<PAGE> 1
As filed with the Securities and Exchange Commission on June 18, 1999
Registration No. 333-73039
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DUSA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3103129
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
(416) 363-5059
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
NANETTE W. MANTELL, ESQ.
LANE AND MANTELL
991 ROUTE 22 WEST, PO BOX 8539
SOMERVILLE, NEW JERSEY 08876
(908) 253-9333
(Name, address, including ZIP code, and telephone
number, including area code, of agent for service)
COPIES TO:
DR. D. GEOFFREY SHULMAN, PRESIDENT
DUSA PHARMACEUTICALS, INC.
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
(416) 363-5059
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities to be Offering Price Per Aggregate Offering Registration
to be Registered Registered Share Price Fee
- --------------------------------------------- ---------- ------------------ ------------------ -------------
<S> <C> <C> <C> <C>
Shares of common stock without par value (2) 1,500,000 $ 6.09375(1) $ 9,140,625.00 $ 2,541.09
Shares of common stock without par value (2) 15,000 9.9375(14) $ 149,062.50 $ 41.44
Shares of common stock without par value (3) 130,435 $ 6.09375(1) $ 794,838.28 $ 220.96
Placement agent warrants (4) 163,043 $ 6.09375(5) $ 993,543.28 $ 276.21
Shares of common stock without par value (6) 163,043 -- $ 0.00 $ 0.00
Shares of common stock without par value (7) 50,000 $ 6.09375(1) $ 304,687.50 $ 84.70
Underwriter's options (8) 300,000 $ 7.70(11) $ 2,310,000.00 $ 642.18
Shares of common stock without par value (9) 300,000 -- $ 0.00 $ 0.00
Underwriter's options (10) 37,500 $ 7.92(11) $ 297,000.00 $ 82.57
Shares of common stock without par value (12) 37,500 -- $ 0.00 $ 0.00
Shares of common stock without par value (13) 20,000 7.875(13) $ 157,500.00 $ 43.79
TOTAL REGISTRATION FEE*...................... $ 3,932.94
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on February 23, 1999.
(2) Represents shares issued to certain selling shareholders in a private
placement completed January 15, 1999 under Rule 506 of Regulation D of the
Securities Act of 1933, as amended, pursuant to subscription agreements.
(3) Represents shares issued to designees of the placement agent, a registered
broker-dealer, as commissions and non-accountable expense allowance in
connection with the private placement.
(4) Represents warrants issued to designees of the placement agent in connection
with the private placement as additional compensation.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g)(3) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on February 23, 1999.
(6) Represents shares issuable upon exercise of the placement agent warrants
issued in connection with the private placement transaction.
(7) Represents shares issuable upon exercise of a warrant issued to a consultant
in connection with services rendered pursuant to an investor relations agreement
dated October 14, 1993.
(8) Represents options to purchase shares issued to principals of the
underwriter in connection with the issuance and sale of common stock pursuant to
an underwriting agreement dated December 11, 1995.
(9) Represents shares issuable upon exercise of underwriter's options to
purchase shares issued in connection with an underwriting agreement dated
December 11, 1995.
(10) Represents options to purchase shares issued to principals of the
underwriter in connection with the issuance and sale of Common Stock pursuant to
an underwriting agreement dated April 15, 1996.
(11) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g)(1) of the Securities Act of 1933, as amended, based upon
the price at which the options may be exercised.
(12) Represents shares issuable upon exercise of underwriter's options to
purchase shares issued in connection with an underwriting agreement dated April
15, 1996.
(13) Represents shares issuable upon exercise of a warrant issued to a
consultant in connection with services rendered pursuant to an investor
relations services agreement dated May 1, 1995. Under Rule 457(g)(3) of the
Securities Act of 1933, the registration fee is estimated based upon the average
of the high and low price as reported on The NASDAQ National Market on April 15,
1999.
(14) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon
the average of the high and low price as reported on The NASDAQ National Market
on June 15, 1999.
*$3,891.50 Previously paid.
<PAGE> 3
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 4
Subject to Completion, Dated June 18, 1999
PROSPECTUS
DUSA PHARMACEUTICALS, INC.
2,215,978 SHARES OF COMMON STOCK
-----------------------------------------------------------------
This prospectus relates to an offering of 2,215,978 shares of
common stock by the selling shareholders listed on pages 8 and 9.
-----------------------------------------------------------------
INVESTING IN THESE SHARES INVOLVES SIGNIFICANT RISKS.
SEE RISK FACTORS BEGINNING ON PAGE 1.
Our common stock is traded on The NASDAQ National Market under the
symbol "DUSA."
The last reported sale price of our common stock on NASDAQ on June 15,
1999 was $9.9375 per share.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
ARE NOT ALLOWED TO SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION, HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is June -, 1999
<PAGE> 5
TABLE OF CONTENTS
Page
DUSA....................................................................... 1
Risk Factors............................................................... 1
Where You Can Find More Information........................................ 7
Incorporation of Certain Documents by Reference............................ 7
Forward-Looking Statements................................................. 7
Use of Proceeds............................................................ 8
Selling Shareholders....................................................... 8
Plan of Distribution....................................................... 10
Securities to be Offered................................................... 10
Legal Matters.............................................................. 11
Experts.................................................................... 11
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities.......................................... 11
<PAGE> 6
DUSA
We are a development stage pharmaceutical company engaged primarily in the
research and development of a light sensitive drug, whose chemical name is
5-aminolevulinic acid, or more commonly known as ALA, in combination with light
devices. The trademark for our brand of ALA is Levulan(R). We have published
trademark applications for our drug applicator, Kerastick(TM) and one of our
light devices, the BLU-U(TM). We believe that this drug and light combination
system may be used to treat numerous diseases and to help detect the presence of
other diseases.
- When we use Levulan(R)and follow it with exposure to light to produce
a therapeutic effect the technology is called photodynamic therapy or
PDT.
- When we use Levulan(R)and follow it with exposure to light to detect
medical conditions the technology is called photodetection or PD.
In July, 1998, we filed an application with the FDA for marketing approval
using Levulan(R) photodynamic therapy to treat pre-cancerous skin lesions of the
face and scalp called actinic keratoses. This application is called a new drug
of application or NDA.
We own or exclusively license certain patents and technology pertaining to
our drug from PARTEQ Research and Development Innovations under a license
agreement between DUSA and PARTEQ. We also own or license certain patents
relating to methods for using pharmaceutical formulations which contain our drug
and related processes and improvements.
We are filing this prospectus, at our expense, as required by agreements
with the selling shareholders. We will not receive any proceeds from the resale
of the common stock by the selling shareholders.
Our principal executive offices are located at 181 University Avenue, Suite
1208, Toronto, Ontario M5H 3M7 CANADA and our telephone number is (416)
363-5059.
RISK FACTORS
Investing in our common stock is very speculative and involves a high
degree of risk. The risk factors described below may cause actual results,
events or performance to differ materially from those predicted in any
forward-looking statements we make in this prospectus. You should carefully
consider these risk factors, in addition to the other information included or
incorporated by reference in this prospectus before you make an investment
decision.
DEVELOPMENT OF OUR POTENTIAL PRODUCTS INVOLVES A LENGTHY PROCESS WHICH MAY
NEVER RESULT IN ANY MEDICALLY EFFECTIVE PRODUCTS.
Most of our products are at an early stage of development. Currently, we
are developing a single drug compound for a number of different medical uses. We
cannot predict how long this process will take. We do not know if any of the
potential products will be effective medical treatments or diagnostic methods.
We face much trial and error and we may fail at numerous stages along the
way. Our products are at the following stages of development:
- Actinic Keratoses - Our NDA is under FDA review.
- Bladder Cancer Photodetection - Our first Phase I/II trial is
completed and additional Phase II trials are planned.
- Hair Removal - Our first Phase I/II study was recently completed and
the results are being analyzed.
- Acne - A Phase I/II study is scheduled to begin this year.
- Endometrial Ablation which is a method of treating excessive uterine
bleeding - We are sponsoring an investigator study which has recently
started.
- Cancer or Pre-cancer of the cervix -We are sponsoring investigator
trials.
Our most advanced development effort involves Levulan(R) PDT for actinic
keratoses, but the FDA could require more testing. All of the other uses will
require significant further research, development and testing.
1
<PAGE> 7
WE HAVE SIGNIFICANT LOSSES AND MAY NEVER BE PROFITABLE.
We have a history of operating losses. We anticipate future losses and we
may never become profitable. As of March 31, 1999, our accumulated deficit was
approximately $31,447,289. We cannot predict whether any of our potential
products will achieve market acceptance to generate sufficient revenues to
become profitable.
IF WE DO NOT OBTAIN GOVERNMENT REGULATORY APPROVAL THEN WE CANNOT MARKET
OUR PRODUCTS.
All of our potential products will require the approval of the FDA before
they can be marketed in the United States. We cannot predict whether any of our
products will obtain required FDA approvals or that regulatory problems will not
arise that could delay or prevent the marketing of Levulan(R) PDT to treat
actinic keratoses. Discovery of problems with a product, manufacturer or
facility can result in delay of approval, product labeling restrictions or
withdrawal of the product from the market. These consequences could adversely
affect our financial condition and operations.
Before an NDA can be filed with the FDA, a product must undergo, among
other things, extensive animal testing and human clinical trials. Other than the
NDA for Levulan(R) PDT to treat actinic keratoses, we have not filed NDAs for
any of our other potential uses of Levulan(R) photodynamic therapy or
photodetection. Following the acceptance of an NDA, the time required for
regulatory approval can vary and is usually one to three years or more. Our drug
and light system, Levulan(R) photodynamic therapy is a novel product based on
new technology, so the FDA may take longer than average to consider our products
for approval. To the best of our knowledge, only two similar PDT applications
have received marketing approval from the FDA. DUSA has been asked to appear at
an FDA advisory committee meeting to discuss its NDA. The meeting was originally
scheduled for June 3, 1999 but is being rescheduled by the agency on a date
which the FDA will announce shortly. We cannot predict what the committee will
recommend to the FDA since our products are part of a relatively new type of
therapy which uses a drug and a light device in combination.
WE MAY NEED ADDITIONAL FUNDS AND IF WE CANNOT OBTAIN THEM ON ACCEPTABLE
TERMS, WE WILL HAVE TO DELAY DEVELOPMENT EFFORTS.
If we do not receive timely regulatory approval for our first product,
Levulan(R) PDT for actinic keratoses, or if our product is approved and our
sales goals are not met, then we will need substantial additional funds in order
to fully develop, manufacture, market and sell our other potential products. We
cannot predict exactly when additional funds will be needed. We may obtain funds
through a public or private financing, including equity financing, and/or
through collaborative arrangements. We cannot predict whether any financing will
be available on acceptable terms when we need it because investors may be
unwilling to invest in DUSA if we have setbacks in the development program or if
the public fails to use our products.
If funding is insufficient, we will have to delay, reduce in scope or
eliminate some or all of our research and development programs. We cannot
predict which programs will be effected since it will depend upon the status of
clinical trials at that time. We may also license rights to third-parties to
commercialize products or technologies that we would otherwise have attempted to
develop and commercialize ourself.
SINCE WE RELY ON SOLE SUPPLIERS FOR MANUFACTURE OF OUR PRODUCTS, ANY
REGULATORY OR PRODUCTION PROBLEMS COULD ADVERSELY AFFECT US.
We do not currently have the capacity to manufacture our Levulan(R) PDT
products on our own. We have only one source for our drug supply, one source for
our Kerastick(TM) brand of drug applicators, and one for our BLU-U(TM) brand of
light device. If any of these suppliers fail to meet our needs our business,
financial condition and results of operations could suffer. Our drug supplier
has been notified that its facilities are not GMP compliant at this time but it
is actively working to resolve the deficiencies. We are relying on this supplier
to manufacture future commercial supplies of our product. If this supplier, or
our other sole sources fail to meet and maintain regulatory requirements,
approval of our first product could be delayed. It would be time-consuming and
costly for DUSA to obtain these products from other FDA-approved manufacturers
because our NDA would have to be amended and reviewed by the FDA.
Our manufacturers have not yet produced our products in commercial
quantities. Manufacturers often encounter difficulties in scaling-up
manufacturing of new products, including problems involving product yields,
quality control, component and service availability, adequacy of control
procedures and policies, compliance with FDA regulations and the need for
further FDA approval of new manufacturing processes and facilities. We cannot
predict whether production yields, costs or quality will be adversely affected
as our appointed manufacturers seek to increase production. Any such adverse
effect could delay or prevent commercialization of our products which would have
a material adverse effect on our business, financial condition and results of
operations.
2
<PAGE> 8
SINCE WE LACK MARKETING EXPERTISE, OUR ABILITY TO ACHIEVE REVENUE GOALS MAY
BE DELAYED.
Although we are developing various plans for marketing our first product
upon receipt of regulatory marketing approval, we do not at this time have a
marketing partner or our own personnel to market our products. If we receive FDA
approval before we establish marketing capabilities, our ability to generate
revenues will be limited until we do so. We are negotiating potential
collaborative licensing arrangements with pharmaceutical companies with
manufacturing and/or sales and distribution capability to market our products.
We are also developing plans to market the products through distribution or
co-promotion arrangements. We cannot predict whether any of these arrangements
will be concluded or if any of our products will be successfully marketed.
WE HAVE LIMITED PATENT PROTECTION AND MAY NOT BE ABLE TO PROTECT OUR
PATENTS AND PROPRIETARY RIGHTS.
Our ability to compete successfully depends, in part, on our ability to
defend patents that have issued, obtain new patents, protect trade secrets and
operate without infringing the proprietary rights of others. We have no product
patent protection for the compound ALA itself, as our basic patents are for
methods of detecting and treating various diseased tissues using ALA or related
compounds called precursors, in combination with light. Even where we have
patent protection, there is no guarantee that we will be able to enforce our
patents. Patent litigation is expensive, and we may not be able to afford the
costs. We own or exclusively license patents and patent applications related to
the following:
- unique physical forms of ALA;
- methods of using ALA and its unique physical forms in combination with
light; and
- compositions and apparatus for those methods.
In addition, a number of third parties are seeking patents for additional
uses of ALA. These additional uses, whether patented or not, could limit the
scope of our future operations because other ALA products might become available
which would not infringe our patents. These products would compete with ours
even though they are marketed for a different use.
We have limited patent protection outside the United States which may make
it easier for third-parties to compete there. Our basic method of treatment
patents and applications have counter-parts in only four foreign countries.
Absent patent protection, third-parties may freely market ALA, subject to
appropriate regulatory approval. There are reports of several third-parties
conducting clinical studies using ALA in countries where DUSA lacks patent
protection. These studies could provide the clinical data necessary to gain
regulatory approval, resulting in competition.
Our patent protection in Japan may be diminished or lost entirely. The
Japanese Patent Office Board of Appeals, acting upon its review of an opposition
to Japanese Patent No. 273032 which we have licensed from PARTEQ Research and
Development Innovation, issued a document titled "Notice of Reasons for
Cancellation" which DUSA received on February 12, 1999. With PARTEQ's
assistance, we are preparing our response to this action which we must file by
July 8, 1999. If our response does not allay the concerns of the Board, they may
limit our patent protections or finalize the cancellation. Japan is a major
pharmaceutical market and loss of this patent could adversely affect DUSA in at
least two ways. First, should DUSA seek to enter the Japanese market, the lack
of a patent would probably diminish our market share. Second, even if we did not
seek to market in Japan, third parties might not be interested in licensing the
product in Japan without patent protections, and this might affect DUSA's
revenues.
Thermolase Corporation has patents that may affect our ability to
commercialize the use of ALA for hair removal. DUSA is aware that Thermolase has
seven issued United States patents which claim methods for removing or
inhibiting the growth of hair. DUSA does not know whether any of these patents
cover our plans to market hair removal using ALA because we have not developed a
final formulation or method of removing hair with ALA and light. If, after
finalizing our formulation and method, we find that these patents do cover our
planned use of ALA, Thermolase may either prevent us from using our system or
they may require us to take a license for a fee.
While we attempt to protect our proprietary information as trade secrets
through agreements with each employee, licensing partner, consultant,
university, pharmaceutical company and agent, we cannot give you any assurance
that these agreements will provide effective protection for our proprietary
information in the event of unauthorized use or disclosure of such information.
COMPETING PRODUCTS AND TECHNOLOGIES MAY MAKE SOME OR ALL OF OUR PROGRAMS OR
POTENTIAL PRODUCTS NONCOMPETITIVE OR OBSOLETE.
Many pharmaceutical companies have substantially greater financial,
technical, manufacturing, marketing and distribution resources than we have
which gives them an advantage over us in the marketplace. This industry is
subject to rapid, unpredictable and significant technological change.
Competition is intense. Well-known pharmaceutical, biotechnology and chemical
companies,
3
<PAGE> 9
are marketing well-established therapies, and/or seeking to develop new products
and technologies, for the treatment of various dermatological conditions
including actinic keratoses. For example, the current preferred methods of
treating actinic keratoses are with the drug 5-fluorouracil for multiple
lesions, and cryotherapy using liquid nitrogen for limited numbers of lesions.
Although both methods are effective, 5-FU can be irritating and often requires
administration for a number of consecutive weeks, while cryotherapy is
non-selective, is usually painful at the site of freezing and may cause
blistering.
In addition, several companies are developing photodynamic therapies and
photodetection products, including products for markets that we intend to
pursue. Commercial development of PDT agents are currently being pursued by a
number of companies, including: QLT Photo Therapeutics Inc. (Canada); Miravant,
Inc. (U.S.); Pharmacyclics, Inc. (U.S.); Nippon Petrochemicals (Japan); Scotia
Pharmaceuticals (United Kingdom); medac GmBh (Germany) ("Medac"); and Photocure
(Norway). Photocure may be working at Phase I/II equivalent trials using ALA PDT
for dermatological uses, including for certain indications being pursued by
DUSA. We are aware that Medac is developing ALA PDT for bladder cancer detection
in Germany and may receive regulatory approval in Germany prior to DUSA
receiving approval from the FDA. We expect that our principal methods of
competition with other PDT companies will be based upon such factors as:
- the ease of administration of our photodynamic therapy,
- the degree of generalized skin sensitivity to light,
- the number of required doses,
- the selectivity of our drug for the target lesion or tissue of
interest, and
- the type and cost of our light systems.
We cannot give you any assurance that new drugs or future developments in
PDT or in other drug technologies will not have a material adverse effect on our
business. Increased competition could result in:
- price reductions,
- lower levels of third-party reimbursements,
- failure to achieve market acceptance, and
- loss of market share
any of which could have an adverse effect on our business. Further, we cannot
give you any assurance that developments by our competitors or future
competitors will not render our technology obsolete.
THE LOSS OF KEY MEMBERS OF OUR MANAGEMENT COULD DELAY THE ACHIEVEMENT OF
OUR BUSINESS AND RESEARCH OBJECTIVES.
We are a small company with only fifteen employees. We are highly dependent
on several key employees with specialized scientific and technical skills
including: D. Geoffrey Shulman, MD, FRCPC, Chairman of the Board, President,
Chief Executive Officer and Chief Financial Officer of the Company; Ronald L.
Carroll, Executive Vice President and Chief Operating Officer; and Stuart L.
Marcus, MD, PhD, Senior Vice President, Scientific Affairs. At least one of them
receives regular solicitations for employment from industry competitors. While
we have entered employment agreements with our three executive officers, they
may not remain with us. Our growth and future success will depend, in large
part, on the continued contributions of these key individuals as well as our
ability to, motivate and retain these qualified personnel in our specialty drug
and light device areas. We currently do not employ anyone who could replace
them. The loss of Dr. Shulman, Mr. Carroll or Dr. Marcus could cause significant
delays in achievement of our business and research goals since very few people
with their expertise could be hired. Our business, financial condition and
results of operations could suffer.
IF REIMBURSEMENT FOR OUR PRODUCTS BY THIRD-PARTY PAYORS IS NOT ADEQUATE OUR
REVENUES AND PROFITS COULD SUFFER.
We expect that our ability to successfully penetrate the market will depend
significantly on the availability of reimbursement for our products from
third-party payors such as governmental programs, private insurance and private
health plans. We cannot predict whether levels of reimbursement for our drug and
light combination therapy, if any, will be high enough to allow us to charge a
reasonable profit margin. Even with FDA approval, third-party payors may deny
reimbursement if the payor determines that our particular new therapy is
unnecessary, inappropriate or not cost effective. If patients are not entitled
to receive reimbursements similar to reimbursements for competing therapies,
they will have to pay for the unreimbursed amounts. These reimbursement factors
could limit our revenues, and our profits, if physicians or patients choose
therapies with higher reimbursements. The reimbursement status of newly-approved
health care products is highly uncertain. If levels of reimbursement
4
<PAGE> 10
are decreased in the future, the demand for our products could diminish or our
ability to sell our products on a profitable basis could be hurt.
WE ARE DEPENDENT UPON AN INDEPENDENT CONSULTING FIRM FOR OUR REGULATORY
AFFAIRS EXPERTISE AND IF THE FIRM STOPPED PROVIDING SERVICES IT COULD BE COSTLY
AND TIME-CONSUMING FOR US TO REPLACE THEM.
Our clinical development program is being implemented by our senior
management, with the assistance of consultants, primarily Guidelines, Inc., a
Florida-based company, specializing in drug development and regulatory affairs.
Guidelines' services involve acting as our liaison with the FDA, preparing and
filing with the FDA our clinical trial information, representing us at FDA
meetings and responding to FDA questions. If we lost their services, at the end
of our contract on December 31, 1999, we would be forced to seek alternative
arrangements or we might have to develop our own regulatory affairs capacity.
These alternatives may prove to be costly and time-consuming which could delay
any FDA approval and cause a material adverse effect on our business, financial
condition and results of operations.
IF WE BECOME SUBJECT TO A PRODUCT LIABILITY CLAIM, WE MAY NOT HAVE ADEQUATE
INSURANCE COVERAGE AND THE CLAIM COULD ADVERSELY AFFECT OUR BUSINESS.
The development, manufacture and sale of medical products exposes us to the
risk of significant damages from product liability claims. We maintain product
liability insurance for coverage of our clinical trial activities. We intend to
obtain coverage for our products when they enter the marketplace but we do not
know if it will be available at acceptable costs. If the cost is too high, we
will have to self-insure. While we have not experienced any product liability
claims, a successful claim in excess of our clinical trial insurance coverage or
any coverage for commercial use of our products could have a materially adverse
effect on our business, financial condition and results of operations.
IF OUTSTANDING OPTIONS AND WARRANTS ARE CONVERTED, THE VALUE OF THOSE
SHARES OF COMMON STOCK OUTSTANDING JUST PRIOR TO THE CONVERSION WILL BE DILUTED.
As of May 21, 1999 there were outstanding options and warrants to purchase
2,120,300 shares of common stock, with exercise prices ranging from U.S. $3.25
to $13.375 per share, respectively, and ranging from CDN. $4.69 to CDN. $12.875
per share, respectively. In addition, there are 480,000 outstanding
underwriter's purchase options and 163,043 outstanding placement agent warrants.
If the holders exercise a significant number of these securities at any one
time, the market price of the common stock could fall. The value of the common
stock held by other shareholders will be diluted. The holders of the options and
warrants have the opportunity to profit if the market price for the common stock
exceeds the exercise price of their respective securities, without assuming the
risk of ownership. If the market price of the common stock does not rise above
the exercise price of these securities, then they will expire without exercise.
The holders are likely to exercise their securities when we would probably be
able to raise capital from the public on terms more favorable than those
provided in these securities.
RESULTS OF OUR OPERATIONS AND GENERAL MARKET CONDITIONS FOR BIOTECHNOLOGY
STOCK COULD RESULT IN THE SUDDEN CHANGE IN THE MARKET VALUE OF OUR STOCK.
From time to time and in particular during the last several months, the
price of our common stock has been highly volatile. These fluctuations create a
greater risk of capital losses for our shareholders as compared to less volatile
stocks. Over the past twelve months our stock price has ranged from a high of
$16.063 to a low of $2.250. From January 1, 1999 to March 31, 1999, our stock
price has ranged from a high of $9.063 to a low of $5.375. Factors that
contributed to the volatility of our stock during the last fifteen (15) months
included:
- announcement of clinical trial results;
- filing of the NDA;
- announcement of a proposed marketing alliance;
- failure to complete that proposed marketing alliance.
Since we are a development stage company the significant general market
decline in similar stage pharmaceutical and biotechnology companies made the
market price of our common stock even more volatile.
5
<PAGE> 11
OUR OPERATIONS AND BUSINESS COULD BE DISRUPTED IF OUR COMPUTER SYSTEM OR IF
OUR KEY SUPPLIERS' SYSTEMS FAIL WHEN THE YEAR CHANGES TO 2000.
Any of our computers, computer programs, and administrative equipment that
have date-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. We cannot give you any assurance that our systems or
the systems of third-parties with whom we do business do not contain undetected
errors or defects associated with the year 2000 date functions that may have a
material adverse effect on our business, results of operation or financial
condition. If any of our systems that have date-sensitive software use only two
digits, system failures or miscalculations may result causing disruptions to our
operations, including among other things:
- a temporary inability to process transactions,
- sending and receiving electronic data with our third-party suppliers,
and
- engaging in similar normal business activities.
Our management information systems have been certified as year 2000
compliant. However, because most computer systems are, by their very nature,
interdependent, it is possible that non-compliant third-party computers could
have an adverse effect on our computer systems.
We have not completed the process of obtaining certifications from
unrelated third-parties but expect to be complete by August, 1999. In the event
such certifications are not available, we are developing plans to evaluate the
potential impact on our operations if such third-parties are unable to perform
their obligations. To the extent that such third-parties are materially
adversely affected by the year 2000 issue, we could experience disruptions and
delays in our operations and in receipt of supplies of our drug or light
devices. These events could negatively impact our research and development
activities and our revenues of any products which may have been commercialized
by that date.
EFFECTING A CHANGE OF CONTROL OF DUSA WOULD BE DIFFICULT, WHICH MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK.
Our certificate of incorporation authorizes the board of directors to issue
up to 100,000,000 shares of stock, 40 million of which are common stock. The
board of directors has the authority to determine the price, rights, preferences
and privileges, including voting rights, of the remaining 60 million shares
without any further vote or action by the shareholders. The rights of the
holders of our common stock will be subject to, and may be adversely affected
by, the rights of the holders of any preferred stock that may be issued in the
future.
We also have a shareholder rights plan. The plan may have the effect of
delaying, deterring, or preventing changes in control or management of DUSA,
which may discourage potential acquirers who otherwise might wish to acquire
DUSA without the consent of the board of directors. Under the plan, if a person
or group acquires 15% or more of our common stock, all holders of rights (other
than the acquiring shareholder) may, upon payment of the purchase price then in
effect, purchase common stock having a value of twice the purchase price. In the
event that DUSA is involved in a merger or other similar transaction where it is
not the surviving corporation, all holders of rights (other than the acquiring
shareholder) shall be entitled, upon payment of the then in effect purchase
price, to purchase common stock of the surviving corporation having a value of
twice the purchase price. The rights will expire on September 26, 2007, unless
previously redeemed.
6
<PAGE> 12
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission in Washington, D.C. You
may read and copy any document we file at the SEC's public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, NW, Washington, D.C.,
20549. The SEC has prescribed rates for copying. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our SEC
filings are also available to the public at the SEC's website at
http://www.sec.gov.
Our reports and other information can also be inspected at the offices of
the National Association of Securities Dealers at 1735 K Street, NW, Washington,
DC 20006-1506.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
information we file with the SEC in other documents. This means that we can
disclose important information to you by referring you to those documents. The
information incorporated may include documents filed after the date of this
prospectus which will update and supercede the information you read in this
prospectus. We incorporate by reference the documents listed below, except to
the extent information contained in those documents is different from the
information contained in this prospectus.
- Annual report on Form 10-K for the year ended December 31, 1998.
- Quarterly report on Form 10-Q for the quarter ended March 31, 1999.
- Three current reports on Form 8-K, including the exhibits: one dated
January 7, 1999 which was filed on January 11, 1999; one dated
January 14, 1999 which was filed January 14, 1999; and one dated June
11, 1999 which was filed June 11, 1999.
- The description of DUSA's common stock contained in its registration
statement on Form 8-A which was filed on January 3, 1992 and amended
on October 24, 1997 and in DUSA's report on Form 10-Q which was filed
on November 12, 1997.
We also incorporate by reference all other documents which we file in the
future with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended, prior to the termination of this offering.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
181 UNIVERSITY AVENUE, SUITE 1208
TORONTO, ONTARIO M5H 3M7 CANADA
ATTENTION: MS. SHARI LOVELL
(416) 363-5059
E-MAIL TO: [email protected]
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC. You should rely only on the information and representations
provided in this prospectus or on the information incorporated by reference in
this prospectus. Neither we nor the selling shareholders have authorized anyone
to provide you with different information. Neither we nor the selling
shareholders are making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
forward-looking statements relating to future events or our future financial
performance. Forward-looking statements are statements that include information
based upon beliefs of our management, as well as assumptions made by and
information available to our management. The words "believes," "expects,"
"anticipates," "intends" or similar terms are intended to identify
forward-looking statements. These forward-looking statements have been compiled
by our management based upon factors they consider reasonable. Such statements
reflect our current views of future events. These statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those
7
<PAGE> 13
anticipated in the forward-looking statements. Many of these risks are discussed
above under the "Risk Factors" section of this prospectus and in the documents
incorporated by reference, including documents which may be filed in the future.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock by the selling shareholders. We will receive the exercise price for
the shares of common stock that underlie the following warrants and/or
underwriter's options if those securities are converted with cash payments into
shares by their holders. Potential proceeds to DUSA if all holders of warrants
or options convert their securities into shares of common stock total
$3,802,215.00, as follows:
- $815,215.00 upon the conversion of 163,043 placement agent warrants
with an exercise price of $5.00 per share;
- $300,000.00 upon the conversion of a warrant for 50,000 shares of
common stock with an exercise price of $6.00 per share;
- $2,310,000.00 upon the conversion of 300,000 underwriter's options
with an exercise price of $7.70 per share;
- $297,000.00 upon the conversion of 37,500 underwriter's options with
an exercise price of $7.92 per share; and
- $80,000.00 upon the conversion of a warrant for 20,000 shares of
common stock with an exercise price of $4.00 per share.
Any proceeds that we may receive upon any exercise of warrants and/or
options will be used for working capital, primarily to advance research and
product development activities of its drug, Levulan(R), including conducting
pre-clinical studies and clinical trials. If sufficient funds are available,
DUSA may also use its resources to acquire by license, purchase or other
arrangements, businesses, technologies, or products that enhance or expand
DUSA's business such as other light-sensitive drugs or light devices.
SELLING SHAREHOLDERS
The following table sets forth the names of the selling shareholders, the
number of shares of common stock beneficially owned by each selling shareholder
as of June 1, 1999, the number of shares of common stock that each may offer
from time to time and the number of shares of common stock beneficially owned by
each selling shareholder upon completion of the offering, assuming all of the
shares offered are sold. The number of shares sold by each selling shareholder
may depend on a number of factors, including, among other things, the market
price of the common stock.
The table is based upon information obtained from the selling shareholders
and upon information in our possession regarding the issuance and sale of
securities offered by this prospectus and the registration rights granted to the
selling shareholders. The selling shareholders listed in the table as numbers 1
through 30 acquired the shares they are offering in a private placement on
January 15, 1999.
<TABLE>
<CAPTION>
Number of
DUSA Shares Shares that Maybe DUSA Shares
Beneficially Owned Number of Offered Upon Beneficially Owned
Prior to Offering Shares Conversion of After Offering
Name Shares Percent Offered Warrants/Options Shares Percent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Amy Newmark..................... 30,300 * 30,300 0 0 0
2. Robert L. Swisher, Jr........... 101,000 * 101,000 0 0 0
3. Rainbow Trading
Venture Partners, L.P. ........ 20,200 * 20,200 0 0 0
4. David Kalatsky ................. 3,030 * 3,030 0 0 0
5. Jeff Kone and Cezanne Kone...... 10,100 * 10,100 0 0 0
6. Larry Miller ................... 20,200 * 20,200 0 0 0
7. Balmore Funds S.A. ............. 25,250 * 25,250 0 0 0
8. Austost Anstalt Schaan.......... 25,250 * 25,250 0 0 0
9. Ohr Somayach International...... 8,080 * 8,080 0 0 0
</TABLE>
8
<PAGE> 14
<TABLE>
<CAPTION>
Number of
DUSA Shares Shares that Maybe DUSA Shares
Beneficially Owned Number of Offered Upon Beneficially Owned
Prior to Offering Shares Conversion of After Offering
Name Shares Percent Offered Warrants/Options Shares Percent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10. Lighthouse Genesis
Partners USA, LP. ............. 15,150 * 15,150 0 0 0
11. Pharos Genesis Fund Limited ..... 136,350 1.24 136,350 0 0 0
12. Bulldog Capital Partners LP. .... 882,200 8.0 101,000 0 781,200 7.1
13. Jack Lief ....................... 5,050 * 5,050 0 0 0
14. Lisa Low ........................ 594,847(1) 5.22 142,410 0 452,437 3.97
15. Cradock Asset Management ........ 20,200 * 20,200 0 0 0
16. EDJ Limited ..................... 41,722 * 40,400 0 1,322 *
17. Matador Microcap Fund, LP. ...... 475,250 4.32 25,250 0 450,000 4.09
18. Porter Partners, LP. ............ 158,448 1.44 40,400 0 118,048 1.07
19. Special Situations Private Equity
Fund LP ....................... 181,800 1.65 181,800 0 0 0
20. Riviera Enid Limited Partnership 41,780 * 18,180 0 23,600 *
21. Talkot Crossover Fund ........... 72,100 * 60,600 0 11,500 *
22. Valor Capital Management LP. .... 262,700 2.39 161,600 0 101,100 *
23. Prism Partners I ................ 115,280 1.05 10,908 0 104,300 *
24. Prism Partners II Offshore Fund . 33,128 * 33,128 0 0 0
25. Prism Partners Offshore Fund .... 16,564 * 16,564 0 0 0
26. JIBS Equities ................... 101,000 * 101,000 0 0 0
27. Michael G. Jesselson ............ 101,000 * 101,000 0 0 0
28. State Capital Partners .......... 20,200 * 20,200 0 0 0
29. Mid Ocean Investments Ltd. ...... 47,700 * 20,200 20,000 7,500 *
30. Yad Avraham Inc. ................ 20,200 * 20,200 0 0 0
31. Derek L. Caldwell** ............. 60,905(2) * 21,174 14,731 25,000 *
32. John Gallagher** ................ 7,500 * 0 5,500 2,000 *
33. Alan Swerdloff** ................ 3,130 * 0 3,130 0 0
34. Nathan Low** .................... 594,847(3) 5.22 66,282 336,155 192,410 1.69
35. Dwight Miller** ................. 10,892 * 4,696 6,196 0 0
36. Paul Scharfer** ................. 116,248 1.04 28,174 88,074 0 0
37. Marc Seelenfreund** ............. 5,731 * 0 5,731 0 0
38. Richard B. Stone** .............. 44,531 * 8,627 35,904 0 0
39. Sunrise Financial Group ......... 50,000 * 0 50,000 0 0
40. Preston Tsao** .................. 6,622 * 0 6,622 0 0
</TABLE>
* Less than 1%
** Designee of Sunrise Securities Corp, a registered broker-dealer. Sunrise
Securities Corp. acted as underwriter in December, 1995, March 1996 and May 1996
and acted as placement agent in connection with a recent private placement under
Rule 506 of Regulation D. Sunrise Securities Corp. is affiliated with Sunrise
Financial Group, selling shareholder number 39.
(1) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Lisa Low may be deemed to be the beneficial owner of 142,410 shares held in
three (3) custodial accounts and an additional 452,437 securities which may be
deemed to be beneficially owned by her spouse, Nathan Low. (See footnote 3,
below).
(2) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Derek Caldwell may be deemed to be the beneficial owner of 25,000 shares that
may be issued upon the exercise of a warrant held by Sunrise Financial Group.
(See footnote 3, below).
(3) Under Rule 13d-3 of the Securities and Exchange Act of 1934, as amended,
Nathan Low may be deemed to be the beneficial owner of 142,410 shares that are
held by Lisa Low as custodian for three (3) children and 50,000 shares that may
be issued upon the exercise of a warrant held by Sunrise Financial Group. Mr.
Low disclaims the beneficial ownership of:
- 142,410 shares held by Lisa Low as custodian;
- 25,000 of the shares underlying the Sunrise Financial Group warrant
which have been committed to Mr. Derek Caldwell; and
- 1,000 shares that may be issued upon the exercise of underwriter's
options which options are currently in Mr. Low's name and are
committed to other employees of Sunrise Financial Group and Sunrise
Securities Corp.
9
<PAGE> 15
PLAN OF DISTRIBUTION
The selling shareholders are offering shares of common stock which they
acquired from us in a private placement or which are issuable to them upon
conversion of options or warrants that we issued to them. The shares may be sold
from time to time in public transactions, on or off The NASDAQ National Market,
or in private transactions, at prevailing market prices or at privately
negotiated prices or through a combination of such methods of sale, at fixed
prices which may be changed, at prices related to prevailing market prices or at
negotiated prices. In addition, any shares of the common stock may be sold
according to Rule 144 rather than as part of this prospectus.
The shares may be sold directly by the selling shareholders or through
underwriters, broker-dealers or agents. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders and/or the purchaser of the shares for whom such
broker-dealer may act as agent, or to whom they sell as principals, or both
(which compensation might be in excess of commission that brokers usually
receive). In addition, the selling shareholders may enter into hedging
transactions with broker-dealers who may engage in short sales of common stock
in the course of hedging the positions they assume with a selling shareholder.
There can be no assurance that all or any of the common stock offered by this
prospectus will be issued to, or sold by, the selling shareholders. The selling
shareholders and any brokers, dealers or agents, who sell any of the common
stock offered by this prospectus, may be deemed "underwriters" as that term is
defined under the Securities Act or the Exchange Act, or the rules and
regulations which pertain to these laws. Any commissions which these persons or
firms receive and any profits on the resale of the shares purchased by them may
be deemed to be underwriting commissions or discounts under such acts. As of the
date of this prospectus, the selling shareholders have advised us that there are
no special selling arrangements between any broker-dealer or other person and
any of the selling shareholders.
Under the Securities Exchange Act of 1934, any person taking part in the
distribution of the shares may not simultaneously engage in market-making
activities with respect to the common stock for five business days prior to the
start of the distribution. In addition, each selling shareholder and any other
person taking part in the distribution will be subject to the Exchange Act which
may limit the timing of purchases and sales of common stock by them. These rules
may affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
At the time a particular offer of shares is made, a supplemental prospectus
will be distributed, if required, which will set forth the number of shares
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
the shares purchased from the selling shareholders, any discounts, commissions
or other items constituting compensation from the selling shareholders in any
discount, commission or concession allowed or reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
The selling shareholders may be entitled under agreements entered into with
us to indemnification from us against liabilities under the Securities Act.
SECURITIES TO BE OFFERED
A total of 1,645,435 of the 2,215,978 securities being offered in this
prospectus are shares of common stock, no par value. 1,515,000 of these shares
are being offered by the participants of a private placement under Rule 506 of
Regulation D and 130,435 of these shares are being offered by the placement
agent, and/or its designees, which shares were issued as commissions and
non-accountable expense allowance in connection with the private placement.
The remaining 570,543 securities being offered in this prospectus are
offered pursuant to warrants and/or options to purchase shares of common stock
as follows:
- 163,043 of the securities are offered pursuant to placement agent
warrants which were issued and remain outstanding in connection with a
private placement transaction that closed on January 15, 1999. The
placement agent warrants can be exercised for a period of five (5)
years, until 5:00 p.m. New York time on January 14, 2004 at an
exercise price of $5.00 per share. The placement agent warrants
contain no provisions regarding changes or
10
<PAGE> 16
adjustments in the exercise price, but do contain provisions for the
issuance of an additional number of shares in the event of a stock
split, stock dividend or similar transaction involving the underlying
common stock.
- 50,000 of the securities are offered pursuant to a warrant which was
issued and remains outstanding in connection with an investor
relations agreement. The warrant had an original expiration date of
October 14, 1998 which was extended for three (3) years until 5:00
p.m. New York time on October 14, 2001. The exercise price of the
warrant is $6.00 per share. The warrant contains no provisions
regarding changes or adjustments in the exercise price but does
contain provisions for the issuance of an additional number of shares
in the event of a stock split, stock dividend or similar transaction
involving the underlying common stock.
- 300,000 of the securities are offered pursuant to underwriter's
options which were issued and remain outstanding in connection with an
underwriting agreement dated December 11, 1995. The underwriter's
options have a five (5) year term and can be exercised until 5:00 p.m.
New York time on December 7, 2000 at an exercise price of $7.70 per
share. These underwriter's options contain no provisions regarding
changes or adjustments in the exercise price, but do contain
provisions for the issuance of an additional number of shares in the
event of a stock split, stock dividend or similar transaction
involving the underlying common stock.
- 37,500 of the securities are offered pursuant to underwriter's options
which were issued and remain outstanding in connection with an
underwriting agreement dated April 15, 1996. These underwriter's
options have a five (5) year term and can be exercised until 5:00 p.m.
New York time on April 14, 2001 at an exercise price of $7.92 per
share. These underwriter's options contain no provisions regarding
changes or adjustments in the exercise price, but do contain
provisions for the issuance of an additional number of shares in the
event of a stock split, stock dividend or similar transaction
involving the underlying common stock.
- 20,000 of the securities are offered pursuant to a warrant which was
issued and remains outstanding in connection with an investor
relations services agreement. The warrant expires at 5:00 p.m. New
York time on March 21, 2000. The exercise price of the warrant is
$4.00 per share. The warrant contains no provisions regarding changes
or adjustments in the exercise price but does contain provisions for
the issuance of an additional number of shares in the event of a stock
split, stock dividend or similar transaction involving the underlying
common stock.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by Lane
and Mantell, a professional corporation, Somerville, New Jersey. As of June 17,
1999, shareholders and associates of Lane and Mantell beneficially own, directly
or indirectly, less than 1% of the common stock of DUSA.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this prospectus by reference from DUSA's annual report on Form
10-K for the year ended December 31, 1998 have been audited by Deloitte &
Touche, LLP independent auditors, as stated in their report (which contains an
emphasis paragraph indicating that DUSA is in the development stage), which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling DUSA pursuant to the foregoing provisions, DUSA has been informed
that in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable.
11
<PAGE> 17
UNTIL JULY , 1999 ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS AN UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
DUSA
PHARMACEUTICALS, INC.
2,215,978 Shares of Common Stock
-----------------------
June 18, 1999
12
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the expenses in connection with the offering
described in the registration statement, all of which will be borne by DUSA.
<TABLE>
<S> <C>
SEC Registration Fee*** $ 3,932.94
NASD Filing Fee** 17,500.00
Printing and Engraving* 5,000.00
Accounting Fees and Expenses* 50,000.00
Legal Fees and Expenses* 40,000.00
Miscellaneous Expenses* 1,500.00
-----------
TOTAL $117,932.94
===========
</TABLE>
*Estimated.
**Previously paid.
***$3,891.50 Previously paid.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 5 of the Company's Certificate of Incorporation, as amended, and
New Jersey Business Corporation Act, N.J.S.A. 14A:2-7 provide as follows:
Any director and officer of the Corporation shall not be personally liable
to the Corporation or its shareholders for damages for breach of any duty
owed to the Corporation or its shareholders, except that this provision
shall not relieve a director or officer from liability for any breach of
duty based upon an act or omission (a) in breach of such person's duty of
loyalty to the Corporation or its shareholders; (b) not in good faith or
involving a knowing violation of law; or (c) resulting in receipt by such
person of an improper personal benefit.
The Company's By-laws, as amended, pursuant to the New Jersey Business
Corporation Act, N.J.S.A. 14A:3-5, provide as follows:
ARTICLE IV
INDEMNIFICATION
Section 1. Actions by Others. The Corporation (1) shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer or trustee of the Corporation or of any constituent corporation absorbed
by the Corporation in a consolidation or merger and (2) except as otherwise
required by Section 3 of this Article, may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he (a) is or was an employee or agent or the legal
representative of a director, officer, trustee, employee or agent of the
Corporation or of any absorbed constituent corporation, or (b) is or was serving
at the request of the Corporation or of any absorbed constituent corporation as
a director, officer, employee, agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise, or the legal
representative of such a person against expenses, costs, disbursements
(including attorneys' fees), judgments, fines and amounts actually and
reasonably incurred by him in good faith and in connection with such action,
suit or proceeding if he acted in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and with respect to any
criminal action or proceeding, he had no reasonable cause to believe that his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a pleas of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not meet the applicable standard of conduct.
II-1
<PAGE> 19
Section 2. Actions by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, trustee, employee or agent of the Corporation
or of any constituent corporation absorbed by the Corporation by consolidation
or merger, or the legal representative of any such person, or is or was serving
at the request of the Corporation or of any absorbed constituent corporation, as
a director, officer, trustee, employee, agent of or participant, or the legal
representative of any such person in another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the New Jersey
Superior Court or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the New Jersey Superior Court or
such other court shall deem proper.
Section 3. Successful Defense. To the extent that a person who is or was a
director, officer, trustee, employee or agent of the Corporation or of any
constituent corporation absorbed by the Corporation by consolidation or merger,
or the legal representative of any such person, has been successful on the
merits or otherwise in defense of any action, suit proceeding referred to in
Section 1 or Section 2 of this Article, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1 or
Section 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, trustee, employee, agent, or the legal
representative thereof, is proper in the circumstances because he has met the
applicable standard of conduct set forth in said Sections 1 and 2. Such
determination shall be made (1) by the Board of Directors by a majority vote of
quorum consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, a quorum of disinterested
directors so directs, by independent legal counsel for a written opinion, (3) by
the shareholders.
Section 5. Advance of Expenses. Expenses incurred by any person who may
have a right of indemnification under this Article in defending civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final distribution of such action, suit or proceeding as authorized by the
board of directors upon receipt of an undertaking by or on behalf of the
director, officer, trustee, employee, or the legal representative thereof, to
repay such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation pursuant to this Article.
Section 6. Right of Indemnity not Exclusive. The indemnification and
advancement of expenses provided by this Article shall not exclude any other
rights to which those seeking indemnification may be entitled under the
certificate of incorporation of the Corporation or any By-Law agreement, vote of
shareholders or otherwise; provided that no indemnification shall be made to or
on behalf of a Director, officer, trustee, employee, agent, or legal
representative if a judgment or other final adjudication adverse to such persons
establishes that his acts or omissions (a) were in breach of his duty of loyalty
to the corporation or its shareholders, (b) were not in good faith or involved a
knowing violation of law or (c) resulted in receipt by such person of an
improper personal benefit.
Section 7. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, trustee, employee or
agent of the Corporation or of any constituent corporation absorbed by the
Corporation by consolidation or merger of the legal representative of such
person or is or was serving at the request of the Corporation or of any absorbed
constituent corporation as a director, officer, trustee, employee or agent of or
participant in another corporation, partnership, joint venture, trust or other
enterprise, or the legal representative of any such person against any liability
asserted against him and incurred by him in any such capacity, arising out of
his status as such or by reason of his being or having been such, whether or not
the Corporation would have the power to indemnify him against such liability
under the provisions of this Article, the New Jersey Business Corporation Act,
or otherwise.
Section 8. Invalidity of any Provision of this Article. The invalidity or
unenforceability of any provision of this Article shall not affect the validity
or enforceability of the remaining provisions of this Article.
II-2
<PAGE> 20
Item 16. EXHIBITS
(a) Exhibits:
(1) None
(2) None
(3) Inapplicable
(4) Instruments defining the rights of security holders, including
indentures
(4.1) Common Stock specimen, filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997 filed November 12, 1997, and is incorporated
herein by reference.
(4.2) Form of Placement Agent Warrant, dated January 15, 1999*
(4.3) Form of Underwriter's Option, dated December 21, 1995*
(4.4) Form of Underwriter's Option, dated May 1, 1996*
(4.5) Sunrise Financial Corp. Warrant, dated October 14, 1993*
(4.6) Extension of Warrant Certificate for Purchase of Common Stock,
dated July 30, 1998*
(4.7) Mid-Ocean Investments Ltd. Warrant, dated as of March 22, 1995*
(5) Opinion re: legality
(5.1) Opinion of Lane and Mantell, a professional corporation
(6) Inapplicable
(7) Inapplicable
(8) None
(9) Inapplicable
(10) Material Contracts
(10.1) Purchase and Supply Agreement between Registrant and National
Biological Corporation dated November 5, 1998 portions of
which have been omitted pursuant to a request for confidential
treatment pursuant to Rule 246 of the Securities Exchange Act
of 1934 and Rule 406 of the Securities Act of 1933.
(10.2) Exhibit A to Amended and Restated License Agreement between
Registrant and PARTEQ dated March 11, 1998, filed as Exhibit
10(e) to Registrant's Form 10-K for the fiscal year ended
December 31, 1998 filed February 26, 1999 and is incorporated
herein by reference. Portions of Exhibit A have been omitted
pursuant to a request for confidential treatment pursuant to
Rule 246 of the Securities Exchange Act of 1934 and Rule 406
of the Securities Act of 1933.
(11) Inapplicable
(12) None
(13) Inapplicable
(14) Inapplicable
(15) None
(16) Inapplicable
(17) Inapplicable
(18) Inapplicable
(19) Inapplicable
(20) Inapplicable
(21) Inapplicable
(22) Inapplicable
(23) Consents of experts and counsel
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Lane and Mantell, a professional corporation*
(24) Powers of Attorney
(24.1) Power of Attorney appointing D. Geoffrey Shulman, MD, FRCPC on
original signature page*
(25) None
(26) None
(27) None
(28) None
(99.1) Form of Subscription Agreement*
(99.2) Underwriting Agreement, dated December 11, 1995, filed as Exhibit 1.1
to Registrant's Registration Statement on Form S-2, No. 33-98030, and
is incorporated herein by reference.
(99.3) Underwriting Agreement, dated February 28, 1996, filed as Exhibit
1.1 to Registrant's Registration Statement on Form S-3, No.
33-31362, and is incorporated herein by reference.
(99.4) Underwriting Agreement, dated April 15, 1996, filed as Exhibit 1.1
to Registrant's Registration Statement on Form S-2, No. 33-32376,
and is incorporated herein by reference.
(99.5) Investor Relations Retainer Agreement, dated October 14, 1993*
(99.6) Investor Relations Services Agreement dated May 1, 1995*
* Previously filed.
II-3
<PAGE> 21
Item 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to the registration statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Toronto, Province of Ontario, Canada, on June 18 1999.
DUSA Pharmaceuticals, Inc.
(Registrant)
By: /s/ D. Geoffrey Shulman
--------------------------------------
D. Geoffrey Shulman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the dates indicated:
/s/ D. Geoffrey Shulman Director, Chairman of the June 18, 1999
- ------------------------------ Board, President, Chief -------------
D. Geoffrey Shulman, MD, FRCPC Executive Officer and Chief Date
Financial Officer (Principal
Executive, Financial, and
Accounting Officer)
/s/ Ronald L. Carroll* Executive Vice President, Chief June 18, 1999
- ------------------------------ Operating Officer -------------
Ronald L. Carroll Date
/s/ Stuart L. Marcus* Senior Vice President June 18, 1999
- ------------------------------ Scientific Affairs -------------
Stuart L. Marcus, MD, PhD Date
/s/ Nanette W. Mantell* Secretary June 18, 1999
- ------------------------------ -------------
Nanette W. Mantell, Esq. Date
/s/ John H. Abeles* Director June 18, 1999
- ------------------------------ -------------
John H. Abeles, MD Date
/s/ James P. Doherty* Director June 18, 1999
- ------------------------------ -------------
James P. Doherty, BSc Date
/s/ Jay M. Haft* Director June 18, 1999
- ------------------------------ -------------
Jay M. Haft, Esq. Date
/s/ Richard C. Lufkin* Director June 18, 1999
- ------------------------------ -------------
Richard C. Lufkin Date
*By /s/ D. Geoffrey Shulman
- ---------------------------
D. Geoffrey Shulman, Attorney-in-Fact
<PAGE> 23
INDEX TO EXHIBITS
(1) None
(2) None
(3) Inapplicable
(4) Instruments defining the rights of security holders, including
indentures
(4.1) Common Stock specimen, filed as Exhibit 4.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997 filed November 12, 1997, and is incorporated
herein by reference.
(4.2) Form of Placement Agent Warrant, dated January 15, 1999*
(4.3) Form of Underwriter's Option, dated December 21, 1995*
(4.4) Form of Underwriter's Option, dated May 1, 1996*
(4.5) Sunrise Financial Corp. Warrant, dated October 14, 1993*
(4.6) Extension of Warrant Certificate for Purchase of Common Stock,
dated July 30, 1998*
(4.7) Mid-Ocean Investments Ltd. Warrant, dated as of March 22, 1995*
(5) Opinion re: legality
(5.1) Opinion of Lane and Mantell, a professional corporation
(6) Inapplicable
(7) Inapplicable
(8) None
(9) Inapplicable
(10) Material Contracts
(10.1) Purchase and Supply Agreement between Registrant and National
Biological Corporation dated November 5, 1998 portions of
which have been omitted pursuant to a request for confidential
treatment pursuant to Rule 246 of the Securities Exchange Act
of 1934 and Rule 406 of the Securities Act of 1933.
(10.2) Exhibit A to Amended and Restated License Agreement between
Registrant and PARTEQ dated March 11, 1998, filed as Exhibit
10(e) to Registrant's Form 10-K for the fiscal year ended
December 31, 1998 filed February 26, 1999 and is incorporated
herein by reference. Portions of Exhibit A have been omitted
pursuant to a request for confidential treatment pursuant to
Rule 246 of the Securities Exchange Act of 1934 and Rule 406
of the Securities Act of 1933.
(11) Inapplicable
(12) None
(13) Inapplicable
(14) Inapplicable
(15) None
(16) Inapplicable
(17) Inapplicable
(18) Inapplicable
(19) Inapplicable
(20) Inapplicable
(21) Inapplicable
(22) Inapplicable
(23) Consents of experts and counsel
(23.1) Consent of Deloitte & Touche LLP
(23.2) Consent of Lane and Mantell, a professional corporation*
(24) Powers of Attorney
(24.1) Power of Attorney appointing D. Geoffrey Shulman, MD, FRCPC on
original signature page*
(25) None
(26) None
(27) None
(28) None
(99.1) Form of Subscription Agreement*
(99.2) Underwriting Agreement, dated December 11, 1995, filed as Exhibit 1.1
to Registrant's Registration Statement on Form S-2, No. 33-98030, and
is incorporated herein by reference.
(99.3) Underwriting Agreement, dated February 28, 1996, filed as Exhibit
1.1 to Registrant's Registration Statement on Form S-3, No.
33-31362, and is incorporated herein by reference.
(99.4) Underwriting Agreement, dated April 15, 1996, filed as Exhibit 1.1
to Registrant's Registration Statement on Form S-2, No. 33-32376,
and is incorporated herein by reference.
(99.5) Investor Relations Retainer Agreement, dated October 14, 1993*
(99.6) Investor Relations Services Agreement dated May 1, 1995*
* Previously filed.
<PAGE> 1
Exhibit 5.1
LANE AND MANTELL
a professional corporation
ATTORNEYS AT LAW
991 Route 22 West, Post Office Box 8539, Suite 102
Somerville, New Jersey 08876
Nanette Weitman Mantell Telephone (908) 253-9333
Steven R. Lane Facsimile (908) 253-9339
Rosemary Farr Howard Freeman
Of Counsel
June 18, 1999
DUSA Pharmaceuticals, Inc.
181 University Avenue, Suite 1208
Toronto, Ontario M5H 3M7
CANADA
Re: DUSA Pharmaceuticals, Inc. (the "Company")
Registration No. 333-73039
Registration Statement - Form S-3
Gentlemen:
We have examined the Company's Registration Statement No. 333-73039 on Form
S-3 as filed on February 26, 1999 and the amendments thereto, in connection with
the registration under the Securities Act of 1933, as amended, of up to
2,215,978 shares of common stock, without par value ("Common Stock").
We have also reviewed (i) the Certificate of Incorporation of the Company
and all amendments to the Certificate of Incorporation filed by the Company in
the Office of the Secretary of State of the State of New Jersey, (ii) the
By-laws of the Company, (iii) the form of subscription or other agreement
between the Company and the selling shareholders, respectively, with respect to
Common Stock being offered pursuant to the Registration Statement and (iv) such
records of corporate proceedings and other documents as we have deemed necessary
in order to enable us to express the opinion set forth below. In our
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals and the conformity with the
original of all documents submitted to us as copies thereof. Where factual
matters relevant to such opinion were not independently established, we have
relied upon certificates of officers and responsible employees and agents of the
Company. Our opinion set forth below is limited to the Business Corporation Law
of the State of New Jersey.
Based on the foregoing examination, it is our opinion that
A. the 1,500,000 shares of Common Stock when originally issued and sold by
the Company to the purchasers in the private placement transaction on January
15, 1999 pursuant to Regulation D of the Securities Act of 1933, were validly
issued and outstanding, fully paid and non-assessable and remain validly
<PAGE> 2
DUSA Pharmaceuticals, Inc.
June 18, 1999
Page 2
issued and outstanding, fully paid and non-assessable; and that the 15,000
shares of Common Stock issued as of June 1, 1999 to the same purchasers to
fulfill a condition subsequent in the same Regulation D offering, were validly
issued and outstanding, fully paid, and non-assessable and remain validly issued
and outstanding, fully paid and non-assessable;
B. the 130,435 shares of Common Stock when originally issued by the Company
to the placement agent, or its designees, as commissions and non-accountable
expense allowance for services related to the private placement mentioned above,
were validly issued and outstanding, fully paid and non-assessable and remain
validly issued and outstanding, fully paid and non-assessable;
C. the 163,043 shares of Common Stock underlying the placement agent
warrants, the 50,000 shares of Common Stock underlying the warrant issued to
Sunrise Financial Group, and the 20,000 shares of Common Stock underlying the
warrant issued to Mid-Ocean Investments Ltd., respectively, if duly converted in
accordance with the terms and conditions of such warrants against payment to the
Company, will be validly issued and outstanding, fully paid and non-assessable;
and
D. the 337,500 shares of Common Stock underlying the underwriter's options
issued pursuant to underwriter's agreements dated December 11, 1995 and April
15, 1996, respectively, if duly converted in accordance with the terms and
conditions of such options against payment to the Company, will be validly
issued and outstanding, fully paid and non-assessable.
Very truly yours,
LANE AND MANTELL
a professional corporation
/s/Nanette W. Mantell
By: Nanette W. Mantell
NWM:lf
<PAGE> 1
Execution Copy
PURCHASE AND SUPPLY AGREEMENT
This Purchase and Supply Agreement (the "Agreement"), effective as of 5
November 1998 (the "Effective Date"), is made by and between DUSA
Pharmaceuticals, Inc., a New Jersey corporation, having executive offices at 181
University Avenue, Suite 1208, Toronto, Ontario M5H 3M7, Canada ("DUSA"), and
National Biological Corporation, an Ohio corporation having offices at 1532
Enterprise Parkway, Twinsburg, OH 44087 ("NBC").
BACKGROUND
A. DUSA and NBC entered into a certain Co-Development Agreement on June 2,
1995, as amended of even date herewith (the "Co-Development Agreement") pursuant
to which the parties developed a certain fluorescent Light Source (as defined
below) useful in photodynamic therapy.
B. DUSA desires to secure supply of the Light Sources as part of the
commercialization of its Levulan(R) products.
C. NBC has the capability and know-how necessary to supply the Light
Sources, all as set forth herein below.
NOW THEREFORE, for and in consideration of the covenants, conditions, and
undertakings hereinafter set forth, it is agreed by and between the parties as
follows:
ARTICLE 1
DEFINITIONS
1.1 "Approval" shall have the meaning as set forth in Section 7.1 below.
1.2 "Blu-U(R) Trademark" shall mean the "Blu-U" trademark that DUSA has
registered in connection with the Light Sources, or such other trademark that
DUSA registers for use with the Light Sources in jurisdictions in which "Blu-U"
is not selected by DUSA for use.
1.3 "Confidential Information" shall have the meaning as set forth in
Section 11.1 below.
1.4 "Control" shall mean possession by a party hereto of the ability to
grant a license or sublicense to particular subject matter as provided for
herein without violating the terms of any in-license agreement or similar
arrangements with any third party under which such subject matter was acquired
by such party to this Agreement.
1.5 "DUSA Technology" shall mean DUSA Patents and DUSA Technical
Information.
1.5.1 "DUSA Technical Information" shall mean confidential
information, tangible and intangible, and materials, including, but not limited
to: pharmaceutical, chemical and biochemical products; technical and
non-technical data and information, software, and/or the results of tests,
assays, methods and processes; and designs, drawings, sketches, plans, diagrams,
<PAGE> 2
specifications and/or other documents containing said information and data; in
each case that is possessed by DUSA as of the Effective Date or discovered,
developed or acquired by DUSA during the term of this Agreement, to the extent
such relates to the manufacture, use or sale of the Light Sources and to the
extent that DUSA owns or Controls the same.
1.5.2 "DUSA Patents" shall mean all patents and all reissues,
renewals, re-examinations and extensions thereof, and patent applications
therefor, and any divisions or continuations, in whole or in part, thereof,
which claim the manufacture, use or sale the Light Sources and that are owned or
Controlled by DUSA during the term of this Agreement.
1.6 "FDA" shall mean the United States Food and Drug Administration.
1.7 "Field" shall mean the photodynamic treatment or photodetection of
medical disorders by light at wavelengths [c.i.] and includes the use of
aminolevulinic acid and the Light Source or have an indicated use for actinic
keratosis with any drug product or light source.
1.8 "Force Majeure Event" shall have the meaning as set forth in Section
14.3 below.
1.9 "HPB" shall mean the Canadian Health Protection Branch.
1.10 "Light Source" shall mean the light sources meeting the Specifications
together with the Stand.
1.11 "NBC Technology" shall mean NBC Patents and NBC Technical Information.
1.11.1 "NBC Technical Information" shall mean confidential
information, tangible and intangible, and materials, including, but not limited
to: technical and non-technical data and information, software, and/or the
results of tests, assays, methods and processes; and designs, drawings,
sketches, plans, diagrams, specifications and/or other documents containing said
information and data; in each case that is possessed by NBC as of the Effective
Date or discovered, developed or acquired by NBC during the term of this
Agreement, to the extent such relates to the manufacture, use or sale of the
Light Sources and to the extent that NBC owns or Controls the same.
1.11.2 "NBC Patents" shall mean all patents and all reissues,
renewals, re-examinations and extensions thereof, and patent applications
therefor, and any divisions or continuations, in whole or in part, thereof,
which claim the manufacture, use or sale the Light Sources and that are owned or
Controlled by NBC during the term of this Agreement.
1.12 "Output Regulating Circuitry System" shall mean, collectively and
individually, the microcontroller, controller firmware, thyristor switching
devices, buck/boost transformer, opto-electric sensors, and electronic support
circuitry utilized to monitor and stabilize the power output of a Light Source.
1.13 "Plastic Housing" shall mean that portion of the outer plastic
covering of the Light Source designed by DUSA.
1.14 "QS" shall mean current Quality Systems regulations, policies and
guidance
<PAGE> 3
documents promulgated by the FDA for the design, manufacture, processing or
packaging of medical devices, and corresponding regulatory standards required by
other regulatory agencies in the Territory. QS shall also include those Quality
Systems requirements specified by DUSA in the Specifications.
1.15 "Specifications" shall mean the specifications set forth in Exhibit A,
as may be modified in accordance with Section 3.6 below.
1.16 "Stand" shall mean the stand for the Light Source meeting the
then-current specifications therefor, which specifications are agreed to and
updated by the parties hereto.
1.17 "Territory" shall mean the United States and Canada.
ARTICLE 2
SUPPLY
------
2.1 Light Source Supply. Subject to the terms and conditions of this
Agreement, NBC shall supply to DUSA quantities of the Light Source ordered by
DUSA from time to time during the term of this Agreement. Subject to Sections
5.2.2 and 6.2 below, DUSA agrees to order all of its commercial, clinical and
other requirements of Light Sources for the Field for the Territory from NBC.
The parties recognize and acknowledge that DUSA's business may be dependent on
the supply of Light Sources to DUSA by NBC as specified hereunder.
2.2 Forecasts. During the term of this Agreement, [c.i.] prior to the start
of each calendar half year ("H1"), DUSA shall provide NBC with a rolling written
forecast of the quantities of Light Sources estimated to be required during H1
and the following calendar half year ("H2").
2.3 Orders.
2.3.1 Orders. Together with each forecast provided under Section 2.2
above (the "Current Forecast"), DUSA shall place a firm order with NBC for
delivery in H1 of the quantity of Light Sources equal to the quantity of Light
Sources reflected for H1 in the Current Forecast. For avoidance of doubt, it is
understood that DUSA may order additional quantities of Light Sources for
delivery hereunder in accordance with the lead times therefor. NBC shall accept
such orders from DUSA, subject to the remaining terms and conditions of this
Agreement.
2.3.2 Form of Orders. DUSA's orders shall be made pursuant to a
written purchase order which is in the form attached hereto as Exhibit B, and
shall provide for shipment in accordance with reasonable delivery schedules and
lead times as may be agreed upon from time to time by NBC and DUSA; provided
that the maximum lead time shall not exceed [c.i.] unless otherwise mutually
agreed. ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS OF ANY PURCHASE
ORDER, ACKNOWLEDGMENT OR SIMILAR STANDARDIZED FORM GIVEN OR RECEIVED PURSUANT TO
THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY
EXCLUDED.
2.3.3 Delays. DUSA shall be entitled to reschedule deliveries of Light
Sources
<PAGE> 4
ordered hereunder, provided that DUSA notifies NBC of such desired changes, in
writing, [c.i.] prior to the scheduled delivery date. Without limiting the
foregoing, if such delay is greater than [c.i.], NBC may invoice DUSA for the
Light Sources so delayed and DUSA will take title to such Light Sources upon
issuance of such invoice; in which case NBC agrees to: (i) maintain a written
record identifying such Light Sources as the property of DUSA, (ii) maintain
such Light Sources in good condition at NBC's risk and expense, and (iii) to
insure such Light Sources against loss, theft, and damage under a policy naming
DUSA (or its designee) as an additional insured. Furthermore, if such
rescheduling represents a delay in shipment of more than [c.i.] from the
original delivery date, DUSA shall [c.i.] on such delayed Light Sources during
such extended period and [c.i.]. For avoidance of doubt, the preceding
provisions of this Section 2.3.3 shall not in anyway limit DUSA's rights of
inspection and rejection set forth in Section 3.3 below.
2.3.4 Inventory. Without limiting the provisions of this Section 2.3
above, it is understood that in order to accommodate DUSA's requirements of
Light Sources hereunder, DUSA may request that NBC maintain in its inventory
Light Source units ordered by DUSA under Sections 2.3.1 above. In such case,
upon placement of a particular Light Source unit in inventory NBC may invoice
DUSA for such units in accordance with Section 2.7 below on the later of (a)the
date which such Light Source unit are requested to be placed in inventory and
(b) the actual date such Light Source units are included in DUSA's (or its
designee's) inventory and DUSA will take title to such Light Sources upon
issuance of such invoice; further NBC agrees to: (i) maintain a written record
identifying such Light Sources as the property of DUSA, (ii) maintain such Light
Sources in good condition at NBC's risk and expense, and (iii) to insure such
Light Sources against loss, theft, and damage under a policy naming DUSA (or its
designee) as an additional insured. In the event that a particular Light Source
unit is held in inventory in excess of [c.i.], DUSA shall [c.i.] on such delayed
Light Sources during such period and [c.i.]. For avoidance of doubt, the
preceding provisions of this Section 2.3.4 shall not in anyway limit DUSA's
rights of inspection and rejection set forth in Section 3.3 below.
2.4 Price. The price to be paid by DUSA per Light Source unit ordered by
DUSA shall be based upon the quantities of Light Sources ordered by DUSA for
delivery pursuant to a particular purchase order issued hereunder (the "Price");
the Price schedule shall be negotiated and established in good faith promptly
upon NBC's completion of its [c.i.] of Light Sources in accordance with the
prices set forth on Exhibit C hereto. After which the Price schedule so
established shall be substituted for Exhibit C. Notwithstanding the foregoing,
beginning with the [c.i.] of the Effective Date, the Prices set forth on Exhibit
C shall be subject to an adjustment once per calendar year upon six (6) months'
prior written notice to DUSA, which adjustment shall [c.i.] in the then current
Price for Light Sources hereunder. Such adjusted Price shall be effective for
orders placed in accordance with Section 2.3 above after the Price adjustment
becomes effective.
2.5 Packaging. Light Sources shall be shipped packaged in containers in
accordance with the Packaging Specifications established under Section 9.1 below
or as otherwise agreed by the parties hereto in writing. Each such container
shall be individually labeled with a description of its contents, including the
manufacturer name, manufacturer lot number, quantity of Light Sources, and date
of manufacture.
<PAGE> 5
2.6 Delivery. NBC shall deliver quantities of Light Sources ordered by DUSA
on the dates specified in DUSA's purchase orders submitted in accordance with
Section 2.3 above. All Light Sources shall be delivered FCA (Incoterms 1990)
NBC's manufacturing plant in Twinsburg, Ohio to the location specified by DUSA
prior to the shipping date therefor. The carrier shall be selected by agreement
between DUSA and NBC, provided that in the event no such agreement is reached
DUSA shall select the carrier. Each shipment shall be insured for the benefit of
DUSA. All [c.i.], as well as any [c.i.], shall be [c.i.].
2.7 Invoicing; Payment. Unless earlier invoiced as set forth in Section
2.3.3 or 2.3.4 above, NBC shall submit an invoice to DUSA upon shipment of Light
Sources ordered by DUSA hereunder. All invoices shall be sent to the address
specified in the purchase order or as otherwise instructed by DUSA in writing,
and each such invoice shall state the aggregate and unit Price for Light Sources
in a given shipment, [c.i.] to the purchase or shipment initially [c.i.]. All
payments hereunder shall be made in U.S. dollars, by direct bank transfer to an
account designated in NBC's invoice. Payment shall be due to NBC within [c.i.]
from the date of an invoice issued hereunder; provided that payment made within
[c.i.] of the foregoing shall be subject to a [c.i.] percent [c.i.] discount.
Notwithstanding the foregoing, NBC shall invoice [c.i.] separately on a weekly
basis as incurred and DUSA agrees to remit payment therefor within [c.i.]. In
addition, such [c.i.] shall not be subject to the [c.i.] percent [c.i.]
discount. Any late payment hereunder shall be subject to interest at the lesser
of [c.i.] percent [c.i.] per month or [c.i.], on the number of days overdue.
ARTICLE 3
QUALITY
-------
3.1 Quality. All Light Sources supplied by NBC shall materially conform
with the current Specifications therefor and shall be manufactured in accordance
with all applicable QS manufacturing and record keeping procedures and Approvals
for the Light Sources in the Territory at NBC's plant located at 1532 Enterprise
Parkway, Twinsburg, Ohio 44087 (the "Facility"). Notwithstanding anything herein
to the contrary and for the avoidance of doubt, all Specifications shall be
deemed to be material.
3.2 Quality Control. Prior to each shipment of Light Sources, NBC shall
perform quality control procedures and inspections to verify that the Light
Sources to be shipped conform materially with the Specifications. Each shipment
of Light Sources shall be accompanied by a certificate of conformance describing
all current requirements of the Specifications, results of test performed
certifying that the Light Sources supplied have been manufactured, controlled
and released according to the Specifications and all relevant QS requirements at
the Facility stipulated under Section 3.1 above. Without limiting the foregoing,
if NBC's performance of the inspection and applicable testing procedures
described in Exhibit D requires inspection or test equipment not generally
available, then DUSA agrees to either (i) provide such equipment to NBC or (ii)
reimburse NBC for its out of pocket costs of acquiring such equipment; provided
that in either such case the following shall apply: NBC shall hold such
equipment at NBC's risk and shall replace the same if they are lost, damaged or
destroyed. NBC shall maintain such equipment in good condition (subject to
normal wear and tear); and such equipment shall be subject to disposition by
DUSA upon expiration or termination of this Agreement. Accordingly, NBC agrees
to cooperate with DUSA in the filing of any UCC financing statements relating to
such equipment as DUSA may deem
<PAGE> 6
necessary or useful. In addition, NBC shall use such equipment solely for the
testing and inspection of Light Sources hereunder, unless otherwise agreed by
DUSA.
3.3 Acceptance.
3.3.1 General. Acceptance by DUSA of Light Sources delivered by NBC
hereunder shall be subject to inspection and applicable testing as generally
described in Exhibit D by DUSA or its designee. The parties hereto acknowledge
that the testing procedures set forth on Exhibit D as of the Effective Date
represent the procedures in effect for clinical prototype Light Sources and that
these procedures will most likely require modifications for commercial
requirements as mutually established by the parties. If on such inspection DUSA
or its designee discovers that any Light Source shipped hereunder fails to
materially conform with the Specifications or otherwise fails to materially
conform to the warranties given by NBC in Section 8.1 below, DUSA or such
designee may reject such Light Sources, which rejection shall be accomplished by
giving written notice to NBC specifying the manner in which such Light Sources
fails to meet the foregoing requirements and request a Return Material
Authorization ("RMA") from NBC. DUSA or its designee shall return the
nonconforming Light Source in accordance with NBC's reasonable instructions with
the RMA attached at NBC's expense. Upon receipt of the nonconforming Light
Source NBC shall promptly issue to DUSA a credit for all amounts invoiced
(including shipping and handling charges) for such Light Source. NBC shall use
its best efforts to replace the Light Sources returned by DUSA within the
shortest possible time. The replacement of nonconforming Light Sources shall
have priority over the supply of Light Sources ordered for shipment under
Section 2.3 within the [c.i.] period prior to the return or any time after the
return of the nonconforming Light Sources to NBC. The warranties given by NBC in
Section 8.1 below shall survive any failure to reject by DUSA under this Section
3.3.
3.3.2 Settlement of Claims. In case of a disagreement between the
parties regarding whether a particular Light Source unit materially complies
with the Specifications, the claim shall be submitted for tests and decision to
an independent testing organization which meets appropriate QS standards or
consultant of recognized repute within the United States medical device industry
mutually agreed upon by the parties (the "Laboratory"), the appointment of which
shall not be unreasonably withheld or delayed by either party. The determination
of the Laboratory with respect to such dispute shall be final and binding upon
the parties. The parties and the Laboratory shall use their best efforts to
complete such analysis within [c.i.] of appointment of the Laboratory as set
forth above. The fees and expenses of the Laboratory shall be paid by the party
against which the determination is made.
3.4 Latent Defects. It is recognized that it is possible for a Light Source
to have defects which are not be discovered upon reasonable physical inspection
or testing ("Latent Defects"). As soon as either party becomes aware of a Latent
Defect in any Light Source it shall immediately notify the other party as to the
serial number(s) of the Light Source(s) involved, which at DUSA's election,
shall be deemed rejected as of the date of such notice. NBC agrees to repair or
replace all Light Sources so involved at its expense. For purposes of this
Section 3.4, "defect" shall mean that a Light Source fails to conform to the
warranties given by NBC herein; however, "defect" for purposes of the foregoing,
shall exclude defects in the design of the Output Regulating Circuitry System,
the Plastic Housing and the Stand.
<PAGE> 7
3.5 Presence At Facility. Upon at least [c.i.] prior written notice given
by DUSA to NBC, DUSA shall have the right to assign a reasonable number of
employees or consultants of DUSA to inspect and audit the Facility at which
Light Sources are manufactured in order to verify NBC's compliance with QS and
other agreed requirements, provided, however that (i) such employees or
consultants shall not unreasonably interfere with other activities being carried
out at the Facility, (ii) that such employees or consultants shall observe all
rules and regulations applicable to visitors and to individuals employed at the
Facility, and (iii) such employees or consultants agree to maintain the
Confidential Information of NBC in accordance with Article 11 below.
3.6 Changes. DUSA shall have the right to modify the Specifications from
time to time. All such modifications shall be in writing and shall be signed by
an authorized representative of DUSA and NBC, and shall be effective for orders
of applicable units placed after such notice. If such modifications result in a
material change [c.i.] as shown by documentation provided by NBC, the parties
shall agree upon an appropriate corresponding [c.i.] of the Light Sources
hereunder; and if such modifications result in a delay in delivery, the parties
shall negotiate a reasonable extension of the affected lead times.
ARTICLE 4
SUPPLY OUTSIDE THE TERRITORY
----------------------------
From time to time as DUSA desires to secure supply of Light Sources for
sale in area(s) outside of the Territory (collectively, the "New Area(s)"), DUSA
agrees to provide notice to NBC regarding the possibility of NBC providing some
or all of such supply ("Notice"). Within [c.i.] after receiving the Notice, NBC
shall notify DUSA whether or not NBC so desires to discuss the possibility of
supplying DUSA such Light Sources for any particular New Area(s) designated by
DUSA in the Notice. If NBC desires, the parties shall negotiate in good faith
for a period of [c.i.] the terms and conditions pursuant to which NBC would
supply Light Sources to DUSA for sale for the New Area(s) so designated outside
of the Territory. If NBC does not desire to provide such supply or the parties
are unable to agree on the terms and conditions of such supply, after such
[c.i.] period DUSA shall be free to secure one or more alternate sources for its
requirements of Light Sources for such New Area(s) outside the Territory
(including manufacturing such Light Sources itself), without any further
obligation to NBC with respect to such New Area(s) so designated.
ARTICLE 5
LICENSES
--------
5.1 To NBC. DUSA hereby grants to NBC a license under the DUSA Technology
to manufacture the Light Sources ordered by DUSA hereunder and deliver such
Light Sources to DUSA or its designee as specified in this Agreement. The
foregoing license shall be transferable only with the prior written consent of
DUSA.
5.2 To DUSA.
5.2.1 General. NBC hereby grants to DUSA a worldwide license under the
NBC Technology to import, use, sell, have sold and otherwise dispose of Light
Sources for purposes of
<PAGE> 8
the Field. The foregoing license and other licenses under this Section 5.2 shall
be transferable only in accordance with Section 14.5 below.
5.2.2 Manufacturing License. NBC hereby grants to DUSA, and DUSA
hereby accepts a license (the "Manufacturing License") under the NBC Technology
necessary to make, have made, use. sell, have sold and otherwise dispose of
Light Sources for use in applications within the Field. DUSA agrees not to
exercise any of its rights under the Manufacturing License, except as expressly
permitted in this Section 5.2.2 below. In any such event, NBC shall provide to
DUSA or its designee copies of all documentation within NBC's control that is
reasonably necessary for DUSA to exercise the Manufacturing License, and shall
reasonably cooperate with DUSA to establish supply of Light Sources, including
sources of components and other materials. In the event that DUSA has Light
Sources manufactured by a third party, DUSA shall obtain from such third party a
written confidentiality agreement to protect against the unauthorized use and
disclosure of NBC's Confidential Information.
5.2.2.1 Failure to Supply. If for any [c.i.] NBC fails to supply
quantities of Light Sources (including those units placed in inventory pursuant
to Sections 2.3.3 or 2.3.4) ordered in accordance with Section 2.3 above, then
DUSA may manufacture or have manufactured Light Sources for sale or other
distribution in the Territory for use in applications within the Field pursuant
to the Manufacturing License. Without limiting the foregoing, if [c.i.] or more
of the [c.i.] units of Light Source delivered hereunder or [c.i.] or more of the
Light Sources supplied in [c.i.] during any [c.i.] period fail to conform to
Specifications, the same shall be deemed a failure to supply for purposes of
this Section 5.2.2.1; provided, however, where it can be shown that a particular
Light Source failure to conform is a result of damage during shipping rather
than a failure to manufacture in Specification, then such Light Source shall not
be deemed to fail to conform to Specifications for purposes of the foregoing and
therefore shall not be considered a failure to supply under this Section
5.2.2.1. Notwithstanding anything in this Agreement to the contrary, if NBC's
failure to supply hereunder is as a result of a Force Majeure Event then DUSA's
right to manufacture Light Sources under this Section 5.2.2.1 shall continue
until such time as NBC provides DUSA with [c.i.] written notice of NBC's desire
to resume manufacturing and reasonably demonstrates to DUSA that it is able to
adequately supply DUSA's requirements of Light Sources and there after until (i)
to the extent DUSA contracts with a third party to supply Light Sources, for the
remaining noncancellable period of such contract, or (ii) to the extent DUSA
manufactures Light Sources itself, for a period of [c.i.] after DUSA commenced
manufacturing of such Light Sources, and thereafter, at such time as NBC [c.i.]
by DUSA to establish such internal manufacturing capacity, unless DUSA is able
to redeploy such manufacturing capacity, in which event NBC shall [c.i.] to
redeploy such manufacturing capacity (it being understood that, if so requested,
DUSA will use reasonable efforts to so redeploy such manufacturing capacity),
and (B) DUSA's [c.i.] to establish such manufacturing capacity for such
redeployed use. For purposes of the foregoing, DUSA's [c.i.] shall be determined
in good faith.
5.2.2.2 Outside the Territory. Except as otherwise agreed, upon
expiration of the [c.i.] period as required in Article 4 above, DUSA may
manufacture or have manufactured Light Sources for sale or other distribution
for the New Area(s) so designated in DUSA's Notice for use in applications
within the Field pursuant to the Manufacturing License.
<PAGE> 9
5.2.2.3 Termination. If NBC terminates this Agreement pursuant to
Section 10.3 below or DUSA terminates this Agreement pursuant to Section 10.2
below (for breach by NBC), then DUSA may manufacture or have manufactured Light
Sources for sale or other distribution worldwide for use in applications within
the Field pursuant to the Manufacturing License.
To the extent that DUSA elects to exercise its rights under this Section 5.2
with respect to supply within the Territory, (i) DUSA shall be relieved of its
obligations under Sections 2.1, 2.2 and 2.3 and (ii) notwithstanding anything in
this Agreement to the contrary DUSA's sole remedy shall be the exercise of such
rights and DUSA shall not be entitled to sue for damages or seek any other
remedy against NBC resulting from NBC's failure to supply hereunder.
ARTICLE 6
EXCLUSIVITY/COMPETITIVE PRICING
-------------------------------
6.1 Exclusivity. Except as provided in Sections 5.2 above or 6.2 below,
DUSA agrees to purchase all of its requirements for Light Sources for the Field
for sale in the Territory from NBC. In consideration of the foregoing, NBC
agrees that during the term of this Agreement, NBC shall not supply or authorize
a third party to supply: (i) Light Sources for any purposes (other than pursuant
to this Agreement), (ii) light sources for use with aminolevulinic acid or a
derivative or prodrug thereof, or (iii) light sources for photodynamic therapy
or photodetection of actinic keratosis; otherwise, NBC shall have the right to
manufacture and/or supply (or authorize a third party to do so) any light source
for any application or purpose. If NBC supplies, or authorizes a third party to
supply, such light sources to a third party, NBC agrees to restrict in writing
such third party's use thereof to applications outside the Field.
6.2 Competitive Pricing. If after the earlier of (i) the [c.i.] or (ii)
DUSA's order of [c.i.] Light Sources in accordance with Section 2.3 above and
notwithstanding anything herein to the contrary, DUSA receives a bona fide
written quote from a non-Affiliate third party for supply of Light Sources for
sale in the Territory for a price [c.i.] the Price charged by NBC hereunder for
such Light Sources and on substantially similar or better terms and conditions
than those hereunder, then DUSA may thereafter purchase up to [c.i.] of its
requirements for the Territory from such third party on [c.i.] written notice to
NBC. To the extent that DUSA elects to exercise its rights under this Section
6.2, DUSA shall be relieved of its obligations under Sections 2.1, 2.2 and 2.3
with respect to [c.i.] of its original obligations. Notwithstanding the
foregoing provisions of this Section 6.2, in no event shall DUSA's obligation
order Light Sources be reduced to less than [c.i.] of its commercial, clinical
and other requirements of Light Sources for the Field. For purposes of this
Section 6.2 "Affiliate" shall mean any entity which controls, is controlled by
or is under common control with DUSA; an entity shall be regarded as in control
of another entity for purposes of the foregoing if it owns or controls more than
fifty percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority).
ARTICLE 7
REGULATORY MATTERS
------------------
7.1 Regulatory Approvals. The parties understand and agree that DUSA,
itself or through its agents, shall have the sole right to correspond with and
submit regulatory applications
<PAGE> 10
and other filings to the FDA, HPB or other regulatory agencies to obtain
approvals to import, export, sell or otherwise commercialize the Light Sources
alone or with other products (collectively, "Approvals") as DUSA deems useful or
necessary. Accordingly, except as otherwise required by law, NBC shall not
correspond directly with the FDA, HPB or any other regulatory agency relating to
the process of obtaining Approvals or any obtained Approval for the Light
Sources, without DUSA's prior written permission. Notwithstanding the foregoing,
NBC agrees to assist DUSA, as requested by DUSA, in preparing, submitting and
maintaining applications for such Approvals.
7.2 Information. Without limiting the provisions of Section 7.1 above, NBC
shall promptly provide DUSA all written and other information, in NBC's
possession or control, necessary or useful for DUSA to apply for, obtain and
thereafter maintain Approvals for the Light Sources, including without
limitation information relating to the Facility, process, methodology or
components used in the design, manufacture, processing, or packaging of the
Light Sources or other such information required to be submitted to the FDA (or
its foreign equivalent) in the form of a marketing application. Except as
otherwise expressly provided herein, DUSA shall restrict the use of such
information solely for the foregoing purposes. Without limiting the foregoing
and subject to Section 7.5 below, NBC agrees to immediately inform DUSA when any
such information is no longer current and reflective of current manufacturing
practices, procedures or the Specifications and to provide updated information
to DUSA.
7.3 Inspections. NBC shall permit the FDA, HPB and other regulatory
agencies to conduct inspections of the Facility as the FDA or such other
regulatory agencies may request, and shall cooperate with the FDA, HPB or such
other regulatory agencies with respect to such inspections and any related
matters. NBC agrees to give DUSA prior notice (when possible) of any such
inspections, and to keep DUSA informed about the results and conclusions of each
such regulatory inspection, including actions taken by NBC to remedy conditions
cited in such inspections. In addition, NBC shall allow DUSA or its
representative to assist in the preparation for and be present at such
inspections. NBC shall provide DUSA with copies of any written inspection
reports issued by such agencies and all correspondence between NBC and the
agency related thereto, including, but not limited to, FDA Form 483, Notice of
Observation, and all correspondence relating thereto. DUSA and its regulatory
consultants, agents, marketing partners or other third parties agreed upon in
advance by NBC, under reasonable confidentiality requirements, shall have
access, to all quality assurance and QS audits of NBC for the purposes of
assessment of regulatory compliance, to the buildings, records and areas of the
Facility involved in the manufacture, testing, storage and shipment of the Light
Sources.
7.4 DUSA Cooperation. DUSA agrees to keep NBC informed as to the status of
Approvals for Light Sources supplied hereunder.
7.5 Maintenance of Approvals. Notwithstanding anything herein to the
contrary, NBC shall not undertake any modifications to the Light Source design,
manufacturing, processing or packaging that could delay or otherwise impact the
Approvals or other regulatory submissions, including without limitation,
regulatory product reviews, Investigational New Drug applications (INDs), New
Drug Applications (NDAs) or any other compliance status without prior written
agreement of DUSA. NBC shall obtain and maintain all licenses, permits and
registrations other than Approvals (e.g., business licenses and the like)
necessary to manufacture the Light Sources and
<PAGE> 11
supply them hereunder.
7.6 Reporting. Pursuant to the FDA's and other applicable regulatory
agency's regulations and policies, DUSA may be required to report to such
regulatory agency information that reasonably suggests that a Light Source may
have caused or contributed to the death or serious injury or has malfunctioned
and that the Light Source would be likely to cause or contribute to a death or
serious injury if the malfunction were to recur. Accordingly, NBC agrees to
inform DUSA of any such information promptly after becoming aware of it so that
DUSA can comply with such reporting requirements. It is understood and agreed
that reporting to DUSA shall be within twenty-four (24) hours to enable DUSA to
comply with applicable reporting requirements.
ARTICLE 8
PRODUCT WARRANTIES/SERVICE
--------------------------
8.1 Product Warranties. NBC warrants and represents that:
8.1.1 Specifications. All Light Sources supplied hereunder shall upon
delivery to DUSA or such other location as specified by DUSA comply with the
Specifications and shall conform with the information shown on the certificate
of conformance provided for the particular shipment according to Section 3.2
hereof;
8.1.2 QS. The Facility, and all Light Sources supplied hereunder upon
delivery to DUSA or such other location as specified by DUSA, meet all
applicable regulatory requirements (including applicable QS regulations) imposed
by applicable regulatory agencies with respect to any Approval;
8.1.3 Materials and Workmanship. Each Light Source shall be free from
defects in materials, workmanship and design for a period of [c.i.] after its
receipt by the end user (the "Warranty Period"). The foregoing warranty set
forth in this Section 8.1.3 shall not apply to (i) the [c.i.] of the Light
Source or (ii) defects in the design of the Output Regulating Circuitry System,
Plastic Housing or the Stand.
8.1.4 Limitations. For avoidance of doubt, defects in the manufacture
of the Output Regulating Circuitry System, Plastic Housing and the Stand shall
be covered by the warranties in this Section 8.1; provided, however, that NBC
shall not be responsible for defects in materials, workmanship, design or
manufacture of third-party components incorporated in the Output Regulating
Circuitry System, Plastic Housing or Stand except to the extent such defect
should have been discovered upon inspection of such third-party components in
accordance with applicable industry standards; and
8.1.5 No Encumbrance. Title to all Light Sources supplied hereunder
shall pass as provided herein free and clear of any security interest, lien, or
other encumbrance.
8.2 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 8.1, NBC MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE LIGHT SOURCES, AND
NBC HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
<PAGE> 12
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR PUNITIVE DAMAGES. EXCEPT FOR LIABILITY ARISING OUT OF 13 BELOW AND
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, NBC'S MAXIMUM LIABILITY UNDER
THIS AGREEMENT SHALL NOT EXCEED THE TOTAL AMOUNTS RECEIVED BY NBC HEREUNDER.
8.3 Warranty Service. During the Warranty Period, NBC agrees, at its
expense, to correct, modify, repair or replace any Light Source failing to meet
the warranties provided hereunder. Without limiting the foregoing, NBC shall use
best efforts to provide on-site warranty repair service to end-users within the
Territory within [c.i.].
8.4 Extended Warranties. NBC may offer extended warranty service contracts
to end-users of the Light Sources supplied hereunder. Such contracts shall be on
reasonable and customary terms and conditions for services of a similar nature
and shall not be any less favorable to the end-users of the Light Sources
supplied hereunder than other end-users of other products manufactured by NBC.
It is understood and agreed that DUSA may contract with third parties to provide
extended warranty or out-of-warranty service for Light Sources or may provide
such service itself.
8.5 Out-of-Warranty Service; Spare Parts. NBC hereby undertakes to maintain
repair capability for Light Sources during the term of this Agreement and for
[c.i.] thereafter (the "Support Period") subject to its ability to source
applicable components from third parties. In accordance with the foregoing, NBC
shall, if requested by DUSA, provide out-of-warranty service on reasonable and
customary terms and conditions. In addition during the Support Period, NBC
agrees to [c.i.] DUSA and its designees spare and replacement parts [c.i.] and
lead times therefor as may be required to service and maintain Light Sources.
Where there are no such [c.i.], such spare or replacement parts shall be
provided [c.i.] and lead times, and in any event NBC's prices, terms and
conditions for providing services under this Section 8.5 shall be no less
favorable to the customer than those offered by NBC to a third party for similar
services or parts. Notwithstanding the foregoing, neither DUSA nor its customers
shall have any obligation to order any such service, or spare or replacement
parts from NBC.
8.6 Epidemic Failures. In addition to and without limiting the warranties
given above, where a defect in the design (excluding the design of the Output
Regulating Circuitry System, Plastic Housing or Stand) of the Light Sources
which effects a minimum of [c.i.] of the total units of any particular Light
Source model (by SKU number) supplied hereunder (an "Epidemic Failure"), NBC
shall, at its expense, and in a reasonable time period, remedy such Epidemic
Failure in all units of such Light Source model (previously supplied or to be
supplied hereunder).
8.7 Recalls. In the event that DUSA is required by any regulatory agency to
recall the Light Sources or if DUSA voluntarily initiates a recall of the Light
Sources and in either case such recall is a result of a breach of any of the
warranties under Section 8.1.1 through 8.1.3 above, NBC shall bear the direct
costs of such recall. In addition, NBC agrees to cooperate with and assist DUSA
in locating and retrieving, if necessary, Light Sources recalled for any reason.
A recall of DUSA's products (including the Light Sources) for reasons other than
those set forth in this Section 8.7 (including reasons due to force majeure)
above shall not affect DUSA's obligation to purchase
<PAGE> 13
Light Sources in accordance with Article 2 herein above, as may be modified, or
DUSA's obligation under any outstanding purchase order hereunder.
8.8 Documentation. NBC agrees to develop and provide to DUSA documentation
describing routine maintenance, service and care of the Light Sources. In
addition, upon DUSA's request, NBC agrees to provide DUSA such other information
and documentation as DUSA may reasonably require in order to fulfill standard
maintenance and support requirements on reasonable and customary terms and
conditions.
ARTICLE 9
TRADEMARKS
----------
9.1 Packaging and Labeling. The trade dress, style of packaging and the
like with respect to the Light Sources will be determined by DUSA in
consultation with NBC so as to be consistent with DUSA's standard trade dress
and style (the "Packaging Specifications"). NBC shall be responsible for
packaging and labeling the Light Sources delivered hereunder in accordance with
the Packaging Specifications and all applicable regulatory requirements.
9.2 Trademarks. Without limiting the provisions of Section 9.1 above,
packaging materials and labels for the Light Sources shall display the Blu-U
Trademark and the DUSA trade name (collectively, the "DUSA Marks"). Accordingly,
DUSA hereby grants to NBC a license to use the DUSA Marks for the term of this
Agreement for the purposes of supplying the Light Sources hereunder. The
ownership and all goodwill from the use of the DUSA Marks shall vest in and
inure to the benefit of DUSA. NBC hereby acknowledges DUSA's ownership rights in
the DUSA Marks, and accordingly agrees that at no time during or after the term
of this Agreement to challenge or assist others to challenge the DUSA Marks or
the registration thereof or attempt to register any trademarks, marks or trade
names confusingly similar to such DUSA Marks.
9.3 Recordation. In those countries of the Territory where a trademark
license must be recorded, DUSA will provide and record a separate trademark
license for the DUSA Marks. NBC shall cooperate in the preparation and execution
of such documents [c.i.].
ARTICLE 10
TERM AND TERMINATION
--------------------
10.1 Term. The term of this Agreement shall commence on the Effective Date
and continue in full force until the tenth anniversary of the Effective Date,
unless terminated earlier in accordance with this Article 10. This Agreement may
be extended for an additional period by mutual written agreement of NBC and DUSA
at least six (6) months prior to expiration of the then-current term hereof;
provided, however, that neither NBC nor DUSA shall be obligated to approve any
such extension and shall have no liability whatsoever by reason of any failure
to agree on any such extension.
10.2 Breach. This Agreement may be terminated by either party if the other
party breaches any material term or condition of this Agreement and fails to
remedy the breach within [c.i.] after being given written notice thereof.
Notwithstanding the foregoing, in the event of breach by either party, the other
party's right to terminate shall be stayed if the breaching party
<PAGE> 14
proposes a mutually agreeable plan to remedy such breach within [c.i.] period
and remedies such breach within [c.i.] after being given written notice thereof.
It is understood and agreed that this Section 10.2 is subject to the provisions
of Section 14.3 below, excusing performance where performance is rendered
impossible due to a Force Majeure Event, including without limitation failure of
suppliers, in each case where such failure is beyond the reasonable control of
the nonperforming party. For avoidance of doubt, among other things a delay by
NBC of more than [c.i.] of the delivery date of any shipment of Light Sources
ordered in accordance with Section 2.3 shall be deemed material.
10.3 Convenience. Either party may terminate this Agreement upon twelve
(12) months' prior written notice to the other party, provided, however such
notice may not be given prior to the third anniversary of the Effective Date.
10.4 Termination for Insolvency. Either party may terminate this Agreement
if the other becomes the subject of a voluntary or involuntary petition in
bankruptcy or any proceeding relating to insolvency, receivership, liquidation,
or composition or the benefit of creditors, if that petition or proceeding is
not dismissed with prejudice [c.i.] after filing.
10.5 Survival. It is understood that termination or expiration of this
Agreement shall not relieve a party from any liability which, at the time of
such termination or expiration, has already accrued to the other party. The
provisions of Sections 5.2, 8.1, 8.2, 8.3, 8.5, 8.6, 8.7 and 10.5 and Articles
1, 11, 13 and 14 shall survive the termination of this Agreement for any reason.
Except as otherwise expressly provided in this Article 10, all other rights and
obligations of the parties shall terminate upon termination of this Agreement.
ARTICLE 11
CONFIDENTIALITY
---------------
11.1 Confidential Information. The parties may from time to time disclose
to each other Confidential Information. "Confidential Information" shall mean
any information disclosed by one party to the other party hereto which
information is not generally known to the public and may include by way of
example, but without limitation (a) information concerning the disclosing
party's management, financial condition, financial operations, purchasing
activities, sales activities, marketing activities and business plans, (b)
information concerning or resulting from the disclosing party's research and
development work, including, but not limited to, improvements, discoveries,
inventions and new product ideas, (c) information of the disclosing party
concerning actual or potential vendors or customers, (d) the disclosing party's
computer programs, including source code, object code, algorithms, methods,
structure and related information including diagrams, flow charts, designs,
specifications, manuals, descriptions, instructions, explanations and
improvements, and (e) information concerning the disclosing party's products,
including plans, blueprints, parts and assembly drawings, specifications,
descriptions, designs, diagrams, dimensions, tolerances, parts and components,
which in each case if disclosed in tangible form is marked "confidential" or
with other similar designation to indicate its confidential or proprietary
nature or if disclosed orally or by inspection is indicated orally to be
confidential or proprietary by the party disclosing such information at the time
of such disclosure and is confirmed in writing as confidential or proprietary by
the disclosing party within forty-five (45) days after such disclosure. In
addition, information or
<PAGE> 15
other subject matter owned by a party pursuant to the Co-Development Agreement
shall be deemed to be Confidential Information of such party under this
Agreement. Notwithstanding the foregoing or anything herein to the contrary,
Confidential Information shall not include any information that, in each case as
demonstrated by written documentation: (i) was already known to the receiving
party, other than under an obligation of confidentiality, at the time of
disclosure; (ii) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving party; (iii) became
generally available to the public or otherwise part of the public domain after
its disclosure and other than through any act or omission of the receiving party
in breach of this Agreement; (iv) was subsequently lawfully disclosed to the
receiving party by a person other than the disclosing party; or (v) is developed
independently by the receiving party without use of or reliance on the
Confidential Information of the other party.
11.2 Confidentiality. Each party agrees to hold and maintain in strict
confidence all Confidential Information of the other party. Without limiting the
foregoing, neither party shall use or disclose the Confidential Information of
the other party, except as otherwise permitted by this Agreement or as may be
necessary or useful to exercise its rights or perform its obligations under this
Agreement. Nothing contained in this Article 11 shall prevent either party from
disclosing any Confidential Information of the other party to (a) regulatory
agencies for the purpose of obtaining approval to distribute and market the
Light Sources (or products incorporating the Light Sources); provided, however,
that all reasonable steps are taken to maintain the confidentiality of such
Confidential Information to be disclosed; (b) to accountants, lawyers or other
professional advisors or in connection with a merger, acquisition or securities
offering, subject in each case to the recipient entering into an agreement to
protect such Confidential Information from disclosure; or (c) is required by law
or regulation to be disclosed; provided, however, that the party subject to such
disclosure requirement has provided written notice to the other party promptly
upon receiving notice of such requirement in order to enable the other party to
seek a protective order or otherwise prevent disclosure of such Confidential
Information.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
------------------------------
12.1 NBC. NBC represents and warrants that: (i) it has full power to enter
into this Agreement and to grant to DUSA the rights granted to DUSA hereunder;
(ii) it has obtained all necessary corporate approvals to enter into and execute
the Agreement; (iii) it has not entered and will not enter into any agreements
with any third party that are inconsistent with this Agreement; (iv) NBC has not
granted any rights to any third parties to subject matter which would otherwise
be included within the definition of NBC Technology; and (v) NBC shall fully
comply with the requirements of any and all applicable federal, state, local and
foreign laws, regulations, rules and orders of any governmental body having
jurisdiction over the activities contemplated by this Agreement.
12.2 DUSA. DUSA represents and warrants that: (i) it has full power to
enter into the Agreement; (ii) it has obtained all necessary corporate approvals
to enter and execute into this Agreement; (iii) it has not entered and will not
enter into any agreements with any third party that are inconsistent with this
Agreement; and (iv) DUSA shall fully comply with the requirements of
<PAGE> 16
any and all applicable federal, state, local and foreign laws, regulations,
rules and orders of any governmental body having jurisdiction over the
activities contemplated by this Agreement and the distribution of the Light
Sources.
12.3 Disclaimer. EXCEPT AS PROVIDED IN THIS 12 AND SECTION 8.1 ABOVE,
NEITHER PARTY MAKES ANY WARRANTIES OR CONDITIONS (EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE) WITH RESPECT TO THE SUBJECT MATTER HEREOF AND EACH PARTY EXPRESSLY
DISCLAIMS ANY SUCH ADDITIONAL WARRANTIES.
ARTICLE 13
INDEMNIFICATION
---------------
13.1 DUSA. DUSA shall indemnify, defend and hold harmless NBC, its
directors, officers, employees, agents, successors and assigns from and against
all liabilities, expenses or costs (including reasonable attorneys' fees and
court costs) arising out of any claim, complaint, suit, proceeding or cause of
action against any of them by a third party alleging (i) the negligent or
intentionally wrongful acts or omissions of DUSA; (ii) any breach by DUSA of its
representations and warranties under Section 12.2 above; and (iii) infringement
of any third party intellectual property arising from the use of a Light Source
in the treatment or diagnosis of a medical disorder or as a result of the Output
Regulating Circuitry System or Stand, in each case subject to the requirements
set forth in Section 13.3 below. Notwithstanding the foregoing, DUSA shall have
no obligations under this Article 13 for any liabilities, expenses or costs
arising out of or relating to claims covered under Section 13.2 below.
13.2 NBC. NBC shall indemnify, defend and hold harmless DUSA, its
directors, officers, employees, agents, successors and assigns from and against
all liabilities, expenses, and costs (including reasonable attorneys' fees and
court costs) arising out of any claim, complaint, suit, proceeding or cause of
action against any of them by a third party alleging (i) the negligent or
intentionally wrongful acts or omissions of NBC; (ii) any breach by NBC of any
of its representations and warranties under Sections 8.1 or 12.1; and (iii)
infringement of any third party intellectual property arising from the Light
Source device (excluding the Output Regulating Circuitry System or Stand) or
manufacture thereof, in each case subject to the requirements set forth in
Section 13.3 below. Notwithstanding the foregoing, NBC shall have no obligations
under this Article 13 for any liabilities, expenses or costs arising out of or
relating to claims covered under Section 13.1 above.
13.3 Indemnification Procedure. A party that intends to claim
indemnification (the "Indemnitee") under this Article 13 shall promptly notify
the indemnifying party (the "Indemnitor") in writing of any third party claim,
suit or proceeding included within the indemnification described in this Article
13 above (each a "Claim") with respect to which the Indemnitee intends to claim
such indemnification, and the Indemnitor shall have sole control of the defense
and/or settlement thereof; provided that the Indemnitee shall have the right to
participate, at its own expense, with counsel of its own choosing in the defense
and/or settlement of such Claim. The indemnification under this Article 13 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected
<PAGE> 17
without the consent of the Indemnitor. The Indemnitee under this Article 13, and
its employees, at the Indemnitor's request and expense, provide full information
and reasonable assistance to Indemnitor and its legal representatives with
respect to such Claims.
13.4 Insurance. Each party shall secure and maintain in effect during the
term of this Agreement and for a period of five (5) years thereafter insurance
policy(ies) underwritten by a reputable insurance company and in a form and
having limits of at least one million dollars ($1,000,000) in the aggregate for
exposures related to the Light Sources. Additionally, each party shall name the
other party as additional insureds on such policy(ies). Upon request by the
other party hereto, certificates of insurance evidencing the coverage required
above shall be provided to the other party.
ARTICLE 14
GENERAL
-------
14.1 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the United States and the State of
New Jersey without reference to conflict of laws principles and excluding the
1980 U.N. Convention on Contracts for the International Sale of Goods.
14.2 Disputes. If NBC and DUSA, are unable to resolve any dispute between
them, either NBC or DUSA may, by written notice to the other, have such dispute
referred to the Chief Executive Officers (or equivalent) of NBC and DUSA, for
attempted resolution by good faith negotiations within [c.i.] after such notice
is received. Unless otherwise mutually agreed, the negotiations between the
designated officers shall be conducted by telephone, within [c.i.] and at times
within the period stated above offered by the designated officers of DUSA to the
designated officer of NBC for consideration. If the parties are unable to
resolve such dispute in accordance with the aforementioned procedure or within
[c.i.], either party shall have the right to pursue any and all other remedies
available to such party.
14.3 Force Majeure. Nonperformance of any party (except for the payment of
money and acceptance by DUSA of Light Sources pursuant to an outstanding
purchase order hereunder) shall be excused to the extent that performance is
rendered impossible by strike, fire, earthquake, flood, governmental acts or
orders or restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the reasonable control of the nonperforming party (each a
"Force Majeure Event"). Notwithstanding the foregoing, NBC's delay of the
delivery date of any shipment of Light Sources ordered in accordance with
Section 2.3 shall not be excused for more than [c.i.] pursuant to this Section
14.3. This Section 14.3 shall not be deemed to limit DUSA's rights under Section
5.2 above.
14.4 Delays. Time shall be of the essence for the performance of the
party's obligations under this Agreement.
14.5 Assignment. The parties agree that their rights and obligations under
this Agreement may not be assigned or otherwise transferred to a third party
without the prior written consent of the
<PAGE> 18
other party hereto. Any assignment in violation of this Section 14.5 shall be
null and void. Notwithstanding the foregoing, either party may transfer or
assign its rights and obligations under this Agreement to a successor to all or
substantially all of its business or assets relating to this Agreement whether
by sale, merger, operation of law or otherwise; provided that such assignee or
transferee has agreed to be bound by the terms and conditions of this Agreement.
Subject to the foregoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto, their successors and assigns.
14.6 Notices. Any notice or report required or permitted to be given or
made under this Agreement by either party shall be in writing and delivered to
the other party at its address indicated below (or to such other address as a
party may specify by notice hereunder) by courier or by registered or certified
airmail, postage prepaid, or by facsimile; provided, however, that all facsimile
notices shall be promptly confirmed, in writing, by registered or certified
airmail, postage prepaid. All notices shall be effective as of the date received
by the addressee.
If to NBC: National Biological Corporation
1532 Enterprise Parkway
Twinsburg, OH 44087
Attn: President
Fax: (330) 425-9614
with a copy to: Buckingham, Doolittle & Burroughs, LLP
50 S. Main Street
P.O. Box 1500
Akron, OH 44309-1500
Attn: David Dreschler, Esq.
Fax: (330) 253-3627
If to DUSA: DUSA Pharmaceuticals, Inc.
181 University Ave.
Suite 1208
Toronto, Ontario M5H 3M7
Attn:
Fax:
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Kenneth A. Clark, Esq.
Fax: (650) 493-6811
14.7 Confidential Terms. Except as expressly provided herein, each
party agrees not to disclose any terms of this Agreement to any third party
without the consent of the other party,
<PAGE> 19
except to prospective investors and to such party's accountants, attorneys and
other professional advisors or as required by securities or other applicable
laws, in which case the disclosing party shall seek confidential treatment to
the extent available.
14.8 Headings. Headings included herein are for convenience only, do not
form a part of this Agreement and shall not be used in any way to construe or
interpret this Agreement.
14.9 Non-Waiver. Any waiver of the terms and conditions hereof must be
explicitly in writing. The waiver by either of the parties of any breach of any
provision hereof by the other shall not be construed to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself.
14.10 Severability. Should any section, or portion thereof, of this
Agreement be held invalid by reason of any law, statute or regulation existing
now or in the future in any jurisdiction by any court of competent authority or
by a legally enforceable directive of any governmental body, such section or
portion thereof shall be validly reformed so as to approximate the intent of the
parties as nearly as possible and, if unreformable, shall be deemed divisible
and deleted with respect to such jurisdiction, but the Agreement shall not
otherwise be affected.
14.11 Independent Contractors. The relationship of DUSA and NBC established
by this Agreement is that of independent contractors. Nothing in this Agreement
shall be construed to create any other relationship between DUSA and NBC.
Neither party shall have any right, power or authority to assume, create or
incur any expense, liability or obligation, express or implied, on behalf of the
other.
14.12 Entire Agreement. The terms and provisions contained in the
Agreement, including the Exhibits hereto, constitute the entire agreement
between the parties and shall supersede all previous communications,
representations, agreements or understandings, either oral or written, between
the parties. Without limiting the foregoing, the rights and obligations of the
parties under the Co-Development Agreement (except for the payment of amounts
due or to be due thereunder) with respect to the Light Source shall be deemed to
be fulfilled; provided, however, otherwise the Co-Development Agreement shall
remain in full force and effect in accordance with its terms. For avoidance of
doubt, to the extent the terms and conditions of this Agreement and the terms
and conditions of the Co-Development Agreement conflict, the terms and
conditions of this Agreement shall control. No agreement or understanding
varying or extending this Agreement shall be binding upon either party hereto,
unless set forth in a writing which specifically refers to the Agreement signed
by duly authorized officers or representatives of the respective parties, and
the provisions hereof not specifically amended thereby shall remain in full
force and effect.
14.13 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement.
DUSA PHARMACEUTICALS, INC. NATIONAL BIOLOGICAL
<PAGE> 20
CORPORATION
By: /s/R. Carroll By: /s/H.J. Drechsler
----------------------- --------------------------
Name: Ronald L. Carroll Name: Howard J. Drechler
--------------------- ------------------------
Title: Executive V.P. Title: President
-------------------- -----------------------
<PAGE> 21
EXHIBIT A
LIGHT SOURCE
[Attached]
[c.i.]
<PAGE> 22
EXHIBIT B
FORM OF PURCHASE ORDER
[Attached]
<PAGE> 23
DUSA Pharmaceuticals, Inc. PURCHASE
ORDER
400 Columbus Avenue
Vahalla, NY 10595; USA
P.O. Number:
Phone: 914 474 4300 Fax: 914 747 7563 -----------------
(Page 1 of )
THE FOLLOWING NUMBER MUST APPEAR ON ALL RELATED
CORRESPONDENCE, SHIPPING PAPERS, AND INVOICES:
TO: VIA FACSIMILE: SHIP TO:
SUBJECT TO TERMS AND CONDITIONS OF THE PURCHASE AND SUPPLY AGREEMENT BETWEEN
DUSA PHARMACEUTICALS, INC. AND NATIONAL BIOLOGICAL CORPORATION
P.O. DATE REQUISITIONER TERMS
DUSA Pharmaceuticals, Inc. See Below
QUANTITY DESCRIPTION UNIT PRICE TOTAL
SUBTOTAL
TOTAL $
1. Please send two copies of your invoice.
2. Enter this order in accordance with the prices, terms, delivery method
and all specifications listed above
3. Please notify us immediately if you are unable to ship as specified
IMPORTANT NOTATIONS:
1] Payment will be processed on a shipment of merchandise and receipt of
an appropriate invoice
2] This facsimile copy will be the only copy issued
3] Credit references are attached.
<PAGE> 24
Authorized for DUSA Pharmaceuticals, Inc. Date
<PAGE> 25
EXHIBIT C
PRICE
<PAGE> 26
NATIONAL BIOLOGICAL CORPORATION
THE PHOTOTHERAPY EXPERTS!
To: R. Carroll
From: M. Friedman
Subject: Pricing - Blu-U 4170
Date: 9/24/98
Pricing for the Blu-U [c.i.] is listed below. Please note that this pricing is
at best only [c.i.], and, therefore, should not be considered [c.i.]. In
addition, pricing [c.i.] does not include [c.i.], as it is impossible to
establish pricing without a finished good. Also, several items, such as the
[c.i.] DUSA [c.i.], and the item marked [c.i.] in the DUSA provided bill of
materials are not quoted due to lack of sufficient information.
Finally, pricing quoted is based [c.i.] as supplied to National Biological.
Since neither DUSA or NBC is able to validate the accuracy of such bill until
[c.i.], errors of omission, as well as costing errors by DUSA may have occurred
which cannot at this time be accounted for, National Biological cannot therefore
rely on these [c.i.] for any purposes other than [c.i.].
The following is our estimated cost to DUSA and, subject to the language in the
P&S Agreement, may be used in the contract.
Quantity: [c.i.] [c.i.] [c.i.]
DUSA PRICE: [c.i.] [c.i.] [c.i.]
<PAGE> 27
EXHIBIT D
ACCEPTANCE TESTING
[c.i.]
<PAGE> 1
Exhibit 10.2
AMENDED AND RESTATED
LICENSE AGREEMENT
EXHIBIT A
Queen's University Patents and Patent Applications
Methods of Diagnosis and/or Treatment Using Photodynamic Therapy Compositions
for Detection or Treatment.
ISSUED PATENTS
--------------
COUNTRY PATENT NO. FILING DATE ISSUE DATE
U.S.A 5,079,262 07/28/89 01/07/92
U.S.A 5,211,938 10/28/91 05/18/93
U.S.A 5,234,940 04/08/92 08/10/93
U.S.A 5,422,093 06/28/93 06/06/95
Australia 624985 07/25/90 10/19/92
Australia 674310 04/02/93 04/09/97
New Zealand 251284 04/02/93 11/10/97
PENDING APPLICATIONS
--------------------
COUNTRY SERIAL NO. FILING DATE
Japan 02-510192 07/25/90
Korea 700294/1991 07/25/90
Netherlands 9021172 07/25/90
Canada 2,133,741 04/02/93
Europe 93907704-6 04/02/93
[c.i.]
Canada 2,126,761 06/27/94
[c.i.]
[c.i.]
PCT CA96/00363 06/03/96
<PAGE> 1
EXHIBIT 23.1
DELOITTE & TOUCHE LLP
BCE PLACE
181 BAY STREET
SUITE 1400
TORONTO, ONTARIO M5J2V1
CANADA
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration Statement of
Dusa Pharmaceuticals, Inc. on Form S-3 of our report dated February 4, 1999
(which expresses an unqualified opinion and includes an emphasis paragraph
indicating that the Company is in the development stage), appearing in the
Annual Report on Form 10-K of Dusa Pharmaceuticals, Inc. for the year ended
December 31, 1998 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Chartered Accountants
Toronto, Ontario
June 18, 1999
