GUILFORD PHARMACEUTICALS INC
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREE.
<DOCUMENT>
<TYPE>EX-10.37
<SEQUENCE>3
<FILENAME>w86535exv10w37.txt
<DESCRIPTION>LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREE.
<TEXT>
<PAGE>

                                                                   Exhibit 10.37

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



              LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT is entered into as of
May 7, 2003 (the "Effective Date"), by and between PFIZER INC ("Pfizer"), a
Delaware corporation, having an office at 235 East 42nd Street, New York, New
York 10017, and GUILFORD PHARMACEUTICALS INC., a Delaware corporation, having an
office at 6611 Tributary Street, Baltimore, MD 21224, and GPI NAALADASE
HOLDINGS, INC., a Delaware corporation, having an office at 222 Delaware Avenue,
Wilmington, Delaware 19899 (collectively, with Guilford Pharmaceuticals Inc.,
"Guilford").

WHEREAS, Pfizer desires to obtain an exclusive license under Guilford's right,
title and interest in the Patent Rights so that Pfizer can evaluate the Patent
Rights and manufacture, use, sell, offer for sale and import the Products; and

WHEREAS, Guilford is willing to grant a license on the terms and subject to the
conditions set forth in this Agreement;

Therefore, in consideration of the mutual covenants and promises set forth in
this Agreement, the parties agree as follows:

1.    DEFINITIONS. The capitalized terms used in this Agreement and not defined
      elsewhere in it shall have the meanings specified for such terms in
      Section 1.

      (a)   "PATENT RIGHTS" shall mean (a) all the patents and patent
            applications listed in Exhibit A, and patents issuing on them,
            including any divisional, continuation, continuation-in-part,
            renewal, extension, reexamination, reissue or foreign counterpart of
            such patent applications; (b) Other Patent Rights; and (c) any
            patent restoration or extension period granted by a Governmental
            Authority, including but not limited to the compensation for patent
            term lost during the clinical trial or regulatory approval process.

      (b)   "VALID CLAIM" shall mean a claim within the Patent Rights so long as
            such claim shall neither have been disclaimed by the owner of the
            patent, nor held invalid in a final decision rendered by a tribunal
            of competent jurisdiction from which no appeal has been taken during
            the applicable appeal period or for

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                                       2


            which no further appeal can be taken.

      (c)   "PRODUCT" means any compound that the manufacture, use, sale, offer
            for sale or import of which would infringe any Valid Claim within
            the Patent Rights in the absence of a license. For purposes of this
            Agreement, in the event there is more than one compound as an active
            pharmaceutical ingredient in a single drug formulation, such
            combination of compounds shall be considered a single compound,
            which shall be separate and distinct from each of the individual
            compounds so combined.

      (d)   "AFFILIATE" shall mean with respect to a party to this Agreement,
            any entity which controls, is controlled by, or is under common
            control with such party. Control" means the ownership or ability to
            direct the voting power of at least 50% of all voting securities of
            an entity.

      (e)   "NET SALES" means the gross amount invoiced by Pfizer, its
            Affiliates, or any sublicensee of Pfizer for sales to a third party
            or parties of Products, less normal and customary trade discounts
            actually allowed, credits or allowances for rejected or returned
            Products previously sold, taxes the legal incidence of which is on
            the purchaser and separately shown on Pfizer's, its Affiliate's, or
            any sublicensee of Pfizer's, invoices and transportation, insurance
            and postage charges, if prepaid by Pfizer, any of its Affiliates or
            any sublicensee of Pfizer and billed on Pfizer's, its Affiliate's or
            any sublicensee of Pfizer's invoices as a separate item, and
            compulsory payments and rebates, accrued, paid or deducted pursuant
            to governmental regulations or agreements (other than employment
            agreements or agreements with Affiliates) with third parties
            (provided such agreements with third parties are identified and made
            available to Guilford for review and deductions relating to such
            agreements are identified separately in any statements pursuant to
            Section 4.6(b)).

      (f)   "GUILFORD COLLABORATIONS" means (a) (1) Guilford's research for the
            evaluation of NAALADase inhibitor conjugated to chemotherapy and
            radiotherapy for the treatment of prostate cancer; (2) Guilford's
            research for the formulation and evaluation of I.V. NAALADase
            inhibitors in acute conditions of glutamate toxicity, such as
            traumatic brain insult, spinal cord injury, cardiac arrest and/or
            global ischemia; and (3) Guilford's proposed clinical trial and
            research with * for the evaluation of NAALADase inhibitors for
            the treatment of drug addiction; and any agreements covering or
            arising out of any of the above-described trials or research; and
            (b) such other collaborations as Guilford may enter into following
            notice to and approval by Pfizer of such collaborations. Unless
            otherwise agreed to by Pfizer, Guilford shall not use * (or any
            other Guilford compounds as to which Pfizer has previously notified
            Guilford that it intends to pursue in development) in connection
            with the Guilford Collaborations. Guilford and Pfizer shall
            cooperate to ensure that compounds developed by Pfizer under


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            this Agreement are not also developed by Guilford under the Guilford
            Collaborations.

      (g)   "COLLABORATION MILESTONE" means, with respect to each Guilford
            Collaboration, unless the parties otherwise agree, the completion of
            a Phase II trial demonstrating safety and efficacy with a
            presentation of data sufficient to enable Pfizer to decide whether
            or not to advance into Phase III trials.

      (h)   "OTHER PATENT RIGHTS" means all patents and patent applications
            relating to NAALADase and patents issuing on them, including any
            divisional, continuation, continuation-in-part, renewal, extension,
            reexamination, reissue or foreign counterpart of such patents and
            patent applications, that arise pursuant to Guilford Collaborations
            to the extent of Guilford's interest therein.

      (i)   "INFORMATION" means all information, including data; process
            information; Product information, know-how; technical and
            nontechnical materials; and Product samples and specifications,
            which one party delivers or makes available to the other pursuant to
            this Agreement.

      (j)   "GUILFORD CONFIDENTIAL INFORMATION" means all Information that
            Guilford discloses to Pfizer and designates "Confidential" in
            writing at the time of disclosure or within thirty (30) days
            following disclosure, to the extent that such Information as of the
            date of disclosure to Pfizer is not (i) known to Pfizer other than
            by virtue of a prior confidential disclosure to Pfizer by Guilford;
            or (ii) disclosed in published literature, or otherwise generally
            known to the public through no fault or omission of Pfizer; or (iii)
            obtained from a third party free from any obligation of
            confidentiality to Guilford.

      (k)   "PFIZER CONFIDENTIAL INFORMATION" means all Information that Pfizer
            discloses to Guilford and designates "Confidential" in writing at
            the time of disclosure or within thirty (30) days following
            disclosure to the extent that such information as of the date of
            disclosure to Guilford is not (i) known to Guilford other than by
            virtue of a prior confidential disclosure to Guilford by Pfizer; or
            (ii) disclosed in published literature, or otherwise generally known
            to the public through no fault or omission of Guilford; or (iii)
            obtained from a third party free from any obligation of
            confidentiality to Pfizer.

      (l)   "GUILFORD TECHNOLOGY" means (A) all proprietary Information and
            intellectual property (other than Patent Rights) (i) developed,
            discovered or invented by Guilford or on behalf of Guilford under an
            agreement which grants Guilford the right to convey the information
            or property, whether on, before or after the Effective Date,
            relating to (a) the modulation of NAALADase or (b) the compounds
            provided by Guilford to Pfizer under the Agreement; (ii) owned by
            Guilford on the Effective Date or at any time during the term of
            this Agreement which describes or relates to (a) the modulation of
            NAALADase or


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                                       4


            (b) the compounds provided by Guilford to Pfizer; or (iii) owned by
            Guilford on the Effective Date or at any time during the term of
            this Agreement and necessary or useful to manufacture, use, sell,
            offer for sale or import Products or compounds that modulate
            NAALADase, or (B) any exclusivity rights (other than Patent Rights)
            under Applicable Law that limit the ability of another Person to
            manufacture, use, sell, offer for sale or import a product that
            modulates NAALADase.

      (m)   "NAALADASE" means the enzyme known as
            N-Acetylated-Alpha-Linked-Acid-Dipeptidase.

      (n)   "INITIAL PERIOD" means the period commencing on the Effective Date
            and ending at the earlier of (i) 5:00 p.m., New York, New York time,
            on March 31, 2004; (ii) ninety (90) days after the date on which
            Pfizer, pursuant to its Candidate Alert Notice guidelines, formally
            nominates a compound to proceed in human clinical trials of a
            Product; or (iii) the date on which this Agreement terminates in
            accordance with the provisions of Section 9.

      (o)   "APPLICABLE LAW" means, with respect to any Person, any domestic or
            foreign, federal, state or local statute, treaty, law, ordinance,
            rule, regulation, administrative interpretation, order, writ,
            injunction, judicial decision, decree or other requirement of any
            Governmental Authority applicable to such Person or any of such
            Person's respective properties, assets, officers, directors,
            employees, consultants or agents (in connection with such officers',
            directors', employees', consultants' or agents' activities on behalf
            of such Person).

      (p)   "PERSON" means an individual, a corporation, a general partnership,
            a limited partnership, a limited liability company, a limited
            liability partnership, an association, a trust or any other entity
            or organization, including a Governmental Authority.

      (q)   "GOVERNMENTAL AUTHORITY" means any foreign, domestic, federal,
            territorial, state or local governmental authority,
            quasi-governmental authority, instrumentality, court, government or
            self-regulatory organization (including any national or
            international securities exchange and The NASDAQ Stock Market),
            commission, tribunal or organization or any regulatory,
            administrative or other agency, or any political or other
            subdivision, department or branch of any of the foregoing.

      (r)   "FDA" means the Federal Food and Drug Administration of the United
            States Department of Health and Human Services or any successor
            agency thereof.

      (s)   "INITIAL TARGET COMPOUNDS" means Guilford's compounds known as *,
            and to the extent contemplated by Exhibit B, such other Guilford
            compounds


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            relating to NAALADase inhibitors (including * and those in the*) as
            Guilford and Pfizer may agree during the Initial Period.

      (t)   "SECURITIES LAWS" means 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 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.

      (u)   "EXCLUSIVITY PERIOD" means, with respect to a Product in a
            particular country, the period prior to the termination of the
            Patent Rights in that country for any reason (including but not
            limited to any patent restoration period granted by a Governmental
            Authority to compensate for patent term lost during the clinical
            trial or regulatory approval process), and with respect to that
            country, any period in which Guilford or Pfizer has exclusivity
            rights (other than Patent Rights) under Applicable Law that limit
            the ability of all other Persons in the country to manufacture,
            obtain regulatory approval, use, sell, offer for sale or import the
            Product, including data exclusivity and/or exclusivity based on
            approval of a new chemical entity or new use of a previously
            approved drug (including but not limited to that afforded under the
            Hatch Waxman Act), pediatric exclusivity, orphan drug exclusivity,
            or the 180-day Abbreviated New Drug Application Exclusivity.

      (v)   "NDA" means a New Drug Application, "SNDA" means a Supplemental New
            Drug Application, and "IND" means an Investigational New Drug
            Application under 21 U.S.C. Section 355.

      (w)   "ADDITIONAL INDICATION" means an indicated use of a Product,
            separate from a previously indicated use, for which the commercial
            marketing or sale would require approval of an application under 21
            U.S.C. Section 355 (or an equivalent provision of Applicable Law of
            a foreign jurisdiction).

      (x)   "BACK UP COMPOUND" means a compound identified and nominated by
            Pfizer as a "back up compound" to a specified lead compound in
            accordance with Pfizer's ordinary business practices; provided,
            however, that such a compound shall only qualify as a "Back Up
            Compound" so long as and if (a) on or before the time Pfizer first
            files a regulatory application with a regulatory authority in
            respect of particular lead compound, Pfizer notifies Guilford in
            writing of the identity of the lead compound and the respective
            possible "back up compound or compounds," (b) no more than two (2)
            compounds may be identified and qualify as possible Back Up
            Compounds for a particular lead compound, (c) a Back Up Compound
            must initially be and remain for the same indication as the lead
            compound, (d) a compound shall only qualify as a Back Up Compound if
            Pfizer is no longer pursuing regulatory approval or


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                                       6


            conducting clinical trials with respect to the identified lead
            compound and any other compound initially identified by Pfizer as a
            possible Back Up Compound to that lead compound, and (e) a compound
            shall no longer qualify as a Back Up Compound at such time as the
            lead compound or another Back Up Compound as to the same lead
            compound is approved for marketing and sale by the FDA or a
            comparable foreign regulatory authority.

2.    GRANT OF EXCLUSIVE COMMERCIAL LICENSE UNDER PATENT RIGHTS AND GUILFORD
      TECHNOLOGY

      In consideration of Pfizer paying Guilford (i) $5,000,000 on the Effective
      Date, (ii) unless this Agreement has been earlier terminated, $10,000,000
      on or before the last day of the Initial Period, and (iii) the royalties
      contemplated by Section 4, Guilford hereby grants Pfizer the following
      licenses, on the terms and conditions set forth in this Agreement:

2.1   GRANT OF RESEARCH LICENSE
      Guilford hereby grants Pfizer a nonexclusive, irrevocable, worldwide,
      royalty-free, perpetual license, including the right to grant sublicenses
      to Affiliates, to use Patent Rights and Guilford Technology, but only for
      internal research purposes in respect of human therapeutic purposes, and
      not for the sale, manufacture for sale or import of products or processes.

2.2   EXCLUSIVE LICENSE UNDER THE PATENT RIGHTS
      Subject to any limitations or restrictions set forth in this Agreement,
      Guilford grants Pfizer a worldwide license, including the right to grant
      sublicenses, to manufacture, use, sell, offer for sale and import Products
      under the Patent Rights and Guilford Technology, such license to be
      exclusive as to Patent Rights and nonexclusive as to Guilford Technology,
      it being understood and agreed that the exclusive license as to Patent
      Rights and the nonexclusive license as to Guilford Technology may not be
      assigned or sublicensed separately. Guilford shall retain the right to
      practice the inventions under the Patent Rights (i) for internal research
      purposes, but not for the sale or manufacture for sale of products or
      processes generally, and/or (ii) in connection with the pursuit of any of
      the Guilford Collaborations at any time up to the date on which Guilford
      may assign its rights in respect of any such Guilford Collaboration to
      Pfizer pursuant to Section 2.4.1, and/or (iii) in connection with the
      pursuit of any of the Guilford Collaborations to the extent that Pfizer no
      longer has the right to acquire Guilford's rights in respect of such
      Guilford Collaboration pursuant to Section 2.4.3, and thereafter to
      manufacture, use, sell, offer for sale and import products resulting from
      such Guilford Collaborations, either directly or indirectly through
      another Person pursuant to a co-promotion, distribution or other
      arrangement intended to further Guilford's commercialization of such
      products in accordance with the


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                                       7


      provisions of Section 2.4.3, and/or (iv) for diagnostic purposes. The
      license granted under this Section 2.2 in each country shall commence on
      the date of this Agreement and shall terminate in accordance with Section
      9 of this Agreement.

2.3   TECHNICAL ASSISTANCE. Guilford shall provide to Pfizer or any permitted
      sublicensee of Pfizer, at Pfizer's request and expense, during normal
      business hours and upon reasonable advance notice and request, any
      technical assistance reasonably necessary to enable Pfizer or such
      sublicensee to manufacture, use, sell, offer for sale or import each
      Product and to enjoy fully all the rights granted to Pfizer pursuant to
      this Agreement; provided, however, that Guilford is reasonably capable of
      providing that assistance and the terms upon which such assistance shall
      be provided are mutually agreeable to Guilford and Pfizer.

2.4   GUILFORD COLLABORATIONS
      During the Initial Period (and, with respect to each Guilford
      Collaboration until such time as Pfizer no longer has the right to acquire
      Guilford's rights under such Guilford Collaboration), subject to any
      restrictions of Applicable Law and the terms and conditions of the
      agreements constituting such Guilford Collaboration, Guilford shall permit
      Pfizer, and shall use reasonable commercial efforts to cause its
      collaborators in each Guilford Collaboration to permit Pfizer, to be kept
      apprised of the work of such Guilford Collaboration and Guilford shall
      keep Pfizer apprised of the work of such Guilford Collaborations at
      quarterly Steering Committee meetings.


            2.4.1 Pfizer may, in respect of each Guilford Collaboration, at any
                  time during the period commencing on the date of delivery to
                  Pfizer by Guilford of a report, in form and substance
                  satisfactory to Pfizer and containing all information relating
                  to the Guilford Collaborations in Guilford's possession and
                  material to Pfizer's decision under this Section 2.4.1,
                  summarizing the results of the respective Guilford
                  Collaboration through the Collaboration Milestone, and ending
                  on the sixtieth (60th) day thereafter, by advance, written
                  irrevocable notice, direct Guilford to make Guilford's rights
                  under any or all of the Guilford Collaborations available to
                  Pfizer subject to the terms and conditions of the agreements
                  constituting such Guilford Collaborations.

            2.4.2 If Pfizer elects to direct Guilford to make its rights
                  available to Pfizer pursuant to Section 2.4.1, thereafter
                  Pfizer will have the right to control the assigned
                  collaboration (including the right to modify the scope of the
                  collaboration or terminate it, in either case in accordance
                  with the terms and conditions of the collaboration), in

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                  Pfizer's sole discretion, subject only to (i) Pfizer paying
                  Guilford * within thirty (30) days of receipt of an invoice or
                  invoices from Guilford; and (ii) Pfizer assuming the
                  obligations of Guilford in respect of the collaboration from
                  and after the date on which such rights are made available to
                  Pfizer in accordance with an agreement between Guilford and
                  Pfizer consistent with this Section 2.4. and on other terms
                  and conditions acceptable to Guilford and Pfizer. Payment of
                  such costs shall be subject to Pfizer's receipt of appropriate
                  documentation of such costs, and such costs shall include
                  Guilford's internal direct and indirect costs as well as costs
                  of the collaborator and any other third-party costs to the
                  extent borne, directly or indirectly, by Guilford.

            2.4.3 If Pfizer does not direct Guilford to make Guilford's rights
                  under a particular Guilford Collaboration available to Pfizer,
                  as set forth in Section 2.4.1, Guilford in its sole discretion
                  may develop and commercialize the Products resulting from that
                  particular Guilford Collaboration for its own account at its
                  own cost. In such event Guilford may manufacture, use, sell,
                  offer for sale and import products resulting from such
                  Guilford Collaboration directly or, subject to Pfizer's
                  consent (which will not be unreasonably withheld), indirectly
                  through another Person pursuant to a co-promotion,
                  distribution or other arrangement intended to further
                  Guilford's commercialization of such products.

2.5   STEERING COMMITTEE.

            2.5.1 Guilford and Pfizer agree to form a steering committee (the
                  "Steering Committee") that will meet at least on a quarterly
                  basis to (i) consult regarding Pfizer's evaluation of the
                  Initial Target Compounds and the screening of Pfizer and other
                  Guilford compounds for efficacy in the modulation of
                  NAALADase, (ii) review and evaluate the progress in respect of
                  Pfizer's research, development and commercialization of
                  Products, including the results of any clinical trials and the
                  status of any regulatory applications, (iii) discuss and seek
                  to resolve any Disputes (as hereinafter defined) in accordance
                  with the provisions of Section 11, and (iv) review and
                  evaluate the progress being made in connection with the
                  Guilford Collaborations.

            2.5.2 Guilford and Pfizer each shall appoint, in its sole
                  discretion, three members, respectively, to the Steering
                  Committee. The party who appointed any particular member of
                  the Steering Committee shall at all times have the power and
                  authority to remove that member of the Steering Committee by
                  providing written notice of such removal


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                  to the other party. Substitutes may be appointed at any time
                  by the party who appointed the member whose resignation or
                  removal caused a vacancy on the Steering Committee.

                  The initial members of the Steering Committee shall be:

                  Guilford:

                  *

                  Pfizer:

                  *

            2.5.3 Steering Committee meetings will take place on a quarterly
                  basis on mutually agreeable dates, times and places. Such
                  meetings may be conducted by videoconference no more than
                  twice a year. Pfizer shall prepare and distribute an agenda at
                  least fifteen (15) days before each meeting of the Steering
                  Committee. Guilford may propose changes and additions to the
                  agenda. Pfizer shall cause one of its representatives on the
                  Steering Committee to prepare and send meeting minutes to
                  Guilford for review and comment within fifteen (15) days
                  following the applicable committee meeting. Final minutes
                  shall be completed by Guilford and Pfizer within thirty (30)
                  days of each meeting.

            2.5.4 Pfizer shall have all decision authority regarding the
                  research and development and commercialization of Products.
                  Notwithstanding the foregoing, subject to its obligation to
                  maintain the confidentiality of the Pfizer Confidential
                  Information in accordance with the provisions of this
                  Agreement and any restrictions of Applicable Law, Guilford
                  shall have reasonable access to any data or reports prepared
                  in connection with Steering Committee meetings.

3.    PFIZER DILIGENCE.

      3.1   Pfizer shall use reasonable efforts to develop and exploit the
            Products commercially employing similar effort to that applied to
            similarly situated Pfizer products and programs that are being
            actively pursued.

      3.2   In furtherance of the provisions of Section 3.1, during the Initial
            Period Guilford will transfer to Pfizer its NAALADase screening
            assay. Upon successful incorporation of Guilford's screening assay
            into Pfizer's high throughput screening format, Pfizer will begin to
            screen Pfizer's compound library for NAALADase inhibitors in
            accordance with Pfizer's


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            standard procedures and criteria for screening and progression.
            During the Initial Period, Pfizer will perform the compound
            characterization studies on * set forth in Exhibit B, and take the
            other actions contemplated by Exhibit B.

      3.3   If Pfizer grants a sublicense pursuant to Section 2, Pfizer shall
            give written notice to Guilford of such sublicense, shall cause the
            sublicensee to confirm in writing to and for the benefit of Guilford
            that it will comply with the covenants and agreements of Pfizer
            hereunder and shall guarantee that any sublicensee fulfills all of
            Pfizer's obligations under this Agreement; provided, however, that
            Pfizer shall not be relieved of its obligations pursuant to this
            Agreement by virtue of any such sublicense.

4.    MILESTONE PAYMENTS, ROYALTIES, PAYMENTS OF ROYALTIES, ACCOUNTING FOR
      ROYALTIES, RECORDS.

      4.1   MILESTONES
            Pfizer shall pay Guilford, in respect of each Product (regardless of
            whether the active ingredient in the Product is an Initial Target
            Compound, another compound of Guilford, or a compound of Pfizer or
            another Person), within thirty (30) business days of the achievement
            by such Product of each event set forth below (each a "Milestone"),
            the payment listed opposite that Milestone (the "Milestone Amount").

<TABLE>
<CAPTION>
            ------------------------------------------------------------------------------------
                                          Milestone                      Milestone Amount
                                          ---------                      ----------------
                                              *                                 *
            ------------------------------------------------------------------------------------
<S>                            <C>                                       <C>

</TABLE>

            Guilford shall be entitled to payment of the Milestone Amounts in
            respect of each Milestone set forth above only once for each Product
            (including Back Up Compounds).

      4.2   ADDITIONAL INDICATIONS.

            If Pfizer pursues an Additional Indication for a Product as to which
            another indicated use has been approved by the FDA (or a comparable
            regulatory authority of a foreign jurisdiction) or in respect of
            which such approval is


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            being pursued, Pfizer shall pay Guilford the payment listed opposite
            each Milestone (each an "Additional Indication Milestone Amount")
            set forth below within thirty (30) business days of the achievement
            of the respective Milestone. Pfizer shall pay each Additional
            Indication Milestone Amount in respect of a Milestone for an
            Additional Indication only once, regardless of how many additional
            indications are pursued with respect to a Product or how many
            different Products are the subject of attempts to seek approvals for
            Additional Indications; provided, however, that the Additional
            Indication Milestone Amounts set forth below need not be paid in
            respect of the same Additional Indication.

<TABLE>
<CAPTION>
           -------------------------------------------------------------------------------------
                                 Milestone                         Additional Indication
                                 ---------                            Milestone Amount
                                                                      ----------------
                                     *                                        *
           -------------------------------------------------------------------------------------
<S>                   <C>                                           <C>

</TABLE>


      4.3   *

      4.4   ROYALTIES. Pfizer shall pay Guilford a royalty based on the Net
            Sales of each Product. Such royalty shall be paid with respect to
            each country of the world from the date of the first commercial sale
            by Pfizer or any sublicensee of Pfizer of such Product in each such
            country until the termination of the Exclusivity Period covering
            such Product in such country.

      4.5   ROYALTY RATES.
            4.5.1 Pfizer shall pay Guilford a royalty for the sale of each
                  Product as set forth in Section 4.6 based on the royalty rates
                  set forth in this Section 4.5; provided, however, that such
                  Royalty shall be subject to application of the credits set
                  forth in Section 4.3.

            4.5.2 The royalty paid each calendar year by Pfizer to Guilford
                  shall be based on increments of Net Sales with respect to each
                  Product sold during the calendar year according to the
                  following schedule:

<TABLE>
<CAPTION>
            Annual Net Sales of each Product           Per Product Royalty Rate
            --------------------------------           -------------------------
<S>                                                    <C>
                  *                                           *
</TABLE>

      4.6   PAYMENT.

            (a)   Pfizer shall pay royalties on Net Sales within sixty (60) days
                  after the end of each calendar quarter in which such Net Sales
                  are made.

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                                       12


            (b)   Such payments shall be accompanied by a statement showing the
                  Net Sales of each Product by Pfizer or any sublicensee of
                  Pfizer in each country, the applicable royalty rate for such
                  Product, and a calculation of the amount of royalty due,
                  including the application of any credits contemplated by
                  Section 4.3.

            (c)   All payments due to Guilford by Pfizer, whether in payment of
                  a Milestone Amount or a royalty, shall be computed and paid in
                  U.S. dollars by wire transfer in immediately available funds
                  to a U.S. bank account designated by Guilford, or by other
                  mutually acceptable means.

            (d)   For purposes of determining the amount of royalties due, the
                  amount of Net Sales in any respect of sales originally
                  denominated in a foreign currency shall be computed by
                  converting such foreign currency amount into U.S. dollars at
                  the prevailing commercial rate of exchange for purchasing
                  dollars with such foreign currency as published in the Wall
                  Street Journal for the close of the last business day of the
                  calendar quarter for which the relevant royalty payment is to
                  be made by Pfizer.

            (e)   In the event that any payment due hereunder is not paid when
                  due, such payment obligation shall bear interest from the date
                  on which the payment was due and payable at a rate of interest
                  per annum equal to*.

            (f)   *

      4.7   TAXES If Applicable Laws require Pfizer to withhold any tax from any
            payment to Guilford, Pfizer will do so and will pay such tax to the
            proper taxing authority. If Pfizer does so, it will provide Guilford
            with copies of official receipts for such taxes withheld and paid by
            Pfizer to such taxing authority, and Pfizer will cooperate as
            Guilford may reasonably request and at Guilford's expense, in any
            filings or other actions by Guilford with respect to such taxes.

      4.8   RECORDS.
            4.8.1 Pfizer shall keep for three (3) years from the date of each
                  payment of royalties complete and accurate records of sales by
                  Pfizer of each Product in sufficient detail to allow the
                  accruing royalties to be determined accurately. Guilford shall
                  have the right for a period of three (3) years after receiving
                  any report or statement with respect to royalties due and
                  payable to appoint at its expense an

<PAGE>

                                       13


                  independent certified public accountant reasonably acceptable
                  to Pfizer to inspect the relevant records of Pfizer to verify
                  such report or statement. Pfizer shall make its records
                  available for inspection by such independent certified public
                  accountant during regular business hours at such place or
                  places where such records are customarily kept, upon
                  reasonable notice from Guilford, to verify the accuracy of the
                  reports and payments. Such inspection right shall not be
                  exercised more than once in any calendar year nor more than
                  once with respect to sales in any given period. Guilford
                  agrees to hold in strict confidence all information concerning
                  royalty payments and reports, and all information learned in
                  the course of any audit or inspection, except to the extent
                  necessary for Guilford to reveal such information in order to
                  enforce its rights under this Agreement or if disclosure is
                  required by law. The failure of Guilford to request
                  verification of any report or statement during said three-year
                  period shall be considered acceptance of the accuracy of such
                  report, and Pfizer shall have no obligation to maintain
                  records pertaining to such report or statement beyond said
                  three-year period. The results of each inspection, if any,
                  shall be binding on both parties unless Pfizer objects, by
                  delivery to Guilford of a written notice of objections, within
                  thirty (30) days of receipt of a report of the independent
                  certified public accountant retained by Guilford. In the event
                  Pfizer disagrees with the conclusions reached by the
                  independent certified public accountant retained by Guilford
                  within such thirty (30) day period in accordance with the
                  preceding sentence, the disagreement shall be considered a
                  Dispute within the meaning of Section 11 and shall be treated
                  accordingly.

            4.8.2 The costs and expenses of the independent certified public
                  accountant retained by Guilford pursuant to Section 4.8.1 to
                  review the records of Pfizer shall be paid by Guilford;
                  provided, however, that if the results of any review of the
                  records of Pfizer pursuant to Section 4.8.1 shall reveal that
                  the Net Sales reported by Pfizer for any period covered by
                  such review shall have been understated by five percent (5%)
                  or more, Pfizer shall reimburse Guilford for all such costs
                  and expenses.

            4.8.3 In the event that it is determined (by failure of Pfizer to
                  object to the report of the independent certified public
                  accountant retained by Guilford, by agreement of the parties
                  or upon any other resolution of a Dispute) that the royalties
                  paid by Pfizer to Guilford hereunder shall have been
                  understated as a result of underreporting of Net Sales for the
                  applicable period, any amount of royalties that were
                  understated shall be paid within thirty (30) days of the final


<PAGE>

                                       14


                  determination of the amount by which such royalties were
                  understated and the amount so understated shall bear interest
                  from the date on which the royalties otherwise would have been
                  due and payable had they not been understated at a rate of
                  interest per annum equal to*.

      4.9   MISCELLANEOUS.
            For purposes of further defining the Milestones in Sections 4.1 and
            4.2, the following provisions apply:

            (a)   a clinical trial shall be deemed to have started at the time
                  the relevant Governmental Authority grants permission to begin
                  human clinical testing (as one example, in the United States,
                  the approval of the IND);

            (b)   Phase I clinical trials include a clinical trial anywhere in
                  the world;

            (c)   a Phase III clinical trial shall be deemed to have started at
                  the time that (i) in the United States the FDA grants
                  permission to begin a Phase III clinical trial or (ii) in any
                  other country the relevant Governmental Authority grants
                  permission to begin the final clinical trial needed to obtain
                  approval to make a commercial sale of the Product in such
                  country;

            (d)   NDA Filing or SNDA filing shall include the filing of an
                  application under 21 U.S.C. Section 355 (or an equivalent
                  provision of Applicable Law of a foreign jurisdiction); and

            (e)   NDA Approval or SNDA Approval shall include the approval of an
                  application under 21 U.S.C. Section 355 (or an equivalent
                  provision of Applicable Law of a foreign jurisdiction).


5.    LEGAL ACTION.

      5.1   If information comes to the attention of Pfizer to the effect that
            any Patent Rights claiming a Product have been or are threatened to
            be unlawfully infringed or a Person is engaged in unauthorized use
            of Guilford Technology in connection with a Product, Pfizer shall
            have the right at its expense to take such action as it may deem
            necessary to prosecute or prevent such unlawful infringement or
            unauthorized use, including the right to bring or defend any suit,
            action or proceeding involving any such infringement or unauthorized
            use. Pfizer shall notify Guilford promptly of the receipt of any
            such information and of the commencement of any such suit, action or
            proceeding and shall consult with Guilford concerning the


<PAGE>

                                       15


            actions it intends to take; provided, that Pfizer may not take any
            action that reasonably could be expected to prejudice Guilford's
            rights in respect of such Patent Rights or Guilford Technology. If
            Pfizer determines that it is necessary or desirable for Guilford to
            join any such suit, action or proceeding, Guilford shall, at
            Pfizer's expense, execute all papers and perform such other acts as
            may be reasonably required to permit Pfizer to commence such action,
            suit or proceeding in which case Pfizer shall hold Guilford free,
            clear and harmless from any and all costs and expenses of
            litigation, including attorneys fees.

            If Pfizer brings a suit, it shall have the right first to reimburse
            itself out of any sums recovered in such suit or in its settlement
            for all costs and expenses, including attorneys' fees, related to
            such suit or settlement, and * of any funds that shall remain from
            said recovery shall be paid to Guilford and the balance of such
            funds shall be retained by Pfizer. If Pfizer does not, within one
            hundred twenty (120) days after giving notice to Guilford of the
            above-described information, notify Guilford of Pfizer's intent to
            bring suit against any infringer, Guilford shall have the right to
            bring suit for such alleged infringement, but it shall not be
            obligated to do so, and may join Pfizer as party plaintiff, if
            appropriate, in which event Guilford shall hold Pfizer free, clear
            and harmless from any and all costs and expenses of such litigation,
            including attorney's fees, and any sums recovered in any such suit
            or in its settlement shall belong to Guilford. However, * of any
            such sums received by Guilford, after deduction of all costs and
            expenses, including attorneys' fees, related to such suit or
            settlement shall be paid to Pfizer. Each party shall always have the
            right to be represented by counsel of its own selection and at its
            own expense in any suit instituted by the other for infringement
            under the terms of this Section.

      5.2   DEFENSE OF INFRINGEMENT CLAIMS. Guilford will cooperate with Pfizer
            at Pfizer's expense in the defense of any suit, action or proceeding
            against Pfizer or any sublicensee of Pfizer alleging the
            infringement of the intellectual property rights of a third party by
            reason of the use of Patent Rights in the manufacture, use or sale
            of the Product. Pfizer shall give Guilford prompt written notice of
            the commencement of any such suit, action or proceeding or claim of
            infringement and will furnish Guilford a copy of each communication
            relating to the alleged infringement. Guilford shall give to Pfizer
            all authority (including the right to exclusive control of the
            defense of any such suit, action or proceeding and the exclusive
            right after consultation with Guilford, to compromise, litigate,
            settle or otherwise dispose of any such suit, action or proceeding),
            at Pfizer's expense, including by providing information and
            assistance necessary to defend or settle any such suit, action or
            proceeding; provided, however, Pfizer shall


<PAGE>

                                       16


            obtain Guilford's prior consent to such part of any settlement which
            contemplates payment or other action by Guilford or has a material
            adverse effect on Guilford's business. If the parties agree that
            Guilford should institute or join any suit, action or proceeding
            pursuant to this Section, Pfizer may, at Pfizer's expense, join
            Guilford as a defendant if necessary or desirable, and Guilford
            shall execute all documents and take all other actions, including
            giving testimony, which may reasonably be required in connection
            with the prosecution of such suit, action or proceeding.

      5.3   NO CHALLENGE TO PATENT RIGHTS. Pfizer shall not challenge the
            validity or enforceability of any of the Patent Rights by
            litigation, opposition, re-examination, revocation, or invalidation
            proceeding; or by requesting or participating in a declaration of an
            interference against any Patent Rights; or by contesting or
            disputing Guilford's entitlement to or ownership of the Patent
            Rights.

      5.4   THIRD PARTY LICENSES. If the manufacture, use or sale by Pfizer of a
            Product in any country would, in the reasonable opinion of Pfizer,
            infringe a patent owned by a third party and Pfizer has obtained or
            will obtain a license under such patent, * of any payments made by
            Pfizer to such third party under the license agreement with such
            third party shall be deductible from royalty payments due from
            Pfizer to Guilford pursuant to this Agreement; provided, however,
            that in no event will royalty payments payable to Guilford hereunder
            in respect of the relevant Product be reduced by an amount greater
            than * of Net Sales for that Product in any quarterly period.

6.    REPRESENTATIONS AND WARRANTIES Guilford represents and warrants to Pfizer
      that it has all legal right, title and authority to grant the licenses
      contemplated by Section 2 of this Agreement, and that, except for rights
      of third parties (including Governmental Authorities) who have provided or
      provide funding in respect of the Guilford Collaborations, or rights of
      third parties in respect of such Guilford Collaborations to consent to the
      actions contemplated by Section 2.4., such licenses do not conflict with
      or violate the terms of any agreement between Guilford and any third
      party.

7.    TREATMENT OF CONFIDENTIAL INFORMATION.

      7.1   CONFIDENTIALITY.
            Subject to Pfizer's and Guilford's right and obligations pursuant to
            this Agreement, Pfizer and Guilford each agree that during the term
            of this Agreement and for five (5) years thereafter, it will keep
            confidential all Guilford Confidential Information or Pfizer
            Confidential Information, as the case may be, that is disclosed to
            it pursuant to this Agreement. Neither Pfizer nor Guilford shall use
            Confidential Information of the other party


<PAGE>

                                       17


            except as expressly permitted under this Agreement.

            Subject to Pfizer's and Guilford's rights and obligations pursuant
            to this Agreement, Pfizer and Guilford each agree that any
            disclosure of the other's Confidential Information to any officer,
            employee or agent of the other party shall be made only if and to
            the extent necessary to carry out its responsibilities under this
            Agreement and shall be limited to the maximum extent possible
            consistent with such responsibilities. Subject to Pfizer's and
            Guilford's rights and obligations pursuant to this Agreement, Pfizer
            and Guilford each agree not to disclose the other's Confidential
            Information to any third parties under any circumstance without
            written permission from the other party. Each party shall take such
            action to preserve the confidentiality of each other's Confidential
            Information as it would customarily take to preserve the
            confidentiality of its own Confidential Information. Upon
            termination of this Agreement, each party, upon the other's request,
            (i) will return all the Confidential Information disclosed to it by
            the other party pursuant to this Agreement, including all copies and
            extracts of documents, within sixty (60) days of the request upon
            the termination of this Agreement except for one (1) copy which may
            be kept for the purpose of complying with continuing obligations
            under this Agreement; or (ii) will destroy and certify such
            destruction, if acceptable to the other party.

            Except as required by Applicable Law and except for the Guilford
            press release attached hereto as Exhibit C (and any subsequent
            disclosure consistent with the information included in such press
            release), neither party may disclose the terms of this Agreement
            without the written consent of the other party. Notwithstanding the
            foregoing or the provisions of Section 7.2, each party acknowledges
            and agrees that the other party may be required to disclose the
            existence of this Agreement or some or all of the information
            included in this Agreement in order to comply with its obligations
            under the Securities Laws or under the rules of a national or
            international securities exchange or The NASDAQ Stock Market, and
            hereby consents to such disclosure to the extent deemed advisable or
            appropriate by counsel to the other party.

      7.2   DISCLOSURE REQUIRED BY APPLICABLE LAW.

            If either party is requested to disclose the Confidential
            Information in connection with a legal or administrative proceeding
            or is otherwise required by Applicable Law to disclose the
            Confidential Information, such party will give the other party
            prompt notice of such request. The disclosing party may seek an
            appropriate protective order or other remedy or waive compliance
            with the provisions of this Agreement. If such party seeks a
            protective order or other remedy, the other party will cooperate. If

<PAGE>

                                       18


            such party fails to obtain a protective order or waive compliance
            with the relevant provisions of this Agreement, the other party will
            disclose only that portion of Confidential Information which its
            legal counsel determines it is required to disclose.

8.    FILING, PROSECUTION AND MAINTENANCE BY GUILFORD.

      8.1   With respect to Patent Rights, except as set forth in Section 8.1.2.
            and Section 8.1.3., Guilford shall have the exclusive right and
            obligation:
            (a)   to file applications for letters patent on patentable
                  inventions; provided, however, that Guilford shall consult
                  with Pfizer regarding countries in which such patent
                  applications should be filed and shall file patent
                  applications in those countries where Pfizer requests that
                  Guilford file such applications; and, further provided, that
                  Guilford, at its option and expense, may file in countries
                  where Pfizer does not request that Guilford file such
                  applications;
            (b)   to take all reasonable steps to prosecute all pending and new
                  patent applications;
            (c)   to respond to oppositions, nullity actions, re-examinations,
                  revocation actions and similar proceedings filed by third
                  parties against the grant of letters patent for such
                  applications;
            (d)   to maintain in force any letters patent included in Patent
                  Rights by duly filing all necessary papers and paying any fees
                  required by the patent laws of the particular country in which
                  such letters patent were granted; and
            (e)   to cooperate fully with, and take all necessary actions
                  requested by, Pfizer in connection with the preparation,
                  prosecution and maintenance of any letters patent included in
                  Patent Rights. Guilford shall notify Pfizer in a timely manner
                  of any decision to abandon a pending patent application or an
                  issued patent included in Patent Rights. Thereafter, Pfizer
                  shall have the option, at its expense, of continuing to
                  prosecute any such pending patent application or of keeping
                  the issued patent in force.

                  8.1.1 COPIES OF DOCUMENTS.
                  Guilford shall provide to Pfizer copies of all patent
                  applications that are part of Other Patent Rights prior to
                  filing, for the purpose of obtaining substantive comment of
                  Pfizer's patent counsel. Guilford shall also provide to Pfizer
                  other copies of all documents relating to prosecution of all
                  such patent applications in a timely manner and shall provide
                  every six (6) months a report detailing the status of all
                  patent applications that are a part of Other Patent Rights.

<PAGE>

                                       19


                  8.1.2 REIMBURSEMENT OF COSTS FOR FILING PROSECUTING AND
                  MAINTAINING PATENT RIGHTS.
                  Within thirty (30) days of receipt of invoices from Guilford,
                  Pfizer shall reimburse Guilford for all the costs of filing,
                  prosecuting, responding to opposition or other interested
                  parties proceedings and maintaining patent applications and
                  patents during the term of this Agreement. Such reimbursement
                  shall be in addition to other funding payments under this
                  Agreement and shall include such costs of all activities
                  described in Section 8.1 (a)-(e) above. However, Pfizer may,
                  upon sixty (60) days notice, request that Guilford discontinue
                  filing or prosecution of patent applications in any country
                  (other than the countries listed in Schedule 8.1.2) and
                  discontinue reimbursing Guilford for the costs of filing,
                  prosecuting, responding to opposition or maintaining such
                  patent application or patent in any such country (other than
                  the countries listed in Schedule 8.1.2). Guilford shall pay
                  all costs in those countries in which Pfizer requests that
                  Guilford not file, prosecute or maintain patent applications
                  and patents, but in which Guilford, at its option, elects to
                  do so in accordance with this Section 8.1.2; provided,
                  however, that in the event Guilford so elects to continue to
                  file, prosecute or maintain patent applications and patents in
                  those countries the licenses granted to Pfizer in respect of
                  such patent applications and patents under Section 2 shall no
                  longer extend to such patent applications and patents in those
                  countries.

                  8.1.3 PATENT AND OTHER EXCLUSIVITY EXTENSIONS.
                  Pfizer and Guilford will consult with each other from time to
                  time regarding all applications for exclusivity extensions
                  pursuant to Applicable Law, including but not limited to
                  extensions pursuant to 35 USC Section 156 and foreign
                  counterparts, with respect to the Products to the extent that
                  such extensions are available. Guilford agrees to sign such
                  further documents and take such further actions as may be
                  reasonably requested by Pfizer to support all actions
                  necessary to obtain any such extension in this regard, at
                  Pfizer's expense.

9.    TERMINATION AND DISENGAGEMENT.

      9.1   Each of the following events shall constitute events of termination
            ("Events of Termination") for purposes of this Agreement:

            (a)   with respect to each Product, the termination of the
                  Exclusivity Period with respect to that Product;

            (b)   Guilford or Pfizer shall fail in any material respect to
                  perform or


<PAGE>

                                       20


                  observe any term, covenant or understanding contained in this
                  Agreement or in any of the other documents or instruments
                  delivered pursuant to, or concurrently with, this Agreement,
                  which failure remains unremedied for thirty (30) days after
                  written notice to the failing party; or

            (c)   during the Initial Period, Pfizer shall fail to take the
                  actions contemplated by, or conduct the evaluation of the
                  Initial Target Compounds and the compounds included in
                  Pfizer's compound library in accordance with, Exhibit B.

      9.2   Upon the occurrence of any Event of Termination under Section 9.1(b)
            or 9.1(c), the party not responsible may, by notice to the other
            party, terminate this Agreement.

      9.3   Termination of this Agreement by either party, with or without
            cause, will not terminate the Research License granted pursuant to
            Section 2.1.

      9.4   Termination of this Agreement for any reason shall be without
            prejudice to:

            (a)   the rights and obligations of the parties set forth in
                  sections which provide for performance of either party
                  subsequent to termination;

            (b)   Guilford's right to receive payments in respect of all
                  Milestone Amounts and royalties accrued hereunder prior to the
                  termination date; or

            (c)   any other remedies which either party may otherwise have under
                  and in accordance with Applicable Law or this Agreement.

      9.5   Prior to the end of the Initial Period, Pfizer at its sole
            discretion may terminate this Agreement by written notice to
            Guilford. In the event that Pfizer fails to make payment of a total
            of $15,000,000 in accordance with Section 2 prior to the end of the
            Initial Period, Guilford at its sole discretion may terminate this
            Agreement by written notice to Pfizer.

      9.6   At any time, Pfizer at its sole discretion may terminate this
            Agreement with respect to any Product in any country or countries in
            the world upon thirty (30) days prior notice to Guilford and
            cessation of sale of the Product. Upon such termination by Pfizer,
            all licenses other than the license granted under Section 2.1 of
            this Agreement, shall terminate with respect to such country or
            countries for any such Product.

      9.7   In addition to the right to terminate this Agreement upon the
            occurrence of


<PAGE>

                                       21


            any Event of Termination, if at any time during the term of this
            Agreement Pfizer, directly or indirectly, takes any action or
            assists or supports another Person in taking any action challenging
            any of the Patent Rights, including any action in connection with an
            opposition, re-examination, revocation or invalidation proceeding,
            or requests a declaration of an interference against or otherwise
            attacks the validity or enforceability of any Patent Rights, or
            contests or disputes Guilford's entitlement to or ownership of the
            Patent Rights, Guilford shall have the right to terminate this
            Agreement immediately.

      9.8   (a) Upon termination of this Agreement (except for breach by
            Guilford), Pfizer shall make available to and transfer or assign to
            Guilford the following: the clinical human experience database, all
            audited toxicology reports and all in vivo animal study data
            including ADME in vivo data, any regulatory submissions and any
            correspondence with the FDA or other regulatory authorities.*

            (b)*

            (c)*

<PAGE>

                                       22


      9.9   Upon termination, this Agreement shall become void and of no further
            force or effect, except for the following provisions, which shall
            remain in full force and effect: provisions relating to payment or
            reimbursement accruing before the termination of the Agreement,
            Sections 4.7, 4.8, and 4.9, Article 5 to the extent relating to the
            period or accruing before the termination of the Agreement, and
            Articles 7, 9, 10, 11, 13 and 14. Any termination shall not affect
            any right or claim hereunder that arises prior to such termination,
            which claims and rights shall survive termination.

10.   INDEMNIFICATION. Pfizer and Guilford will indemnify each other for
      damages, settlements, costs, legal fees and other expenses incurred in
      connection with a claim by a third party against either party based on any
      action or omission of the indemnifying party's agents, employees, or
      officers related to its obligations under this Agreement; provided,
      however, that the foregoing shall not apply (i) if the claim is found to
      be based upon the negligence, recklessness or wilful misconduct of the
      party seeking indemnification; or (ii) if such party fails to give the
      other party prompt notice of any claim it receives and such failure
      materially prejudices the other party with respect to any claim or action
      to which its obligation pursuant to this Section applies.

      Each party will notify the other in the event it becomes aware of a claim
      for which indemnification may be sought hereunder. In case any proceeding
      shall be instituted involving any party in respect of which indemnity may
      be sought pursuant to this Section 10, such party (the "Indemnified
      Party") shall promptly notify the other party (the "Indemnifying Party")
      in writing and the Indemnifying Party and Indemnified Party shall meet to
      discuss how to respond to any claims that are the subject matter of such
      proceeding. The Indemnifying Party, upon request of the Indemnified Party,
      shall retain counsel reasonably satisfactory to the Indemnified Party to
      represent the Indemnified Party and shall pay the fees and expenses of
      such counsel related to such proceeding. In any such proceeding, the
      Indemnified Party shall have the right to retain its own counsel, but the
      fees and expenses of such counsel shall be at the expense of the
      Indemnified Party unless (i) the Indemnifying Party and the Indemnified
      Party shall have mutually agreed to the retention of such counsel or (ii)
      the named parties to any such proceeding include both the Indemnifying
      Party and the Indemnified Party and representation of both parties by the
      same counsel would be inappropriate due to actual or potential differing
      interests between them. All such fees and expenses shall be reimbursed as
      they are incurred. The Indemnifying Party shall not be liable for any
      settlement of any proceeding effected without its written consent, but if
      settled with such consent or if there be


<PAGE>

                                       23


      a final judgment for the plaintiff, the Indemnifying Party agrees to
      indemnify the Indemnified Party from and against any loss or liability by
      reason of such settlement or judgment. The Indemnifying Party shall not,
      without the written consent of the Indemnified Party, effect any
      settlement of any pending or threatened proceeding in respect of which the
      Indemnified Party is, or arising out of the same set of facts could have
      been, a party and indemnity could have been sought hereunder by the
      Indemnified Party, unless such settlement includes an unconditional
      release of the Indemnified Party from all liability on claims that are the
      subject matter of such proceeding.

11.   DISPUTE RESOLUTION.

      If a dispute, controversy or difference (in each case, a "Dispute")
      between the parties arises out of or is related to this Agreement, then
      such Dispute first shall be referred to the Steering Committee to seek a
      resolution of the Dispute. In such an event, the Steering Committee shall
      hold at least one (1) meeting within thirty (30) days of the date on which
      the Dispute is referred to the Steering Committee. In the event that the
      Steering Committee is unable to resolve the Dispute within forty five (45)
      days of the date on which the Dispute is referred to the Steering
      Committee, each party shall designate a member of its senior management to
      discuss the Dispute in an effort to settle it amicably during a period of
      no less than thirty (30) days.

12.   NOTICES AND REPORTS.

      12.1  All notices shall be in writing mailed via certified mail, return
            receipt requested, courier, or facsimile transmission addressed as
            follows, or to such other address as may be designated from time to
            time:

            IF TO PFIZER:    Pfizer Global R&D Headquarters
                             50 Pequot Avenue
                             New London, CT 06320
                             Attn.: Executive Vice President, PGRD
                             with copy (which shall not constitute notice) to:
                                    Assistant General Counsel

                             Invoices should be sent to the attention of Lori
                             Schenking, Strategic Alliances, PGRD Groton
                             Laboratories, at the following address:

                             Pfizer Global Research & Development
                             Groton Laboratories
                             Eastern Point Road - MS 8200-30
                             Groton, CT  06340

<PAGE>

                                       24


            IF TO GUILFORD:  Guilford Pharmaceuticals Inc.
                             6611 Tributary Street
                             Baltimore, MD 21224
                             Attn: Senior Vice President Corporate Development
                             with a copy (which shall not constitute notice) to:
                                    Senior Vice President & General Counsel
                             and
                             GPI NAALADase Holdings, Inc.
                             222 Delaware Avenue
                             Wilmington, Delaware 19899
                             Attn: Vice President & Secretary

               Notices shall be deemed given as of the date sent.

      12.2  On a quarterly basis during the term of this Agreement, to the
            extent not made available to Guilford through the Steering
            Committee, Pfizer will provide Guilford with written reports,
            summarizing all material data and information arising out of the
            actions contemplated by this Agreement and the research and
            development conducted by Pfizer in respect of NAALADase inhibitors.
            In the event that after receipt of any such report, Guilford shall
            request additional data or information relating to the report,
            Pfizer shall promptly provide such data or information to Guilford.

13.   GOVERNING LAW. This Agreement shall be governed by and construed in
      accordance with the laws of the State of New York.

14.   MISCELLANEOUS.

      14.1  BINDING EFFECT. This Agreement shall be binding upon and inure to
            the benefit of the parties and their respective legal
            representatives, successors and permitted assigns.

      14.2  HEADINGS. Section headings are inserted for convenience of reference
            only and do not form a part of this Agreement.

      14.3  COUNTERPARTS. This Agreement may be executed simultaneously in two
            or more counterparts, each of which shall be deemed an original.

      14.4  AMENDMENT; WAIVER; ETC. This Agreement may be amended, modified,
            superseded or cancelled, and any of the terms may be waived, only by
            a written instrument executed by each party or, in the case of
            waiver, by the party or parties waiving compliance. The delay or
            failure of any party at any time or times to require performance of
            any provisions shall in no


<PAGE>

                                       25


            manner affect the rights at a later time to enforce the same. No
            waiver by any party of any condition or of the breach of any term
            contained in this Agreement, whether by conduct, or otherwise, in
            any one or more instances, shall be deemed to be, or considered as,
            a further or continuing waiver of any such condition or of the
            breach of such term or any other term of this Agreement.

      14.5  NO THIRD PARTY BENEFICIARIES. No third party including any employee
            of any party to this Agreement, shall have or acquire any rights by
            reason of this Agreement. Nothing contained in this Agreement shall
            be deemed to constitute the parties partners with each other or any
            third party.

      14.6  ASSIGNMENT AND SUCCESSORS. This Agreement may not be assigned by
            either party, except that each party may assign this Agreement and
            the rights and interests of such party, in whole or in part, to any
            of its Affiliates, any purchaser of all or substantially all of its
            assets or to any successor corporation resulting from any merger or
            consolidation of such party with or into such corporations.

      14.7  FORCE MAJEURE. Neither Pfizer nor Guilford shall be liable for
            failure of or delay in performing obligations set forth in this
            Agreement, and neither shall be deemed in breach of its obligations,
            if such failure or delay is due to an act of God, weather
            conditions, strikes, lockouts, inability to procure labor,
            materials, or fuels due to shortages, fires, riots, interference by
            civil or military authorities, or acts of war, or other cause which
            is beyond the reasonable control of Pfizer or Guilford.

      14.8  SEVERABILITY. If any provision of this Agreement is or becomes
            invalid or is ruled invalid by any court of competent jurisdiction
            or is deemed unenforceable, it is the intention of the parties that
            the remainder of the Agreement shall not be affected.

      14.9. INTERPRETATION. The Section headings contained in this Agreement are
            for convenience of reference only and shall not affect the meaning
            or interpretation of this Agreement. As used in this Agreement, any
            reference to the masculine, feminine or neuter gender shall include
            all genders, the plural shall include the singular, and singular
            shall include the plural. Unless the context otherwise requires, the
            term "party" when used herein means a party hereto. References
            herein to a party or other Person include their respective
            successors and assigns. The words "include," "includes" and
            "including" when used herein shall be deemed to be followed by the
            phrase "without limitation" unless such phrase otherwise appears.
            Unless the context otherwise requires, references herein to
            Sections, Schedules and Exhibits shall be deemed references to
            Sections of, and Schedules and Exhibits to, this Agreement. Unless
            the


<PAGE>

                                       26


            context otherwise requires, the words "hereof," "hereby" and
            "herein" and words of similar meaning when used in this Agreement
            refer to this Agreement in its entirety and not to any particular
            Section or provision hereof. With regard to each and every term and
            condition of this Agreement, the parties understand and agree that
            the same have or has been mutually negotiated, prepared and drafted,
            and that if at any time the parties desire or are required to
            interpret or construe any such term or condition or any agreement or
            instrument subject thereto, no consideration shall be given to the
            issue of which party actually prepared, drafted or requested any
            term or condition of this Agreement.

      14.10 ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
            understanding between the parties hereto with respect to the subject
            matter hereof and supersedes all prior agreements, commitments,
            arrangements, negotiations or understandings, whether oral or
            written, between the parties hereto and their respective Affiliates
            with respect thereto. There are no agreements, covenants or
            undertakings with respect to the subject matter of this Agreement
            other than those expressly set forth or referred to herein and no
            representations or warranties of any kind or nature whatsoever,
            express or implied, are made or shall be deemed to be made herein by
            the parties hereto, except those expressly made in this Agreement.

            THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NO REPRESENTATION,
            WARRANTY, PROMISE, INDUCEMENT, UNDERSTANDING, COVENANT OR AGREEMENT
            HAS BEEN MADE OR RELIED UPON BY ANY PARTY HERETO OTHER THAN THOSE
            EXPRESSLY SET FORTH IN THE TRANSACTION DOCUMENTS. WITHOUT LIMITING
            THE GENERALITY OF THE DISCLAIMER SET FORTH IN THE PRECEDING
            SENTENCE, (I) NEITHER GUILFORD NOR ANY OF ITS AFFILIATES HAS MADE OR
            SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATIONS OR WARRANTIES, IN
            ANY PRESENTATION OR WRITTEN INFORMATION RELATING TO THE BUSINESS OR
            THE TECHNOLOGY GIVEN OR TO BE GIVEN IN CONNECTION WITH THE
            CONTEMPLATED TRANSACTIONS, IN ANY FILING MADE OR TO BE MADE BY OR ON
            BEHALF OF GUILFORD OR ANY OF ITS AFFILIATES WITH ANY GOVERNMENTAL
            AUTHORITY, AND NO STATEMENT MADE IN ANY SUCH PRESENTATION OR WRITTEN
            MATERIALS, MADE IN ANY SUCH FILING OR CONTAINED IN ANY SUCH OTHER
            INFORMATION SHALL BE DEEMED A REPRESENTATION OR WARRANTY HEREUNDER
            OR OTHERWISE, AND (II) GUILFORD EXPRESSLY DISCLAIMS ANY IMPLIED
            WARRANTIES, INCLUDING WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE
            AND WARRANTIES OF MERCHANTABILITY. PFIZER ACKNOWLEDGES THAT GUILFORD

<PAGE>

                                       27


            HAS INFORMED IT THAT NO PERSON HAS BEEN AUTHORIZED BY GUILFORD OR
            ANY OF ITS AFFILIATES TO MAKE ANY REPRESENTATION OR WARRANTY IN
            RESPECT OF THE BUSINESS OR THE TECHNOLOGY OR IN CONNECTION WITH THE
            CONTEMPLATED TRANSACTIONS, UNLESS IN WRITING AND CONTAINED IN THIS
            AGREEMENT OR IN ANY OF THE TRANSACTION DOCUMENTS TO WHICH THEY ARE A
            PARTY.

      14.11 EXPENSES. Except as expressly set forth herein, each party hereto
            shall bear all fees and expenses incurred by such party in
            connection with, relating to or arising out of the execution,
            delivery and performance of this Agreement and the consummation of
            the transactions contemplated by this Agreement, including
            attorneys', accountants' and other professional fees and expenses.




<PAGE>

                                       28


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.

PFIZER INC                                  GUILFORD PHARMACEUTICALS INC.


By:   /s/ Peter B. Corr                     By: /s/ Craig R. Smith, M.D.
    ---------------------------                --------------------------------
Name:  Peter B. Corr                        Name: Craig R. Smith, M.D.


Title: Senior Vice President,               Title: Chairman, President and Chief
       Science and Technology                       Executive Officer

GPI NAALADASE HOLDINGS, INC.


By: /s/ Daniel P. McCollom
   -----------------------
Name: Daniel P. McCollom
Title: Vice President and Secretary



<PAGE>

                                    EXHIBIT A
                         PATENTS AND PATENT APPLICATIONS






                                       *
<PAGE>

                                    EXHIBIT B
                                DILIGENCE ACTIONS





                                       *
<PAGE>

                                    EXHIBIT C
                         FORM OF GUILFORD PRESS RELEASE




<PAGE>

FOR IMMEDIATE RELEASE


          GUILFORD PHARMACEUTICALS SIGNS LICENSE AGREEMENT WITH PFIZER

             NOVEL NAALADASE INHIBITOR TECHNOLOGY TO BE DEVELOPED TO
                        TREAT NEURODEGENERATIVE DISEASES


BALTIMORE, MD, May 8, 2003, Guilford Pharmaceuticals Inc. (Nasdaq: GLFD)
announced today that it has entered into an exclusive license agreement with
Pfizer for a novel class of potential drugs called NAALADase inhibitors that
have been shown in preclinical testing to ameliorate certain central and
peripheral neurodegenerative diseases, such as diabetic peripheral neuropathy
and neuropathic pain.

Under the terms of the agreement, Pfizer will have exclusive right to develop
Guilford's NAALADase inhibitors worldwide and will conduct and pay for all costs
associated with research, development, manufacturing, and commercialization of
any products that may emerge from this agreement. Guilford retains the right to
continue to conduct and pay for the development of NAALADase inhibitors not
under development by Pfizer for prostate cancer, head and spinal cord injury,
and drug addiction. Pfizer has the exclusive right in the future to acquire, for
certain consideration, any products developed by Guilford for these indications.
In exchange, Pfizer has agreed to pay Guilford $15 million in cash, including $5
million at signing, and $10 million by March 31, 2004 (or earlier depending on
whether a lead compound has been selected for clinical development). If Pfizer
does not pay the additional $10 million on or before March 31, 2004, all rights
revert to Guilford at its election, along with data and other information
generated by Pfizer relating to Guilford's NAALADase inhibitors.

<PAGE>

As part of the agreement, Guilford is eligible to receive royalties on future
product sales and milestone payments related to the successful development and
commercialization of a NAALADase inhibitor. The schedule of milestone payments
outlines a total of $42 million to be paid for each compound developed through
commercialization, as well as one additional set of milestone payments totaling
$20 million for an additional indication for the same compound.

"We are very pleased to license our NAALADase inhibitor program to Pfizer, the
world's leading pharmaceutical company. Pfizer has a major commitment to the
fields of central and peripheral nervous system disorders," commented Craig R.
Smith, M.D., Chairman, President and Chief Executive Officer of Guilford. "Our
agreement with Pfizer is consistent with Guilford's objective of finding the
highest-quality strategic partnerships for the programs we intend to license,
while continuing to advance select product development efforts in the US
independently."

Guilford has one marketed product, GLIADEL(R) Wafer, which recently received FDA
approval for an expanded indication for use in patients with newly diagnosed
high-grade malignant glioma as an adjunct to surgery and radiation, and a
pipeline which includes two product candidates, GPI 1485 and AQUAVAN(TM)
Injection, in Phase II clinical testing.


NAALADASE INHIBITOR PROGRAM BACKGROUND

NAALADase, or N-Acetylated-Alpha-Linked-Acidic-Dipeptidase, is a membrane-bound
enzyme found principally in the central and peripheral nervous systems.
NAALADase is believed to play a role in modulating the release of glutamate, one
of the most common chemical messengers between nerves. During conditions of
acute injury or chronic neurodegenerative disorders, there may be a large
increase in


<PAGE>

glutamate release that incites a cascade of biochemical events, ultimately
leading to cell injury and death.

Guilford has created several unique classes of NAALADase inhibitors and
evaluated their potential therapeutic application in preclinical models of
various acute and chronic neurodegenerative disorders, including diabetic
peripheral neuropathy, neuropathic pain, Lou Gehrig's Disease (ALS), head and
spinal cord trauma, and stroke. NAALADase is the same protein as prostate
specific membrane antigen (PSMA), a protein found on the surface of prostate
cancer cells. Guilford has also shown that its compounds may have utility for
diagnostic or therapeutic purposes in prostate cancer.

In preclinical animal models of diabetic peripheral neuropathy and neuropathic
pain, Guilford scientists have shown that treatment with a NAALADase inhibitor
can normalize pain sensitivity, increase nerve conduction velocity and prevent
or slow peripheral nerve degeneration.

Diabetic peripheral neuropathy is a debilitating and progressive disorder
involving increased pain sensitivity, tingling, weakness and numbness in a
patient's extremities. It is believed to affect approximately one million people
in the United States.

Guilford has 37 issued US patents and 10 pending patent applications, and
corresponding foreign counterparts protecting its NAALADase inhibitor
technology.


ABOUT GUILFORD

Guilford Pharmaceuticals Inc. is a fully integrated pharmaceutical company that
discovers, develops and markets novel pharmaceutical products targeting the
hospital and neurological markets. Guilford's product pipeline includes a
marketed therapeutic for the most common form of brain cancer, GLIADEL(R) Wafer,
and products in


<PAGE>

development for Parkinson's disease, post-prostatectomy erectile dysfunction,
peripheral nerve damage, and anesthesia and sedation.


                                       ###


Contact:    Guilford Pharmaceuticals Inc.
            Stacey Jurchison 410.631.5022

Internet addresses: www.guilfordpharm.com

This press release contains forward-looking statements that involve risks and
uncertainties, including those described in the section entitled "Risk Factors"
contained in the Company's Annual Report on Form 10-K filed with the SEC on
March 31, 2003, that could cause the Company's actual results and experience to
differ materially from anticipated results and expectations expressed in these
forward-looking statements. Among other things, there can be no assurance that
the Company will receive additional payments from Pfizer, or that Pfizer will
successfully develop the Company's NAALADase technology into an approved
pharmaceutical product.

<PAGE>

                                   SCHEDULE 4



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<PAGE>

                                 SCHEDULE 8.1.2
                                TIER I COUNTRIES



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