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EXHIBIT 3.05
AMENDMENT TO RESTRICTED SHARE AGREEMENTS UNDER
THE 1993 SHARE OPTION AND RESTRICTED SHARE PLAN, ADOPTED BY THE
BOARD IN AUGUST 1998
I. Pursuant to Section 12.2 of the Guilford Pharmaceuticals Inc. 1993
Share Option and Restricted Share Plan, as amended, the share forfeiture
requirements with respect to outstanding Restricted Share Awards granted under
that plan are modified and Section 3.2 of the Holder's Restricted Agreement by
replacing current Section 6.1 and replacing in its entirety with the following:
6.1 VESTING UPON A CHANGE IN CONTROL
Notwithstanding any other provisions of the Plan or this Agreement,
in the event of a "Change in Control" (as defined below), the Limitation Period
shall be deemed terminated, the restrictions on transfer set forth above in
Section 3.2 and the forfeiture provisions of Section 3.1 above shall be deemed
waived in full with respect to all Shares granted hereunder, and all such Shares
shall be deemed fully vested as of the date immediately prior to effective date
of the Change in Control if the Holder continues to be employed by the Company
as of the date of such accelerated vesting.
II. Sections 6.2 and 6.3 of each Holder's Restricted Share Agreement is
hereby deleted in their entirety and Section 6.4 is hereby denominated Section
6.2., and is amended and restated to read in its entirety as follows:
6.2 DEFINITION OF "CHANGE IN CONTROL".
A "Change in Control" shall be deemed to have occurred if: (a) any
"person" (including, without limitation, any individual, sole proprietorship,
partnership, trust, corporation, association, joint venture, pool, syndicate, or
other entity, whether or not incorporated), or any two or more persons acting as
a syndicate or group or otherwise acting in concert with regard to the ownership
of securities of the Company and thereby deemed collectively to be a "person")
as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), becomes, after the date hereof, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's then outstanding securities
(but excluding for purposes of such computation all securities of the Company
beneficially owned by such person as of February 22, 1995), unless, in
transaction in which a "person" becomes, after the date hereof, the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of
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securities of the Company representing less than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities, prior to the
acquisition by such person of securities of the Company which causes such person
to have such beneficial ownership, the full Board shall by at least a two-thirds
vote have specifically approved such acquisition and determined that such
acquisition shall not constitute a Change in Control for purposes of options
granted under the Plan despite such beneficial ownership; or (ii) during any two
(2) year period, individuals who at the beginning of such period constitute the
Board, together with any new directors elected or appointed during the period
whose election or appointment resulted from a vacancy on the Board caused by the
retirement, death, or disability of a director and whose election or appointment
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of the period, cease for any
reason to constitute a majority thereof.
III. A new Section 8A of each Holder's Restricted Share Agreement is hereby
added to read as follows:
8A. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
Notwithstanding any other provision of this Restricted Share Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Holder and the Company, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this Section 8A (the "Other Agreements"), and notwithstanding any
formal or informal plan or other arrangement heretofore or hereafter adopted by
the Company for the direct or indirect compensation of the Holder (including
groups or classes of participants or beneficiaries of which the Holder is a
member), whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for a Holder (a "Benefit Arrangement"), if the Holder is
a "disqualified individual," as defined in Section 280G(c) of the Code, in the
event it shall be determined that any right to receive any payment or other
benefit under this Restricted Share Agreement, taking into account all other
rights, payments, or benefits to or for Holder under the Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
a Holder under this Plan to be considered a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code as then in effect (a "Payment") which
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Holder with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Holder shall be entitled
to receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Holder of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Holder retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
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(b) Subject to the provisions of Section 8A(c), all determinations
required to be made under this Section, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by KPMG Peat
Marwick or such other certified public accounting firm as may be designated by
the Holder (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Holder within 15 business days of the
receipt of notice from the Holder that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Holder may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section, shall be paid by the
Company to the Holder within five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Holder. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 8A(c) and the Holder
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Holder.
(c) The Holder shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. The Holder shall not pay such claim prior to
the expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Holder in writing prior to the expiration of such period that it desires to
contest such claim, the Holder shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Holder harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8A(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Holder to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Holder agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Holder to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to the Holder, on an interest-free basis and shall indemnify and hold the Holder
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Holder with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Holder shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Holder of an amount advanced by the
Company pursuant to Section 8A(c), the Holder becomes entitled to receive any
refund with respect to such claim, the Holder shall (subject to the Company's
complying with the requirements of Section 8A(c)) promptly pay to the Company
the amount of such refund (together with any interest actually paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Holder of
an amount advanced by the Company pursuant to Section 8A(c), a determination is
made that the Holder shall not be entitled to any refund with respect to such
claim and the Company does not notify the Holder in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
IV. Capitalized terms not otherwise defined herein shall have the
means set forth in Guilford Pharmaceuticals Inc. 1993 Share Option and
Restricted Share Plan, as amended, or the Restricted Share Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Amendment to Restricted Share Agreement, or caused this Amendment
to Restricted Share Agreement to be duly executed and delivered on their behalf,
as of the 17th day of August, 1998.
ATTEST: GUILFORD PHARMACEUTICALS INC.
By:
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Title:
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HOLDER:
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