<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
DUSA Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-3103129
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
181 University Avenue, Suite 1208
Toronto, Ontario, CANADA M5H 3M7
(Address of principal executive offices) (Zip Code)
Commission File Number: 0-19777
Registrant's telephone number, including area code: (416) 363-5059
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
Common Stock
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 or Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant computed by reference to the closing price of such stock as of
February 23, 1999 was $67,622,096.
The number of shares of common stock outstanding of the Registrant as
of February 23, 1999 was 11,001,385.
DOCUMENTS INCORPORATED BY REFERENCE
Document incorporated by reference to this Report is:
(1) Proxy Statement for the 1999 Annual Meeting of Shareholders
PART III, Items 10 through 13.
<PAGE> 2
EXHIBIT INDEX
3(a) Certificate of Incorporation, as amended
3(b) By-laws of the Registrant, filed as Exhibit 3(ii) to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1997, and are incorporated herein by reference
4(a) 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, and are incorporated herein by reference
4(b) Class B Warrant, filed as Exhibit 4.3 to the Registrant's Registration
Statement on Form S-1, No. 33-43282, and is incorporated herein by
reference
10(a) License Agreement between the Company, PARTEQ and Draxis Health Inc.
dated August 27, 1991, filed as Exhibit 10.1 to the Registrant's
Registration Statement on Form S-1, No. 33-43282, and is incorporated
herein by reference
10(b) ALA Assignment Agreement between the Company, PARTEQ, and Draxis Health
Inc. October 7, 1991, filed as Exhibit 10.2 to the Registrant's
Registration Statement on Form S-1, No. 33-43282, and is incorporated
herein by reference
10(c) Employment Agreement of D. Geoffrey Shulman, MD, FRCPC dated October 1,
1991, filed as Exhibit 10.4 to the Registrant's Registration Statement
on Form S-1, No. 33-43282, and is incorporated herein by reference
10(d) Amendment to Employment Agreement of D. Geoffrey Shulman, MD, FRCPC
dated April 14, 1994, filed as Exhibit 10.4 to the Registrant's
Registration Statement on Form S-2, No. 33-98030, and is incorporated
hereby by reference
10(e) Amended and Restated License Agreement between the Company and PARTEQ
dated March 11, 1998, portions of Exhibit A have been omitted pursuant
to a request for confidential treatment pursuant to Rule 24b of the
Securities Exchange Act of 1934 and Rule 406 of the Securities Act of
1933
10(f) Incentive Stock Option Plan, filed as Exhibit 10.11 of Registrant's
Registration Statement on Form S-1, No. 33-43282, and is incorporated
herein by reference
10(g) 1994 Restricted Stock Option Plan, filed as Exhibit 1 to Registrant's
Schedule 14A definitive Proxy Statement dated April 26, 1995, and is
incorporated herein by reference
10(h) 1996 Omnibus Plan, as amended, filed as Exhibit 1 to Registrant's
Schedule 14A definitive Proxy Statement dated April 27, 1998, and is
incorporated herein by reference
10(i) Purchase and Supply Agreement between the Company and National
Biological Corporation dated November 5, 1998, portions of which have
been omitted pursuant to a request for confidential treatment pursuant
to Rule 24b of the Securities Exchange Act of 1934 and Rule 406 of the
Securities Act of 1933.
27 Financial Data Schedule for the Registrant's Form 10-K for the period
ending December 31, 1998
<PAGE> 3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
(Registrant) DUSA Pharmaceuticals, Inc.
-----------------------------------------------
By (Signature and Title) /s/D. Geoffrey Shulman, President
----------------------------------
Date: June 18, 1999
<TABLE>
<S> <C> <C>
/s/D. Geoffrey Shulman Director, Chairman of the Board, June 18, 1999
- ------------------------------ President, Chief Executive -------------
D. Geoffrey Shulman, MD, FRCPC Officer and Chief Financial Date
Officer (Principal Executive,
Financial, and Accounting
Officer)
/s/ Ronald L. Carroll Executive Vice President, June 18, 1999
- ------------------------------ Chief Operating Officer -------------
Ronald L. Carroll Date
/s/Stuart L. Marcus Senior Vice President of June 18, 1999
- ------------------------------ Scientific Affairs -------------
Stuart L. Marcus, MD, PhD 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
Secretary
- ------------------------------ -------------
Nanette W. Mantell, Esq.
</TABLE>
<PAGE> 1
Exhibit 10.E
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 10.I
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.]
