-WAIVER OF DEFAULTS. No waiver of any provision of this Lease
shall be implied by any failure of Landlord to enforce any remedy on account of
the violation of such provision, even if such violation be continued or repeated
subsequently, and no express waiver shall affect any provision other than the
one specified in such waiver and in that event only for the time and in the
manner specifically stated. No receipt of monies by Landlord from Tenant after
the termination of this Lease will in any way alter the length of the Term or
Tenant's right of possession hereunder or, after the giving of any notice, shall
reinstate, continue or extend the Term or affect any notice given Tenant prior
to the receipt of such monies, it being agreed that after the service of notice
or the commencement of a suit or after final judgment for possession of the
Premises, Landlord may receive and collect any Rent due, and the payment of Rent
shall not waive or affect said notice, suit or judgment, nor shall any such
payment be deemed to be other than on account of the amount due, nor shall the
acceptance of Rent be deemed a waiver of any breach by Tenant of any term,
covenant or condition of this Lease. No endorsement or statement on any check or
any letter accompanying any check or payment of Rent shall be deemed an accord
and satisfaction. Landlord may accept any such check or payment without
prejudice to Landlord's right to recover the balance due of any installment or
payment of Rent or pursue any other remedies available to Landlord with respect
to any existing Defaults. None of

                                       24
<PAGE>
the terms, covenants or conditions of this Lease can be waived by either
Landlord or Tenant except by appropriate written instrument.

         31.07 FORCE MAJEURE. Neither party shall be deemed in default with
respect to the failure to perform any of the terms, covenants and conditions of
this Lease on such party's part to be performed, if such failure is due in whole
or in part to any strike, lockout, labor dispute (whether legal or illegal),
civil disorder, inability to procure materials, failure of power, restrictive
governmental laws and regulations, riots, insurrections, war, fuel shortages,
accidents, casualties, Acts of God, acts caused directly or indirectly by the
other party (or the other party's agents, employees, guests or invitees), acts
of other tenants or occupants of the Building or any other cause beyond the
reasonable control of such party. In such event, the time for performance shall
be extended by an amount of time equal to the period of the delay so caused. No
interruption of service resulting from any causes described in the first
sentence of this Section 31.07 shall relieve Tenant of any of its obligations
under this Lease, except as expressly provided in Section 8.04, or render liable
for damages. Unless caused by Landlord's negligence or willful misconduct,
Landlord shall not be liable to Tenant for any expense, injury, loss or damage
resulting from work done in or upon, or the use of, any adjacent or nearby
building, land, street, alley or underground vault or passageway. In no event
shall this Section 31.07 apply to excuse a party from any financial obligation
or any obligation to execute documents.

         31.08 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES. If Tenant fails
timely to perform any of its duties under this Lease, Landlord shall have the
right (but not the obligation), after the expiration of any grace period
provided by this Lease, to perform such duty on behalf and at the expense of
Tenant without further notice to Tenant, and all sums expended or expenses
incurred by Landlord in performing such duty shall be deemed to be Rent under
this Lease and shall be due and payable to Landlord upon demand by Landlord.

         31.09 PARKING. Landlord agrees to provide, and Tenant agrees to rent,
through the Term of this Lease, 3.5 unreserved spaces per 1,000 square feet of
Rentable Area of Premises (or 142 spaces based on 40,730 rentable square feet),
for the parking of automobiles in the parking garage located at the Building. Of
such 142 spaces, Tenant shall have the right, by at least thirty (30) days prior
written notice to Landlord, to designate up to forty (40) of such 142 spaces as
reserved spaces. As rental for parking spaces provided to Tenant hereunder,
Tenant shall pay to Landlord or the operator of the garage, as may be designated
from time to time by Landlord, monthly in advance, rental on each such parking
space at the rate of $50 per month per reserved space and $-0- per month per
unreserved space, payable at the same times, in the same manner, and in addition
to, the Base Rent provided in this Lease. Tenant shall comply with all traffic,
security, safety and other rules and regulations promulgated from time to time
by Landlord and shall use its unreserved spaces in common with all other tenants
of the Building. Tenant shall indemnify and hold harmless Landlord from and
against all claims, losses, liabilities, damages, costs and expenses (including,
but not limited to, attorneys' fees and court costs) arising or alleged to arise
out of Tenant's use of any such parking spaces. In the event any of the above
parking spaces are or become unavailable at any time or from time to time
throughout the Term, whether due to casualty or any other cause, this Lease
shall continue in full force and effect, and Tenant's sole remedy shall be an
abatement of rentals for those parking spaces rendered unavailable, which
abatement shall continue until such time as said parking spaces, or substitutes
therefor, again become available; it being expressly agreed and understood that
Landlord shall have no duty to provide substitute parking spaces for those
spaces rendered unavailable.

         31.10 NOTICE OF INDEMNIFICATION. THIS LEASE CONTAINS INDEMNIFICATION
PROVISIONS WHICH EACH SHALL EXPRESSLY SURVIVE THE EXPIRATION OR TERMINATION OF
THIS LEASE.

         31.11 WAIVER. TENANT HEREBY WAIVES THE PROVISIONS OF Section
93.002(g)(1) OF THE TEXAS PROPERTY CODE.

         31.12 EXHIBITS. The Exhibits attached hereto are hereby incorporated in
this Lease by reference and all terms and conditions of this Lease shall apply
to the provisions set forth in such Exhibits.

         31.13 LIEN FOR RENT. Intentionally deleted.

                                       25
<PAGE>
         31.14 FINANCIAL STATEMENTS. No financial statements shall be required
from Tenant so long as it is a public company.

         31.15 ABATEMENT PERSONAL. If and to the extent that this Lease provides
for the abatement of any Rent or other charges due from Tenant under this Lease,
including, without limitation, parking charges or storage space charges, any
such abatement is personal to the original named Tenant under this Lease and
intended for its benefit only, and is not transferable to any assignee of
Tenant's rights under this Lease. If Tenant's rights are assigned, then, as of
the effective date of such assignment, any such abatements shall terminate and
be rendered of no force or effect and the Rent or other charges in question
shall be payable at the rate otherwise applicable for the period in question.

                                      32.
                                    SIGNAGE

         32.01 Tenant is hereby granted the right to install and maintain the
signage described in Section 32.02 below ("Tenant Signage"). The design and size
of, and materials used (including lighting) for, all Tenant Signage shall be
subject to Landlord's prior written approval. All Tenant Signage shall comply
with all applicable laws, codes, ordinances and regulations. Tenant shall pay
the cost to construct, install and maintain all Tenant Signage (including the
cost of lighting therefor). Landlord shall use reasonable efforts to obtain from
Universal Ensco, another tenant of the Building, a waiver of the provisions of
its lease which would then permit Tenant to install signage on the facade of the
Building.

         32.02 Tenant will have the right to have its name displayed, on a
non-exclusive basis, on the existing Building monument sign on Loop Central
Drive. The signage rights granted to Tenant in this Section 32 are conditioned
upon there being no Default under this Lease. If a Default exists, Landlord may
give Tenant written notice that Landlord requires Tenant to remove all Tenant
Signage.

         32.03 Landlord shall provide, at its sole cost, Building standard
tenant signage at the main entry doors to the Premises on the 7th and 8th floors
of the Building, as well as a directory board listing in the lobby of the
Building.

                                      33.
                            LIMITATION OF LIABILITY

         In consideration of the benefits accruing hereunder, Tenant and all
successors and assigns of Tenant covenants and agree that, anything contained
herein to the contrary notwithstanding, the obligations under this Lease do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord, or the partners, directors, officers or
shareholders of the partners of Landlord. Any claim based on or in respect to
any liability of Landlord under this Lease shall be enforced only against the
Property and not against any other assets, properties or funds of: (1) Landlord
or any director, officer, general partner, limited partner, employee or agent of
Landlord or its general partners (or any legal representative, heir, estate,
successor or assign thereof); (2) any predecessor or successor partnership or
corporation (or other entity) of Landlord or its general partners, either
directly or through Landlord or its predecessor or successor partnership or
corporation (or other entity) of Landlord or its general partners; and (3) any
other person or entity. Tenant further agrees that each of the foregoing
provisions shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by statute or at common law. Tenant's
covenants and agreements contained in this Section 32 are enforceable both by
Landlord and also by any partner of Landlord.

                                       26
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above written.

                                 LANDLORD:

                                 W9/LWS II REAL ESTATE LIMITED PARTNERSHIP, a
                                 Delaware limited partnership

                                 BY:  W9/LWS II GEN-PAR, INC.,  a Delaware
                                      corporation, its General Partner

                                      By: /s/ Bari Nichols
                                         ---------------------------------------
                                      Name: Bari Nichols
                                           -------------------------------------
                                      Title: Sr. Vice President
                                            ------------------------------------

                                 Date: Nov. 23, 2004
                                      ------------------------------------------

                                 TENANT:

                                 ENCYSIVE PHARMACEUTICALS, INC.,
                                 a Delaware corporation

                                 By: /s/ Bruce D. Given, M.D.
                                    --------------------------------------------
                                 Name: Bruce D. Given, M.D.
                                      ------------------------------------------
                                 Title: President & CEO
                                       -----------------------------------------

                                 Date: Nov. 19, 2004
                                      ------------------------------------------

                                       27exv10w42

 

Exhibit 10.42

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

MANUFACTURING AND SUPPLY AGREEMENT

By and Between

GUILFORD PHARMACEUTICALS INC.

and

BAXTER HEALTHCARE CORPORATION

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

TABLE OF CONTENTS

	 	 	 	 	 
	1. DEFINITIONS
	 	 	1	 
	2. ENGAGEMENT
	 	 	5	 
	2.1 Engagement of Baxter
	 	 	5	 
	2.2 Permits, Licenses and Authorizations
	 	 	5	 
	3. SUPPLY, FORECASTS AND ORDERS
	 	 	5	 
	3.1 Forecasts and Orders
	 	 	5	 
	3.2 Satisfaction of Firm Orders
	 	 	6	 
	3.3 Terms
	 	 	6	 
	3.4 Short Supply of Materials and/or Resources
	 	 	6	 
	3.5 Exclusive Manufacture and Supply
	 	 	6	 
	3.6 Cancellation of Firm Orders and Rescheduling
	 	 	7	 
	4. MANUFACTURING FEES & PAYMENTS
	 	 	7	 
	4.1 Manufacturing Fees
	 	 	7	 
	4.2 Application of Prices for each Tier
	 	 	7	 
	4.3 Underlying Assumptions
	 	 	7	 
	4.4 Fee to Re-Package Product
	 	 	8	 
	4.5 User Fees
	 	 	8	 
	4.6 Amount and Timing of Manufacturing Fee Increases
	 	 	8	 
	4.7 Notification, Effective Date and Application of Manufacturing
Fee Increases
	 	 	8	 
	4.8 Payment for Product
	 	 	9	 
	4.9 Payment Penalties Charged to Guilford
	 	 	9	 
	4.10 Payment Penalties Charged to Baxter
	 	 	9	 
	5. PRODUCT DELIVERY, TITLE AND RISK OF LOSS
	 	 	9	 
	5.1 Delivery of Product
	 	 	9	 
	5.2 Shipment of Product
	 	 	9	 
	5.3 Title and Risk of Loss
	 	 	10	 
	6. BULK ACTIVE AND MATERIALS
	 	 	10	 
	6.1 Bulk Active Title, Risk of Loss and Use
	 	 	10	 
	6.2 Certificate of Analysis
	 	 	10	 
	6.3 Inventory Counts
	 	 	10	 
	6.4 Bulk Active Freight Claims
	 	 	10	 
	6.5 Materials – Container
	 	 	11	 
	6.6 Materials – Other than Container
	 	 	11	 
	7. GUILFORD WARRANTY AND LIMITATIONS
	 	 	11	 
	7.1 Guilford Warranties
	 	 	11	 
	7.2 Claims for Failure to Meet Bulk Active Specifications
	 	 	12	 
	7.3 Other Claims
	 	 	12	 
	7.4 Bulk Active not Meeting Warranties
	 	 	13	 
	8. BAXTER WARRANTY AND LIMITATIONS
	 	 	13	 
	8.1 Baxter Warranties
	 	 	13	 
	8.2 Claims for Failure to Meet Product Specifications
	 	 	13	 
	8.3 Other Claims
	 	 	14	 
	8.4 Product Not Meeting Warranties
	 	 	15	 
	9. INDEMNIFICATION
	 	 	15	 
	9.1 Baxter Indemnification
	 	 	15	 
	9.2 Guilford Indemnification
	 	 	16	 
	9.3 No Claim for Losses
	 	 	16	 
	9.4 Prompt Notice
	 	 	16	 

ii

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	 	 	 
	9.5 Refund Due to Injunction
	 	 	17	 
	9.6 Not Binding
	 	 	17	 
	9.7 Additional Remedies
	 	 	17	 
	10. MARKETING
	 	 	17	 
	10.1 Catalog Listings
	 	 	17	 
	10.2 Baxter Promotion
	 	 	17	 
	10.3 Product Sales
	 	 	18	 
	10.4 Guilford Promotional Materials
	 	 	18	 
	10.5 Labeling
	 	 	18	 
	11. INTELLECTUAL PROPERTY
	 	 	18	 
	11.1 Registration of Trademarks
	 	 	18	 
	11.2 Ownership of Trademarks
	 	 	18	 
	11.3 License to Use Trademarks
	 	 	19	 
	11.4 Trademark Marking
	 	 	19	 
	11.5 Quality Control
	 	 	19	 
	11.6 Goodwill of Trademarks
	 	 	19	 
	11.7 Protection of Trademarks
	 	 	19	 
	11.8 License to Patents and Unpatented Technology
	 	 	20	 
	12. GUILFORD LICENSEES AND DISTRIBUTORS
	 	 	20	 
	12.1 Notification
	 	 	20	 
	12.2 Baxter Disapproval Due to Confidentiality Concerns
	 	 	20	 
	12.3 Other Baxter Disapproval
	 	 	20	 
	12.4 No Unreasonable Disapproval
	 	 	21	 
	12.5 Guilford License with Licensees
	 	 	21	 
	12.6 Approval [***] Rights
	 	 	21	 
	12.7 Distributors
	 	 	21	 
	12.8 Guilford Continuing Obligations
	 	 	21	 
	13. BULK ACTIVE LOSSES
	 	 	21	 
	14. ENVIRONMENT
	 	 	21	 
	14.1 Compliance with Laws
	 	 	21	 
	14.2 Indemnification
	 	 	21	 
	15. CONFIDENTIALITY
	 	 	22	 
	15.1 Confidentiality
	 	 	22	 
	15.2 Exceptions
	 	 	22	 
	15.3 Further Exception
	 	 	23	 
	15.4 Export
	 	 	23	 
	15.5 Enforcement
	 	 	23	 
	15.6 Prior Arrangements
	 	 	24	 
	15.7 Return of Confidential Information
	 	 	24	 
	15.8 Survival
	 	 	24	 
	16. TERM AND TERMINATION
	 	 	24	 
	16.1 Condition Precedent
	 	 	24	 
	16.2 Term
	 	 	24	 
	16.3 Termination for Default or Bankruptcy
	 	 	25	 
	16.4 Termination by Either Party Due to Change in Ownership
	 	 	25	 
	16.5 Termination by Guilford if Product Is Withdrawn from the U.S.
Market
	 	 	25	 
	16.6 Termination by Guilford in the Event of Relocation of
Facility
	 	 	26	 
	16.7 Termination by Guilford in the Event of
Cross-Contamination
	 	 	26	 
	16.8 Dispositions of Inventory Upon Termination or Expiration
	 	 	26	 
	16.9 Remaining Obligations
	 	 	27	 
	16.10 Use of Trademarks
	 	 	28	 
	16.11 Alternative Suppliers
	 	 	28	 

iii

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	 	 	 
	17. WASTE/DISPOSAL
	 	 	28	 
	17.1 Baxter Warranty
	 	 	28	 
	17.2 Baxter Indemnification
	 	 	29	 
	17.3 Limitation
	 	 	29	 
	17.4 Guilford Indemnification
	 	 	29	 
	18. INSURANCE
	 	 	29	 
	18.1 Insurance Coverage
	 	 	29	 
	18.2 Evidence of Insurance
	 	 	30	 
	19. REGULATORY MATTERS
	 	 	30	 
	19.1 Maintenance of NDA
	 	 	30	 
	19.2 Communications with the FDA
	 	 	30	 
	20. QUALITY AGREEMENT
	 	 	30	 
	21. CTM SUPPLY AGREEMENT
	 	 	30	 
	22. SAFETY MATTERS, PRODUCT RETURN AND PRODUCT RECALL
	 	 	31	 
	22.1 Safety

	 	 	31	 
	22.2
 Adverse Experience Reporting
	 	 	31	 
	22.3 Product Returns
	 	 	31	 
	22.4 Product Recall 31
	 	 	31	 
	23. MISCELLANEOUS
	 	 	32	 
	23.1 Force Majeure
	 	 	32	 
	23.2 Assignment
	 	 	32	 
	23.3 Severability
	 	 	33	 
	23.4 Notices
	 	 	33	 
	23.5 Applicable Law
	 	 	34	 
	23.6 Alternative Dispute Resolution
	 	 	34	 
	23.7 Entire Agreement
	 	 	34	 
	23.8 Amendment
	 	 	35	 
	23.9 Subcontracting
	 	 	35	 
	23.10 Headings
	 	 	35	 
	23.11 Independent Contractors
	 	 	35	 
	23.12 Waiver
	 	 	35	 
	23.13 Counterparts
	 	 	35	 
	23.14 Successors and Assigns
	 	 	35	 
	23.15 Execution
	 	 	35	 
	23.16 Remedies
	 	 	35	 
	23.17 Review with Counsel
	 	 	35	 
	23.18 Benefit
	 	 	36	 
	23.19 Merck/Baxter Agreement
	 	 	36	 

	 	 	 
	Schedule A:

	 	Product and Bulk Active Specifications
	Schedule B:

	 	Approved Vendors for Excipients
	Schedule C:

	 	Manufacturing Fees
	Schedule D:

	 	Product Definitions
	Schedule E:

	 	Bulk Active Losses
	Schedule F:

	 	Invoicing Requirements
	Schedule G:

	 	Initial Firm Order and Forecast
	Schedule H:

	 	Form of Purchase Order
	Schedule I:

	 	Financing Arrangements

iv

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

MANUFACTURING AND SUPPLY AGREEMENT

This Manufacturing and Supply Agreement (the “Agreement”), is effective as of
July 1, 2004 (the “Effective Date”), between Baxter Healthcare Corporation, a
Delaware corporation, having its principal office at One Baxter Parkway,
Deerfield, Illinois 60015 U.S.A. (“Baxter”) and Guilford Pharmaceuticals Inc.,
a Delaware corporation, having its principal office at 6611 Tributary Street,
Baltimore, Maryland 21224 U.S.A. (“Guilford”).

WITNESSETH:

WHEREAS, Guilford has acquired from Merck & Co, Inc. (“Merck”) the commercial
and intellectual property rights to the Product (as defined herein) in the
United States and its territories; and

WHEREAS, Guilford desires to engage the facilities and services of Baxter to
Manufacture (as defined herein) the Product for Guilford, and Baxter has
appropriate facilities and the ability to Manufacture Product for Guilford and
is willing to undertake the Manufacturing of Product for Guilford in accordance
with the terms and conditions set forth herein; and

WHEREAS, Guilford will supply Bulk Active (as defined herein) to Baxter and
Baxter will Manufacture the Product for Guilford at the Facility (as defined
herein) on the terms specified herein; and

WHEREAS, Baxter and Guilford will enter into a separate CTM Supply Agreement
(as defined herein) whereby Baxter will Manufacture clinical trial material for
Guilford at the Facility on the terms and conditions specified in the CTM
Supply Agreement and, for terms and conditions not specified in the CTM Supply
Agreement, in accordance with the terms and conditions herein;

NOW, THEREFORE, in consideration of the mutual premises and covenants contained
herein the parties agree as follows:

	1.	 	DEFINITIONS
	 
	 	 	Unless specifically set forth to the contrary herein, the following
capitalized terms, whether used in the singular or plural, shall have the
respective meanings set forth below:

	 	1.1	 	The term “Baxter” as used hereinafter shall mean Baxter and
its Affiliates.
	 
	 	1.2	 	The term “Affiliate” of Guilford or Baxter shall mean any
corporation or business entity which controls, is controlled by or
is under common control with Guilford or Baxter, as the case may be.
A corporation or business entity shall be deemed to control another
corporation or business entity if it owns, directly or indirectly,
fifty percent (50%) or more of the securities or other ownership
interests representing the equity, the voting stock or general
partnership interest of such corporation or business entity.
	 
	 	1.3	 	The term “Act” shall mean the U.S. Federal Food, Drug, and
Cosmetic Act, 21 U.S.C. § 301 et seq., as amended, and
the regulations promulgated thereunder, as amended from time to
time.

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	1.4	 	The term “Applicable Law” shall mean any United States
(including federal, territorial, state, municipal and local)
statute, law, ordinance, rule, regulation, administrative
interpretation, order, writ, injunction, judicial decision, decree
or other requirement of any Governmental Authority.
	 
	 	1.5	 	The term “Bulk Active” shall mean the pharmacologically
active ingredient
N-(Butylsulfonyl)-O-[4-(4-piperindinyl)butyl]-L-
tyrosine monohydrochloride monohydrate, also known as “tirofiban
hydrochloride”, and meeting the specifications specified in Schedule
A.
	 
	 	1.6	 	The term “Bulk Active Specifications” shall mean the
specifications and test methods for Bulk Active, specified in
Schedule A, as they may be modified from time to time by Guilford.
	 
	 	1.7	 	The term “Bulk Production Lot” shall mean the total quantity
of solution which has been mixed in one tank during the process of
Manufacturing Product.
	 
	 	1.8	 	The term “Bulk Production Lot Number” shall mean the unique
number assigned by Baxter to each Bulk Production Lot.
	 
	 	1.9	 	The term “Calendar Month” shall mean each month of the
Calendar Year beginning with the first date of that month and ending
with the last date of that same month.
	 
	 	1.10	 	The term “Calendar Quarter” shall mean each period of three
(3) consecutive Calendar Months ending March 31, June 30, September
30 and December 31, as the case may be.
	 
	 	1.11	 	The term “Calendar Year” shall mean the period of January 1
to December 31.
	 
	 	1.12	 	The term “cGMPs” shall mean the current Good Manufacturing
Practices as specified in the United States Code of Federal
Regulations or in applicable regulations promulgated or issued by
the FDA.
	 
	 	1.13	 	The term “Container” and “Flexible Container” shall mean
Baxter’s container, the description and specifications of which are
set forth in the Quality Agreement and in Baxter’s FDA filings,
which is either a 250-mL or a 100-mL flexible non-PVC container
having a single administration port containing PVC and wrapped in an
overpouch.
	 
	 	1.14	 	The term “Container Drug Master File” or “CDMF” shall mean a
separate filing with the FDA consisting of confidential detailed
information about the facilities, processes and/or materials used in
the manufacturing, processing, testing and/or storing of the
Container. Information contained in a CDMF shall be used to support
filings made to the FDA to obtain and maintain registration of the
Product.
	 
	 	1.15	 	The term “CPI” shall mean the U.S. Consumer Price Index as
published by the U.S. Department of Labor.

2

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	1.16	 	The term “CTM Supply Agreement” shall mean the Clinical Trial
Material Supply Agreement dated as of the date hereof between Baxter
and Guilford for the Manufacture and supply by Baxter to Guilford of
batches of clinical trial material.
	 
	 	1.17	 	The term “Deliver”, “Delivered”, “Delivering” or “Delivery”
by Baxter shall mean the act of Baxter in making complete
shipment(s) of Product available to Guilford at Baxter’s Facility
for immediate shipment and transportation by Guilford in accordance
with Section 5.2, which Product shall be completely Manufactured,
packaged and ready for administration.
	 
	 	1.18	 	The term “Distributors” shall mean those persons and/or
entities engaged by Guilford and/or Guilford’s Affiliates to
distribute Product in the Territory on behalf of Guilford and its
Affiliates, but shall not include Licensees.
	 
	 	1.19	 	The term “Facility” shall mean that portion of Baxter’s
facilities located at Highway 221 North Marion, North Carolina, used
in the Manufacturing of the Product.
	 
	 	1.20	 	The term “FDA” shall mean the United States Food and Drug
Administration and its successors.
	 
	 	1.21	 	The term “FIFO” shall mean first-in, first-out.
	 
	 	1.22	 	The term “Filling Production Lot” shall mean a quantity of
solution taken from a Bulk Production Lot and filled into
Containers.
	 
	 	1.23	 	The term “Filling Production Lot Number” shall mean (i) with
respect to the first Filling Production Lot filled from a Bulk
Production Lot, the Bulk Lot Production Number for such Bulk Product
Lot, and (ii) with respect to each Filling Production Lot filled
from the same Bulk Production Lot thereafter, a unique number
assigned by Baxter to such Filling Production Lot.
	 
	 	1.24	 	The term “Firm Order” shall mean a binding commitment in
writing and evidenced by a Purchase Order made by Guilford to
purchase Product from Baxter pursuant to Section 3.1.2.
	 
	 	1.25	 	The term “Governmental Authority” shall mean any United
States (including federal, territorial, state, municipal and local)
governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization
(including any national or international securities exchange and The
NASDAQ Stock Market), commission, tribunal or organization or any
regulatory, administrative or other agency (including the FDA), or
any political or other subdivision, department or branch of any of
the foregoing.
	 
	 	1.26	 	The term “Licensees” shall mean those persons and/or entities
to which Guilford and/or Guilford’s Affiliates shall, subject to
Section 12, license its rights to market and sell the Product in the
Territory.
	 
	 	1.27	 	The term “Lot Numbers” shall mean, collectively, the Bulk
Production Lot Numbers and the Filling Production Lot Numbers.

3

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	1.28	 	The terms “Manufacture”, “Manufacturing” and “Manufactured”
shall mean all operations of Baxter and its successors, permitted
assigns and permitted subcontractors in the acquisition of Materials
and the formulation of Product from Bulk Active, and in filling,
labeling, packaging, warehousing and quality control testing of
Product.
	 
	 	1.29	 	The term “Manufacturing Fee” shall mean the fee per unit paid
by Guilford to Baxter for Product Manufactured in accordance with
the terms of this Agreement.
	 
	 	1.30	 	The term “Materials” shall mean all raw materials,
excipients, components, packaging materials (including the
Container), and other items necessary for the Manufacture of Product
as supplied by Baxter other than the Bulk Active, package inserts
and any other items which are supplied by Guilford to Baxter.
	 
	 	1.31	 	The term “Merck/Baxter Agreement” means the Manufacturing and
Supply Agreement dated as of April 15, 1995, as amended, by and
between Merck and Baxter.
	 
	 	1.32	 	The term “NDA” shall mean the New Drug Application relating
to Product filed in accordance with FDA regulations.
	 
	 	1.33	 	The term “Parametric Release” shall mean a review and
comparison of sterilization records to validated parameters to
effect release of a Filling Production Lot of Product in lieu of
routine end product sterility testing.
	 
	 	1.34	 	The term “Product” shall mean AGGRASTAT® Pre-Mixed Injection
in either (i) a 0.05 mg/mL bulk active in 0.9% normal saline and
packaged as a terminally steam sterilized pre-mixed intravenous
(I.V.) solution in Container, in package size and meeting the
Product Specifications specified in Schedule A, which comprise a
12.5 mg dosage, 250 mL diluent volume pharmaceutical form (the “250
mL Product”), or (ii) a 0.05 mg/mL bulk active in 0.9% normal saline
and packaged as a terminally steam sterilized pre-mixed intravenous
(I.V.) solution in Container, in package size and meeting the
Product Specifications specified in Schedule A, which comprise a 5.0
mg dosage, 100 mL diluent volume pharmaceutical form (the “100 mL
Product”).
	 
	 	1.35	 	The term “Product Specifications” shall mean the
specifications and test methods for Product as specified in Schedule
A, as they may be modified from time to time in accordance with the
Quality Agreement.
	 
	 	1.36	 	The term “Quality Agreement” shall mean the Quality Agreement
dated as of the date hereof by and between Baxter and Guilford,
together with the exhibits thereto, that provides the details on the
responsibilities of the technical and quality activities required to
Manufacture the Product.
	 
	 	1.37	 	The term “Related Agreements” shall mean, collectively, the
Quality Agreement and the CTM Supply Agreement.

4

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	1.38	 	The term “Securities Laws” shall mean the United States
Securities Act of 1933, as amended, the United States Securities
Exchange Act of 1934, as amended, and any other similar law or
regulation of a United States Governmental Authority, or any
successor to any such laws or regulations, together with any rules,
regulations or listing standards or agreements of any national or
international securities exchange or The NASDAQ Stock Market, as
generally applicable.
	 
	 	1.39	 	The term “Territory” shall mean the United States of America
and its territories and possessions, including without limitation
the Commonwealth of Puerto Rico, Guam and the U.S. Virgin Islands.
	 
	 	1.40	 	The term “Trademarks” shall mean, collectively, Baxter’s
United States registered trademarks for the Container and Guilford’s
United States registered trademark for Product.

	2.	 	ENGAGEMENT

	 	2.1	 	Engagement of Baxter. Guilford hereby engages Baxter
to Manufacture the Product at the Facility, subject to the
conditions and terms set forth in this Agreement and the Related
Agreements. Baxter accepts such engagement to Manufacture the
Product and to perform such other acts as are provided in this
Agreement and the Related Agreements.
	 
	 	2.2	 	Permits, Licenses and Authorizations. Except as
otherwise agreed by the parties in writing, Baxter shall be
responsible for obtaining, at its cost, all the necessary
permissions, licenses and approvals for the Manufacture of Product
in the Facility for distribution in the Territory.

	3.	 	SUPPLY, FORECASTS AND ORDERS

	 	3.1	 	Forecasts and Orders. During the term of this
Agreement the forecasting and ordering provisions set forth in this
Section shall apply.

	 	3.1.1	 	Forecasts. In order to assist Baxter in
its production planning, at least [***] before the beginning
of each Calendar Quarter, Guilford shall provide to Baxter a
statement of its estimated purchase requirements (“Estimated
Requirements”) and expected Delivery dates for Product for the
[***] next succeeding such Calendar Quarter. It is understood
that such Estimated Requirements shall not constitute
commitments to purchase Product or Firm Orders.
	 
	 	3.1.2	 	Firm Orders. At least [***] days prior
to the beginning of each Calendar Quarter, Guilford shall
place a Firm Order for its requirements and requested Delivery
dates of Product for such Calendar Quarter. Firm Orders shall
be placed in amounts equal to the
Filling Production Lot sizes, multiplied by whole number
increments of the applicable minimum order quantities as set
forth on Schedule C. Firm Orders for Product in such
Calendar Quarter shall not be for less than seventy percent
(70%) nor more than one hundred thirty percent

5

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	 	(130%) of
Guilford’s Estimated Requirements of Product for such
Calendar Quarter as most recently updated. Notwithstanding
the foregoing, Baxter shall use reasonable efforts to comply
with any subsequent changes in such Firm Orders, but shall
not be held liable for its inability to do so. Guilford
shall limit the number of requested Delivery dates to no
more than two (2) per Calendar Month.
	 
	 	3.1.3	 	Initial Forecast and Firm Order.
Attached hereto as Schedule G is Guilford’s initial Firm Order
for its requirements of Product and requested Delivery dates
for the period beginning on the Effective Date and ending on
December 31, 2004, as well as Guilford’s Estimated
Requirements and estimated Delivery dates for the next
succeeding two (2) Calendar Quarters beginning October 1,
2004. Guilford shall deliver Estimated Requirements and
estimated Delivery dates for the [***] beginning January 1,
2005 on or before [***].

	 	3.2	 	Satisfaction of Firm Orders. Baxter shall confirm the
receipt of each Firm Order within [***] of its receipt thereof.
Subject to Section 23.1, Baxter shall meet Guilford’s requested
Delivery dates. Baxter shall satisfy each Firm Order by Delivering
not less than [***] and not more than [***] of the quantity of
Product ordered by Guilford in each Firm Order to Guilford.
Deliveries of Product shall be made on the date specified in the
Firm Order, but in no event more than [***] in advance of the date
specified in the Firm Order without Guilford’s prior written
approval. Baxter shall notify Guilford at least [***] prior to
actual Delivery of Product if Baxter is not Delivering Product to
Guilford on the requested Delivery date.
	 
	 	3.3	 	Terms. Firm Orders will be made on the form of
purchase order attached hereto as Schedule H or in such other form
as Baxter and Guilford shall agree in writing from time to time (a
“Purchase Order”), provided that the terms and conditions of this
Agreement shall be controlling over any terms and conditions
included in any such Purchase Order used in ordering Product.
	 
	 	3.4	 	Short Supply of Materials and/or Resources. In the
event that the Materials and/or resources required to Manufacture
Product are in short supply, Baxter shall notify Guilford of such
shortage as soon as possible and shall allocate to Guilford a
proportionate share of the available amount of such Materials and/or
resources (as existing as of the time of such shortage and going
forward) required for Manufacture of Product hereunder based upon
Guilford’s projected requirements for Product hereunder, as compared
to the projected requirements of other customers of Baxter who
require use of such Materials or resources, for the ensuing [***]
period.
	 
	 	3.5	 	Exclusive Manufacture and Supply. Except as otherwise
contemplated in this Agreement, during the term and subject to the
provisions of this Agreement and the Related Agreements, Baxter
shall supply Product exclusively to Guilford in the Territory, and
Guilford shall purchase exclusively from Baxter quantities of
Product equal to Guilford’s needs for the Territory.

6

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	3.6	 	Cancellation of Firm Orders and Rescheduling.
Guilford may cancel a Firm Order or reschedule requested Delivery
dates to a later date by giving Baxter prior written notice to such
effect. Baxter will use reasonable efforts to comply with
Guilford’s requests and to avoid or minimize any costs incurred by
Baxter as a result of such cancellation or change. If, however,
either (i) a cancellation by Guilford of a Firm Order or (ii) a
rescheduling of Delivery dates for a Firm Order that causes a
rescheduling by Baxter of the Product manufacturing date, occurs
less than [***] but more than [***] prior to Baxter’s scheduled
production date for the Firm Order, Guilford will pay Baxter a
cancellation fee or rescheduling fee equal to [***] of the
Manufacturing Fee for such Firm Order, and if any such cancellation
or rescheduling occurs [***] or less prior to Baxter’s scheduled
production date for the Firm Order, Guilford will pay Baxter a
cancellation fee or rescheduling fee equal to [***] of the
Manufacturing Fee for such Firm Order. Notwithstanding the
foregoing, if any such cancellation or rescheduling occurs [***] or
more prior to Baxter’s scheduled production date for the Firm Order,
Guilford shall not have any obligation to pay any cancellation fee,
rescheduling fee or other penalty to Baxter.

	4.	 	MANUFACTURING FEES & PAYMENTS

	 	4.1	 	Manufacturing Fees. The Manufacturing Fees charged by
Baxter to Guilford for Product Manufactured hereunder shall be
determined and paid as set forth in this Section 4 and in Schedule
C. Guilford will purchase a minimum of one hundred thousand
(100,000) units of Product during each Calendar Year of this
Agreement, except the first Calendar Year (the “First Calendar
Year”). During the First Calendar Year, the minimum requirement
shall be 75,000 units and shall be reduced by the number of units
that Guilford purchased from Merck during 2004. The 100,000 units
may be any combination of 100 mL Product and 250 mL Product units
[***]. If Guilford desires to have a different packaging
configuration than shown on Schedule D, then the parties shall
negotiate in good faith applicable Manufacturing Fees for such
configuration.
	 
	 	4.2	 	Application of Prices for each Tier. The
Manufacturing Fees shown in Schedule C correspond to an individual
unit of Product depending on whether it is a 250 mL Product or a 100
mL Product. Firm Orders shall be placed by Guilford in whole
number increments of the Order Quantities set forth in the tables
provided in Schedule C. Baxter shall invoice Guilford at the
Manufacturing Fee corresponding to applicable pricing tier
reflected on Schedule C for each such unit.
	 
	 	4.3	 	Underlying Assumptions. The Manufacturing Fees set
forth herein are based upon the following key assumptions:

	 	(i)	 	The Manufacturing Fees include all labor and
Material costs incurred by Baxter (it being understood that
Baxter shall incur no costs in connection with the Bulk Active
or any other materials, such as package inserts, provided by
Guilford) and excludes all applicable sales and value added
taxes.

7

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	(ii)	 	In the event either Guilford or Baxter shall
desire to make any change in any label for the Product
(including without limitation the bag label, the intermediate
carton label and the case label) during the term of this
Agreement, the parties shall meet to negotiate the additional
costs to be incurred by Baxter, which costs shall be allocated
between Guilford and Baxter as set forth in this Section
4.3(ii). With respect to label changes by Guilford, including
both discretionary changes and changes required by the FDA or
Applicable Law, Guilford may request, and Baxter shall
implement [***]. If Guilford shall request (or shall be
required by the FDA or Applicable Law to implement) [***], the
parties shall meet to negotiate in good faith the additional
costs to be incurred by Baxter in connection with such
changes, which costs shall be invoiced separately by Baxter to
Guilford, and Guilford will pay such amount to Baxter within
[***] of invoicing by Baxter. With respect to label changes
by Baxter, including both discretionary changes and changes
required by the FDA or Applicable Law, Baxter shall bear the
cost of such changes.
	 
	 	(iii)	 	[***] testing is utilized throughout the
Territory. [***] testing, if required, shall be separately
paid for by Guilford as set forth in the Quality Agreement.

	 	4.4	 	Fee to Re-Package Product. In the event that Guilford
requests Baxter to re-package Product (for example, due to a change
in the package insert), Baxter shall perform such re-packaging and
will invoice Guilford on delivery of the re-packaged Product. The
fee to Guilford will be [***] per unit of re-packaged Product.
	 
	 	4.5	 	User Fees. Baxter will pay all user and/or filing
fees charged by Governmental Authorities in the Territory which
relate to separate Container submissions. Guilford will pay all
user and/or filing fees charged by Governmental Authorities in the
Territory which relate to the NDA and ongoing marketing of the
Product, including, but not limited to, the application fee (other
than in connection with the Container), the drug
product fee, and that portion of the drug establishment fee (DEF)
assessed to Guilford by the FDA.
	 
	 	4.6	 	Amount and Timing of Manufacturing Fee Increases.
Baxter may increase the Manufacturing Fees [***], which shall be
further limited to a maximum increase of [***] for each Calendar
Year. Baxter shall use its commercially reasonable efforts to
minimize increases in its Material costs to Manufacture Product.
	 
	 	4.7	 	Notification, Effective Date and Application of
Manufacturing Fee Increases. Baxter will provide to Guilford
written notification, [***], of any proposed Manufacturing Fee
increase pursuant to Section 4.6, which increase will become
effective the following January 1. Such Manufacturing Fee increase
shall not apply to Product already invoiced to Guilford, but shall
apply to Product which has been released, Delivered and invoiced by
Baxter to Guilford after the January 1 effective date.

8

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	4.8	 	Payment for Product. Baxter shall invoice Guilford
upon release of Product to Guilford that has been quality control
tested by Baxter in accordance with the Quality Agreement.
Invoicing requirements are specified in Schedule F. Guilford shall
make payment [***] of receipt of said invoice of Product in
accordance with this Section 4.8 or of Delivery of Product by
Baxter, whichever is later. Payment shall be remitted by wire
transfer in U.S. dollars to a bank account designated in writing by
Baxter. [***]
	 
	 	4.9	 	Payment Penalties Charged to Guilford. In addition to
any other remedies available to Baxter under this Agreement, Baxter
may charge Guilford a penalty for amounts not paid within the
required [***] period set forth in Section 4.8. Such penalty shall
be assessed based on the amount not paid when due at the rate of
[***]. Such penalty shall not be assessed if the reason for the
late payment is due to (i) discrepancies between Baxter’s invoice
and the shipping records, (ii) incomplete documentation accompanying
the Product Delivered by Baxter hereunder, or (iii) due to a claim
asserted by Guilford pursuant to Section 8.2 or 8.3. Guilford shall
notify Baxter as soon as practicable after it is aware that any of
these circumstances exist, and the parties will in good faith
attempt to resolve the discrepancy, incompleteness, error and/or
dispute in a timely manner. In the event that such circumstances
exist, then Guilford will have [***] after resolution of the matter
to pay the amount so due before Baxter may assess the aforementioned
penalty.
	 
	 	4.10	 	Payment Penalties Charged to Baxter. In addition to
any other remedies available to Guilford under this Agreement, in
the event that Baxter fails to Deliver on time (i.e., no later than
Guilford’s requested Delivery date as set forth in Section 3.1.2)
the Product subject to a Firm Order, Guilford may (i)
reduce the invoice price relating to such Firm Order, or (ii)
cancel such Firm Order if Baxter fails to Deliver to Guilford
within [***] after Guilford’s requested Delivery date.
	 
	 	 	 	The amount of any such reduction in (i) above shall be equal to:
	 
	 	 	 	[***].
	 
	 	 	 	Notwithstanding the foregoing, if Baxter does not Deliver Product
to Guilford in accordance with the requested Delivery date as
provided for in Section 3 because of Guilford’s breach or
negligence or a force majeure event affecting Baxter as set forth
in Section 23.1, then the number of days by which Delivery by
Baxter is considered late for purposes of enabling Guilford to
reduce the invoice price shall commence upon [***].

	5.	 	PRODUCT DELIVERY, TITLE AND RISK OF LOSS

	 	5.1	 	Delivery of Product. Baxter shall notify Guilford no
less than [***] prior to each Delivery of Product by Baxter
hereunder.
	 
	 	5.2	 	Shipment of Product. Guilford shall arrange for
transportation of the Product Manufactured hereunder from Baxter’s
Facility. Guilford shall assume the freight and insurance costs and
risk of loss for the Product after Baxter

9

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

physically transfers the Product to Guilford’s designated carrier at Baxter’s Facility.
Delivery shall be F.O.B. Baxter’s Facility. Guilford shall be
subject to a penalty if Guilford or Guilford’s designated carrier
does not pick up the Product from Baxter’s Facility within [***]
after Delivery of such Product by Baxter to Guilford hereunder. The
amount of such penalty will be equal to [***] of the invoice price.
Notwithstanding the foregoing, if Guilford does not pick up the
Product due to Baxter’s breach or negligence or a force majeure
event affecting Guilford as set forth in Section 23.1, then the
number of days Guilford is considered late for purposes of enabling
Baxter to charge the penalty set forth in this Section 5.2 shall
commence upon [***] after the date on which such situation shall be
rectified.

	5.3	 	Title and Risk of Loss. Title and risk of loss to
Product sold hereunder shall pass to Guilford upon delivery at the
F.O.B. point specified in Section 5.2.

	6.	 	BULK ACTIVE and MATERIALS

	6.1	 	Bulk Active Title, Risk of Loss and Use. Guilford
shall, at no cost to Baxter, at least [***] prior to the date of
requested Delivery of Product pursuant to a Firm Order, supply to
Baxter sufficient quantities of Bulk Active, and Bulk Active
reference standard material for use in conducting
assays, which will allow Baxter to meet its obligations to
Manufacture Product in accordance with the terms of this Agreement.
Baxter shall not be responsible for delays in Delivering Product
to Guilford caused by delays in receipt of Bulk Active provided by
Guilford. Title to Bulk Active shall remain at all times with
Guilford; however, risk of loss shall pass to Baxter at the time
Bulk Active arrives at the Facility and is accepted by Baxter from
Guilford’s carrier. Baxter shall not use Bulk Active supplied by
Guilford for any purpose other than the Manufacture of Product
exclusively for Guilford hereunder or as otherwise agreed by the
parties in writing.
	 
	6.2	 	Certificate of Analysis. Guilford shall provide
Baxter with a certificate of analysis for each lot of Bulk Active
delivered by Guilford to Baxter using the format set forth in the
Quality Agreement. Guilford shall also provide Baxter with a
certificate of analysis for each lot of Bulk Active reference
standard material delivered to Baxter in the format set forth in the
Quality Agreement.
	 
	6.3	 	Inventory Counts. Physical inventory counts of all
Bulk Active shall be taken by Baxter at the end of each Calendar
Month, reconciled to Baxter’s books and perpetual records, and
promptly reported to Guilford in a form and level of detail
specified in the Quality Agreement. Data trail/accountability
information will be kept by Baxter for all receipts and
disbursements of Bulk Active in accordance with the Quality
Agreement. All inventories of Bulk Active will be subject to audit
by Guilford in accordance with the Quality Agreement.
	 
	6.4	 	Bulk Active Freight Claims. Baxter shall maintain
paperwork on all freight claims arising from Bulk Active that Baxter
claims was delivered to its Facility in a damaged state. Baxter
will assist Guilford in obtaining recovery for such freight claims,
and Guilford shall reimburse Baxter for all reasonable

10

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

direct expenses including, but not necessarily limited to, salaries and
wages of personnel and out-of-pocket costs, which are incurred and
documented by Baxter in connection with such assistance.

	6.5	 	Materials – Container. Baxter shall manufacture the
Container itself and shall be responsible for approving all vendors
of raw materials therefor. The Container shall meet the
requirements of the Container specifications set forth in the
Quality Agreement and shall be manufactured in accordance with cGMPs
and all Applicable Laws, FDA requirements, CDMFs and approved FDA
filings. Changes to the Container specifications shall be made only
in accordance with the Quality Agreement.
	 
	6.6	 	Materials – Other than Container. All Materials
(other than the Container) required for Manufacture of Product
supplied by Baxter shall be purchased by Baxter from vendors
approved by Baxter in accordance with Baxter’s vendor qualification
and approval procedures, copies of which have been provided to
Guilford. Baxter shall provide Guilford with copies of any
amendments or revisions to such procedures during the term of this Agreement.
Notwithstanding the foregoing, excipient vendors shall be approved
in writing by Guilford in advance of use by Baxter for Manufacture
of Product. Excipient vendors currently approved by Guilford are
set forth on Schedule B; additional vendors may be added to
Schedule B from time to time upon prior written agreement of the
parties. Such Materials shall meet the requirements of the Product
Specifications. All Materials supplied to Baxter by Guilford shall
be purchased, inspected and released by Guilford per Guilford’s
Standard Operating Procedures. Materials supplied by Guilford will
be purchased from Guilford approved vendors.

	7.	 	GUILFORD WARRANTY AND LIMITATIONS

	7.1	 	Guilford Warranties. Guilford represents and warrants
that all Bulk Active shall, at the time of delivery to Baxter’s
Facility (i) meet the Bulk Active Specifications; (ii) be
manufactured in accordance with cGMPs; (iii) be manufactured in
accordance with Applicable Laws and FDA requirements in effect on
the day of delivery; and (iv) be fit for the Manufacture of the
Product. Without limiting the warranty in Section 7.1(iii),
Guilford represents and warrants that no Bulk Active shall, at the
time of delivery, be (a) adulterated or misbranded within the
meaning of the Act, or any similar law of any other jurisdiction in
the Territory; or (b) an article which may not, under the provisions
of the Act, or any similar law of any other jurisdiction in the
Territory, be introduced into interstate commerce. Guilford also
represents and warrants that the Bulk Active reference standard
material shall, at the time of delivery to Baxter’s Facility, meet
the assigned purity as set forth in the related certificate of
analysis for such reference standard material. Guilford also
represents and warrants (x) that it has acquired all commercial and
intellectual property rights to the Product for the Territory which
are necessary for Baxter to realize its rights and fulfill its
obligations under this Agreement and the CTM Supply Agreement and to
grant Baxter the licenses set forth in Article 11 below, and (y)
that it has the right to enter into this Agreement and require
Baxter to Manufacture Product in accordance with the terms and

11

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	 	 	 	conditions set forth herein and in the Quality Agreement. Guilford
also represents and warrants that it has the right to enter into
this Agreement in accordance with the terms and conditions set forth
herein and in the Related Agreements, and that this Agreement and
the Related Agreements will not conflict with, contravene or
constitute a default under any other agreement, contract or other
arrangement by which Guilford is bound, including without limitation
the Merck/Guilford Agreement. NO OTHER EXPRESS OR IMPLIED WARRANTY
EXISTS, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND GUILFORD EXPRESSLY DISCLAIMS ANY SUCH
WARRANTIES.

	7.2	 	Claims for Failure to Meet Bulk Active Specifications.
Claims by Baxter on account of quality or concerning any failure of
Bulk Active to meet the warranty specified in Section 7.1(i) shall
be made promptly by Baxter, in writing, but no later than [***] following Baxter’s
receipt of Bulk Active at the Facility. Claims by Baxter on
account of shortage, loss or damage shall be made promptly by
Baxter, in writing, but no later than [***] following Baxter’s
receipt of Bulk Active at the Facility. In connection with such
claim(s), Baxter shall, at Guilford’s request, investigate and
re-test such Bulk Active and shall permit one or more
representatives from Guilford to be present and participate in the
investigation and re-testing by Baxter, which investigation and
re-testing will be done at Baxter’s own cost. If Guilford and
Baxter agree that the Bulk Active did not meet the warranties set
forth in Section 7.1(i) upon delivery to Baxter, then Baxter shall
destroy or return the Bulk Active to Guilford in accordance with
Guilford’s instructions in accordance with the provisions of
Section 7.4. If the Bulk Active is determined upon agreement by
the parties to meet such warranty, then Baxter shall utilize the
Bulk Active to Manufacture Product. If the parties are unable to
agree as to whether such Bulk Active met such warranties, Baxter
shall return the Bulk Active to Guilford and the parties shall
cooperate to have the Bulk Active in dispute analyzed by an
independent testing laboratory of recognized repute agreeable to
both parties. The results of such laboratory testing shall be
final and binding on the parties on the issue of compliance of the
Bulk Active with such warranty. [***].
	 
	7.3	 	Other Claims.  If Baxter claims that any shipment of
Bulk Active did not, at the time of delivery, meet the warranties
specified in Section 7.1(ii) or (iii), Baxter shall promptly (and in
any event within [***]) notify Guilford and either destroy or return
such Bulk Active to Guilford in accordance with Guilford’s
instructions, and if Guilford and Baxter are unable to agree as to
whether or not such Bulk Active met such warranties, the dispute
shall be settled in accordance with the dispute resolution
provisions set forth in Section 23.6. If the Bulk Active is
determined to have met such warranties, then Baxter shall bear the
cost of such dispute resolution proceedings, including Guilford’s
reasonable attorneys’ fees. If the Bulk Active is determined not to
have met any such warranty, then Guilford shall bear the cost of
such proceedings, including Baxter’s reasonable attorneys’ fees, and
shall pay Baxter for any Product Manufactured which incorporates
such Bulk Active at the Manufacturing Fees specified in Section 4.

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The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	7.4	 	Bulk Active not Meeting Warranties. Any Bulk Active
which fails to meet the warranties under Section 7.1 and which is in
Baxter’s possession or control shall, at Guilford’s option, either
be destroyed by Baxter or returned to Guilford pursuant to
Guilford’s written instructions. Unless otherwise provided in
Sections 7.2 and 7.3, Guilford shall assume the cost of destruction
of such Bulk Active, or the freight and insurance costs and risk of
loss for return of such Bulk Active after Baxter physically
transfers the Bulk Active to Guilford’s designated carrier at
Baxter’s Facility.

	8.	 	BAXTER WARRANTY AND LIMITATIONS

	8.1	 	Baxter Warranties. Baxter represents and warrants
that all Product shall, at the time of Delivery to Guilford (i) meet
the Product Specifications; (ii) be Manufactured in accordance with
cGMPs; and (iii) be Manufactured in accordance with the validated
processes and test methods specified in NDA and other filings with
the FDA maintained in the Territory with respect to Product, and
with all Applicable Laws and regulations and FDA requirements in
effect on the day of Delivery. Without limiting the warranty in
Section 8.1(iii), Baxter guarantees that no Product shall, at the
time of Delivery, be (a) adulterated or misbranded within the
meaning of the Act, or any similar law of any other jurisdiction in
the Territory, or (b) an article which may not, under the provisions
of the Act, or any similar law of any other jurisdiction in the
Territory, be introduced into interstate commerce. Baxter also
represents and warrants that it has the right to enter into this
Agreement and to Manufacture and supply Product to Guilford in
accordance with the terms and conditions set forth herein and in the
Related Agreements, and that this Agreement and the Related
Agreements will not conflict with, contravene or constitute a
default under any other agreement, contract or other arrangement by
which Baxter is bound, including without limitation the Merck/Baxter
Agreement. NO OTHER EXPRESS OR IMPLIED WARRANTY EXISTS, INCLUDING
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
AND BAXTER EXPRESSLY DISCLAIMS ANY SUCH WARRANTIES.
	 
	8.2	 	Claims for Failure to Meet Product Specifications. If
Guilford claims that any shipment of Product did not, at the time of
Delivery to Guilford, meet the warranty specified in Section 8.1(i),
Guilford shall notify Baxter within [***] from Guilford’s receipt of
Product at the designated location; provided that in the case of
latent defects that are not discoverable upon exercise of reasonable
diligence within such [***] period, Guilford shall notify Baxter as
soon as practicable upon discovery of such defect, however, in no
event after the Product has expired according to its expiry date.
If Guilford and Baxter are unable to agree as to whether such
Product met such warranty, then the parties shall cooperate to have
the Product in dispute analyzed by an independent testing laboratory
of recognized repute selected by Guilford and approved by Baxter,
which approval shall not be unreasonably withheld. The results of
such laboratory testing shall be final and binding on the parties on
the issue of compliance of the Product with such warranty. If the
Product is determined to have met such warranty, then Guilford shall
bear the cost of such laboratory testing. If the Product is
determined not to have met such warranty for reasons

13

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

unrelated to a breach of Guilford’s warranty under Section 7.1, then Baxter shall:

	(i)	 	bear the cost of such laboratory testing;
	 
	(ii)	 	pay Guilford, [***], which price may be adjusted
by Guilford no more than once per Calendar Year by a
percentage up to the percentage increase in the CPI for the
most recently ended Calendar Year over the
prior Calendar Year which shall be further limited to a
maximum of [***] for that Calendar Year;
	 
	(iii)	 	at Guilford’s written election, within [***]
after receipt of such determination, either (a) replace the
rejected Product within [***] of the date of such
determination; or (b) at Baxter’s option either credit
Guilford’s account or refund to Guilford an amount equal to
the Manufacturing Fees paid for such Product, plus any
applicable delivery charge paid by Guilford. In the event
that Guilford does not make such written election within
[***], then the election shall be made at Baxter’s option
after written notification to Guilford;
	 
	(iv)	 	pay to Guilford interest at the rate of [***] on
the amount of payment(s) made by Guilford for such Product, if
any, from the date that such payment was made until, as
applicable, (a) [***] after delivery of the replacement
Product and associated invoice to Guilford, or (b) deduction
of the credit from an amount due by Guilford to Baxter on the
date when due (i.e., the credit must actually be used by
Guilford and not simply be posted by Baxter to Guilford’s
account) or refund to Guilford, as applicable, pursuant to
Section 8.2(iii)(b); and
	 
	(v)	 	cancel any late fees assessed by Baxter to
Guilford for non-payment or late payment of the invoice(s)
relating to such Product which did not meet such warranty.

	8.3	 	Other Claims. If Guilford claims that any shipment of
Product did not, at the time of Delivery to Guilford, meet the
warranties specified in Section 8.1(ii) or (iii), Guilford shall
notify Baxter, and if Guilford and Baxter are unable to agree as to
whether or not such Product met such warranties, the dispute shall
be settled in accordance with the dispute resolution provisions set
forth in Section 23.6. If the Product is determined to have met
such warranties, then Guilford shall bear the cost of such dispute
resolution proceedings, including Baxter’s reasonable attorneys’
fees. If the Product is determined not to have met any such
warranty for reasons unrelated to a breach of Guilford’s warranty
under Section 7.1, then Baxter shall:

	(i)	 	bear the cost of such dispute resolution
proceedings, including Guilford’s reasonable attorneys’ fees;
	 
	(ii)	 	pay Guilford, at the price established in Section
8.2(ii), for the Bulk Active consumed in the Manufacture of
such Product;

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The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	(iii)	 	at Guilford’s written election, within [***]
after receipt of such determination, either (a) replace the
rejected Product within [***] of the date of such
determination; or (b) at Baxter’s option either credit
Guilford’s account or refund to Guilford an amount equal to
the Manufacturing Fees paid for such Product, plus any
applicable delivery charge paid by Guilford. In the event
that Guilford does not make such written election within [***], then the election shall be
made at Baxter’s option after written notification to
Guilford;
	 
	(iv)	 	pay to Guilford interest at the rate of [***] on
the amount of payment(s) made by Guilford for such Product, if
any, from the date that such payment was made until, as
applicable, (a) [***] after delivery of the replacement
Product and associated invoice to Guilford, or (b) deduction
of the credit from an amount due by Guilford to Baxter on the
date when due (i.e., the credit must actually be used by
Guilford and not simply be posted by Baxter to Guilford’s
account) or refund to Guilford, as applicable, pursuant to
Section 8.3(iii)(b); and
	 
	(v)	 	cancel any late fees assessed by Baxter to
Guilford for non-payment or late payment of the invoice(s)
relating to such Product which did not meet such warranty.

	8.4	 	Product Not Meeting Warranties. Any Product which
fails to meet the warranties under Section 8.1 and which is in
Guilford’s possession or control shall, at Guilford’s option, either
be returned to Baxter for destruction in accordance with Baxter’s
written shipping instructions, or destroyed by Guilford, in either
case at Baxter’s expense. If returned to Baxter, then risk of loss
for such Product shall pass to Baxter upon shipment from Guilford’s
facility.

	9.	 	INDEMNIFICATION

	9.1	 	Baxter Indemnification. Baxter shall defend,
indemnify and hold harmless Guilford and its Affiliates, and their
respective directors, officers, shareholders, employees and agents,
and each of their successors and permitted assigns (collectively,
the “Guilford Indemnitees”), from and against any and all claims,
actions, causes of action, liabilities, losses, damages, costs or
expenses, and resulting settlements, awards or judgments, including
reasonable attorneys’ fees (collectively, “Damages”), which arise
out of or relate to (i) the failure of Product provided by Baxter
hereunder to meet the warranties set forth in Section 8.1; (ii) a
breach by Baxter of any of its other representations, warranties,
covenants, agreements or obligations under this Agreement or the
Related Agreements; (iii) the negligence or willful misconduct of
Baxter in Manufacturing Product or in the performance or
nonperformance of any obligations under this Agreement or the
Related Agreements; or (iv) any patent, trade name, trademark,
service mark or copyright infringement or misuse, or any claim or
judgment of such infringement or misuse thereof, relating to the
Container or the Manufacture of the Product by Baxter (except to the
extent covered by Guilford’s indemnification obligations pursuant to
Section 9.2), or the use of the Baxter

15

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

Trademarks, trade names or copyrightable materials in connection with any labeling or
promotional materials for the Product authorized by this Agreement;
provided, that Baxter shall have no obligation to indemnify Guilford
under this Section 9.1 to the extent such Damages arise out of or
relate to any matter for which Guilford is
obligated to indemnify Baxter under this Agreement or the Related
Agreements.

	9.2	 	Guilford Indemnification. Guilford, on its own
behalf, and on behalf of its Affiliates and Licensees, shall defend,
indemnify and hold harmless Baxter and its Affiliates and their
respective directors, officers, shareholders, employees and agents,
and each of their successors and permitted assigns (collectively,
the “Baxter Indemnitees”), from and against any and all Damages
which arise out of or relate to (i) the failure of Bulk Active
provided by Guilford hereunder to meet the warranties set forth in
Section 7.1; (ii) a breach of any of Guilford’s other
representations, warranties, covenants, agreements or obligations
under this Agreement or the Related Agreements; (iii) negligence or
willful misconduct in the performance or nonperformance of
Guilford’s obligations under this Agreement or the Related
Agreements; (iv) personal injury or property damage caused by the
Product (except to the extent covered by Baxter’s indemnification
obligations hereunder, including those set forth in Sections 9.1, 14
and 17, and the Related Agreements); or (v) any patent, trade name,
trademark, service mark or copyright infringement or misuse, or any
claim or judgment of such infringement or misuse thereof, relating
to the Bulk Active supplied by Guilford or to the Product (except to
the extent covered by Baxter’s indemnification obligations
hereunder, including those set forth in Section 9.1) or the use or
printing of any trademarks, trade names or copyrightable materials
of Guilford or its Affiliates, Licensees and Distributors as
authorized by this Agreement; provided, that Guilford shall have no
obligation to indemnify Baxter under this Section 9.2 to the extent
such Damages arise out of or relate to any matter for which Baxter
is obligated to indemnify Guilford under this Agreement or the
Related Agreements.
	 
	9.3	 	No Claim for Losses. In no event shall either party
or their respective Affiliates be liable for any special, indirect,
incidental or consequential damages arising out of this Agreement,
except to the extent any such special, indirect, incidental or
consequential damages shall be payable to a third party.
	 
	9.4	 	Prompt Notice. Each party agrees to give the other
prompt written notice of any claims made for which the other might
be liable under the foregoing indemnifications. The party from whom
indemnification is sought hereunder shall have the right to assume
responsibility for any such claim for indemnification, including the
defense thereof, by providing notice to the indemnified party within
[***] of receipt of such notice and by selecting counsel reasonably
acceptable to the indemnified party within such [***] period. The
indemnified party will cooperate fully with the indemnifying party
in defending or otherwise resolving any claim subject to
indemnification hereunder, and the indemnifying party will have full
control of the defense of any such litigation; however, the
indemnified party, at its expense, shall be entitled to be
represented by its own counsel in any such litigation. The

16

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	 	 	indemnifying party agrees to bear all other costs and expenses of
litigation, including its own attorneys’ fees, in connection with
such litigation. In the event the indemnifying party refuses or fails to assume defense of any such
claim in accordance with the foregoing, or refuses or fails to
appoint counsel reasonably acceptable to the indemnified party
within the [***] time period set forth above, the indemnified party
may retain reasonable counsel to defend the claim and the
indemnifying party agrees to bear all reasonable costs and expenses
of such litigation, including the indemnified party’s reasonable
attorneys’ fees, in connection with such litigation. 
	 
	9.5	 	Refund Due to Injunction. In the event that the sale
of Product is enjoined due to an alleged or actual infringement of
third party intellectual property rights by either party, then, in
addition to all other rights and obligations of the parties
hereunder (i) if Guilford is obligated under Section 9.2(v) to
indemnify Baxter and Baxter’s Affiliates, Guilford shall pay Baxter
for any affected Product remaining in Baxter’s possession at the
Manufacturing Fees set forth in Section 4.1; and (ii) if Baxter is
obligated under Section 9.1(iv) to indemnify Guilford and Guilford’s
Affiliates, Baxter shall (a) return to Guilford any affected Bulk
Active remaining in Baxter’s possession; and (b) refund to Guilford
the Manufacturing Fees paid by Guilford, calculated on a FIFO basis,
for all affected Product remaining in Guilford’s and its
Affiliates’, Licensees’ and Distributors’ inventory as of the
applicable date of injunction and subsequently returned to Guilford
by its customers pursuant to the injunction after the injunction
date.
	 
	9.6	 	Not Binding. Neither party nor its respective
Affiliates shall be responsible or bound by any settlement made by
the other party without its prior written consent.
	 
	9.7	 	Additional Remedies. The indemnification obligations
of the parties established in this Section 9 shall be in addition
to, and shall be available to the parties irrespective of the
availability of, any other remedies expressly contemplated in this
Agreement, including without limitation those contemplated in
Sections 7, 8, 14, 17 and 22; provided, that no party shall be
entitled to recover multiple damages for the same claim under
multiple sections of this Agreement.

	10.	 	MARKETING

	10.1	 	Catalog Listings. Each party may list Product in its
catalogs as a regularly available item in the Territory. Baxter
shall also be permitted to provide customers with its “sell sheets”
listing the availability of Product. Baxter listings in catalogs
and “sell sheets” will show no prices and Baxter will provide
Guilford with a copy of such listings for prior written approval.
	 
	10.2	 	Baxter Promotion. Baxter shall not promote Product or
its therapeutic qualities. Baxter will use reasonable efforts to
promote acceptance and use of Container in the Territory. Any such
promotion of the Container that is to include reference to the
Product shall be approved in writing in advance by Guilford.

17

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	10.3	 	Product Sales. Nothing in Section 10.1 or 10.2 shall
be construed to grant Baxter a license to sell Product. Guilford
and its Affiliates, Licensees and Distributors shall be the
exclusive marketers, sellers and distributors of Product in the
Territory.
	 
	10.4	 	Guilford Promotional Materials. Guilford is
responsible for, and is not required or expected to forward to
Baxter for written approval, any promotional materials for Product,
except as to the use of Baxter’s Trademarks as provided in Section
11 and except as to any statements and/or claims made regarding the
Container. Baxter hereby agrees to the use of its Trademarks and
the statements and/or claims regarding the Container made in the
promotional materials that have been approved in writing by Baxter
(the “Approved Materials”). Guilford need not submit individual
promotional materials to Baxter for approval provided that any
statements and/or claims made in such promotional materials using
Baxter’s Trademarks or related to the Container are identical to the
statements and/or claims made in the Approved Materials. If
Guilford desires to make statements and/or claims related to the
Container, or desires to use Baxter’s Trademarks, in either case in
a manner not identical to the Approved Materials, then Guilford
shall submit such statements and/or claims to Baxter in writing, and
if Baxter does not object to such statements and/or claims within
[***] of receipt from Guilford, then Guilford shall have been
authorized to use such Trademarks, statements and/or claims and the
Approved Materials shall be deemed to be amended to include such new
items.
	 
	10.5	 	Labeling. Prescribing information and all labeling
copy, including all changes therein, to accompany the Product in the
Territory on the Product label and in the Product insert shall be
the responsibility of Guilford. Notwithstanding the foregoing,
Guilford will collaborate with Baxter in determining the appropriate
information and statements to be made regarding the description,
characteristics and/or use of the Container and will utilize, to the
greatest extent possible and appropriate for the Product, statements
which are consistent with language used by Baxter for other products
packaged in Baxter’s Container.

	11.	 	INTELLECTUAL PROPERTY

	11.1	 	Registration of Trademarks. Each party or its
Affiliates, as the case may be, will seek to maintain in force
during the term of this Agreement, its Trademark(s), at its own
cost, in the Territory.
	 
	11.2	 	Ownership of Trademarks. Each party warrants that it
or its Affiliate, as the case may be, has full right, title and
interest in and to its Trademark(s) and registrations obtained in
the Territory. Each party retains all right, title and interest in
or to its Trademark(s) and shall not assert any claim to any
goodwill, reputation or ownership of the other party’s Trademark(s).
All uses of Guilford’s Trademark by Baxter shall inure to the benefit of
Guilford, and all uses of Baxter’s Trademarks by Guilford shall
inure to the benefit of Baxter. However, neither party shall be
obligated to compensate the other for

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The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	 	 	benefits which may inure as the results of the use of such other party’s Trademark(s). 
	 
	11.3	 	License to Use Trademarks. During the term of this
Agreement, on a non-exclusive and royalty-free basis, solely for the
Territory and solely in connection with the rights and
responsibilities of the parties as provided in this Agreement and
the Related Agreements, (a) Guilford hereby grants Baxter a license
to use its Trademark in connection with the Manufacturing of Product
hereunder and in connection with activities permitted pursuant to
Sections 10.1 and 10.2; and (b) Baxter hereby grants Guilford a
license to use its Trademarks in connection with the registration,
promotion, sale and distribution of the Product. Neither party may
sublicense this license to the other party’s Trademark(s), except
that Guilford may sublicense this license to Guilford’s Affiliates,
Licensees and Distributors of Product, without obtaining the prior
written consent of Baxter. Any such sublicense granted shall
incorporate the terms of this Agreement by reference and shall bind
the sublicensee to the provisions of Section 11.
	 
	11.4	 	Trademark Marking. Each party shall approve in
writing the proper manner in which its Trademark(s) must be
displayed by the other party when used in connection with the terms
of this Agreement prior to any use of such Trademark(s), including
appropriate indication of each party’s ownership and registration
status of its Trademark(s).
	 
	11.5	 	Quality Control. Each party shall use the other
party’s Trademark(s) only as specified in Section 11 and in strict
accordance with the approved use under Section 11.4. The quality
control provisions of the Quality Agreement apply to the use of
Trademarks.
	 
	11.6	 	Goodwill of Trademarks. Neither party shall use the
other party’s Trademark(s) in any way which will adversely affect
the goodwill of the other party’s Trademark(s) and shall exercise
the necessary controls to maintain the good reputation and good will
of such Trademark(s). A requesting party may periodically inspect,
sample and review the other party’s actual use of the Trademark(s)
of the requesting party to determine whether the other party is
maintaining the goodwill of such Trademark(s). Such inspections,
sampling and review shall be undertaken by the other party at the
requesting party’s expense and request, but no more than once per
year, to which the other party shall promptly respond and cooperate.
	 
	11.7	 	Protection of Trademarks. Each party will in good
faith protect its Trademark rights against any infringement or claim
that the Trademarks are invalid or infringe the rights of others. Each party will give prompt written
notice to the other party of any infringement or possible
infringement of the other party’s Trademark(s) during the term of
this Agreement. The commencement, strategies, termination and
settlement of any action relating to the validity or infringement
of each party’s Trademark(s) shall be decided by the party owning
such Trademark(s).

19

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	11.8	 	License to Patents and Unpatented Technology. During
the term of this Agreement, on a non-exclusive and royalty free
basis solely for the Territory and solely to the extent necessary
for Baxter to realize its rights and fulfill its obligations under
this Agreement, Guilford hereby grants to Baxter a license under all
patents, unpatented technology, and other intellectual property
rights owned or controlled by Guilford relating to the Product;
provided that (i) Baxter shall only have the right to such license,
and to use such patents, unpatented technology, and intellectual
property rights, if and to the extent necessary for Baxter to
realize its rights and fulfill its obligations under this Agreement
and the Related Agreements, and that Baxter shall have no right to
use any such patents, unpatented technology or intellectual property
rights in any other manner or for any other purpose, and (ii) Baxter
shall not sublicense the license granted pursuant to this Section
11.8 without Guilford’s prior written consent except in connection
with the assignment of this Agreement to an Affiliate in accordance
with Section 23.2.

	12.	 	GUILFORD LICENSEES AND DISTRIBUTORS

	12.1	 	Notification. If Guilford and/or its Affiliates
desire to license Guilford’s rights to market and sell Product in
the Territory, Guilford shall first notify Baxter in writing of the
identity of the proposed Licensee and the nature of the rights to be
licensed.
	 
	12.2	 	Baxter Disapproval Due to Confidentiality Concerns.
With respect to those proposed Licensees which will need access to
Baxter’s Confidential Information, Baxter shall have the right,
within [***] after written notice given by Guilford pursuant to
Section 12.1, to disapprove any such proposed Licensee; provided
that in order to exercise such right, Baxter must demonstrate to
Guilford’s reasonable satisfaction that such proposed Licensee is
engaged in, or is preparing to engage in, the development or
manufacture of Flexible Containers.
	 
	12.3	 	Other Baxter Disapproval. Baxter shall also have the
right, within thirty (30) calendar days after written notice given
by Guilford pursuant to Section 12.1, to disapprove any such
proposed Licensee if Guilford’s license with such proposed Licensee
would create circumstances under which Baxter, by carrying out its
obligations under this Agreement, would [***] then in existence in
the Territory; provided that Baxter must provide Guilford with
documentary evidence of such [***]. Notwithstanding the foregoing,
Baxter agrees that it will not, after it signs this Agreement, [***],
unless such contract or arrangement would similarly affect Baxter’s
other pharmaceutical company customers for pre-mixed products in
the Territory. In the event that Baxter shall for any reason
become subject to any provision or restriction in any contract or
other arrangement which would interfere with Guilford’s utilization
of third parties as Licensees in the Territory after the date of
this Agreement, this Section 12.3 shall not apply with respect to
such contract or arrangement. Without limiting the generality of
the foregoing, in no event shall Baxter be entitled to enter into
any contract which would interfere with Guilford’s utilization in
the Territory of a previously approved Licensee.

20

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	12.4	 	No Unreasonable Disapproval. Baxter will not
unreasonably disapprove any proposed Licensee pursuant to Section
12.2 or 12.3.
	 
	12.5	 	Guilford License with Licensees. Guilford shall not
license any responsibilities under this Agreement to any proposed
Licensee disapproved by Baxter pursuant to Section 12.2 or 12.3.
	 
	12.6	 	Approval [***] Rights. If Baxter does not disapprove
a proposed Licensee within the thirty (30) calendar day period set
forth in Section 12.2 or 12.3, then such proposed Licensee shall be
deemed to be approved by Baxter [***]. Guilford shall have the
right to license its rights under this Agreement to any Licensee
approved by Baxter in accordance with this Section 12.
	 
	12.7	 	Distributors. Notwithstanding anything to the
contrary in this Section 12, there shall be no restriction upon, and
Baxter shall not have the right to approve or disapprove, Guilford’s
or its Affiliates’ use of any Distributors; provided that Guilford
shall not license its rights to market and sell Product to such
Distributors except in accordance with this Section 12 and Guilford
shall not disclose Baxter’s Confidential Information to any
Distributor without Baxter’s prior written consent, which consent
shall not be unreasonably withheld or delayed.
	 
	12.8	 	Guilford Continuing Obligations. No license or
contract with a Licensee or Distributor shall relieve Guilford of
its obligations under this Agreement or any other written agreement
entered into by the parties. Furthermore, Guilford shall be
responsible for the performance of any Licensee concerning the
Product in the Territory and shall indemnify Baxter and its
Affiliates with respect thereto as provided in Section 9.2.

	13.	 	BULK ACTIVE LOSSES

	 	 	Baxter shall reimburse Guilford for Bulk Active Losses in connection with
the Manufacture of Product pursuant to the provisions of Schedule E.

	14.	 	ENVIRONMENT

	14.1	 	Compliance with Laws. Baxter represents and warrants
that its operations and activities connected with or relating to the
preparation and Manufacture of the Product will comply with all
Applicable Laws relating to protection of human health and the
environment.
	 
	14.2	 	Indemnification. Baxter agrees to indemnify, defend
and hold harmless the Guilford Indemnitees from and against any and
all Damages arising out of or relating to a breach of the covenant
in Section 14.1, including without limitation (i) any condition in,
on, under or near the Facility, and (ii) any condition caused by
Baxter, its employees or agents arising out of or in any way
connected to any act or omission whatsoever of Baxter and/or its
Affiliates, employees or agents. Such duty of indemnification shall
include, but not be limited to, claims for injury to person(s) or
damage to property, including natural resources, and further
including claims for environmental

21

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

investigation and/or remediation of property at or around the Facility or any off-site location where
material from the Facility may have been transported or otherwise
came to be located. Baxter has the option of selecting the
attorneys for the defense of claims under this provision and shall
be responsible for all costs and expenses of such attorneys.
Guilford may elect to have its own attorneys as additional counsel,
in which case Guilford shall be responsible for its own attorneys’
fees.

	15.	 	CONFIDENTIALITY

	15.1	 	Confidentiality. With respect to the terms of this
Agreement and all information furnished by one party to the other
party pursuant to or under this Agreement or the Confidentiality
Agreement entered into on October 15, 2003, whether or not
identified herein as specifically subject to Section 15,
(collectively, “Confidential Information”), the party receiving such
Confidential Information shall maintain the confidential and
proprietary status of such Confidential Information, keep such
Confidential Information and each part thereof within its possession
or under its control, use all reasonable efforts to prevent the
disclosure of any Confidential Information to any other person or
entity, and use all reasonable efforts to ensure that such
Confidential Information is used only for those purposes
specifically authorized by this Agreement. These mutual obligations
shall not apply to any information to the extent that such
information is:

	(i)	 	developed by a receiving party independently of
the Confidential Information and not in violation of this
Agreement;
	 
	(ii)	 	in the public domain at the time of its receipt
from the disclosing party or thereafter becomes part of the
public domain through no fault of the recipient;
	 
	(iii)	 	received without obligation of confidentiality
from a third party having the right to disclose such
information;
	 
	(iv)	 	released from the restrictions of this Section
15.1 by the express written consent of the disclosing party;
or
	 
	(v)	 	known by the receiving party prior to its receipt
from the disclosing party as evidenced by the receiving
party’s business records.

	15.2	 	Exceptions. Notwithstanding the provisions of Section
15.1, the parties shall have the right to disclose Confidential
Information hereunder to the extent:

	(i)	 	required by Applicable Laws to be disclosed (the
disclosing party shall, however, give the other party
reasonable prior notice thereof and a copy of the disclosure
proposed to be made, and will also reasonably cooperate with
the other party to prevent or to limit such disclosure and
permit the other party to participate in seeking an
appropriate protective order);

22

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	(ii)	 	required by Securities Laws to be disclosed (the
disclosing party shall, however, consult with the other party
on the provisions of this Agreement to be redacted in any
filings made by the parties with the United States Securities
and Exchange Commission or as otherwise required by Applicable
Law);
	 
	(iii)	 	disclosed to the FDA and/or other governmental
agencies by a party in fulfillment of its obligations under
this Agreement in order to obtain or maintain FDA approval of
the Product, or to obtain or maintain patents (but such
disclosure shall only be made pursuant to the provisions of
this Agreement, as appropriate);
	 
	(iv)	 	necessary to be disclosed to Affiliates,
Licensees, Distributors, agents, consultants, and/or other
third parties, for the research and development, manufacturing
and/or marketing of the Product in the Territory, but only on
the condition that the prior written approval of Baxter has
been obtained for disclosure to Distributors in accordance
with Section 12.7 and such recipients of the Confidential
Information shall, prior to such disclosure, agree in writing
to be bound by the confidentiality and non-use obligations
contained in this Agreement; or
	 
	(v)	 	necessary to effect the licenses granted under
this Agreement, the Related Agreements or any other written
agreement entered into by the parties, but only on the
condition that such recipients of the Confidential Information
shall, prior to such disclosure, agree in writing to be bound
by the confidentiality and non-use obligations contained in
this Agreement and any other written agreement entered into by
the parties.

	15.3	 	Further Exception. Nothing in this Section 15 shall
prohibit a party from disclosing its own Confidential Information to
third parties unless such information also constitutes Confidential
Information of the other party hereunder or otherwise
is contemplated to be kept as confidential in this Agreement or the
Related Agreements.
	 
	15.4	 	Export. A recipient of Confidential Information shall
adhere to the U.S. Export Administration laws and regulations and
shall not export or re-export, to the extent covered by such laws
and regulations, any technical data or information received from the
disclosing party or the direct product of such technical data or
information to any proscribed country listed in the U.S. Export
Administration regulations unless properly authorized by the U.S.
Government.
	 
	15.5	 	Enforcement. Each party specifically recognizes that
any breach by it of this Section 15 may cause irreparable injury to
the other party and that actual damages may be difficult to
ascertain and in any event, may be inadequate. Accordingly (and
without limiting the availability of legal or equitable, including
injunctive, remedies under any other provision of this Agreement)
each party agrees that in the event of any such breach,
notwithstanding the provisions of Section 9 or 23.6 hereof, the
other party shall be entitled to seek,

23

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

by way of private litigation in the first instance, injunctive relief and such other legal and
equitable remedies as may be available. 

	15.6	 	Prior Arrangements. The parties acknowledge that they
have executed earlier agreements regarding confidential information
exchanged pursuant to the Confidentiality Agreement entered into on
October 15, 2003. The parties agree that Section 15 of this
Agreement shall supersede all provisions in such earlier agreements
relating to confidentiality and non-use obligations of the parties
with regard to confidential information disclosed under such earlier
agreements, except that where such agreements contain
confidentiality and non-use obligations which are more restrictive
than those set forth in Section 15 of this Agreement then those more
restrictive provisions shall continue to apply after execution of
this Agreement to confidential information disclosed under such more
restrictive provisions.
	 
	15.7	 	Return of Confidential Information. All Confidential
Information, including copies thereof, shall remain the property of
the disclosing party and, to the extent readily identifiable or
clearly identified, and upon request of the disclosing party, shall
be returned to it upon expiration or termination of this Agreement,
except to the extent retention is necessary to effect the licenses
granted under this Agreement or to comply with Applicable Laws.
	 
	15.8	 	Survival. The obligations of confidentiality and
non-use referred to in Section 15.1 shall survive until five (5)
years after termination or expiration of this Agreement.

	16.	 	TERM AND TERMINATION

	16.1	 	Condition Precedent. Both parties’ rights and
obligations under this Agreement and the Related Agreements, in
particular, those rights and obligations under Section 2 and the CTM
Supply Agreement, will be contingent upon the execution by Merck and
Baxter of an amendment to the Merck/Baxter Agreement (“the
Amendment”), which shall specifically relieve and release Merck from
its obligation to purchase from Baxter, and specifically relieve and
release Baxter from its obligation to manufacture and supply to
Merck, Product for sale in the Territory and otherwise permit Baxter
to perform the services and meet its obligations to Guilford
hereunder; provided that Baxter shall use reasonable commercial
efforts to enter into the Amendment with Merck contemporaneously
with this Agreement or as soon as practicable (and in any event
within five (5) days) after the date hereof. In the event that
Baxter and Merck shall fail to execute the Amendment, either
Guilford or Baxter shall have the right to terminate this Agreement
and the Related Agreements effective immediately upon written notice
to the other, except that Baxter shall have no such right to
terminate this Agreement or the Related Agreements if Baxter shall
have failed to exercise reasonable commercial efforts to enter into
the Amendment as contemplated by the foregoing sentence.
	 
	16.2	 	Term. The initial term of this Agreement shall be
effective as of the Effective Date, and shall continue in effect for
five (5) years. Thereafter, this

24

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

Agreement shall be renewed automatically for consecutive two (2) year periods unless and until
either party shall give written notice of termination at least
twelve (12) months before the end of the initial term or any renewal
thereof.

	16.3	 	Termination for Default or Bankruptcy. This Agreement
may be terminated upon written notice by either party to the other
party at any time during the term of this Agreement:

	(i)	 	if the other party, by act or omission, breaches
or defaults on a material term or condition of this Agreement
and such party fails to cure such breach within thirty (30)
calendar days after written notice by the other party, or if
by its nature such breach cannot be cured within such period
and such party does not take all reasonable steps which can be
taken within such thirty (30) day period to correct or remedy
such breach and thereafter diligently pursues such corrective
measures, which shall be completed not later than ninety (90)
calendar days from the date of such notice, unless the parties
shall agree otherwise in writing; or
	 
	(ii)	 	upon the filing or institution with respect to
the other party of bankruptcy, reorganization, liquidation or
receivership proceedings, or upon an assignment of a
substantial portion of its assets for the benefit of creditors
by the other party; provided, however, in the case of any
involuntary proceeding such right to terminate shall only
become effective if the other party consents to the
involuntary proceeding or such proceeding is not dismissed within ninety (90) calendar
days after the filing thereof.

	16.4	 	Termination by Either Party Due to Change in
Ownership. Each party shall provide written notice to the other
party prior to, or upon first becoming aware of (or, if prior notice
is not practicable or is otherwise prohibited, as soon as
practicable or after such notice is no longer prohibited), a change
of fifty percent (50%) or more of the direct or indirect ownership
of, or a change in control of, the notifying party (a “Change in
Control”). If the party entitled to notice reasonably believes that
such Change in Control will result in material harm to its business
as a result of competition between Guilford (and its Affiliates) and
Baxter (and its Affiliates) as a result of such Change in Control,
then such party shall have the option, within sixty (60) calendar
days of such notice, to terminate this Agreement effective
immediately after notifying the other party in writing.
	 
	16.5	 	Termination by Guilford if Product Is Withdrawn from the
U.S. Market. This Agreement may be terminated or suspended
immediately by Guilford if Product shall be withdrawn from the
market in the U.S. by Guilford due to (a) serious problems relating
to safety or efficacy; or (b) failure to obtain or maintain FDA
approval or any other license, permit or authorization required for
the Manufacture and sale of the Product in the United States. In
case of any termination or suspension of this Agreement under this
Section 16.5, Guilford’s sole liability shall be to pay Baxter for
Product as provided in

25

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

Section 16.8. This Agreement may be reinstated by Guilford for the balance of the existing contract term
if Guilford shall reintroduce Product within ninety (90) calendar
days following suspension of this Agreement under this Section 16.5;
thereafter, this Agreement may be reinstated by Guilford upon
agreement by Baxter, which shall not be unreasonably withheld.

	16.6	 	Termination by Guilford in the Event of Relocation of
Facility. Guilford shall have the right to terminate this
Agreement if the Facility used to Manufacture Product is relocated
in accordance with the procedures set forth in this Section 16.6,
provided, however, that Guilford’s approval of any such relocation
of Facility shall not be unreasonably withheld. Manufacture of
Product may not be relocated without at least two (2) years advance
written notice to Guilford. Guilford must provide Baxter with
written notice of its intent to terminate as set forth herein no
later than one hundred eighty (180) calendar days after receipt of
Baxter’s notice of its intent to relocate Manufacture of Product to
a new facility, which termination shall be effective as of the end
of the two (2) year notice period provided by Baxter. In the event
that Baxter intends to relocate Manufacturing of Product to another
facility, then, in addition to its other obligations set forth
herein, Baxter shall, at its own cost, be obligated to meet
pre-approval inspection and readiness requirements of the FDA,
revalidate equipment and Manufacturing processes, Manufacture new
stability batches, conduct required stability studies,
reimburse Guilford for any associated reasonable documented direct
costs of amending its filings with the FDA, including, but not
necessarily limited to, salaries and wages of personnel and
out-of-pocket costs, and pay for any other reasonable direct costs
associated with the relocation. Baxter will continue to supply
Product from the Facility until the new facility is approved by the
FDA.
	 
	16.7	 	Termination by Guilford in the Event of
Cross-Contamination. If Baxter receives FDA approval to
formulate, fill, label, package, warehouse and/or test any chemical
entity or product in the Facility that Guilford reasonably considers
to present cross-contamination problems for Product Manufactured
hereunder as contemplated in the Quality Agreement and Guilford can
provide reasonable evidence to this effect to Baxter, then Guilford
shall be entitled to terminate this Agreement immediately upon
written notice to Baxter, provided that such written notice is given
no later than thirty (30) calendar days after Baxter advises
Guilford in writing of such FDA approval.
	 
	16.8	 	Dispositions of Inventory Upon Termination or
Expiration.

	16.8.1	 	Certain Terminations by Guilford. In the event of
any termination of this Agreement by Guilford pursuant to
Section 16.3, 16.4, 16.6 or 16.7, then (i) Baxter shall
promptly return any remaining inventory of Bulk Active, and
package inserts and materials relating to the packaging of the
Product which contain Guilford’s or its Affiliates’,
Licensees’ or Distributors’ trademarks or trade names, in
accordance with Guilford’s written instructions, and Baxter
shall pay the freight and insurance costs and shall assume the
risk of loss for return of such items until Baxter physically
transfers the items to Guilford at Guilford’s designated
location; (ii) Guilford shall have the option to

26

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

cancel any outstanding Firm Orders for Product, without penalty to Guilford, or to compel Baxter to Manufacture and Deliver
Product relating to any outstanding Firm Orders in accordance
with the terms of this Agreement; and (iii) Guilford shall
have the option to purchase from Baxter all Product which
meets the warranties and other requirements of this Agreement,
in accordance with the terms of this Agreement.

	16.8.2	 	Certain Terminations by Baxter. In the event of any
termination of this Agreement by Baxter pursuant to Section
16.3 or 16.4, then (i) Baxter shall promptly return any
remaining inventory of Bulk Active, and package inserts and
materials relating to the packaging of the Product which
contain Guilford’s or its Affiliates’, Licensees’, or
Distributors’ trademarks or trade names, in accordance with
Guilford’s written instructions, and Guilford shall pay the
freight and insurance costs and assume the risk of loss for
return of such items after Baxter physically transfers the
items to Guilford’s designated carrier at Baxter’s Facility; (ii) Baxter shall have the
option to cancel any outstanding Firm Orders for Product,
without penalty to Baxter, or to Manufacture and Deliver
Product relating to any outstanding Firm Orders in
accordance with the terms of this Agreement; and (iii)
Guilford shall purchase from Baxter all Product Manufactured
pursuant to Firm Orders which meets the warranties and other
requirements of this Agreement, in accordance with the terms
of this Agreement.
	 
	16.8.3	 	Termination for Any Other Reason or Expiration. In
the event of termination of this Agreement for any reason
other than those contemplated in Sections 16.8.1 and 16.8.2,
or in the event of expiration of this Agreement, then (i)
Baxter shall promptly return any remaining inventory of Bulk
Active, and package inserts and materials relating to the
packaging of the Product which contain Guilford’s or its
Affiliates’, Licensees’, or Distributors’ trademarks or trade
names, in accordance with Guilford’s written instructions, and
the parties shall share equally the freight and insurance
costs and the risk of loss for return of such items after
Baxter physically transfers the items to Guilford’s designated
carrier at Baxter’s Facility; and (ii) the parties shall
cooperate in good faith to either cancel any outstanding Firm
Orders for Product, without penalty to either party, or to
Manufacture and Deliver Product relating to any outstanding
Firm Orders for purchase by Guilford in accordance with the
terms of this Agreement.
	 
	16.8.4	 	Destruction and Bulk Active Loss Calculations. Any
Product which is not purchased by Guilford under the
provisions of Section 16.8.1(iii) shall be destroyed by Baxter
in accordance with Section 17, and such Product shall be
included in Line F of the Bulk Active Usage Variance form(s)
prepared for the relevant Bulk Production Lot pursuant to
Schedule E.

	16.9	 	Remaining Obligations. Expiration or termination of
this Agreement shall not relieve the parties of any of their
respective obligations accruing prior to such

27

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

expiration or termination. The covenants and agreements of the parties that
require by their terms performance or compliance after expiration or
termination of this Agreement shall survive the termination of this
Agreement.

	16.10	 	Use of Trademarks. Except as may be required to
dispose of Product in existence at the time of expiration or
termination of this Agreement, any and all rights of either party to
use the Trademark(s) and trade names of the other party for the
Product shall end upon termination or expiration of this Agreement.
	 
	16.11	 	Alternative Suppliers. At the expiration of the term
of this Agreement, or in the event of early termination of this
Agreement by Guilford pursuant to any of Sections 16.3, 16.4, 16.6,
16.7 or 23.1, at Guilford’s written request [***]. The reasonable
costs for such technology transfer shall be reimbursed by Guilford
if the transfer results from expiration of the Agreement and the costs of
the transfer shall be born by Baxter if the transfer results from a
material breach by Baxter. Upon the earlier of (i) Guilford’s
delivery of notice of termination pursuant to any of Sections 16.3,
16.4, 16.6 or 16.7, (ii) the existence and continuation of a
circumstance contemplated by 23.1 for a period of at least ninety
(90) days, and (iii) one (1) year prior to the expiration of this
Agreement by its terms, Guilford shall be entitled to qualify an
alternative supplier (other than Baxter or its Affiliates) of
Product, and Guilford’s reasonable activities in connection with
such qualification shall not constitute a violation of Section 3.5;
provided that Guilford shall not be otherwise relieved of its
obligations hereunder, including its obligation under Section 15.

	17.	 	WASTE/DISPOSAL

	17.1	 	Baxter Warranty. To the extent of its
responsibilities therefor pursuant to this Agreement, Baxter
warrants that in connection with handling and/or disposing of (i)
any and all Bulk Active, Materials and/or Product, and (ii) those
waste streams derived from or associated with Bulk Active, Materials
and/or Product, or derived from or associated with the preparation
and Manufacturing of the Product, it will comply with all Applicable
Laws governing the transportation, unloading, discharge, generation,
storage, treatment, disposal, and handling of Bulk Active, Materials
and/or Product Manufactured under this Agreement, including, but not
limited to:

	(i)	 	the Toxic Substance Control Act (P.L. 94-469);
	 
	(ii)	 	the Federal Food, Drug and Cosmetic Act, as
amended, 21 U.S. Code, Section 301, et. seq.
	 
	(iii)	 	the Clean Air Act, 42, U.S.C. Section 7401, et.
seq.;
	 
	(iv)	 	the Federal Water Pollution Control Act, 33
U.S.C. Section 1251, et. seq.; and

28

 

The symbol “[***]” denotes that confidential portions of this exhibit have been omitted
in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The confidential portions
have been submitted separately to the Securities and Exchange Commission.

	(v)	 	the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et. seq.

	17.2	 	Baxter Indemnification. Baxter agrees to defend,
indemnify and hold Guilford and its Affiliates harmless from any and
all third party claims, losses, damages, costs and expenses,
including reasonable attorneys’ fees, arising from the
transportation, unloading, discharge, generation, storage,
treatment, disposal and handling of waste Bulk Active, Materials and
Product and of waste streams derived from or associated with the
preparation and Manufacturing of Product hereunder.
	 
	17.3	 	Limitation. The warranty and indemnity set forth in
Sections 17.1 and 17.2 shall not apply with respect to handling or
disposal of Bulk Active, Product, package inserts
and other materials used in Manufacturing of Product to the extent
that Guilford is responsible therefor pursuant to this Agreement or
otherwise, including Baxter returns of Bulk Active to Guilford for
destruction in accordance with the terms of this Agreement.
	 
	17.4	 	Guilford Indemnification. Guilford agrees to defend,
indemnify and hold Baxter and its Affiliates harmless from any and
all third party claims, losses, damages, costs and expenses,
including reasonable attorneys’ fees, arising from the
transportation, unloading, discharge, generation, storage,
treatment, disposal and handling of Bulk Active, Product, package
inserts and other materials used in the Manufacture of Product to
the extent that Guilford is responsible therefor pursuant to this
Agreement or otherwise, including handling and disposal by Guilford
of any and all customer return of Product in accordance with the
terms of this Agreement, except to the extent such claims, losses,
damages, costs and expenses are covered by Baxter’s indemnification
obligations hereunder, including pursuant to Section 17.2.

	18.	 	INSURANCE

	18.1	 	Insurance Coverage. Baxter shall, at its sole cost
and expense, procure and maintain throughout the life of this
Agreement and any extension thereof the following insurance with
carriers satisfactory to Guilford:

	(i)	 	Statutory Workers Compensation insurance as
required by Applicable Law and Employers Liability insurance
in an amount not less than [***] for each accident.
	 
	(ii)	 	Commercial General Liability insurance for bodily
injury or death of persons and/or loss of or damage to
property as follows:

	(a)	 	General Aggregate [***]
	 
	(b)	 	Premises/Operations [***]
	 
	(c)	 	Blanket Contractual Liability [***]
	 
	(d)	 	Completed Products Operations [***]

29

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	(e)	 	Personal & Advertising Injury [***]

	(iii)	 	Excess Liability insurance with limits of [***]
per occurrence and in the aggregate.

	18.2	 	Evidence of Insurance. Baxter shall provide Guilford
with written evidence of such insurance naming Guilford as an
additional insured and shall notify Guilford at least [***] prior to
any cancellation, non-renewal or material change in such insurance.
Baxter may elect to self-insure all or part of the limits described
above (including deductibles or retentions); however, such decision
to self-
insure shall not in any way limit Baxter’s liability with respect
to its indemnification obligations under this Agreement and the
Related Agreements.

	19.	 	REGULATORY MATTERS

	19.1	 	Maintenance of NDA. Guilford shall be responsible for
maintaining the NDA and all regulatory filings and submissions
associated with the Product in the Territory. Baxter shall provide
Manufacturing-related Product information to Guilford as may be
reasonably necessary or helpful for Guilford to meet its regulatory
obligations to maintain the NDA and file the required reports
thereunder in the Territory, including providing such information
relating to any changes to the Product Specifications, the
Manufacturing process or otherwise pursuant to the Quality
Agreement. Each party shall cooperate with the other in making and
maintaining all regulatory filings that may be necessary in
connection with the performance of this Agreement and the Related
Agreements.
	 
	19.2	 	Communications with the FDA. Guilford shall have the
responsibility for communications with the FDA relating to the
Product. Baxter shall provide Guilford, in a timely manner, all
information reasonably in its (or its Affiliates’) control
concerning the Product within or outside the Territory reasonably
necessary or helpful to meet Guilford’s regulatory obligations.

	20.	 	QUALITY AGREEMENT
	 
	 	 	Simultaneously with the execution of this Agreement, the parties are
entering into the Quality Agreement. Quality control testing and other
quality related matters shall be governed by, and performed by the
parties in accordance with, the terms and conditions of the Quality
Agreement. The Quality Agreement is intended to supplement this
Agreement, and is hereby incorporated in this Agreement in its entirety,
except that in the event of a conflict between any term, condition or
provision of this Agreement and any term, condition or provision of the
Quality Agreement, the applicable term, condition or provision of this
Agreement shall control unless otherwise agreed in writing by the
parties.
	 
	21.	 	CTM SUPPLY AGREEMENT
	 
	 	 	Simultaneously with the execution of this Agreement, the parties are
entering into the CTM Supply Agreement. Manufacture and supply of
clinical trial material and

30

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	related matters shall be governed by, and
performed by the parties in accordance with, the terms and conditions of
the CTM Supply Agreement. The CTM Supply Agreement is intended to
supplement this Agreement, and is hereby incorporated in this Agreement
in its entirety, except that in the event of a conflict between any term,
condition or provision of this Agreement and any term, condition or
provision of the CTM Supply Agreement, the applicable term, condition or
provision of this Agreement shall control unless otherwise agreed in
writing by the parties.
	 
	22.	 	SAFETY MATTERS, PRODUCT RETURN AND PRODUCT RECALL

	22.1	 	Safety. Baxter shall comply at all times with all
applicable health and safety regulations, policies and procedures
relating to the Manufacture of the Product, including the
transmission by Baxter to its employees of health and safety
information relating to the Product and its manufacture, storage,
disposal and transportation
	 
	22.2	 	Adverse Experience Reporting. The parties shall be
responsible for reporting adverse experiences and complaints with
respect to the Product (including the Bulk Active and the
Materials), and for responding to any such reports and complaints,
in accordance with the terms and conditions of the Quality
Agreement.
	 
	22.3	 	Product Returns. In the event that Baxter (or any of
its Affiliates) shall receive any returned goods of Product from a
third party, Baxter shall notify Guilford of such returned goods
and, at Guilford’s option, either destroy such returned goods or
deliver such return goods to Guilford, in each case at Guilford’s
expense. Guilford shall not have the right to return any Product
received by Guilford as returned goods from third parties to Baxter,
other than in accordance with Section 8.2. The parties shall notify
each other of, and shall respond to, any customer complaints
associated with returned Product in accordance with the terms and
conditions of the Quality Agreement.
	 
	22.4	 	Product Recall. Product recalls shall be conducted in
accordance with the terms of the Quality Agreement. Each party
shall make a permanent, complete and accurate record of all costs
incurred by it in connection with any Product recall, a copy of
which shall be delivered to the other as soon after the completion
of such recall or seizure as practically may be done. If the cause
of or reason for said recall or seizure arises from or is
attributable to Baxter’s negligence or breach of this Agreement,
Baxter shall, in addition to its other obligations hereunder,
reimburse Guilford for (i) all Bulk Active incorporated into the
recalled or withdrawn Product at the price per kilo set forth in
Section 8.2(ii), (ii) the Manufacturing Fees paid by Guilford for
the recalled or withdrawn Product calculated on a FIFO basis, and
(iii) all reasonable direct expenses including, but not necessarily
limited to, salaries and wages of personnel and out-of-pocket costs
which are incurred by Guilford and its Affiliates in connection with
such recall and documented and invoiced by Guilford to Baxter. If
the cause of or reason for said recall or seizure is directly
attributable to Guilford’s negligence or breach of this Agreement,
Guilford shall, in addition to its other obligations hereunder,
reimburse Baxter for all reasonable direct expenses including, but
not necessarily limited to,

31

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	salaries and wages of personnel and
out-of-pocket costs which are incurred and documented by Baxter in
connection with such recall and invoiced by Baxter to Guilford. If
Baxter and Guilford cannot agree which party is at fault, then an
independent technical expert, acceptable to both, will be
designated to make the determination. The so designated technical
expert shall not be an employee, consultant, officer, director or
shareholder of or otherwise associated with either party or an
Affiliate of either party. The technical expert’s determination
shall be, in the absence of fraud or manifest error, binding and
conclusive upon the parties.
	 
	23.	 	MISCELLANEOUS

	23.1	 	Force Majeure. Except as otherwise contemplated in
Section 3.4, Section 16.11 and this Section 23.1, neither party
shall be liable to the other for the failure or delay in performing
any obligation under this Agreement if and to the extent such
failure or delay is due to causes beyond the reasonable control of
the affected party, including (i) acts of God; (ii) weather, fire or
explosion; (iii) war, invasion, riot or other civil unrest; (iv)
governmental laws, orders, restrictions, actions, embargos or
blockades; (v) national or regional emergency; (vi) injunctions,
strikes, lockouts, labor trouble or other industrial disturbances;
(vii) shortage of adequate fuel, power, Materials, Bulk Active or
transportation facilities; or (viii) any other event which is beyond
the reasonable control of the affected party; provided that the
party affected shall promptly notify the other party, in writing, of
the force majeure condition and shall exert reasonable efforts to
eliminate, cure or overcome any such causes, at its own cost, and to
resume performance of its obligations as soon as possible. After
notice has been given by the affected party to the other party of
the force majeure event, the parties will discuss and attempt to
resolve the issues related to the force majeure event on terms and
conditions agreeable to both parties. Notwithstanding the
foregoing, if as the result of a force majeure event Baxter cannot
supply Product to Guilford for a period exceeding one hundred twenty
(120) calendar days, then Guilford shall be entitled to terminate
this Agreement upon written notice to Baxter and such termination
shall be effective immediately.
	 
	23.2	 	Assignment. Neither this Agreement nor the rights and
obligations of the parties hereunder may be assigned, delegated or
otherwise transferred by either party without the prior written
consent of the other party, which shall not be unreasonably withheld
or delayed, except (i) as contemplated in Section 12.6, and (ii)
that either party shall have the right to assign this Agreement, or
delegate its rights and obligations hereunder, in whole or in part,
to any Affiliate of such party; provided, that such assigning party
shall remain primarily responsible for its obligations hereunder.
In addition to the foregoing, and notwithstanding anything to the
contrary therein, Guilford shall have the right to grant a security
interest in, or to collaterally assign, this Agreement to the
extent, but only to the extent, required in connection with the
financing arrangements described in Schedule I hereto, and such
grant or assignment shall include the right of the grantee or
assignee to foreclose upon such security interest or collateral upon
default by Guilford and, in such event, to sell, assign, license or
otherwise dispose of such security interest or

32

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	collateral to a third
party;
provided, however, that any such sale, assignment, license or other
disposal shall be subject to the provisions of Section 16.4 to the
extent applicable. Any attempted assignment of this Agreement in
violation of this Section 23.2 shall be void. Notwithstanding the
foregoing, the prohibition on assignment set forth in this Section
23.2 shall not apply to any assignment that constitutes a Change in
Control, which shall be governed by the provisions of Section 16.4.
	 
	23.3	 	Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, such
provisions shall be ineffective to the extent (and only to the
extent) of such invalidity or unenforceability in such jurisdiction
and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby, unless the absence of the invalidated provision(s)
adversely affects the substantive rights of the parties. The
parties agree to replace any invalid, illegal or unenforceable
provision(s) or parts thereof by new provision(s) which closely
approximate the result intended by the parties.
	 
	23.4	 	Notices. All notices or other communications which
are required or permitted hereunder shall be in English and in
writing and shall be sufficient and deemed given on the same
business day if delivered personally, on the same business day if
sent by facsimile (and promptly confirmed by personal delivery,
registered or certified mail, or overnight courier), on the business
day after dispatch is sent by nationally recognized overnight
courier which provides a delivery receipt, or on the third business
day following the date of mailing if sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as
follows:

	 	 	 	 	 
	

	 	if to Guilford:
	 	Guilford Pharmaceuticals Inc.
	

	 	 	 	6611 Tributary Street
	

	 	 	 	Baltimore, Maryland 21224
	

	 	 	 	Attention: Senior Vice President -

Technical Operations
	

	 	 	 	Fax Number: (410) 631-6899
	 
	 	 	 	 
	

	 	with a copy to:
	 	Guilford Pharmaceuticals Inc.
	

	 	 	 	6611 Tributary Street
	

	 	 	 	Baltimore, Maryland 21224
	

	 	 	 	Attention: General Counsel
	

	 	 	 	Fax Number: (410) 631-5598
	 
	 	 	 	 
	

	 	if to Baxter:
	 	Baxter Healthcare Corporation
	

	 	 	 	Route 120 & Wilson Rd.
	

	 	 	 	Round Lake, IL 60073
	

	 	 	 	Attention: General Manager
	

	 	 	 	Global Drug Delivery
	

	 	 	 	Fax Number: 847-270-3410

33

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	 	 	 
	with a copy to:

	 	Baxter Healthcare Corporation
	

	 	Highway 221 North
	

	 	Marion, North Carolina 28752
	

	 	Attention: Plant Manager
	

	 	Fax Number: 704-756-4821

	 	 	or to such other address as the party to whom notice is to be given
may have furnished to the other party in accordance herewith.
	 
	23.5	 	Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware
without reference to any rules of conflict of laws or renvoi.
	 
	23.6	 	Alternative Dispute Resolution. The parties will
attempt to settle any claim or controversy arising out of this
Agreement through good faith negotiations and in the spirit of
mutual cooperation. If those attempts fail, except as otherwise
contemplated in this Agreement or the Related Agreements (including
without limitation Sections 7.2, 8.2 and 15.5 of this Agreement) and
subject to the provisions of this Section 23.6, such dispute between
the parties will be mediated by a mutually acceptable mediator to be
chosen by the parties within [***] after written notice by the party
demanding mediation. The disputes referred to in Sections 7.2, 8.2
and 15.5 of this Agreement, or elsewhere in this Agreement or the
Related Agreements, shall be settled as specified therein. Neither
party may unreasonably withhold consent of the selection of the
mediator and the parties will share the costs of the mediation
equally. The parties may agree to replace mediation with some other
form of Alternative Dispute Resolution (“ADR”), such as neutral
fact-finding, mini-trial or arbitration. Any dispute which cannot
be resolved by the parties through mediation or another form of ADR
within [***] of the date of the initial written demand for mediation
may then be submitted to the Federal or state courts, as
appropriate, for resolution. The use of any ADR procedures with
respect to unresolved disputes will not be construed under the
doctrine of latches, waiver or estoppel to affect adversely either
party’s right to assert any claim or defense. Notwithstanding the
foregoing, nothing in this Section 23.6 will prevent either party
from resorting to judicial process at any time if (i) good faith
efforts to resolve the dispute under these procedures have been
unsuccessful and such party reasonably believes that good faith
efforts to continue to attempt to resolve the dispute under these
procedures would be unsuccessful (irrespective of whether the [***]
period contemplated herein has expired), or (ii) injunctive relief
from a court is necessary to prevent serious and irreparable injury
to one party or to others.
	 
	23.7	 	Entire Agreement. This Agreement, together with the
Related Agreements, contains the entire understanding of the parties
with respect to the subject matter hereof and cancels all previous
agreements, negotiations, commitments and writing in
respect to the subject matter hereof except for the confidentiality
agreements between the parties to the extent referred to in Section
15.3.

34

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	23.8	 	Amendment. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both
parties hereto.
	 
	23.9	 	Subcontracting. Baxter shall not contract with a
third party to undertake any portion of the Manufacture of Product
without Guilford’s prior written consent.
	 
	23.10	 	Headings. The captions to the Sections hereof are
not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the Sections hereof.
	 
	23.11	 	Independent Contractors. It is expressly agreed that
Baxter and Guilford shall be independent contractors and that the
relationship between the two parties shall not constitute a
partnership, joint venture, agency or similar relationship. Neither
Baxter nor Guilford shall have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written
consent of the other party to do so.
	 
	23.12	 	Waiver. The waiver by either party hereto of (i) any
right hereunder; (ii) the failure to perform by the other party; or
(iii) a breach by the other party shall not be effective unless set
forth in a writing signed by the party against who such waiver is to
be enforced, and shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by said other party,
whether of a similar nature of otherwise.
	 
	23.13	 	Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument. Each party
may execute this Agreement on a facsimile of the Agreement and
facsimile signatures of authorized signatories of either party shall
constitute due execution and delivery of this Agreement.
	 
	23.14	 	Successors and Assigns. The terms and conditions of
this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted
assigns.
	 
	23.15	 	Execution. Each party agrees to execute such further
papers, agreements, documents, instruments and the like as may be
necessary or desirable to effect the purpose of this Agreement and
to carry out its provisions.
	 
	23.16	 	Remedies. Except as may be otherwise expressly
provided herein, no remedy referred to in this Agreement is intended
to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to in this Agreement or otherwise available
under law.
	 
	23.17	 	Review with Counsel. Each of the parties agrees that
it has had the opportunity to review this Agreement with its legal
counsel. Accordingly, the rule of construction that any ambiguity
in this Agreement is to be construed against the drafting party
shall not apply.

35

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

	23.18	 	Benefit. Except as otherwise provided in Section
23.19, nothing in this Agreement or the Related Agreements, express
or implied, is intended to or shall confer on any person other than
the parties hereto, and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement or the Related Agreements.
	 
	23.19	 	Merck/Baxter Agreement. Guilford (but only as to (ii)
and (iii)) and Baxter (but only as to (i)A and (i)B and (iv)) hereby
acknowledge and agree (and represent, warrant and covenant to Merck
and to each other) that effective as of the Effective Date of this
Agreement (i) (A) Merck and its Affiliates shall be relieved and
released from its obligation to purchase from Baxter, and Baxter
shall be relieved and released from its obligation to manufacture
and supply to Merck and its Affiliates, Product for sale in the
Territory, and (B) with respect to the Territory, both Merck and
Baxter have waived any provisions of exclusivity, noncompetition or
the like in the Merck/Baxter Agreement that would limit Guilford’s
ability to directly contract with Baxter to purchase Product for
sale in the Territory, (ii) pursuant to the letter agreement (the
“Letter Agreement”) dated as of the Effective Date of this
Agreement between Guilford, Merck and Merck, Sharp & Dohme (Ireland)
Limited, an Affiliate of Merck (“MSD Ireland”), Merck and its
Affiliates have been relieved and released from the obligation to
supply to Guilford, and Guilford and its Affiliates have been
relieved and released from the obligation to purchase from Merck,
Product for sale in the Territory (except for the sale and purchase
of certain inventory pursuant to the Letter Agreement), (iii) from
and after the Effective Date, all Product manufactured and supplied
by Baxter to Guilford shall not be labeled using the name “Merck” or
any trademark, trade name or other designation of Merck or its
Affiliates, unless otherwise permitted under the Supply Agreement
dated as of October 28, 2003 by and between Guilford and MSD Ireland
or a certain Transition Services Agreement between Guilford and
Merck, and (iv) this Agreement does not materially adversely affect
Merck or its Affiliates or its or their business or interest with
respect to Baxter and Baxter’s ability to make the Product for Merck
outside the United States in the Territory as set forth in the
Manufacturing and Supply Agreement and the related agreements, as
amended, between Merck and Baxter. Merck and its Affiliates shall
be
deemed a third party beneficiary to the provisions contained in
this Section 23.19.

36

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

1IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first set forth above.

	 	 	 
	Guilford Pharmaceuticals Inc.

	 	Baxter Healthcare Corporation
	 
	 	 
	By: /s/ John P. Brennen

	 	By:/s/ David F. Drohan
	 
	 	 
	Name: John P. Brennen

	 	Name:David F. Drohan
	 
	 	 
	Title: Senior Vice President,

	 	Title: Senior Vice President,
	          Technical Operations

	 	        Medication Delivery
	 
	 	 
	Date: July 1, 2004

	 	Date: July 1, 2004

37

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE A

SPECIFICATIONS FOR PRODUCT and BULK ACTIVE

[***]

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE B

APPROVED VENDORS FOR EXCIPIENTS

[***]

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE C

MANUFACTURING FEES

250 mL Product Packaging Configuration

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Fee per Unit 1
	 	 	 	 	Minimum	 	Fee per Unit	 	Unit per Box 8
	 	 	Order Quantity	 	Codes per	 	18 Units per	 	Boxes per
	Tier
	 	per Code (units)
	 	Order
	 	Shipper
	 	Shipper

	

	 	 	 	[***]	 	 	 	 

100 mL Product Packaging
Configuration

	 	 	 	 	 
	 	 	 	 	Fee per Unit 1
	 	 	 	 	Unit per Box
	 	 	Order Quantity	 	24 Boxes per
	Tier
	 	per Code (units)
	 	Shipper

	

	 	[***]	 	 

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE D

PRODUCT DEFINITIONS

100mL Single Port / U.S.

	 	 	 
	Quantity
	 	Description

	24

	 	Filled/printed PL2408 single port IV containers each within a printed foil overpouch
	 
	 	 
	24

	 	Intermediate single unit white paperboard shipping cartons with applied
labels (each containing one foil overpouched container).
	 
	 	 
	1

	 	Labeled Master Shipper carton (each containing 24 intermediate single

unit shipping cartons
	 
	 	 
	35

	 	Master Shippers (840 units) / pallet

250mL Single Port / U.S.

	 	 	 
	Quantity
	 	Description

	8

	 	Filled/printed PL2408 single port IV container each within a sealed
printed foil overpouch.
	 
	 	 
	8

	 	Intermediate Single unit brown shipping cartons (corrugated) with applied
labels (each containing one foil overpouched container).
	 
	 	 
	1

	 	Labeled Master Shipper carton each containing 8 intermediate single unit

preprinted (brown corrugated) shipping cartons
	 
	 	 
	45

	 	Master Shippers (360 units) / pallet

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE E

BULK ACTIVE LOSSES

	A.	 	General

	1.	 	The term “Bulk Active Loss” shall mean the destruction of
Bulk Active during the process of Manufacture such that the Bulk
Active cannot be used to Manufacture usable Product and must be
discarded.
	 
	2.	 	The term “Unit Yield per Gram” means the number of units of
finished Product yielded from each gram of Bulk Active used in the
Manufacture of such Product.
	 
	3.	 	Bulk Active Losses are an expected outcome of Manufacturing.
Baxter shall use reasonable efforts, at its own cost, to minimize
Bulk Active Losses, and in any event shall at all times Deliver to
Guilford the Minimum Allowable Unit Yield per Gram of Bulk Active
(the “Minimum”), which Minimum shall be determined [***]. Baxter
and Guilford shall collaborate to identify opportunities for
minimizing Bulk Active Losses in the Manufacture of Product.
Guilford may inspect Baxter’s records relating to the calculations
referred to in this Schedule E in accordance with the provisions
specified in the Quality Agreement.

	B.	 	Compensation for Bulk Active Losses. Baxter shall pay Guilford at
the rate $[***] per kilo of Bulk Active consumed in any Manufacture of
Product rendering a Bulk Active Loss (which price shall be subject to
adjustment as set forth in Section 8.2(ii) of this Agreement), for the
amount of Bulk Active utilized which does not meet the Minimum as
established in Section A(3) above and updated annually. 
	 
	C.	 	Reporting. The Unit Yield per Gram will be calculated by Baxter
for each Bulk Production Lot. 
	 
	D.	 	Invoicing. Guilford shall invoice Baxter for the Bulk Active Loss
for each Bulk Production Lot not meeting the Minimum that has been
established in accordance with Section A(3) above.
	 
	E.	 	Payment. Payment of the invoice issued pursuant to Section D
shall be made by Baxter within thirty (30) calendar days after delivery of
the invoice by Guilford.
	 
	F.	 	Other Bulk Active Losses. If the reconciliation of physical
inventory counts to Baxter’s books and perpetual records made pursuant to
Section 6.3 of this Agreement indicates a loss of Bulk Active in addition
to that which is accounted for pursuant to this Schedule E, then Baxter
shall pay Guilford at the rate per kilo set forth in Section 8.2(ii) for
the amount of such lost Bulk Active exceeding [***].

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

BULK ACTIVE LOSS FORM

Lot Number:                    

Code Number:                    

Manufacture Date:                    

	 	 	 	 	 	 	 	 	 
	 	 	 	 	ACCOUNTABILITY:
	 	Actual
	 	 
	A

	 	 	 	Total Bulk Active used in Bulk Production Lot
	 	 	 	Grams
	 
	 	 	 	 	 	 	 	 
	B

	 	 	 	Total volume in Bulk Production Lot
	 	 	 	Liters
	 
	 	 	 	 	 	 	 	 
	 	 	Unit Count Reconciliation:	 	 	 	 
	

	 	 	 	Released Product units
	 	 	 	# of units
	+

	 	 	 	Units required for quality control release testing
	 	 	 	# of units
	+

	 	 	 	Units requested by Guilford
	 	 	 	# of units
	+

	 	 	 	First of Code Batch testing units
	 	 	 	# of units
	+

	 	 	 	Units used in ongoing [***] testing
	 	 	 	# of units
	 
	 	 	 	 	 	 	 	 
	C	 	Total number of units accounted for	 	 	 	# of units
	 
	 	 	 	 	 	 	 	 
	 	 	UNIT YIELD per
GRAM of Bulk Active:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	D	 	Unit Yield per Gram = C/A	 	 	 	Units/Gram
	 
	 	 	 	 	 	 	 	 
	 	 	MINIMUM UNIT YIELD per GRAM of ACTIVE:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Minimum Allowed 250 mL Unit Yield per Gram of Active	 	[***]	 	Units/Gram
	 	 	Minimum Allowed 100 mL Unit Yield per Gram of Active	 	[***]	 	Units/Gram
	 
	 	 	 	 	 	 	 	 
	 	 	Units Short per Gram	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	E	 	Minimum Unit Yield – Actual Unit Yield (D)	 	 	 	Units/Gram
	 
	 	 	 	 	 	 	 	 
	 	 	Units Short	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	F	 	Total Bulk Active used (A) x Units Short per Gram (D)	 	 	 	Units
	 
	 	 	 	 	 	 	 	 
	 	 	Grams of Active Lost	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	G	 	Units Short (F) x grams of Active per bag	 	 	 	Grams
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Grams of Active per 250 mL Unit
	 	[***]
	 	Grams/Bag
	

	 	 	 	Grams of Active per 100 mL Unit
	 	[***]
	 	Grams/Bag

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE F

INVOICING REQUIREMENTS

Invoices must contain the following information

	 	 	 
	

	 	Quantity of units shipped
	

	 	Rx Number
	

	 	Bulk Production Lot Number
	

	 	Filling Production Lot Number
	

	 	Date of Manufacture
	

	 	Guilford’s Purchase Order Number
	

	 	Ship to Address
	

	 	Date of Shipment

Invoices are to be sent to:

	 	 	 
	

	 	Guilford Pharmaceuticals Inc
	

	 	Accounts Payable
	

	 	6611 Tributary Street
	

	 	Baltimore, MD 21224

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE G

INITIAL FIRM ORDER AND FORECAST

Forecast of Product Requirements

	 	 	 	 	 
	 	 	AGGRASTAT 250mL Bag
	 	AGGRASTAT 100mL Bag

	MONTH
	 	 	 	 
	

	 	[***]	 	 

Firm Orders

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Delivery	 	Price per	 	Total	 	 
	Product Name
	 	UOM
	 	Qty
	 	Date
	 	Unit
	 	Amount
	 	PO No

	

	 	 	 	 	 	[***]	 	 	 	 	 	 

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE H

FORM OF PURCHASE ORDER

[***]

 

 

The symbol “[***]” denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.

SCHEDULE I

FINANCING ARRANGEMENTS

     In order to finance its acquisition of the rights to the Product in the
Territory from Merck, Guilford entered into a revenue interest financing
arrangement with Paul Royalty Fund, L.P. and Paul Royalty Fund II, L.P.
(collectively, “PRF”) pursuant to a revenue interest assignment agreement.
Under Guilford’s arrangement with PRF, and subject to the terms and conditions
thereof, PRF is entitled to receive a certain percentage of Guilford’s annual
net sales of the Product. In order to secure its obligations to PRF, Guilford
granted PRF a security interest in the assets related to the Product.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]