Document:

exv10w41

 

Exhibit 10.41

 

 

June 15, 2004

 

 

Mr. William F. Spengler

11980 Thurloe Drive

Timonium, MD 21093

Dear Bill:

I am very pleased to offer you employment with Guilford Pharmaceuticals on the
following terms:

	 	1.	 	Your title will be Executive Vice President, Chief Financial
Officer. In this capacity, you will report directly to me, Chairman,
Chief Executive Officer and President. You will have responsibility
for Finance and Accounting, Treasury, Investor and Public Relations,
Information Services, and Purchasing. You will also work closely
with the Audit Committee of the Board of Directors and serve as a
member of Guilford’s Executive Committee.
	 
	 	2.	 	In consideration of your services, the Company will provide the
following compensation:

	 	a.	 	Salary: Your salary will be $27,083.33 per
month (an annual rate of $325,000), payable in semi-monthly
increments. Your performance and salary will be reviewed
annually according to our performance review program and you
will be eligible for pro-rata consideration for 2004, payable in
March, 2005.
	 
	 	b.	 	Annual Incentive Plan: As an officer of the
Company, you will be eligible to participate in any incentive
plan the Board of Directors may adopt from time to time for
executive officers of the Company. Our incentive plan is based
on attainment of corporate objectives and is further influenced
by individual performance. Your annual target incentive is 40%
and you will be eligible for pro-rata participation for 2004.
Bill, I believe that with your help and leadership we will make
important progress in achieving our goals and the corresponding
incentive awards.

 

 

William F. Spengler

June 15, 2004

Page 2 of 4

 

	 	c.	 	Joining Stock Options: Subject to the approval of the
Board of Directors, the Company will award you options to purchase
125,000 shares of its common stock, subject to the terms and
conditions of the Company’s standard stock option agreement. The
price of the options will be the closing price of Guilford’s stock
on the trading date immediately preceding your first day of
employment with the Company. These options will vest as follows:
25% of your options will vest on the first anniversary of the
grant. The remaining options vest monthly over the next 36
months. Ongoing Option Awards: You will be eligible to receive
further stock options, if any, pursuant to stock option plans
approved by the Board of Directors from time to time.
	 
	 	d.	 	Executive Change in Control Severance
Agreement: As an Executive of Guilford Pharmaceuticals
Inc., you will be entitled to certain benefits in the event of a
change in control of the Company, as set forth in the attached
Executive Change in Control Severance Agreement. Essentially,
under certain conditions, you could receive an amount equal to
two times your then-current annual salary, accelerated vesting
of outstanding options, and Benefits continuation for up to two
years.

	 	3.	 	Additional Benefits. In addition to the compensation
described above, you will be eligible for the following benefits:

	 	a.	 	Supplemental Disability Insurance: In
addition to the group disability insurance offered by Guilford,
as a Vice President of the Company, you will be eligible to
apply for a supplemental long-term disability policy paid for by
Guilford and underwritten by Principal Life Insurance Company.
This plan is subject to standard underwriting requirements.
Please see the attached summary example of this important
benefit.
	 
	 	b.	 	Insurance: The Company offers comprehensive
medical, dental, vision, life, accidental death, short-term and
long-term disability insurance as described in the Employee
Benefits Overview.
	 
	 	c.	 	Financial Planning Assistance: You will be
reimbursed up to $5,000 each calendar year for financial
planning services provided by a qualified tax accountant,
financial planner or other similar service.
	 
	 	d.	 	Vacation and Holidays: You will be entitled
to 20 vacation days during your first year of employment;
thereafter, a vacation day will be added annually, up to a
maximum of 25 vacation days. Also, the Company offers paid
specified holidays (currently 11).

 

 

William F. Spengler

June 15, 2004

Page 3 of 4

 

	 	e.	 	401(k) Plan: You may elect to join Guilford’s
401(k) Plan at the quarterly enrollment date following your date
of hire. You will be eligible to receive the Company match
subject to the terms and conditions of such plan as may be in
effect from time to time. Guilford currently matches 50% of the
first 6% of employee salary deferral in the form of newly issued
Guilford stock. You may reallocate the Company match to other
funds within the plan once the quarterly match has been made.
The annual maximum contribution for 2004 is $13,000. An
additional $3,000 may be contributed for those at age 50,
subject to IRS limitations.
	 
	 	f.	 	Employee Stock Purchase Plan: From time to
time, Guilford offers the opportunity to participate in an
Employee Stock Purchase Plan. If you elect to participate, you
may contribute from 1% to 15% of your regular salary to purchase
            shares under the Plan. However, you may not purchase more than
$25,000 worth of Guilford stock during any calendar year.

	 	4.	 	
Other Conditions of Employment. This offer of
employment at will is conditioned on:

	 	(i)	 	continuing compliance with relevant
requirements under the Immigration Reform Act of 1986,
including presentation of documentation that proves your
identity and legal right to work in the United States within
three days of your start of employment;
	 
	 	(ii)	 	your signing a Patent and Confidentiality
Agreement in connection with your employment by the Company;
	 
	 	(iii)	 	successful completion of a background
investigation; and
	 
	 	(iv)	 	your taking and successfully passing the
included drug screen, which should be scheduled at your
earliest convenience and our expense.

	 	5.	 	Executive Severance: In the event your employment
is terminated by Guilford other than for cause* or change in
control, you would be entitled to severance payments in the form of
a continuation of your then-current base salary for up to 18
months. Such payments would cease upon your commencement of paid
employment or consultancy during the severance period. Receipt of
this benefit is conditioned upon the execution of Separation
Agreement and General Release, a copy of which is attached for your
review.

 

 

William F. Spengler

June 15, 2004

Page 4 of 4

 

During the severance period, the Company would also reimburse you for
the cost of continuation of any health and life insurance coverage
available at the time of the termination of employment, provided that
the Company reserves the right to provide substantially equivalent
alternative coverage to the extent reasonably available upon conversion
from full-time employment. Such continuing coverage is conditioned upon
your reasonable cooperation in complying with any necessary application
procedures. Remaining benefits of employment, including your
eligibility for any incentive program and the vesting of unvested
options would cease at termination and not continue to accrue during the
severance period.

As we discussed Bill, I look forward to working with you and to the
considerable contributions I know you will make on behalf of Guilford. I am
committed to ensuring that we take full advantage of your abilities and to that
end, we will review the breadth and scope of your responsibilities early in the
New Year. Together we can determine what next steps make the most sense for
Guilford.

Bill, all of us at Guilford are very enthusiastic about your joining our team.
Please feel free to review the details of this letter with Marge Contessa or me
should you have any questions. I look forward to seeing you on Wednesday.

Sincerely,

/s/ Craig R. Smith, M.D.

Craig R. Smith, M.D.

Chairman, Chief Executive Officer and President

Enclosures

cc: M. M. Contessa

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

Agreed to and accepted:

/s/ William F. Spengler

William F. Spengler

/s/ June 17, 2004

Date

“Cause”: (i) conviction of a crime involving fraud or theft against the
Employer or a crime involving moral turpitude; or (ii) a finding by the
Board that an Executive has (x) compromised trade secrets or other
proprietary information of the Employer, (y) willfully failed or refused
to perform material assigned duties, or (z) engaged in gross or willful
misconduct that causes substantial and material harm to the business and
operations of the Employer.exv10w42

 

Exhibit 10.42

MANUFACTURING AND SUPPLY AGREEMENT

By and Between

GUILFORD PHARMACEUTICALS INC.

and

BAXTER HEALTHCARE CORPORATION

*The asterisk denotes that confidential portions of this exhibit have been

omitted and 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
	 	6
	3.1 Forecasts and Orders
	 	6
	3.2 Satisfaction of Firm Orders
	 	6
	3.3 Terms
	 	7
	3.4 Short Supply of Materials and/or Resources
	 	7
	3.5 Exclusive Manufacture and Supply
	 	7
	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
	 	8
	4.3 Underlying Assumptions
	 	8
	4.4 Fee to Re-Package Product
	 	8
	4.5 User Fees
	 	8
	4.6 Amount and Timing of Manufacturing Fee Increases
	 	9
	4.7 Notification, Effective Date and Application of Manufacturing Fee Increases
	 	9
	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
	 	10
	5.1 Delivery of Product
	 	10
	5.2 Shipment of Product
	 	10
	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
	 	11
	6.3 Inventory Counts
	 	11
	6.4 Bulk Active Freight Claims
	 	11
	6.5 Materials – Container
	 	11
	6.6 Materials – Other than Container
	 	11
	7. GUILFORD WARRANTY AND LIMITATIONS
	 	12
	7.1 Guilford Warranties
	 	12
	7.2 Claims for Failure to Meet Bulk Active Specifications
	 	12
	7.3 Other Claims
	 	13
	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
	 	14
	8.3 Other Claims
	 	15
	8.4 Product Not Meeting Warranties
	 	16

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

ii

 

 

	 	 	 
	9. INDEMNIFICATION
	 	16
	9.1 Baxter Indemnification
	 	16
	9.2 Guilford Indemnification
	 	17
	9.3 No Claim for Losses
	 	17
	9.4 Prompt Notice
	 	17
	9.5 Refund Due to Injunction
	 	18
	9.6 Not Binding
	 	18
	9.7 Additional Remedies
	 	18
	10. MARKETING
	 	18
	10.1 Catalog Listings
	 	18
	10.2 Baxter Promotion
	 	18
	10.3 Product Sales
	 	18
	10.4 Guilford Promotional Materials
	 	19
	10.5 Labeling
	 	19
	11. INTELLECTUAL PROPERTY
	 	19
	11.1 Registration of Trademarks
	 	19
	11.2 Ownership of Trademarks
	 	19
	11.3 License to Use Trademarks
	 	20
	11.4 Trademark Marking
	 	20
	11.5 Quality Control
	 	20
	11.6 Goodwill of Trademarks
	 	20
	11.7 Protection of Trademarks
	 	20
	11.8 License to Patents and Unpatented Technology
	 	19
	12. GUILFORD LICENSEES AND DISTRIBUTORS
	 	20
	12.1 Notification
	 	20
	12.2 Baxter Disapproval Due to Confidentiality Concerns
	 	21
	12.3 Other Baxter Disapproval
	 	21
	12.4 No Unreasonable Disapproval
	 	21
	12.5 Guilford License with Licensees
	 	21
	12.6 *
	 	21
	12.7 Distributors
	 	21
	12.8 Guilford Continuing Obligations
	 	21
	13. BULK ACTIVE LOSSES
	 	21
	14. ENVIRONMENT
	 	22
	14.1 Compliance with Laws
	 	22
	14.2 Indemnification
	 	22
	15. CONFIDENTIALITY
	 	22
	15.1 Confidentiality
	 	22
	15.2 Exceptions
	 	23
	15.3 Further Exception
	 	24
	15.4 Export
	 	24
	15.5 Enforcement
	 	24
	15.6 Prior Arrangements
	 	24
	15.7 Return of Confidential Information
	 	24
	15.8 Survival
	 	24
	16. TERM AND TERMINATION
	 	25

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

iii

 

 

	 	 	 
	16.1 *
	 	25
	16.2 Term
	 	25
	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 *
	 	24
	16.8 Dispositions of Inventory Upon Termination or Expiration
	 	26
	16.9 Remaining Obligations
	 	28
	16.10 Use of Trademarks
	 	28
	16.11 Alternative Suppliers
	 	28
	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
	 	31
	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
	23. MISCELLANEOUS
	 	32
	23.1 Force Majeure
	 	32
	23.2 Assignment
	 	33
	23.3 Severability
	 	33
	23.4 Notices
	 	33
	23.5 Applicable Law
	 	34
	23.6 Alternative Dispute Resolution
	 	34
	23.7 Entire Agreement
	 	35
	23.8 Amendment
	 	35
	23.9 Subcontracting
	 	35
	23.10 Headings
	 	35
	23.11 Independent Contractors
	 	35
	23.12 Waiver
	 	35
	23.13 Counterparts
	 	36
	23.14 Successors and Assigns
	 	36
	23.15 Execution
	 	36
	23.16 Remedies
	 	36
	23.17 Review with Counsel
	 	36

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

iv

 

 

	 	 	 
	23.18 Benefit
	 	36
	23.19 *
	 	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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

v

 

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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

 

 

	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.
	 
	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,

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

2

 

	 	 	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	 	*
	 
	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-

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

3

 

	 	 	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.
	 
	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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

4

 

	 	 	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.
	 
	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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

5

 

	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 * 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 *
nor more than * 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 *, as
well as Guilford’s Estimated Requirements and estimated
Delivery dates for the next succeeding * beginning *.
Guilford shall deliver Estimated Requirements and estimated
Delivery dates for the * beginning * 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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

6

 

	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 Product
exclusively to Guilford in the Territory, and Guilford shall purchase
exclusively from Baxter quantities of Product equal to Guildford’s needs for the Territory.
	 
	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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

7

 

	4.2	 	Application of Prices for each Tier. The Manufacturing Fees
shown in Schedule C *. 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.
	 
	(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. *
	 
	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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

8

 

	 	 	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.
	 
	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 asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

9

 

	 	 	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 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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

10

 

	 	 	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 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,

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

11

 

	 	 	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 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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

12

 

	 	 	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.
	 
	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,

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

13

 

	 	 	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 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 * 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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

14

 

	 	 	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;
	 
	(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;

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

15

 

	(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 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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

16

 

	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
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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

17

 

	 	 	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.
	 
	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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

18

 

	 	 	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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

19

 

	 	 	party shall be
obligated to
compensate the other for 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).
	 
	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 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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

20

 

	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. * 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.
	 
	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	 	*
	 
	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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

21

 

	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 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;

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

22

 

	(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);
	 
	(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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

23

 

	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, 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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

24

 

	16.	 	TERM AND TERMINATION

	16.1	 	*

	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 Agreement shall be renewed automatically
for consecutive two (2) year periods unless and until either party
shall give written notice of termination at least * 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 * 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 *
period to correct or remedy such breach and thereafter
diligently pursues such corrective measures, which shall be
completed not later than * 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 * 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 * 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

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

25

 

	 	 	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 Section 16.8. This Agreement may be reinstated by
Guilford for the balance of the existing contract term if Guilford
shall reintroduce Product within * 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. * Guilford must
provide Baxter with written notice of its intent to terminate as set
forth herein no later than * 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 * 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	 	*
	 
	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 cancel any outstanding Firm
Orders for Product, without penalty to Guilford, or to compel
Baxter to Manufacture

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

26

 

	 	 	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.

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

27

 

	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 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 *, and (iii) * 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.;

*The asterisk denotes that confidential portions of this exhibit have been

omitted and submitted separately to the Securities and Exchange Commission.

28

 

	(iv)	 	the Federal Water Pollution Control Act, 33
U.S.C. Section 1251, et. seq.; and
	 
	(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:

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

29

 

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

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

30

 

	 	 	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 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

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

31

 

	 	 	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, 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

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

32

 

	 	 	exceeding *, 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 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:

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

33

 

	 	 	 	 	 
	

	 	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
	 
	 	 	 	 
	

	 	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 asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

34

 

	 	 	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.
	 
	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

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

35

 

	 	 	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.
	 
	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	 	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

36

 

IN 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,
Technical Operations	 	Title:	 	Senior Vice President,
Medication Delivery
	

	 	

	 	 	 	

	 
	 	 	 	 	 	 
	Date:

	 	July 1, 2004	 	Date:	 	July 1, 2004
	

	 	

	 	 	 	

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

37

 

SCHEDULE A

SPECIFICATIONS FOR PRODUCT and BULK ACTIVE

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE B

APPROVED VENDORS FOR EXCIPIENTS

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE C

MANUFACTURING FEES

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE D

PRODUCT DEFINITIONS

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE E

BULK ACTIVE LOSSES

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE F

INVOICING REQUIREMENTS

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE G

INITIAL FIRM ORDER AND FORECAST

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and submitted separately to the Securities and Exchange Commission.

 

 

SCHEDULE H

FORM OF PURCHASE ORDER

	 
	*

*The asterisk denotes that confidential portions of this exhibit have been 
omitted and 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.

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