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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 1999
DUSA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 0-19777 22-3103129
(State or other (IRS Employer
jurisdiction of (Commission Identification
incorporation) File Number) Number)
25 UPTON DRIVE
WILMINGTON, MASSACHUSETTS 01887
(Address of principal executive offices, including ZIP code)
(978) 657-7500
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On Monday, November 22, 1999, Registrant entered a Marketing
Development and Supply Agreement with Schering AG, a German corporation, (the
"MD&S Agreement) with respect to products containing aminolevulinic acid ("ALA")
for photodynamic therapy or photodetection in the field of dermatology. Schering
AG will promote the Registrant's aminolevulinic acid, i.e., Levulan(R)
Photodynamic Therapy ("PDT"), initially for actinic keratoses of the face and
scalp subsequent to the pending marketing approval of the product from the
United States Food and Drug Administration. The parties will co-develop and
commercialize additional ALA products for dermatology disorders subject to
various terms and conditions. Schering AG has the exclusive right to market,
promote and sell the products which are developed under the terms of the MD&S
Agreement initially in the United States followed by other countries on a
worldwide basis, except Canada. The U.S. market introduction of Levulan(R) PDT
is planned by Schering AG through its U.S. affiliate, Berlex Laboratories, Inc.
during the first half of 2000. The Registrant will supply the Levulan(R)
Kerastick(TM), its proprietary drug applicator, to Schering AG for distribution.
The Registrant will be responsible for supplying the BLU-U(TM), its proprietary
light device, to dermatologists and other physician end-users.
The Registrant will receive milestone and other payments totaling
$23,750,000 due on signing, on the satisfaction of certain regulatory events,
including approval of the commercial model of the BLU-U(TM) and on the first
commercial sale of a Levulan(R) Kerastick(TM). This total includes the
$8,000,000 for future research and development support to be used at DUSA's
discretion. Additional milestones in the form of pre-paid royalties will be due
upon the receipt of FDA marketing approval of each of the next three products if
the estimated market potential of the new product reaches certain levels.
Within ten (10) business days of the signing of the MD&S Agreement,
Schering Berlin Venture Corporation ("Schering Berlin"), an affiliate of
Schering AG, will purchase in a private placement, 340,458 shares of the
Registrant's common stock at a purchase price of $6,250,000 according to the
terms and conditions of a Common Stock Purchase Agreement between the Registrant
and Schering Berlin signed contemporaneously with the MD&S Agreement. The shares
are subject to standstill and other lock-up provisions for one year from the
closing date of the share purchase. The Registrant has agreed to register the
shares on demand, on certain terms and conditions, after 270 days from the date
of issuance of the shares. The Registrant has also granted certain piggy-back
registration rights to Schering Berlin. Upon issuance, Schering Berlin will hold
approximately 2.9% of the Registrant's issued and outstanding shares of common
stock.
During the term of the MD&S Agreement, (which on a product-by-product
basis in each country in the territory is the later of (i) 12-1/2 years after
the first commercial sale of a respective product in such country, or (ii) the
expiration of patents pertaining to the manufacture, sale or use of such product
in such country; and which Agreement will expire upon expiration of the
Agreement with respect to all products) and subject to various terms and
conditions, including provisions for early termination on twelve months notice,
the parties will fund development of ALA PDT or PD dermatology products with
Schering AG contributing two-thirds of a joint committee-approved budget and the
Registrant contributing one-third of the budget. Initially, for the years 2000
and 2001, the parties have committed to a budget of $4,500,000; however, the
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amount is subject to change and funding may be eliminated during subsequent
years of the term.
Schering AG will pay royalties and supply fees in various amounts
depending on the level of net sales. The Registrant has the exclusive right to
manufacture and supply finished products in the United States and bulk supply of
products for sale outside of the United States. Schering AG is obligated to
purchase all of its requirements of products from the Registrant based upon
forecasts.
Under the terms of a Light Source Agreement also signed by Registrant
and Schering AG on November 22, 1999, Schering AG will promote and solicit
orders from end-users to lease the Registrant's BLU-U(TM) . The Registrant will
maintain inventory and supply the BLU-U(TM) based upon forecasts provided by
Schering AG. The Registrant will maintain and repair the units under
lease/maintenance agreements with the end-users. To induce the Registrant to
maintain a sufficient inventory of BLU-U's, Schering AG has agreed, under the
terms of a Guaranty, to guarantee the lease payments by each lessee to the
Registrant for the Registrant's cost of the BLU-U(TM) from its third-party
manufacturer. The Guaranty will expire on the second anniversary of the first
delivery to an end-user of a BLU-U(TM). In addition, Schering AG has agreed to
provide the Registrant with an interest-free line of credit for up to $1,000,000
to finance the inventory of BLU-U(TM) brand devices pursuant to the terms of a
Secured Line of Credit Promissory Note. The Note is secured by the equipment in
accordance with the terms of a Security Agreement. The maturity date of the Note
is twelve (12) months following the date of the first advance under the Note.
Except for historical information, this report, including the exhibits,
contains certain forward-looking statements that involve known and unknown risk
and uncertainties, which may cause actual results to differ materially from any
future results, performance or achievements expressed or implied by the
statements made. These forward-looking statements relate to Schering's
promotional activities, anticipated FDA approval of Levulan(R) PDT for actinic
keratoses, co-development and commercialization of additional ALA products and
the contribution to the development budget, timing of the launch of Levulan(R)
PDT, receipt of milestone payments, payment of royalties and supply fees,
maintenance of inventory and supply of the BLU-U(TM) and the obligation to
service the units. Such risks and uncertainties include, but are not limited to,
final approval of Levulan(R) PDT, including approval of the commercial light
source, by the FDA and other world-wide health regulatory authorities, the
ability of Registrant and Schering AG to develop a market for the products,
introduction of competitive products, reimbursement by government and other
third-party payors, the results of future clinical trials, the status of patents
and proprietary protection for these indications, reliance on third parties to
manufacture (in compliance with FDA regulations), and other risks detailed from
time to time in the Registrant's United States Securities and Exchange
Commission (SEC) filings.
ITEM 7. FINANCIAL STATEMENTS AND OTHER EXHIBITS.
(c) Exhibits
[10.1] Marketing, Development and Supply Agreement between Registrant
and Schering AG dated November 22, 1999 portions of which have been
omitted pursuant to a request for confidential treatment pursuant to
Rule 24b of the Securities Exchange Act of 1934.
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[10.2] Common Stock Purchase Agreement dated as of November 22, 1999
between Registrant and Schering Berlin Venture Corporation portions of
which have been omitted pursuant to a request for confidential
treatment pursuant to Rule 24b of the Securities Exchange Act of 1934.
[10.3] Light Source Agreement dated as of November 22, 1999 between
Registrant and Schering AG portions of which have been omitted pursuant
to a request for confidential treatment pursuant to Rule 24b of the
Securities Exchange Act of 1934.
[10.4] Guaranty dated as of November 22, 1999 by Schering AG in favor
of Registrant portions of which have been omitted pursuant to a request
for confidential treatment pursuant to Rule 24b of the Securities
Exchange Act of 1934.
[10.5] Secured Line of Credit Promissory Note dated November 22, 1999
with Registrant as payee and Schering AG as Holder portions of which
have been omitted pursuant to a request for confidential treatment
pursuant to Rule 24b of the Securities Exchange Act of 1934.
[10.6] Security Agreement dated as of November 22, 1999 between
Registrant and Schering AG portions of which have been omitted pursuant
to a request for confidential treatment pursuant to Rule 24b of the
Securities Exchange Act of 1934.
[99.1] Press Release dated November 23, 1999 regarding Agreement with
Schering AG.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
DUSA PHARMACEUTICALS, INC.
By: /s/ D. Geoffrey Shulman
---------------------------------
D. Geoffrey Shulman, MD, FRCPC
President and Chief Executive Officer
Dated: November 24, 1999
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Exhibit 10.1
MARKETING, DEVELOPMENT AND SUPPLY AGREEMENT
DUSA Pharmaceuticals, Inc.
and
Schering AG
November 22, 1999
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS........................................................................................... 2
1.1 "Additional Collaboration Product"............................................................ 2
1.2 "Affiliate"................................................................................... 2
1.3 "AK".......................................................................................... 2
1.4 "ALA"......................................................................................... 2
1.5 "Applicator".................................................................................. 2
1.6 "Collaboration Product"....................................................................... 2
1.7 "CMC"......................................................................................... 2
1.8 "Competing Product"........................................................................... 3
1.9 "Control"..................................................................................... 3
1.10 "Cost of Goods"............................................................................... 3
1.11 "Current Good Manufacturing Practices" or "cGMP".............................................. 3
1.12 "Data"........................................................................................ 3
1.13 "Dermatological Disorders".................................................................... 4
1.14 "Development Costs"........................................................................... 4
1.15 "Development Plan and Budget"................................................................. 4
1.16 "Development Program"......................................................................... 4
1.17 "DUSA Technology"............................................................................. 5
1.18 "EMEA"........................................................................................ 5
1.19 "Existing MAA"................................................................................ 5
1.20 "FDA"......................................................................................... 5
1.21 "Field"....................................................................................... 6
1.22 "Finished Product"............................................................................ 6
1.23 "First Commercial Sale"....................................................................... 6
1.24 "Full Program Funding Period"................................................................. 6
1.25 "GAAP"........................................................................................ 6
1.26 "Initial Product"............................................................................. 6
1.27 "Kerastick Trademark"......................................................................... 6
1.28 "Levulan Trademark"........................................................................... 6
1.29 "Major Country"............................................................................... 7
1.30 "Manufacturing Standards"..................................................................... 7
1.31 "Marketing Approval".......................................................................... 7
1.32 "Marketing Approval Application" or "MAA"..................................................... 7
1.33 "Net Sales"................................................................................... 7
1.34 "PARTEQ License Agreement".................................................................... 8
1.35 "Party or Parties"............................................................................ 8
1.36 "Product Territory"........................................................................... 8
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1.37 "Region" and "Key Market"..................................................................... 8
1.38 "Specifications".............................................................................. 8
1.39 "Sublicensee"................................................................................. 8
1.40 "Term of the Development Program"............................................................. 8
1.41 "Territory"................................................................................... 8
1.42 "United States or U.S."........................................................................ 8
ARTICLE 2 STEERING AND DEVELOPMENT COMMITTEES................................................................... 9
2.1 Steering Committee............................................................................ 9
2.2 Development Committee......................................................................... 9
2.3 No Committee Amendments; Authority............................................................ 10
ARTICLE 3 DEVELOPMENT PLANS AND BUDGETS......................................................................... 11
3.1 Development Plans and Budgets................................................................. 11
3.2 Full Program Funding Period................................................................... 11
3.3 Below Full Program Funding.................................................................... 13
3.4 Additional Projects........................................................................... 13
3.5 Tail Period................................................................................... 14
3.6 Wind-Down Period.............................................................................. 15
3.7 Funding Limit................................................................................. 16
ARTICLE 4 DEVELOPMENT PROGRAM................................................................................... 16
4.1 Product Development........................................................................... 16
4.2 Development Program Funding................................................................... 18
4.3 Regulatory Matters............................................................................ 18
4.4 Step-In Rights................................................................................ 20
ARTICLE 5 RECORD KEEPING; PUBLICATION........................................................................... 21
5.1 Reports and Records........................................................................... 21
5.2 Review of Publications........................................................................ 21
ARTICLE 6 DEVELOPMENT PROGRAM FUNDING........................................................................... 22
6.1 Development Costs............................................................................. 22
6.2 Payment of Development Costs.................................................................. 23
6.3 Milestone Payments............................................................................ 25
6.4 Credit Against Future Royalties............................................................... 27
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ARTICLE 7 USE OF PRECLINICAL AND CLINICAL DATA.................................................................. 27
7.1 Exchange...................................................................................... 27
7.2 Use; Disclosure............................................................................... 27
7.3 Regulatory Requirements....................................................................... 28
ARTICLE 8 MARKETING RIGHTS...................................................................................... 28
8.1 Schering Rights............................................................................... 28
8.2 Ex-U.S. Light Source.......................................................................... 29
8.3 Rights Retained by DUSA....................................................................... 29
8.4 Sublicensees and Affiliates................................................................... 29
8.5 Restrictions.................................................................................. 30
8.6 Marketing Plans............................................................................... 30
8.7 Marketing Materials........................................................................... 30
8.8 Right of First Discussion..................................................................... 31
8.9 Substitution.................................................................................. 32
ARTICLE 9 MANUFACTURE AND SUPPLY................................................................................ 34
9.1 Manufacturing Rights.......................................................................... 34
9.2 Supply........................................................................................ 34
9.3 Forecasts..................................................................................... 35
9.4 Orders........................................................................................ 35
9.5 Delivery...................................................................................... 36
9.6 Quality Guidelines............................................................................ 36
9.7 Collaboration Product Acceptance/Rejection.................................................... 38
9.8 Documentation................................................................................. 39
9.9 Schering Right of Audit and Inspection........................................................ 40
9.10 Suppliers..................................................................................... 41
9.11 Invoicing..................................................................................... 42
9.12 Shortage of Supply............................................................................ 42
9.13 Schering's [c.i.] ............................................................................ 44
9.14 Supply of Light Source........................................................................ 44
ARTICLE 10 COLLABORATION PRODUCT PAYMENTS TO DUSA............................................................... 45
10.1 Prices........................................................................................ 45
10.2 Commercial Sales.............................................................................. 45
10.3 Minimum Supply Prices......................................................................... 47
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10.4 Certain Quantities............................................................................ 48
10.5 Discounting................................................................................... 48
10.6 Payments...................................................................................... 48
10.7 Adjustment to Commercial Supply Price [c.i.].................................................. 49
10.8 Undue Hardship................................................................................ 49
ARTICLE 11 THIRD PARTY ROYALTIES................................................................................ 50
ARTICLE 12 PAYMENTS; BOOKS AND RECORDS.......................................................................... 50
12.1 Payment Method................................................................................ 50
12.2 Currency Conversion........................................................................... 50
12.3 Taxes......................................................................................... 50
12.4 Records; Inspection........................................................................... 51
ARTICLE 13 MARKETING EFFORTS.................................................................................... 52
13.1 Marketing Efforts............................................................................. 52
13.2 Failure to File MAA........................................................................... 54
13.3 Failure to Sell............................................................................... 54
13.4 Other......................................................................................... 55
ARTICLE 14 INTELLECTUAL PROPERTY................................................................................ 55
14.1 Licenses to Schering.......................................................................... 55
14.2 Ownership of Inventions....................................................................... 55
14.3 Patent Prosecution............................................................................ 55
14.4 Defense of Third Party Infringement Claims.................................................... 57
14.5 Enforcement................................................................................... 58
14.6 Third Party Rights............................................................................ 59
14.7 No Rights Beyond Collaboration Products....................................................... 59
14.8 Covenants..................................................................................... 59
14.9 Patent Marking................................................................................ 59
ARTICLE 15 TRADEMARKS........................................................................................... 59
15.1 Display....................................................................................... 59
15.2 License....................................................................................... 59
15.3 Registration.................................................................................. 60
15.4 Ownership..................................................................................... 60
15.5 Recordation................................................................................... 60
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15.6 Mark Infringement............................................................................. 60
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15.7 Approval of Representation of DUSA Marks...................................................... 60
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15.8 Termination................................................................................... 61
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ARTICLE 16 REPRESENTATIONS AND WARRANTIES....................................................................... 61
16.1 General Warranties............................................................................ 61
---- ------------------
16.2 Mutual Covenants of Exclusivity............................................................... 63
---- -------------------------------
16.3 Warranties Regarding Products................................................................. 63
---- -----------------------------
16.4 Notice........................................................................................ 64
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ARTICLE 17 CONFIDENTIALITY...................................................................................... 64
17.1 Confidential Information...................................................................... 64
---- ------------------------
17.2 Permitted Disclosures......................................................................... 65
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17.3 Prior Non-Disclosure Agreements............................................................... 65
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ARTICLE 18 INDEMNIFICATION...................................................................................... 65
18.1 Indemnification of DUSA....................................................................... 65
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18.2 Indemnification of Schering................................................................... 66
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18.3 General Indemnification of DUSA............................................................... 66
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18.4 General Indemnification of Schering........................................................... 66
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18.5 Procedure..................................................................................... 66
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18.6 Insurance..................................................................................... 67
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ARTICLE 19 TERM AND TERMINATION................................................................................. 67
19.1 Term.......................................................................................... 67
---- ----
19.2 Termination for Cause......................................................................... 67
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19.3 Termination Upon Notice....................................................................... 69
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19.4 Effects of Expiration or Termination.......................................................... 69
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19.5 Survival...................................................................................... 71
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ARTICLE 20 MISCELLANEOUS........................................................................................ 72
20.1 Governing Law, Venue.......................................................................... 72
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20.2 Particular Disputes........................................................................... 72
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20.3 Force Majeure................................................................................. 73
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20.4 No Implied Waivers; Rights Cumulative......................................................... 73
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20.5 Independent Contractors....................................................................... 73
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20.6 Notices....................................................................................... 73
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20.7 Assignment.................................................................................... 74
20.8 Affiliate Assignment.......................................................................... 74
20.9 Modification.................................................................................. 74
20.10 Severability.................................................................................. 75
20.11 Publicity Review.............................................................................. 75
20.12 Counterparts.................................................................................. 75
20.13 Headings...................................................................................... 75
20.14 Export Laws................................................................................... 75
20.15 Entire Agreement.............................................................................. 75
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EXHIBIT 1.4 AMINOLEVULINIC ACID HCL
EXHIBIT 1.17 DUSA PATENTS
EXHIBIT 1.21 U.S. STANDARD PACKAGING AND LABELING
EXHIBIT 1.38 INITIAL PRODUCT SPECIFICATIONS
EXHIBIT 4.1.1 INITIAL PRODUCT PLAN
EXHIBIT 8.1(b) REGIONS; KEY MARKETS
EXHIBIT 8.6 INITIAL MARKETING PLAN
EXHIBIT 9.3 SCHERING INITIAL FORECAST
EXHIBIT 9.7 INITIAL PRODUCT INSPECTION CRITERIA
EXHIBIT 14.3 CORE PATENTS
EXHIBIT 14.6 THIRD PARTY LICENSORS
EXHIBIT 15.3 REGISTRATION OF DUSA MARKS
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MARKETING, DEVELOPMENT AND SUPPLY AGREEMENT
This Marketing, Development and Supply Agreement (the "Agreement"),
entered into as of November 22, 1999 (the "Execution Date"), is made by and
between DUSA Pharmaceuticals, Inc., a New Jersey corporation, having offices at
25 Upton Drive, Wilmington, Massachusetts 01887, USA ("DUSA"), and Schering AG,
a German corporation, having offices at 13342 Berlin, Germany ("Schering").
BACKGROUND
A. DUSA is developing aminolevulinic acid HCl (Levulan(R), as further
defined below) photodynamic therapy and photodetection for the treatment and
detection of human diseases. Certain of the underlying technology was
in-licensed by DUSA from PARTEQ Research and Development Innovations.
B. Schering and DUSA desire to collaborate on the development and
commercialization of certain products utilizing Levulan(R) photodynamic therapy
and photodetection of dermatological indications in humans, all on the terms and
conditions set forth below.
C. DUSA is willing to grant to Schering, and Schering desires to
obtain, certain licenses with respect to the development and commercialization
of Collaboration Products (as defined below), and DUSA will keep the right to
manufacture and supply such products to Schering, all on the terms and
conditions set forth below.
D. In addition, DUSA and Schering have entered into a certain agreement
of even date herewith (the "Light Source Agreement") pursuant to which DUSA will
supply the light sources to be used with the Collaboration Products (the "Light
Sources") directly to physicians, all on the terms and conditions set forth in
the Light Source Agreement.
E. Concurrently with this Agreement, DUSA and Schering Berlin Venture
Corporation, an Affiliate (as defined below) of Schering have entered into a
Stock Purchase Agreement, pursuant to which DUSA will sell and issue to Schering
shares of DUSA Common Stock, on the terms and conditions set forth therein.
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:
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ARTICLE 1
DEFINITIONS
1.1 "Additional Collaboration Product" shall mean any Collaboration
Product that differs from the Initial Product or from any previously approved
Collaboration Product in indication and which requires new pivotal clinical
trials.
1.2 "Affiliate" shall mean any person, corporation, partnership, firm,
joint venture or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
DUSA or Schering, as the case may be . An entity shall be regarded as in control
of another entity for purposes of this definition 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) or
otherwise possesses the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of outstanding voting
shares, by contract, or otherwise. A "Controlled Affiliate" shall mean an entity
that is controlled by a Party to this Agreement.
1.3 "AK" shall mean actinic keratosis.
1.4 "ALA" shall mean 5-Aminolevulinic Acid HCl, as more particularly
described on Exhibit 1.4 hereto. It is understood that ALA shall not include any
prodrug form of the composition described in Exhibit 1.4.
1.5 "Applicator" shall mean (i) the Kerastick(TM) applicator being used
to apply the Collaboration Product, as defined in the Existing MAA, and/or (ii)
such other applicator (including derivatives of the Kerastick(TM) applicator),
in each case as is developed pursuant to the Development Program to administer
the Collaboration Product for uses within the Field.
1.6 "Collaboration Product" shall mean (i) the Initial Product; and
(ii) all formulations containing ALA but in each case solely to the extent that
same are developed in the course of performing the Development Program to be
marketed and sold within the Field. For clarification, a compound containing ALA
which is developed in the course of the Development Program to be marketed and
sold within the Field but which: (i) is for a different indication; (ii) and/or
consists of a different formulation than other Collaboration Products; and (iii)
which requires additional pivotal clinical trials for Marketing Approval,
constitutes a separate Collaboration Product. The term "Collaboration Product"
shall also include Additional Collaboration Products. Where applicable, the
Collaboration Product shall include the appropriate Applicator. As used herein
it is understood that "Collaboration Product" shall not include any light source
to be used with such Collaboration Product. This definition is further subject
to the provisions of Sections 3.4-3.6, 8.1(b), 13.2, and 13.3.
1.7 "CMC " shall mean the chemistry, manufacturing and control data
necessary for an investigational new drug application and related amendments or
supplements or a new drug
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application and related amendments or supplements to the FDA or any equivalent
application to the EMEA or any other regulatory authority of the applicable
Product Territory.
1.8 "Competing Product" shall mean any topical photodynamic therapy
product that is substantially identical to a Collaboration Product (including
both dosage form and active ingredient), is approved for the same indication(s)
as such Collaboration Product, and is legally marketed in any country in the
Territory by an entity other than Schering, its Affiliate or Sublicensee.
1.9 "Control" shall mean possession of the ability to grant a license
or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any third party.
1.10 "Cost of Goods" shall mean all costs for the Finished or
Collaboration Product calculated by using each Party's standard accounting
procedures, in each case consistently applied. Such costs shall include, but not
be limited to, the [c.i.] of [c.i. ]. Such costs shall exclude, without limiting
the generality hereof, (i) all costs and charges related to or occasioned by
[c.i.] not [c.i.] to be [c.i.] for [c.i.] of Collaboration Products; (ii) the
[c.i.] at such Party's facilities; (iii) [c.i.] of [c.i.] not related to
manufacturing of the Finished or Collaboration Product; (iv) allocation of
[c.i.]; such Party's [c.i.], whether or not [c.i.] is [c.i.] to the
manufacturing of any Collaboration Product; and (v) any [c.i.] associated with
[c.i.]; provided that the Cost of Goods in case DUSA manufactures the
Collaboration Products shall be [c.i.] to [c.i.] of the [c.i.] for such
manufacture by the previous third party manufacturer ([c.i.] and other related
manufacturing costs) Cost of Goods shall also include [c.i.] with respect to the
manufacture, sale or use of Collaboration Products [c.i.] in [c.i.] by the
respective other Party (it being understood that amounts paid to [c.i.] pursuant
to the [c.i.] shall [c.i.] within Cost of Goods.)
1.11 "Current Good Manufacturing Practices" or "cGMP" shall mean all
applicable standards relating to manufacturing practices for fine chemicals,
intermediates, bulk products, or finished pharmaceutical products: (i)
promulgated by any governmental body having jurisdiction over the manufacture of
Collaboration Products, in the form of laws or regulations; (ii) promulgated by
any governmental body having jurisdiction over the manufacture of Collaboration
Products in the form of guidance documents, which guidance documents are being
implemented within the pharmaceutical manufacturing industry for such
Collaboration Products; or (iii) which [c.i.] to be current, in each case as in
effect at the Execution Date and as amended, promulgated, or accepted from time
to time during the term of this Agreement.
1.12 "Data" shall mean any and all research data, clinical pharmacology
data, CMC data, preclinical data, clinical data and/or all submissions made in
association with an IND or NDA or other Marketing Approval Applications with
respect to Collaboration Products within the Field.
1.13 "Dermatological Disorders" shall mean all diseases and other
medical disorders of [c.i.], including without limitation, the following
diseases and disorders to the extent they manifest themselves primarily in
[c.i.]: [c.i.] and all other diseases of [c.i.] and/or [c.i.] that manifest
themselves [c.i.]. For clarification, Dermatological Disorders shall not include
any disease or medical disorder that manifests itself primarily in [c.i.] or any
other [c.i.] or any [c.i.] that does not
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primarily manifest itself in [c.i.]. It is understood that as used in the
Section 1.13, the term "disorder" of [c.i.] includes any naturally occurring
conditions of such systems (e.g., [c.i.]).
1.14 "Development Costs" shall mean the [c.i.] incurred by, or on
behalf of, either DUSA or Schering in conducting the Development Program
according to the Development Plan and Budget. These costs shall include [c.i.]
incurred by a Party or for its account which are [c.i.] as well as [c.i.] that
are [c.i.] to preclinical, clinical and CMC/Manufacturing studies and activities
conducted in accordance with the Development Plan and Budget. These costs shall
include, but not be limited to, the cost of [c.i.] of a Collaboration Product,
the cost of [c.i.], and [c.i.]and costs/related fees for [c.i.] for the purpose
of submission to a governmental authority to obtain and/or maintain Marketing
Approval of a Collaboration Product in the Territory. These costs shall also
include [c.i.] for [c.i.] by [c.i.] and provided that such [c.i.] is shown
[c.i.] on the balance sheet of [c.i.] in accordance with GAAP and [c.i.] the
same are used in connection with the Development Program and [c.i.] to the
Collaboration Product. These costs shall not include [c.i.] occurring from
operation units that are [c.i.] in the [c.i.] under the Development Program.
1.15 "Development Plan and Budget" shall mean the plan and budget for
the Development Program in effect from time to time, as established in
accordance with Article 3 below.
1.16 "Development Program" shall mean all activities with respect to
the research and development of products, other than the Initial Product, within
the Field as outlined in the Development Plan and Budget established pursuant to
Article 3 of this Agreement, which may be comprised of preclinical, clinical and
all other activities relating to the research and development of such products
and/or applications (including MAAs and Marketing Approvals) for government
approval to manufacture, market and distribute such products in the Territory in
the Field. Development Program includes, but is not limited to, the pre-clinical
development of such products (e.g., pre-clinical testing, pharmacokinetics,
toxicology, immunology and related documentary and medical writing), the
clinical development of such products (e.g., planning and execution of clinical
studies and related documentary and medical writing) and the CMC development for
the manufacture of such products (e.g., formulation, production, fill/finish,
sourcing of components, raw materials and packaging supplies, development of
regulatory methods and controls, including assays, quality assurance and
stability protocols and related CMC documentary writing). It is understood that
the Development Program may include such research and development activities
relating to light sources as established in the Development Plans and Budgets in
effect from time to time.
1.17 "DUSA Technology" shall mean DUSA Patents and DUSA Know-How.
1.17.1 "DUSA Know-How" 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, and/or the results of tests, assays, methods and
processes; and drawings, sketches, plans, diagrams, software, specifications
and/or other documents or materials containing said information and data; in
each case that is possessed by, or the property of, DUSA or its Controlled
Affiliates as of the Execution Date or discovered, developed or acquired by DUSA
or its Controlled Affiliates during the term of this Agreement, to the extent
such relates to the manufacture, sale or use of a
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Collaboration Product for purposes within the Field and to the extent that DUSA
or its Controlled Affiliates Control the same.
1.17.2 "DUSA Patents" shall mean all issued, unexpired 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, sale or use of a Collaboration Product
within the Field and that are Controlled by DUSA as of the Execution Date or
that come into the Control of DUSA or its Controlled Affiliates during the term
of this Agreement. DUSA Patents also includes a Supplementary Certificate of
Protection of a member state of the European Union or any similar protective
rights in any country. DUSA Patents shall not include any patent that has been
held invalid or unenforceable by a court or other agency of competent
jurisdiction or that has been admitted to be invalid or unenforceable through
re-issue, re-examination, disclaimer or otherwise; provided however, that if the
holding of a such court or agency is later reversed by a court or agency with
overriding authority, such patent shall be reinstated as a DUSA Patent. The DUSA
Patents existing as of the Execution Date are listed on Exhibit 1.17.
1.18 "EMEA" shall mean the European Medicines Evaluation Agency.
1.19 "Existing MAA" shall mean the DUSA MAA filed with the FDA on July
1, 1998.
1.20 "FDA" shall mean the U.S. Food and Drug Administration.
1.21 "Field" shall mean the topical administration to the external
epidermis or dermis of products containing ALA, for the photodynamic therapy,
and/or photodetection of, Dermatological Disorders in humans. The Field shall
also include other routes of administration, (e.g., systemic and other local
applications) as the Parties may agree from time to time of particular
Collaboration Products containing ALA for the photodynamic therapy and/or
photodetection of Dermatological Disorders in humans, as such routes of
administration apply to the particular Collaboration Product. The Field shall
exclude topical or other routes of administration of such products for
applications other than Dermatological Disorders.
1.22 "Finished Product" shall mean a single unit of Collaboration
Product meeting the applicable Specifications for sale within the U.S., with
such labeling, packaging and package inserts as is established pursuant to
Section 9.2.2 below.
1.23 "First Commercial Sale" shall mean, with respect to each
Collaboration Product in each country, the first bona fide commercial sale of
such Collaboration Product following Marketing Approval in such country by or
under authority of Schering, its Affiliates or Sublicensees;[c.i.] where such a
first commercial sale [c.i.] in [c.i.] (for clarification, the Parties
acknowledge that [c.i.] is [c.i.] in [c.i.]) and [c.i.] to [c.i.] for [c.i.],
then [c.i.] shall [c.i.] until [c.i.] has been [c.i.].
1.24 "Full Program Funding Period" shall mean the period starting with
the Execution Date, continuing during each calendar year for which a Development
Plan and Budget has been established in accordance with Section 3.1 below that
provides for Schering to fund at least
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US$3,000,000 per calendar year in Development Costs and DUSA to fund at least
US$1,500,000 per calendar year, or such lesser amounts as the Parties may
establish in accordance with Section 3.1, and in any calendar year thereafter
until such period [c.i.] and in the time remaining in any calendar year in which
the Full Program Funding Period [c.i.] in accordance with Article 3.
1.25 "GAAP" shall mean U.S. generally accepted accounting principles.
1.26 "Initial Product" shall mean the initial product that is the
subject of the Existing MAA as of the Execution Date.
1.27 "Kerastick Trademark" shall mean the "Kerastick" trademark, for
which DUSA has applied for registration in connection with the Collaboration
Products, or such other trademark that DUSA registers, and the Parties agree to
use, for the Collaboration Products in countries in which "Kerastick" is not
selected by the Parties for use.
1.28 "Levulan Trademark" shall mean the "Levulan" trademark that DUSA
has registered in connection with the Collaboration Products, or such other
trademark that DUSA registers and the Parties agree to use for the Collaboration
Products in countries in which "Levulan" is not selected by the Parties for use.
1.29 "Major Country" shall mean [c.i.] and [c.i.].
1.30 "Manufacturing Standards" shall mean, with respect to a particular
Collaboration Product, cGMP as established by the FDA, as such regulations and
guidance may be amended from time to time, together with such other standards as
are necessary to comply with the laws and regulations of other countries of the
applicable Product Territory, to the extent established pursuant to Section
9.6.2 below.
1.31 "Marketing Approval" shall mean, with respect to each country of
the Territory for a particular Collaboration Product, approval of the applicable
MAA filed in such country by the health regulatory authority in such country
that is the counterpart of the FDA. It is understood that Marketing Approval
does not include pricing or reimbursement approval.
1.32 "Marketing Approval Application" or "MAA" shall mean a New Drug
Application, Premarket Approval Application, or Biologics License Application,
respectively, as required under the United States Federal Food, Drug and
Cosmetics Act and the regulations promulgated thereunder, or a comparable filing
for Marketing Approval in a country, in each case with respect to a
Collaboration Product for use within the Field in the Territory.
1.33 "Net Sales" shall mean the total amount invoiced to third parties
in connection with sales of Collaboration Products by Schering or DUSA, as the
case may be, their Affiliates and their permitted Sublicensees, [c.i.] the
following [c.i.] and [c.i.]: (i) [c.i.]; (ii) [c.i.] and any other [c.i.] upon
the sale of a Collaboration Product; (iii) [c.i.] in the ordinary course of
business in connection with the sale of a Collaboration Product; (iv) [c.i.] in
the ordinary course of business in connection with the sale of a Collaboration
Product; (v) [c.i.] in the ordinary course of business in connection with the
sale of [c.i.] of such Collaboration Product; (vi) a [c.i.] for [c.i.] and (vii)
[c.i.], to the extent
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mutually agreed by the Parties. In the case of (i) and (ii) above, such amounts
shall be [c.i.] only [c.i.] the same are [c.i.] by [c.i.] on the sale to the
third-party purchaser; and in the case of (iii)-(v), such amounts shall be
[c.i.] only to [c.i.] the same are [c.i.] to the customer [c.i.] to the
customer. For the purpose of calculating a Party's Net Sales, the Parties
recognize that (x) a Party's customers may include persons in the chain of
commerce who enter into agreements with a Party as to price even though title to
the Collaboration Product does not pass directly from a Party to such customers,
and even though payment for such Collaboration Product is not made by such
customers directly to a Party and (y) in such cases [c.i.] by a Party to a
customer through a Third party (such as a wholesaler) [c.i.] by a Party [c.i.]
in order to calculate a Product's Net Sales. Any [c.i.] listed above which
[c.i.] by a Party shall be [c.i.] for the period in which the [c.i.] is made.
For the avoidance of doubt, Net Sales shall not include sales by Schering to its
Affiliates or Sublicensees for resale, provided that if Schering or DUSA sells a
Collaboration Product to an Affiliate or Sublicensee for resale, Net Sales shall
include the amounts invoiced by such Affiliate or Sublicensee to third parties
on the resale of such Collaboration Product. A "sale" shall also include a
transfer or other disposition for consideration other than cash, in which case
such consideration shall be valued at the fair market value thereof.
1.34 "PARTEQ License Agreement" shall mean the Amended and Restated
License Agreement between PARTEQ Research and Development Innovations, having
its principal place of business at Queens University in Kingston, Ontario,
Canada ("PARTEQ") and DUSA, dated March 11, 1998, as amended and supplemented.
1.35 "Party or Parties" shall mean DUSA and Schering or DUSA or
Schering, as indicated by the context.
1.36 "Product Territory" for a particular Collaboration Product shall
have the meaning defined in Section 8.1(b). It is understood that the Product
Territory for a particular Collaboration Product shall not include the Abandoned
Regions (as defined in Section 8.1(b) or Article 13 below) for such
Collaboration Product.
1.37 "Region" and "Key Market" shall each have the meanings defined in
Section 8.1(b).
1.38 "Specifications" shall mean, with respect to the Initial Product,
and with respect to each subsequent Collaboration Product, those specifications
as are required by the applicable Marketing Approval for the applicable Product
Territory, or, for the purposes of Section 9.7 below, those specifications set
forth in Exhibit 1.38 for the Initial Product and as supplemented at such later
point in time as agreed by the Parties for subsequent Collaboration Products.
1.39 "Sublicensee" shall mean, with respect to a particular
Collaboration Product, a non-Affiliate third party to whom Schering or DUSA has
granted directly or indirectly a right to distribute such Collaboration Product,
provided that such third party is responsible for some or all of the marketing
and promotion of such Collaboration Product within its region of the applicable
Product Territory.
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1.40 "Term of the Development Program" shall mean the period from
January 1, 2000 until this Agreement is terminated or the Term of the
Development Program is ended in accordance with Section 3.6 below.
1.41 "Territory" shall mean all countries world-world excluding Canada.
1.42 "United States or U.S." shall mean the United States of America,
including its possessions and territories.
ARTICLE 2
STEERING AND DEVELOPMENT COMMITTEES
2.1 Steering Committee. Schering and DUSA shall establish a steering
committee to oversee, review and coordinate the research and development of
Collaboration Products for applications within the Field throughout the
Territory and the implementation thereof ("Steering Committee"). The Steering
Committee will review and approve the Development Plan and Budget, modifications
thereto and will make the final decision regarding an early termination of a
clinical study (other than in accordance with the protocol), and it will make
those specific decisions expressly designated to be made by the Steering
Committee pursuant to Section 3.1 below.
2.1.1 Membership. The Steering Committee shall be comprised of
an equal number of representatives from each of Schering and DUSA, selected by
such Party. The exact number of such representatives shall be as the Parties
agree, with each Party designating at least one (1) representative who shall be
at the Vice President level or European equivalent or above. Subject to the
foregoing provisions of this Section, DUSA and Schering may replace its Steering
Committee representatives at any time, with prior written notice to the other
Party. Steering Committee members may be employees of an Affiliate.
2.1.2 Steering Committee Meetings. During the performance of
the Development Program, the Steering Committee shall meet semi-annually, or as
otherwise agreed by the Steering Committee Members. Unless the Steering
Committee Members agree otherwise, at least one (1) meeting of the Steering
Committee per full calendar year will be held at each Party's facilities. At its
meetings, the Steering Committee will (i) formulate and review the Development
Program objectives, (ii) monitor the progress of the Development Program toward
the respective objectives, and (iii) review and approve the Development Plan and
Budget, pursuant to Article 3 below. With the consent of the Steering Committee
Members, other representatives of DUSA or Schering may attend Steering Committee
or subcommittee meetings as non-voting observers. Each Party shall bear its own
personnel and travel costs and expenses relating to Steering Committee meetings.
2.1.3 Decision Making. Except as set forth in this Section
2.1.3, decisions of the Steering Committee shall be made by unanimous approval
of all members present; provided that at least one representative of each Party
is present and so approves. In the event the required approval for a decision
cannot be reached within 30 days and all the members of each Party take the same
opposing positions in a matter of importance, the matter shall be submitted to a
senior executive
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officer from each of DUSA and Schering, who shall meet and discuss in good faith
to resolve such matter; provided, however, that if such meeting and good faith
discussions do not result in mutual agreement, [c.i.] or [c.i.] shall have the
[c.i.] the [c.i.] with respect to those matters set forth in Section 3.2.2.
Non-attending members of the Steering Committee may represent themselves by
proxies in any decision.
2.2 Development Committee. Schering and DUSA shall establish a
development committee to plan, implement and coordinate the conduct of the
Development Program at the operational level ("Development Committee").
2.2.1 Membership. The Development Committee shall be comprised
of an equal number of representatives from each of Schering and DUSA, selected
by such Party. The exact number of such representatives shall be as the Parties
may agree. Each Party shall at all times have at least one (1) representative on
the Development Committee at the senior executive level. Subject to the
foregoing provisions of this Section 2.2.1, DUSA and Schering may replace its
respective Development Committee representatives at any time, with prior written
notice to the other Party. Development Committee members may be employees of an
Affiliate.
2.2.2 Development Committee Meetings. During the Term of the
Development Program, the Development Committee shall meet quarterly, or as
otherwise agreed by the Parties, at such locations in the U.S. as the Parties
agree and once per year in Germany. At its meetings, the Development Committee
will (i) formulate the Development Plans and Budgets, pursuant to Section 3.1 of
this Agreement for approval by the Steering Committee, (ii) propose to the
Steering Committee indications to be pursued and studies to be conducted, (iii)
develop protocols for studies for approval by the Steering Committee; (iv)
interact with the Steering Committee on a regular basis to keep it appraised of
the progress of the Development Program and submit for its approval any changes
to the Development Plan and Budget; and (v) undertake and/or approve such other
matters as are provided for the Development Committee under this Agreement. With
the consent of the Parties, other representatives of DUSA or Schering may attend
Development Committee or subcommittee meetings as non-voting observers. DUSA's
lead representative shall chair meetings of the Development Committee and shall
be responsible for preparing the meeting agendas and minutes. Such minutes shall
be distributed in draft form not later than thirty (30) days following each
meeting and shall be deemed accepted and effective unless an authorized
representative of Schering has objected to the same within thirty (30) days of
Schering's receipt of such minutes; final minutes shall be promptly distributed
to the Parties. Each Party shall bear its own personnel and travel costs and
expenses relating to Development Committee meetings.
2.2.3 Decision Making. Decisions of the Development Committee
shall be made by unanimous approval of the members present, provided that at
least one (1) representative of each Party is present and so approves. In the
event that a deadlock arises within the Development Committee, the dispute shall
be referred to the Steering Committee.
2.3 No Committee Amendments; Authority. Notwithstanding the creation of
the Steering Committee, Development Committee or any subcommittee thereof, each
Party to this Agreement shall retain the rights, powers, and discretion granted
to it hereunder, and neither the Steering
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Committee, Development Committee nor any subcommittee thereof shall be delegated
or vested with any such rights, powers, or discretion unless such delegation or
vesting is expressly provided for herein or the Parties expressly so agree in
writing. Neither the Steering Committee, Development Committee nor any
subcommittee shall have the power to amend or modify this Agreement, which may
be amended or modified only as provided in Section 20.9 "Modification." It is
understood and agreed that issues to be formally decided by the Development
Committee are only those specific issues that are expressly provided in this
Agreement to be decided by the Development Committee.
ARTICLE 3
DEVELOPMENT PLANS AND BUDGETS
3.1 Development Plans and Budgets.
3.1.1 Development Plans and Budgets. Within [c.i.] of the
Execution Date, and by [c.i.] of each year thereafter during the Term of the
Development Program, DUSA shall submit to the Development Committee a good faith
proposed plan and budget for the activities to be undertaken as part of the
Development Program in the next succeeding calendar year. After reviewing and
considering such proposal, the Development Committee shall prepare a reasonably
detailed Development Plan and Budget pursuant to which the Development Program
will be carried out. For the purpose of facilitating the long-term planning of
goals for the development of the Collaboration Products, the Development
Committee shall also develop a reasonably detailed [c.i.] development plan for
each Collaboration Product included in the Development Program (the "[c.i.]
Plan").
3.1.2 Annual Review. Within [c.i.] from the Execution Date,
and by [c.i.] of 2000 and of each year thereafter during the Term of the
Development Program, the Development Committee shall submit to the Steering
Committee the proposed plan and budget established under Section 3.1.1 above for
the following calendar year. The Steering Committee shall review such proposal
[c.i.] and shall establish and approve no later than [c.i.] and [c.i.] of
subsequent years the final Development Plan and Budget for the next succeeding
calendar year.
3.1.3 Periodic Reviews. The Development Committee shall review
the Development Plan and Budget on an ongoing basis, and may propose changes
thereto; provided, however, the Development Plan and Budget in effect for a year
shall not be modified except as approved by the Steering Committee.
3.1.4 Development Priorities. It is the intent of the Parties
to develop under the Development Program multiple Collaboration Products and
indications of such Collaboration Products within the Field, giving due
consideration to the priorities of both Schering and DUSA and to balance those
priorities so as to mutually agree upon the priorities of particular
Collaboration Products and indications to be collaboratively developed under the
Development Program.
3.2 Full Program Funding Period. It is understood that for the
calendar years 2000 and 2001, Schering has committed that it will fund US$3
million, and DUSA has
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committed that it will fund US$1.5 million, per calendar year in Development
Costs (such amounts being referred to as the respective "Full Funding
Commitment" of each Party) pursuant to the Development Plan and Budget, as
provided in Section 6.1.1 below. For subsequent calendar years, it is understood
that during the Term of the Development Program the funding level for the
Development Program will be as mutually agreed by the Parties. The Full Program
Funding Period shall [c.i.] as [c.i.] each Party [c.i.] to [c.i.] Full Funding
Commitment for the Development Costs as set forth in the applicable Development
Plan and Budget. If at the time during a calendar year when the Parties discuss
the Development Plan and Budget for the following year (starting with the
Development Plan and Budget for the year 2002) either Party [c.i.] its
respective Full Funding Commitment for funding of Development Costs pursuant to
the Development Plan and Budget, then [c.i.] may [c.i.], by so notifying the
[c.i.] in writing; provided, however, if [c.i.] has [c.i.], [c.i.] to [c.i.]
with [c.i.], in which case the Parties [c.i.] the [c.i.]. Notwithstanding the
foregoing, if the Parties, by mutual agreement, set a total funding level of
less than US$ 4.5 million for a calendar year ([c.i.]) and agree on the
Development Plan and Budget for that funding level, then the [c.i.] will [c.i.].
3.2.1 Budget Agreement. Provided that the Development Committee and the
Steering Committee are able to establish and approve a Development Plan and
Budget for the upcoming year on or before [c.i.] of any particular year
(excluding 1999), or a dispute arose which was resolved thereafter by the Chief
Executive Officer of DUSA and senior executive officer designated by Schering in
accordance with Section 2.1.3 above, development priorities shall be in
accordance with such Development Plan and Budget and Section 3.1.4 above.
3.2.2 Budget Disagreement. Notwithstanding Section 3.1.4 above, if
[c.i.] the Development Committee and the Steering Committee are unable to
establish and approve a Development Plan and Budget for the upcoming year on or
before [c.i.] of any particular year (excluding 1999) and thereafter the Chief
Executive Officer of DUSA and senior executive officer designated by Schering
are unable to resolve such dispute in accordance with Section 2.1.3 above, then
the following shall apply:
(a) Schering shall have the right to establish the priority of
Collaboration Product indications and the projects to be conducted pursuant to
the Development Program with respect to the amount of Development Costs funded
by Schering. It is understood that this right of Schering shall not be deemed to
limit Section 4.1.2(a) below.
(b) DUSA shall have the right to establish the priority of
Collaboration Product indications and the projects to be conducted pursuant to
the Development Program with respect to the amount of Development Costs funded
by DUSA.
(c) Notwithstanding the foregoing paragraphs, subject to review and
approval by the Development Committee, DUSA shall have the right to require that
in each Development Plan and Budget an amount [c.i.] of Development Costs funded
by the Parties pursuant to Section 6.1 below be expended towards Collaboration
Products that are subject of clinical trials, studies and activities that are at
an earlier stage of development than a Phase III clinical trial, including
exploratory studies and investigator-sponsored studies.
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3.2.3 Development [c.i.]. DUSA agrees that neither DUSA nor
its Controlled Affiliates shall [c.i.] on any [c.i.] during [c.i.] other than:
(i) pursuant to the Development Program; (ii) with respect to [c.i.]; or (iii)
in the event [c.i.] by the Parties.
3.3 Below Full Program Funding. If at the time during a calendar year
when the Parties discuss the Development Plan and Budget for the following year
that will amount to less than US$ 4.5 million, and the Parties are unable to
agree on a Development Plan and Budget of US$ 4.5 million, then the following
provisions will apply:
3.3.1 [c.i.]:
(a) Schering shall have the right to establish the priority of
Collaboration Product indications and the projects to be conducted pursuant to
the Development Program with respect to the Development Costs funded by
Schering. It is understood that this right of Schering shall not be deemed to
limit Section 4.1.2(a) below.
(b) DUSA shall have the right to establish the priority of
Collaboration Product indications and the projects to be conducted pursuant to
the Development Program with respect to the Development Costs funded by DUSA.
(c) Notwithstanding the foregoing paragraphs, subject to review and
approval by the Development Committee, DUSA shall have the right to require that
in each Development Plan and Budget an amount [c.i.] of Development Costs funded
by the Parties pursuant to Section 6.1 below be expended towards Collaboration
Products that are subject of clinical trials, studies and activities that are at
an earlier stage of development than a Phase III clinical trial, including
exploratory studies and investigator-sponsored studies.
3.3.2 Alternatively, either Party may [c.i.], by so notifying
the other Party in writing. If such notice is given, then DUSA [c.i.]
development projects for Additional Collaboration Products to Schering for
inclusion in the Development Plan and Budget pursuant to Section 3.4. Should
Schering agree to include such development projects for Additional Collaboration
Products in the Development Plan and Budget pursuant to Section 3.4 such that
the Parties [c.i.] their respective Full Funding Commitment or agree on a lesser
amount, then [c.i.] shall [c.i.] during the applicable calendar year
notwithstanding that the foregoing notice under this Section was given, and
[c.i.] DUSA shall [c.i.] any products or Collaboration Products, [c.i.] pursuant
to the Development Program. Should Schering not agree to fund its respective
Full Funding Commitment or such lesser amount as the Parties agree on, then
[c.i.] shall [c.i.], and either [c.i.] or [c.i.] will [c.i.], as described
[c.i.]
3.4 Additional Projects. Not more than [c.i.] per calendar year during
the Tail Period (as defined below), DUSA [c.i.] to include in the Development
Program up to [c.i.] development projects for Additional Collaboration Products
within the Field not yet within, or proposed for, the Development Program for
which DUSA has [c.i.] relating to such Additional Collaboration Products
(including [c.i.] from independent investigators and/or scientific
presentations/publications) together with a proposed good faith budget to
develop such Additional Collaboration Products pursuant to the
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Development Program (each an "Additional Collaboration Product Proposal"). Such
Additional Collaboration Product Proposal shall be addressed to Schering's
representatives on the Development Committee.
3.4.1 If Schering is interested in including any or all of
such development projects for Additional Collaboration Products within the
Development Program, Schering shall notify DUSA in writing [c.i.] after
receiving such Additional Collaboration Product Proposal, specifying the
development projects for Additional Collaboration Products in which Schering is
so interested. Upon receipt of Schering's notice of interest in an Additional
Collaboration Product Proposal, the Parties shall discuss in good faith a budget
for such development project for an Additional Collaboration Product, and if the
Parties so agree, the resulting budget shall be included within the Development
Plan and Budget for such calendar year.
3.4.2 If Schering does not notify DUSA [c.i.] days after
receiving an Additional Collaboration Product Proposal that Schering is
interested in a particular Additional Collaboration Product identified in the
Additional Collaboration Product Proposal, or (ii) Schering does not agree to
include a particular development project for an Additional Collaboration Product
in the Development Plan and Budget for such Additional Collaboration Product
[c.i.] thereafter, then such Additional Collaboration Product shall be deemed a
"Rejected Product". Provided, however, that development projects for Additional
Collaboration Products which are subject to an Additional Collaboration Product
Proposal or which have not been presented to either the Development Committee or
to Schering shall not be deemed Rejected Products [c.i.] Schering is [c.i.],
regardless of whether or not Schering accepts all of the development projects
for Additional Collaboration Products pursuant to the Additional Collaboration
Product Proposal.
3.4.3 It is understood by the Parties that DUSA's obligations
under this Section 3.4 shall terminate at the end of the Tail Period.
3.5 Tail Period. During the period, if any, succeeding [c.i.] for
which period Schering has [c.i.] the development of one Collaboration Product
for [c.i.] which is expected to [c.i.] of such Collaboration Product for [c.i.]
with a [c.i.] than that of previous Collaboration Products (the "Tail Period"),
the following shall apply:
(a) [c.i.] in accordance with Section 3.4 above, DUSA [c.i.]
not more than [c.i.] new development projects for Additional Collaboration
Products in the Additional Collaboration Product Proposal to Schering for
inclusion in the budget for the subsequent calendar year, and following
Schering's receipt of such, the procedures and provisions of Sections 3.4 above
shall apply. If Schering agrees to include [c.i.] development projects for
Additional Collaboration Products from the Additional Collaboration Product
Proposal in the Development Program such that [c.i.] its [c.i.] (unless the
Parties mutually agree on [c.i.]), [c.i.] will be [c.i.]. Those development
projects from the most recent Additional Collaboration Product Proposal which
Schering did reject shall not be considered Rejected Products [c.i.] Schering is
[c.i.]. However, previously Rejected Products shall continue as such, and in the
case that any Rejected Product is the subject of an agreement between DUSA and a
third party, DUSA's obligations with respect to that Rejected Product under this
Agreement shall be subject to that other agreement.
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(b) Notwithstanding any other provisions of this Article 3,
DUSA shall be free to develop and commercialize any Rejected Products (by itself
or through others) without further obligation to Schering. Such Rejected
Products [c.i.] to funded Collaboration Products in terms of [c.i.] and [c.i.].
The Parties agree that the intent of the immediately preceding sentence is to
[c.i.] DUSA from [c.i.] Rejected Products for [c.i.] which Schering [c.i.] could
have [c.i.] in the applicable Product Territory with Collaboration Products
marketed and sold by Schering.
(c) Any disputes regarding this Section 3.5 shall be governed
by Section 20.2.1 below.
3.6 Wind-Down Period. Upon the end of the Tail Period or [c.i.] (if
there is no Tail Period), the following shall apply:
(a) The Development Program shall continue for the
Collaboration Products for which human clinical trials were being conducted
under the last approved Development Plan and Budget, until completion of the
then-current Phase of development (i.e., Phase I, Phase II or Phase III, as
applicable) solely to the extent such Phase of development was authorized
pursuant to a Development Plan and Budget (as the same may be extended as set
forth below in this Section 3.6(a)); provided that a clinical trial can always
be discontinued for drug safety reasons or by mutual agreement of the Parties;
and the Parties shall continue to be obligated to fund the Development Costs of
such activities in the ratio of one-third (1/3) for DUSA and two-thirds (2/3)
for Schering (the "Wind-Down Period"). In the event that a Development Plan and
Budget remains in effect for such activities, such reimbursement shall be in
accordance with such Development Plan and Budget and Article 6 below. In the
event that the Development Plan and Budget for such activities does not cover
the full period in which such activities are to be concluded, then the last
Development Plan and Budget shall be deemed extended through the completion of
the respective Phase of development for each such Collaboration Product at the
same quarterly funding level as was allocated to such Collaboration Product in
such Development Plan and Budget or at such level as is necessary to fund such
applicable Phase, and with the same percentage of the total Development Costs
allocated to be incurred by DUSA and Schering, as each Party had been allocated
in such prior Development Plan and Budget.
(b) Schering shall not have rights to market under this
Agreement any products funded by the Development Program for which, by the end
of the Term of the Development Program, an MAA has not been filed pursuant to
the Development Program, and no such products shall be deemed Collaboration
Products for purposes of this Agreement.
(c) The end of the Wind-Down Period shall constitute the
termination of the Development Program.
3.7 Funding Limit Notwithstanding the foregoing, it is understood that
Schering's obligation to fund the Development Program is subject to and limited
by Section 6.1.2 below and in any event DUSA shall be obligated to fund the
amount of [c.i.] in any calendar year, except as otherwise mutually agreed.
Further, in no event will DUSA be obligated to incur in any calendar year more
than US$1.5 million in Development Costs that are not reimbursed by Schering
under
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Sections 6.1 and 6.2 below; nor shall Schering be obligated to incur or
reimburse in any calendar year more than US$3 million in Development Costs,
except by mutual agreement of the Parties.
ARTICLE 4
DEVELOPMENT PROGRAM
4.1 Product Development
4.1.1 Initial Product. With respect to the Initial Product,
the Parties shall complete the following development activities:
(a) U.S. Development. Any additional development efforts
and regulatory activities required by the FDA to obtain or to maintain Marketing
Approval by the FDA will be performed by DUSA [c.i.]. The Parties acknowledge
and agree that these activities as of the Execution Date are those specified in
that certain letter dated 27 June 1999 to DUSA from the FDA (as the same may be
modified by agreement between DUSA and the FDA) and in the Initial Product Plan
attached hereto as Exhibit 4.1.1.
(b) Territory Outside U.S. All preclinical and clinical
development and regulatory activities required to obtain Marketing Approval for
countries of the applicable Product Territory outside the U.S. shall be
performed by Schering [c.i.]; provided, however, that DUSA shall be responsible
for preparing additional data required for the counterpart in any country of the
CMC Section of an NDA in the United States, to the extent specifically required
by the applicable health regulatory agency or otherwise reasonably requested by
Schering, and Schering agrees [c.i.] DUSA [c.i.] towards [c.i.] of preparing
such additional Data (i.e., in addition to [c.i.] to DUSA under Article 6
below).
4.1.2 Future Collaboration Products. With respect to the
worldwide development of Collaboration Products other than the Initial Product,
the following shall apply:
(a) All activities pursuant to the Development Program
shall be undertaken by DUSA, itself or through subcontractors, provided,
however, all activities pursuant to the Development Program outside of the U.S.
shall be undertaken by Schering itself or through subcontractors unless the
Parties otherwise agree. All Phase I and Phase II studies will take place in the
U.S., but Phase III studies may involve [c.i.] of patients outside of the U.S.,
unless otherwise required by regulatory authorities for a particular Product
Territory or unless otherwise agreed by the Parties. For the avoidance of doubt,
any development activities with respect to Collaboration Products performed by
Schering outside of the United States that are necessary in order to obtain
Marketing Approval in any ex-US part of the Product Territory, and are in
addition to those Phase I, Phase II and Phase III studies referred to above,
shall be considered part of the Development Program and presented to the
Development Committee for approval pursuant to Section 3.1.1; provided, however,
that [c.i.] shall be [c.i.] pursuant to [c.i.].
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(b) Schering shall take the lead in preparing all MAAs
for Collaboration Products in countries of the applicable Product Territory
other than the United States, in accordance with Section 4.3 below; provided
that such activities shall [c.i.] under the Development Program, but, for the
avoidance of doubt, shall nevertheless be considered part of the Development
Program.
4.1.3 Diligence. During the Term of the Development Program:
(a) Each Party shall proceed diligently to perform the
work allocated to such Party in the Development Plan and Budget, including,
without limitation, by using diligent efforts to allocate such resources to the
Development Program as required under the Development Plan and Budget, and by
using personnel with sufficient skills and experience, together with sufficient
equipment and facilities to carry out its obligations under the Development
Program and to accomplish the objectives of the Development Program in an
expeditious manner;
(b) Each Party shall conduct those activities allocated
to such Party under the Development Program in compliance in all material
respects with all requirements of applicable laws, rules and regulations of the
United States, and all other requirements of any good laboratory and clinical
practices and cGMP applicable under the laws and regulations of the country
where such activities are conducted, to attempt to achieve its objectives
efficiently and expeditiously; and
(c) Each Party shall keep the Development Committee
fully informed as to the progress and results of those portions of the
Development Program conducted by such Party.
(d) The activities performed pursuant to the Development
Program, unless otherwise [c.i.], shall be performed in a manner consistent with
internationally accepted standards such as the standards agreed to by the
International Conference on Harmonization ("ICH") or regulatory standards of
EMEA in order to facilitate the preparation and approval of MAAs for
Collaboration Products outside of the U.S. Any incremental increase in
Development Costs over and above international standards or ICH standards on a
per product basis specifically attributable to this provision shall be [c.i.].
(e) Each Party agrees to provide the other Party with a
copy of all material correspondence between such Party and the FDA concerning
the development of the Initial Product and all subsequent Collaboration
Products.
4.2 Development Program Funding. Monies contributed by the Parties to
fund the Development Program shall be expended by the Parties in accordance with
the Development Plan and Budget.
4.3 Regulatory Matters
4.3.1 MAAs.
(a) It is understood that the Existing MAA has been
filed in DUSA's name, and shall continue to be held in the name of DUSA.
Following FDA approval, promptly upon
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<PAGE> 24
request by Schering, the Parties shall [c.i.] under which DUSA [c.i.] to [c.i.]
regarding the Existing MAA and the resulting Marketing Approval. All other MAAs
and Marketing Approvals for Collaboration Products other than the Initial
Product or outside the U.S. shall be as set forth in paragraphs (b)-(e) below
(it being understood that paragraphs (b)-(e) below shall not apply to the
Initial Product in the United States).
(b) Responsibility for preparing and filing MAAs shall
be as follows:
(i) With respect to countries other than the U.S.,
Schering shall be responsible for the preparation and filing of MAAs and related
amendments and supplements for Collaboration Products for purposes within the
Field in each such country in the applicable Product Territory up to and
including Marketing Approval (subject to Section 13.2). All such activities with
respect to MAAs of Collaboration Products within the Field in the applicable
Product Territory shall be done in full consultation with the Development
Committee. The Party manufacturing Collaboration Products in the U.S. shall also
obtain any export approvals required by the FDA to export such Collaboration
Products to other countries of the applicable Product Territory. With respect to
the Initial Product, DUSA shall provide Schering with a copy of Data, in English
and in electronic form, in each case if so available, as is necessary to file an
MAA in countries outside the United States.
(ii) With respect to the U.S., DUSA shall be
responsible as part of the Development Program for the preparation and filing of
INDs and MAAs and related amendments and supplements with the FDA.
(c) MAAs and Marketing Approvals in each country in the
applicable Product Territory shall be filed jointly in the names of both DUSA
and Schering, except that the MAA or Marketing Approval shall be only in the
name of Schering (or its designated Affiliate or Sublicensee) in any country in
the applicable Product Territory to the extent that it is legally required for
Schering to be the sole owner thereof. In addition, an MAA or Marketing Approval
shall be only in the name of Schering (or its designated Affiliate or
Sublicensee) in any country in the applicable Product Territory where the
Parties otherwise mutually agree. In any country of the applicable Product
Territory where the MAA or Marketing Approval is to be only in Schering's name
(or that of its Affiliate or Sublicensee), then subject to and upon the terms
and conditions contained in this Agreement, in connection with and in
furtherance of Schering's grant of rights as set forth in Article 8, DUSA shall
transfer and assign to, or give Schering the right to file in the name of
Schering (or its designated Affiliate or Sublicensee), such MAA or Marketing
Approval for the Collaboration Product in such country. DUSA shall promptly
execute, acknowledge and deliver such further instruments, and shall do such
other acts which may be necessary to effectuate the filing of such MAAs or
Marketing Approvals in each such country in the Territory.
(d) Schering shall, at DUSA's request and option, as
promptly as reasonably practicable either provide DUSA with complete copies of
any MAA or Marketing Approval filed by or under authority of Schering, including
without limitation those held in the name of Schering (or that of its Affiliate
or Sublicensee), or make the same available for inspection and/or copying by
DUSA or its designee at a single location in the U.S. and/or Germany. Further,
Schering
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<PAGE> 25
shall promptly provide DUSA or its designees with the relevant portions of (and
make available for copying by DUSA or its designees), and the right to
cross-reference, any MAA or Marketing Approval held in the name of Schering (or
that of its Affiliate or Sublicensee) reasonably necessary or useful to enable
DUSA or its designees to market products other than Collaboration Products
within the Field in the applicable Product Territory, and Schering shall
execute, acknowledge and deliver such further instruments, and shall do all such
other acts, all as promptly as possible, which may be necessary or appropriate
to effectuate such right in each such country and to otherwise make fully
available to DUSA and its designees the benefits of such MAAs or Marketing
Approvals for purposes of exercising any right not exclusively granted to
Schering hereunder, upon the request of DUSA. In the event that any MAAs or
Marketing Approvals are in the name of Schering (or that of its Affiliate or
Sublicensee), Schering shall ensure that all such filings and registrations are
assigned to DUSA [c.i.] after any termination of Schering's rights under this
Agreement with respect to such Collaboration Product in such country pursuant to
Sections 8.1(b), 13.2, 13.3 and Article 19. With respect to any MAA or Marketing
Approval held in the name of a Sublicensee of Schering, Schering shall cause
such Sublicensee to provide DUSA with a letter of authorization for the
foregoing, in form and substance reasonably acceptable to DUSA, simultaneously
with the granting of a distribution right by Schering to such Sublicensee.
(e) Schering agrees to keep DUSA informed as to material
plans of the regulatory strategy and developments with respect to MAAs and
Marketing Approvals, and any related applications for pricing and/or
reimbursement approvals, filed by or under authority of Schering hereunder.
Without limiting the foregoing, Schering agrees to promptly notify DUSA in the
event a regulatory agency in any country requests a meeting with respect to a
Collaboration Product or in the event Schering or its designee plans to request
such a meeting, and upon request by DUSA in either such event, Schering agrees
to use reasonable efforts (given the demands of the regulatory authority) to
schedule such meeting so that DUSA or its representative may attend. All
material communications with such regulatory authority by either Party with
respect to an MAA within the Territory shall be approved in writing by the other
Party, and such Party shall provide to the other Party copies of all documents
sent to or received from such regulatory authority regarding such MAAs, together
with English translations thereof, if such translations exist or if such
translations do not exist, with English summaries thereof.
4.3.2 Reporting Adverse Drug Reactions/Experiences. Promptly
following execution of this Agreement the Parties will prepare a standard
operating procedure governing the collection, investigation, reporting, and
exchange of information concerning adverse drug reactions, Collaboration Product
quality and Collaboration Product complaints, sufficient to permit each Party to
comply with its legal obligations. The standard operating procedure will be
promptly updated if required by changes in legal requirements. Schering shall be
responsible for reporting all adverse drug reactions/experiences to the
appropriate regulatory authorities in the countries in which such Collaboration
Product is being developed or commercialized, in accordance with the appropriate
laws and regulations of the relevant countries and authorities. Schering shall
ensure that its Affiliates and Sublicensees comply with such reporting
obligations. These reporting obligations shall apply to non-serious adverse
events as well, which shall mean adverse events occurring from product overdose
or from product withdrawal, as well as any toxicity, sensitivity, failure of
expected pharmacological action, or laboratory abnormality which is, or is
thought by the reporter, to be
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<PAGE> 26
serious or associated with relevant clinical signs or symptoms. Each Party will
designate a regulatory affairs liaison to be responsible for communicating with
the other Party regarding the reporting of adverse drug reactions/experiences.
In addition to the above, DUSA shall keep Schering informed about any adverse
drug reactions DUSA experiences or is informed about regarding the use of a
Collaboration Product in the Field and outside the applicable Product Territory.
4.3.3 Protocols. All protocols for clinical trials within the
Field to be conducted for a Collaboration Product in the applicable Product
Territory shall be subject to the approval of the Development Committee.
4.4 Step-In Rights. Without prejudice to any other remedies available
under this Agreement or at law, if a Party (the "Defaulting Party") materially
fails to carry out reasonable Development Program activities allocated to it
under this Agreement in accordance with the time lines and other conditions
allocated to it under the Development Plan and Budget and this Agreement
generally, the other Party (the "Other Party") may, after [c.i.] prior written
notice to the Defaulting Party, undertake that particular task ("Work") and
complete it at its own expense, subject to the reimbursement set forth below, if
the Defaulting Party has not at such time begun to carry out such Work in a
manner reasonably likely to cure its default. The Other Party shall be entitled
to [c.i.] cooperation and assistance from the Defaulting Party to accommodate
its efforts if necessary to permit the exercise by the Other Party of its rights
under this Section 4.4. All costs [c.i.] by the Other Party in carrying out such
Work [c.i.] by the Defaulting Party [c.i.], or may, at the Other Party's option,
[c.i.] any [c.i.] to the Defaulting Party under this Agreement; provided that
[c.i.] shall [c.i.] of the amount budgeted for such activities under the
Development Plan and Budget then in effect.
ARTICLE 5
RECORD KEEPING; PUBLICATION
5.1 Reports and Records
5.1.1 Records. DUSA and Schering shall maintain records of the
Development Program (or cause such records to be maintained) in sufficient
detail and in good scientific manner as will properly reflect all work done and
results achieved in the performance of the Development Program (including all
data substantially in the form required under any applicable governmental
regulations necessary for obtaining Marketing Approvals). Each Party shall allow
the other to have reasonable access to all records, materials and Data generated
by or on behalf of such Party with respect to each Collaboration Product within
the Field at reasonable times and in a reasonable manner.
5.1.2 Reports. Each Party shall periodically provide the
Development Committee with a written report summarizing the progress of the
Development Program performed by such Party with respect to each Collaboration
Product during the preceding calendar quarter. Unless otherwise agreed, such
reports shall be due [c.i.] prior to the next succeeding meeting of the
Development Committee.
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5.2 Review of Publications. As soon as is practicable prior to the oral
public disclosure, and prior to the submission to any outside person for
publication of a manuscript describing any scientific data resulting from the
Development Program, in each case to the extent the contents of the oral
disclosure or manuscript have not been previously disclosed pursuant to this
Section 5.2 before such proposed disclosure, DUSA or Schering, as the case may
be, shall disclose to the other Party a copy of the manuscript, or a written
summary of any oral disclosure, to be made or submitted, and shall allow the
other Party [c.i.] to determine whether such disclosure or manuscript contains
subject matter for which patent protection should be sought prior to publication
or which either Party believes should be modified to avoid disclosure of
Confidential Information or regulatory or other problems. With respect to
publications by investigators or other third parties, such publications shall be
subject to review by the other Party under this Section 5.2 only to the extent
that DUSA or Schering (as the case may be) has the right to do so; provided that
each Party shall use reasonable efforts to secure the other Party's right to
require and permit such review. It is understood that each Party shall only have
the right to publish under this Section 5.2 scientific data which such Party (or
its third party contractors) generated in performing the Development Program.
5.2.1 Publication Rights. After the expiration of [c.i.] from the
date of receipt of such disclosure or manuscript, unless DUSA or Schering has
received the written notice specified in Section 5.2.2, the authoring Party
shall be free to submit such manuscript for publication or to orally disclose or
publish the disclosed research results in any manner consistent with academic
standards; provided that, in any publication permitted under this Section 5.2,
each Party shall acknowledge its collaboration with the other Party under this
Agreement unless the other Party requests that such acknowledgement not be made.
5.2.2 Delay of Publication. Prior to the expiration of [c.i.]
period specified in Section 5.2.1 above, the other Party may notify in writing
the submitting Party of its determination that such oral presentation or
manuscript contains Confidential Information of such other Party or
objectionable material or material that consists of patentable subject matter
for which patent protection should be sought. The notified Party shall withhold
its proposed public disclosure and confer with the other Party to determine the
best course of action to take in order to modify the disclosure (including
removing Confidential Information of the other Party) or to obtain patent
protection. After resolution of the confidentiality, regulatory or other issues,
or the filing of a patent application or due consideration as to whether a
patent application can reasonably be filed, but in no event [c.i.] after
notification of the submitting Party as provided above, the submitting Party
shall be free to submit the manuscript and/or make its public oral disclosure in
a manner consistent with academic standards. If the submitting Party declines to
file an appropriate patent application, then either DUSA or Schering, as the
case may be, may undertake to file such application in accordance with Section
14.3 below.
ARTICLE 6
DEVELOPMENT PROGRAM FUNDING
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6.1 Development Costs. Schering and DUSA shall fund the Development
Costs to be incurred by DUSA and Schering, subject to Section 4.1.2(a) during
the Term of the Development Program in accordance with the Development Plan and
Budget as follows:
6.1.1 Funding Requirements
(a) Schering shall commit Three Million Dollars (US
$3,000,000), and DUSA shall commit One Million Five Hundred Thousand Dollars (US
$1,500,000), per year for each of the calendar years 2000 and 2001 to be used to
reimburse Development Costs incurred by DUSA and Schering subject to Section
4.1.2(a) in such years (or such lesser or greater amounts as the Parties agree)
under the respective Development Plan and Budget then in effect. In the event
the Parties agree pursuant to Article 3 to a Development Plan and Budget in an
amount other than US $4,500,000, Schering and DUSA shall fund such budget in the
ratio of 2:1 (i.e., Schering funding two-thirds and DUSA funding one-third),
provided that in no event shall either Party be obligated to spend amounts in
excess of the funding limits set forth in Section 3.2 unless such Party so
agrees. Each year after 2001 [c.i.] the Development Program, Schering shall be
required to fund two-thirds, and DUSA shall be required to fund one-third, of
the Development Costs reflected in the applicable Development Plan and Budget.
In the event that the Parties do not agree on an applicable Development Plan and
Budget for a calendar year, Schering shall continue to be required to fund
two-thirds, and DUSA shall continue to be required to pay one-third, of the
development costs incurred pursuant to this Agreement.
(b) For purposes of determining the Development Costs incurred
by Schering and/or DUSA to be counted towards the Parties' funding commitment
under paragraph (a) above and the Development Plan and Budget in effect from
time to time, the costs of studies, clinical trials and other activities
conducted [c.i.] for [c.i.] shall be [c.i.]; and to the extent that any study,
clinical trial or activity is designed or undertaken to meet the requirements of
a particular country other than the United States, the costs of such study or
trial (or [c.i.] of the study that is so designed to meet such non-U.S.
requirements) shall be [c.i.].
(c) It is understood that, as described in [c.i.], the Parties
may agree that certain activities pursuant to the Development Program will be
undertaken by [c.i.] rather than [c.i.]. In such event, it is understood that a
portion of the funding described in paragraph (a) above shall be used [c.i.] for
the Development Costs it incurs in performing such activities in accordance with
the Development Plan and Budget.
6.1.2 Excess Costs. Unless otherwise mutually agreed by the Parties,
neither Party shall be obligated to incur Development Costs in excess of the
amounts set forth for such Party in the then-current Development Plan and
Budget. To the extent the actual Development Costs incurred by a Party for the
calendar year [c.i.] the Development Costs budgeted to be so incurred by such
Party in the Development Plan and Budget then in effect the [c.i.] in accordance
with this Section 6.1 [c.i.] but any portion over such excess Development Costs
[c.i.] unless the other Party approves such excess Development Costs, which
approval shall [c.i.] to the [c.i.] of such excess costs was [c.i.] of the Party
who incurred such excess costs.
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6.2 Payment of Development Costs.
6.2.1 Payment.
(a) During [c.i.], payment for Development Costs
shall be made in accordance with this paragraph (a). The Parties will share the
Development Costs incurred in accordance with the Development Plan and Budget in
the ratio of two-thirds by Schering and one-third by DUSA, balancing payments
shall be made as follows: On or before [c.i.] of [c.i.], commencing [c.i.], the
Party who is budgeted to incur Development Costs during such [c.i.] (as
reflected in the then-current Development Plan and Budget) in an amount less
than its share of the Development Costs (i.e., two-thirds (2/3) for Schering and
one-third (1/3) for DUSA) (such Party being referred to as the "Reimbursing
Party," and its percentage share being referred to as the "Reimbursing Party's
Share") shall pay to the other Party (the "Receiving Party") an amount equal to
(i) the Reimbursing Party's Share of the total Development Costs budgeted to be
incurred by both Parties during such [c.i.], less (ii) the Development Costs to
be incurred by the Reimbursing Party during such [c.i.], all in accordance with
the Development Plan and Budget then in effect. Unless otherwise specified in
the applicable Development Plan and Budget, amounts budgeted for the full year
will be deemed budgeted in equal amounts over [c.i.].
(b) During [c.i.], payment for Development Costs
shall be made in accordance with this paragraph (b). [c.i.] following the end of
[c.i.], each Party shall provide to the other a summary of the Development Costs
actually incurred in the [c.i.] by such Party in accordance with the Development
Plan and Budget. The following payments should be made:
(i) if the actual Development Costs incurred by
DUSA exceed one-third of the total Development Costs incurred by both Parties
during such quarter, Schering shall pay to DUSA [c.i.] after receipt of DUSA's
report an amount equal to such excess, not to exceed the amounts established
under the Development Plan and Budget (subject to Section 6.1.2 above); or
(ii) if the actual Development Costs incurred
by Schering exceed two-thirds of the total Development Costs incurred by both
Parties during such quarter, DUSA shall pay to Schering [c.i.] after receipt of
Schering's report an amount equal to such excess, not to exceed the amounts
established under the Development Plan and Budget (subject to Section 6.1.2
above).
Every payment pursuant to this Section 6.2.1(b) is subject to both
Parties' verification of those expenses during [c.i.] period following receipt
of the other Party's report. To the extent the Receiving Party's report of
Development Costs is established to overstate the amount due, a reconciling
payment shall be due to the Reimbursing Party.
(c) With respect to payments made pursuant to
Section 6.2.1(a), [c.i.] following the end of [c.i.], each Party shall provide
to the other a summary of the Development Costs actually incurred by such Party
during [c.i.], in a form mutually agreed by the Parties, including a reasonably
detailed accounting supporting the indirect costs included in the Development
Costs. If the actual Development Costs incurred by DUSA in such [c.i.] are less
than the amounts budgeted for DUSA for such [c.i.] under the Development Plan
and Budget, then [c.i.] of the difference will be
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[c.i.] and [c.i.] the payment [c.i.] for [c.i.]; and if the Development Costs
incurred by Schering in such period are less than the amounts budgeted for
Schering for such period under the Development Plan and Budget, then [c.i.] to
[c.i.] as soon as possible [c.i.] the Development Program in the next succeeding
[c.i.]. Subject to Section 6.1.2 above, if a Party incurs in such period
Development Costs in excess of the amounts budgeted for such Party for such
period, the other Party agrees to pay its share of the difference within [c.i.]
of receiving an appropriate invoice, subject to Section 6.1.2 above and subject
to verification of those expenses during a [c.i.] after receiving an appropriate
invoice.
6.2.2 Interim Periods. In the event the Steering Committee is
unable for any reason to establish a Development Plan and Budget for any period
during the initial Term of the Development Program (calendar years 2000 and
2001), Schering shall nonetheless make payments to DUSA, at the level required
to reimburse DUSA for its costs incurred in carrying out the [c.i.] Plan then in
effect for each Collaboration Product under development in the calendar years
2000 and 2001. If no Development Plan and Budget is established for calendar
years 2000 and 2001, then Schering shall pay to DUSA [c.i.] and [c.i.], during
the year 2000 and 2001, the amounts set forth under Section 6.2.1 (a), until
such a Development Plan and Budget is established. DUSA shall expend any amounts
[c.i.] by Schering solely for conducting [c.i.] and/or [c.i.] with respect to
the Collaboration Products within the Field.
6.3 Milestone Payments.
6.3.1 Milestones. Schering agrees to make the following
payments to DUSA upon the occurrence of each milestone specified below:
<TABLE>
<CAPTION>
MILESTONE CASH AMOUNT
<S> <C>
1. Execution Date of this Agreement. US $ 5,000,000
2. Upon receipt of official correspondence from the FDA of a recommendation
that DUSA's ALA supplier is in full compliance with cGMP with respect to
the manufacture of 5-ALA at its facilities and/or recommendation by the
FDA of approval for its use in an NDA. US $ 3,750,000
3. First Commercial Sale in the United States of the first Collaboration
Product for an indication within the Field (the "First Indication"),
provided that such Collaboration Product is approved by the regulatory
authority [c.i.], and provided further that DUSA has [c.i.] for [c.i.] US $ 7,000,000
4. For each of the next three (3) additional indications within the Field
after the First Indication: (a) upon receipt of a separate
Marketing Approval in [c.i.] to market any existing
Collaboration Product for each additional indication within the Field; or
(b) upon the First Commercial Sale in [c.i.] of a new Collaboration
Product approved for one or more indications within the Field (for each
such indication), provided that [c.i.] for [c.i.] (if required) has been
[c.i.] US [c.i.]
(each occurrence)
Concurrent with Schering's Milestone 2 payment, and pursuant to the
Stock Purchase Agreement executed between the Parties, Schering shall also make
a capital investment in DUSA as
</TABLE>
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provided for in that Stock Purchase Agreement. Further, concurrent with
Schering's Milestone 3 payment, Schering shall also pay US$ 8,000,000 to DUSA
for DUSA's future research and development efforts. DUSA shall be free to
allocate such money in its sole discretion, either inside or outside the Field,
and DUSA shall have no obligations to Schering with respect to the results of
any such research and development efforts.
(a) Notwithstanding the foregoing, Milestone 3 and Milestone 4 [c.i.] to
[c.i.] if at the time of such First Commercial Sale DUSA [c.i.] of [c.i.] that
DUSA [c.i.] to customers in the [c.i.] as of the date of such First Commercial
Sale, all in accordance with the Light Source Agreement; and in such event,
Milestone 3 and Milestone 4 [c.i.] (respectively) [c.i.] when DUSA [c.i.].
Similarly, in the event that [c.i.] for [c.i.] has [c.i.] in [c.i.] at the time
of First Commercial Sale, as required under Milestone 3 or 4 above, that
Milestone [c.i.] at such time as [c.i.] for [c.i.] has been [c.i.].
(b) In any event, Milestone 2 shall be deemed to have occurred no later
than the time a Collaboration Product receives Marketing Approval in the United
States. For purposes of Milestone 4 above, "additional indication" shall mean
the Marketing Approval to allow the marketing and sale of such Collaboration
Product to treat a Dermatological Disorder other than one which was covered by a
Marketing Approval previously obtained for a Collaboration Product, such
Collaboration Product [c.i.] in the applicable Product Territory for such
additional indication in [c.i.] after First Commercial Sale of [c.i.], and, for
clarification purposes, shall not mean that a Collaboration Product is approved
to be marketed and sold, to the extent such Marketing Approval only permits a
previously approved Collaboration Product to be marketed and sold in another
dosage, formulation or strength. In the event the Parties are unable to agree
upon [c.i.] for [c.i.], the same shall be determined pursuant to Section 20.2.3
below. In addition, for purposes of Milestone 4, a "separate" Marketing Approval
shall mean a Marketing Approval granted pursuant to a separate filing, it being
understood, however, that such a filing may be an amendment or supplement to a
previously granted Marketing Approval (such as, for example, a Supplemental
NDA).
(c) Notwithstanding the foregoing, with respect to each of the Milestones
3 and 4 above if a particular Milestone is met with respect to [c.i.] prior to
such Milestone being met with respect to [c.i.] then [c.i.] of the payment that
would otherwise be due when such Milestone is met with respect to [c.i.] shall
be due and payable at the occurrence of such Milestone with respect to such
[c.i.] and all amounts so paid [c.i.] at such [c.i.] of the same Milestone for
such Collaboration Product with respect to [c.i.]. For purposes of example, if
Schering completes the First Commercial Sale [c.i.] of a Collaboration Product
for the First Indication, a total of [c.i.] would be due and payable to DUSA for
Milestone 3 ([c.i.] for DUSA's future research and development efforts), and
then when Schering later completes the First Commercial Sale in [c.i.] to market
such Collaboration Product for the First Indication [c.i.] would be due and
payable to DUSA ([c.i.] for DUSA's future research and development efforts).
(d) For the avoidance of doubt, it is understood and agreed that with
respect to Milestones 1, 2 and 3 payments shall be payable by Schering with
respect to each of the Milestones set forth above only one (1) time and that
with respect to Milestone 4, the payment shall be made no more than three (3)
times.
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6.3.2 Other. In the event that Milestone 3 is achieved prior
to the achievement of Milestone 2 the payment corresponding to all such
Milestones shall then be due. The payments set forth in this Section 6.3 hereof
shall each be due and payable [c.i.] after the occurrence of the applicable
Milestone event, except Milestone 1 shall be due [c.i.] from the Execution Date.
For Milestones accomplished by DUSA, such payment shall be due [c.i.] after
written notice thereof to Schering, subject to Schering's verification during
[c.i.] period that the Milestone occurred. DUSA and Schering agree to promptly
notify the other in writing of its achievement of any Milestone.
6.4 Credit Against Future Royalties. [c.i.] of the amounts paid
pursuant to Milestone 4 [c.i.] a [c.i.] (i) the [c.i.] and the [c.i.] of the
[c.i.] by Schering to DUSA under [c.i.] below on [c.i.] and (ii) the [c.i.] (as
defined in [c.i.]). The [c.i.] of such [c.i.] shall be [c.i.] until the end of
the [c.i.] after each occurrence of the Milestone 4 for which the amount was
paid, and [c.i.]. In the event that such [c.i.] the [c.i.] and the [c.i.] of the
[c.i.] to DUSA combined with [c.i.] the [c.i.] have not permitted Schering to
[c.i.] pursuant to Milestone 4 then from and after [c.i.] of the [c.i.], DUSA
shall [c.i.] a [c.i.] to [c.i.] of the [c.i.] ([c.i.] in the same manner as
[c.i.] where "Collaboration Product" shall be deemed to refer to any such
product in the Field [c.i.]) until [c.i.] have been [c.i.]. Such [c.i.], if any,
shall be [c.i.] within [c.i.] from the end of each [c.i.] and shall be [c.i.]
showing in reasonable detail the [c.i.]. It is understood that such [c.i.] shall
[c.i.] at such time as the [c.i.] under this Section 6.4, [c.i.] of the [c.i.]
by DUSA under this Section 6.4, [c.i.].
ARTICLE 7
USE OF PRECLINICAL AND CLINICAL DATA
7.1 Exchange. Schering and DUSA, respectively, shall provide to each
other all Data generated in the course of the performance of the Development
Program for use of each DUSA and Schering for the purposes stipulated in this
Agreement in a timely fashion and as promptly as possible upon request of each
DUSA or Schering.
7.2 Use; Disclosure. DUSA may only use or provide Data to third parties
as is reasonably necessary or useful for commercialization of Collaboration
Products for applications outside the Field or outside the applicable Product
Territory, or of products other than Collaboration Products, including without
limitation for use by third parties and for cross-referencing drug master files
or other regulatory filings provided that the disclosure of such Data to a
non-governmental third party is made under reasonable and customary
confidentiality restrictions. Schering will only use and disclose Data to third
parties as required to obtain Marketing Approvals for Collaboration Products for
purposes within the Field in the applicable Product Territory and as may be
necessary in performing its obligations and exercising its rights under this
Agreement, i.e. development activities, marketing activities, medical education
activities, professional services activities and public relations activities;
for purposes of obtaining consultation services in the normal course of business
(such as business consultants, advertising agencies, law firms, accounting
firms, etc.) in each case solely to the extent necessary for development and
commercialization of Collaboration Products in the Field in the applicable
Product Territory; or as may otherwise be agreed by DUSA and Schering. Schering
may not use any Data (or permit any third party to use Data) outside the Product
Territory
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of the Collaboration Products for which such Data is used, or outside the Field
or for any products other than the Collaboration Products.
7.3 Regulatory Requirements. In all agreements with third parties or
Affiliates involving the development of Data, Schering and DUSA, respectively,
shall require that such third parties and Affiliates provide the other Party
access to all such Data, to the extent that such Data is required for
preparation of MAAs and filing of MAAs with the applicable regulatory
authorities throughout the Territory in accordance with this Agreement.
ARTICLE 8
MARKETING RIGHTS
8.1 Schering Rights.
(a) Schering shall have the exclusive right to market,
sell and distribute each Collaboration Product for use in the applicable Product
Territory within the Field, subject to paragraph (b) and Section 8.5 below. This
Section 8.1 shall not be deemed to limit the licenses granted to Schering under
Section 14.1 below.
(b) Schering shall have the option, with respect to each
Collaboration Product, to retain its rights hereunder in countries of the
Territory on a region by region basis as further described below, or to
terminate its rights in such regions with respect to such Collaboration Product.
The regions ("Region(s)") and corresponding key markets ("Key Market(s)") of
each Region of the Territory are as set forth on Exhibit 8.1(b). With respect to
the Initial Product, Schering shall notify DUSA in writing [c.i.] after the
Execution Date of the Regions in which Schering has elected to retain its rights
to such Initial Product, and Schering's rights to the Initial Product with
respect to all other Regions shall thereupon terminate. For each Collaboration
Product other than the Initial Product for which an MAA has been filed in the
U.S. pursuant to the Development Program, Schering shall [c.i.] from the filing
of such MAA notify DUSA of the Regions in which Schering elects to retain its
rights with respect to such Collaboration Product, and Schering's rights to such
Collaboration Product with respect to all other Regions shall thereupon
terminate. In the event Schering fails to notify DUSA [c.i.] period, Schering
shall be deemed to have elected not to retain its rights to such Collaboration
Product in all Regions (i.e., Schering's rights to such Collaboration Product
shall terminate with respect to all Regions). With respect to each Collaboration
Product for which Schering has elected to continue its rights, the Regions in
which Schering has so elected to retain its rights, shall be referred to as the
"Product Territory". For Collaboration Products for which Schering has not
elected to retain its rights in the entire Territory, then, with respect to the
Regions in which Schering has not so elected to retain its rights to such
Collaboration Product, such product shall be referred to herein as an "Abandoned
Product" and such Region shall be referred to as an "Abandoned Region." Once
Schering's rights with respect to a Collaboration Product have terminated
pursuant to this Section 8.1(b) for any Abandoned Region, then Schering shall
have no further rights with respect to such Collaboration Product in such
Abandoned Region for any purpose; accordingly, for example, if Schering elects
to terminate its rights to a Collaboration Product in any Region as provided
above, and such same Collaboration
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Product later becomes approved for other indications, Schering shall have no
rights to such new indications of such Collaboration Product in the Abandoned
Regions for such Collaboration Product.
(c) It is further understood and agreed that DUSA shall
have the right to commercialize (itself or through others) any Abandoned Product
in the applicable Abandoned Regions, both within and outside the Field.
(d) In [c.i.] and [c.i.] under the Development Program
DUSA agrees [c.i.] Schering [c.i.] from [c.i.] in the respective Abandoned
Regions [c.i.] (it being understood that, for purposes of this paragraph [c.i.]
and [c.i.] shall have the meanings defined in Sections [c.i.] and [c.i.] above,
[c.i.] in such definitions). For Abandoned Products for which Schering, in
accordance with the Development Plan and Budget for such Abandoned Product,
[c.i.] in [c.i.] of such Abandoned Region at the time of Schering's election
under Section 8.1(b), DUSA [c.i.] of [c.i.] of such Abandoned Product in all the
countries of the Abandoned Region [c.i.] from the date of the [c.i.] of such
Abandoned Product. For an Abandoned Product for which [c.i.] has [c.i.] in
[c.i.] of the Abandoned Region at the time of Schering's election under Section
8.1(b) above, DUSA [c.i.] of [c.i.] of such Abandoned Product in the Abandoned
Region for [c.i.] from the date of the [c.i.] of such Abandoned Product. For
purposes of clarification, the [c.i.] shall [c.i.] to Abandoned Products for
which [c.i.] in [c.i.] pursuant to the Development Program; and notwithstanding
only the foregoing, this Section 8.1(d) shall not apply to the Initial Product.
8.2 Ex-U.S. Light Source. In order to allow Schering to make
its decision with respect to the election of Regions outside the U.S. within
which it wishes to market the Initial Product, Schering and DUSA, promptly after
the Execution Date, shall begin good faith negotiations on the manufacture,
promotion, and distribution of the Light Source in connection with the sale of
the Initial Product outside the U.S. DUSA will also prepare and provide to
Schering [c.i.] for [c.i.] as expected at the time of approval outside of the
U.S. [c.i.] after the conclusion of such negotiations [c.i.] after the
Effective Date, and on a Region-by-Region basis, Schering shall notify DUSA
[c.i.] to [c.i.] with DUSA to use [c.i.] in connection with the promotion,
marketing and sale of the Initial Product outside the U.S.
8.3 Rights. It is understood that DUSA retains the right,
directly or through third parties, to market, sell and distribute the
Collaboration Products, for use outside the applicable Product Territory and/or
for purposes outside the Field.
8.4 Sublicensees and Affiliates. Schering may authorize
Affiliates and Sublicensees to market, sell or distribute any Collaboration
Product for use in the applicable Product Territory within the Field. Schering
shall promptly provide notice to DUSA of any sublicense or Affiliate
authorization to be granted pursuant to this Section 8.4. In the event that
Schering or its Affiliate receives any up-front license fee, milestone payment
or similar payments from a Sublicensee, directly or indirectly, in connection
with the granting of rights to such Sublicensee pursuant to this Section 8.4,
Schering shall pay to DUSA [c.i.] of such payments with respect to the Initial
Product and [c.i.] of such payments with respect to future Collaboration
Products, [c.i.] of such receipt. Schering agrees to use [c.i.] efforts to
obtain reasonable cash consideration with respect to the grant
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of such rights to a Sublicensee. Such payments by Schering to DUSA shall be in
addition to the payments made pursuant to Section 6 above and Section 10 below.
8.5 Restrictions. Schering [c.i.] outside the applicable Product
Territory in relation to each Collaboration Product [c.i.] customers or engaging
in marketing activities. DUSA [c.i.], inside the applicable Product Territory in
relation to each Collaboration Product, [c.i.] customers or engaging in
marketing activities. This provision is not intended to limit customers within
[c.i.] from placing unsolicited orders for Collaboration Products from either
Party.
8.6 Marketing Plans. Schering shall prepare overview-marketing
plans for the overall Territory and [c.i.] marketing plans for each Key Market,
such plans to include plans related to the prelaunch, launch, promotion and sale
of Collaboration Products which shall include [c.i.] the number of sales
representatives, and [c.i.] of the marketing and advertising campaigns proposed
to be conducted, for each Collaboration Product (the "Marketing Plans"). The
Marketing Plans shall be designed to fulfill Schering's undertakings pursuant to
Section 13.1. Schering shall provide copies of the Marketing Plans to DUSA by
[c.i.] of each calendar year during the term of this Agreement. The draft
Marketing Plan for the Initial Product is attached as Exhibit 8.6 and shall be
supplemented by the final Marketing Plan for the Initial Product [c.i.], but in
no case later than [c.i.] At a reasonable time thereafter, Schering shall meet
with DUSA to review the Marketing Plans and the actual results as compared with
prior Marketing Plans. In addition, Schering agrees to keep DUSA informed,
[c.i.] with respect to the marketing, sales and promotion of the Collaboration
Products. Subject to the provisions of this Agreement, and subject to compliance
with the Marketing Plans, as modified or adjusted from time to time by [c.i.],
Schering shall have full control and authority of the day-to-day
commercialization of Collaboration Products in the Territory within the Field
and implementation of the corresponding Marketing Plans, at Schering's expense.
No later than [c.i.] prior to the start of the forecasted year, Schering shall
provide forecasts of estimated aggregate annual Net Sales for the Territory.
8.7 Marketing Materials. Schering shall use [c.i.] to keep DUSA
informed regarding the preparation of promotional materials, samples,
advertising and materials for training sales representatives with respect to a
Collaboration Product and, subject to Section 15.7, will provide DUSA with
copies of such materials, in advance of distribution [c.i.]. Schering [c.i.]
incorporation of any reasonable suggestions or comments promptly made by DUSA in
such materials if such comments or suggestions are received [c.i.] of DUSA being
provided the materials.
8.8 Right of First Discussion.
8.8.1 Notice. During the period specified in Section 8.8.3
below, [c.i.] prior to DUSA entering into material and substantial negotiations
to grant to a third party the right to market and distribute for use outside the
Field a product containing ALA (including, for the avoidance of doubt, a
Collaboration Product) within [c.i.] that is part of the Subject Territory (as
defined below), DUSA agrees to notify Schering in writing, together with a
summary description of the product(s) or field to be proposed that would be the
subject of such negotiations ("Initial Notice"). Upon request by Schering
following its receipt of such Initial Notice, DUSA and Schering shall discuss
the terms and conditions under which DUSA would grant such rights to Schering.
In the event that the Parties
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have not agreed upon such terms and conditions pursuant to which such rights and
license would be granted to Schering, [c.i.] after the date DUSA provided the
Initial Notice to Schering, DUSA shall be free to grant to any third party the
right to market and distribute such products containing ALA outside the Field,
without further obligations to Schering, and on any terms that DUSA considers
appropriate. It is understood that, because DUSA will be providing the Initial
Notice to Schering prior to the commencement of material and substantial
negotiations with a third party, DUSA may not be able to define the entire or
exact scope of the product, field or rights to be granted, and accordingly, so
long as the Initial Notice describes a product, field or rights that overlap
with the product, field or rights actually negotiated with, or granted to, a
third party, DUSA shall be deemed to have satisfied its obligations, under this
Section 8.8.1; also, it is understood that DUSA need only provide one such
Initial Notice hereunder before engaging in such material and substantial
negotiations with the first third party, and that DUSA is not obligated to
provide any further notice if DUSA subsequently engages in discussions with more
than one third party with respect to subject matter described in the Initial
Notice. As used in this Section 8.8.1, "Subject Territory" shall mean Regions
(i) in which Schering has elected to retain its rights to the Initial Product
under Section 8.1(b) above, or (ii) for which, at the time the Initial Notice is
required, Schering has previously elected under Section 8.1(b) above to retain
its rights to any Collaboration Product (i.e. where Schering has made such
election following the filing of an MAA in the U.S. with respect to such
Collaboration Product).
8.8.2 No Implied Obligations. The only obligations of
Schering and DUSA under Section 8.8.1 above are as expressly stated therein, and
there are no further implied obligations relating to the matters contemplated
therein. Without limiting the foregoing, it is further understood and agreed
that the subject product(s) containing ALA may or may not be discovered or
reduced to practice to any particular degree or at all at the time of the
Initial Notice under Section 8.8.1, and that further modification and/or
variations of a product may be developed after the date of such Initial Notice;
accordingly, so long as DUSA includes with the Initial Notice a good faith
summary of the product as it then exists, or a summary of the field in which the
rights would be granted, the requirements of Section 8.8.1 above shall be deemed
satisfied with respect to any and all modifications, variants or derivatives of
the product developed or reduced to practice after the date of the Initial
Notice. Without limiting the foregoing, it is further acknowledged and agreed
(i) that: this Section 8.8 shall not be deemed to apply to a transaction by
which a third party acquires substantially all of the business or assets of
DUSA, if such third party agrees to be bound by the terms of this Agreement in
accordance with Section 20.7 below; and (ii) if DUSA enters into a transaction
with a third party in accordance with this Section 8.8 that includes the grant
by DUSA of an option or other contingent right to acquire the right to market
and distribute one or more products containing ALA (including, for the avoidance
of doubt, a Collaboration Product) (each such option or right being referred to
as a "Contingent Right"), then the grant of rights by DUSA upon a third party's
exercise of such Contingent Right shall not be subject to this Section 8.8 so
long as the grant of such Contingent Right was made in a transaction entered
into with the third party in compliance with Section 8.8.1; and (iii) DUSA is
not obligated under this Section 8.8 to provide to Schering any particular
information other than as expressly stated in Section 8.8.1, and that DUSA may
require a separate confidentiality agreement as a condition to any disclosure of
information in connection with Section 8.8.1. Any dispute under this Section 8.8
shall be resolved in accordance with Section 20.2.1 below.
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8.8.3 Termination. DUSA's obligations under Section 8.8.1
shall terminate effective upon the earlier of (i) [c.i.] the Execution Date or
(ii) the [c.i.] under Section [c.i.] above, or upon the giving of notice of
termination of this Agreement under Sections 19.2 or 19.3, whichever occurs
first.
8.8.4 Notice. Until the earlier of (i) [c.i.] the
Execution Date or (ii) the [c.i.] under Section [c.i.] above, or upon the giving
of notice of termination of this Agreement under Sections 19.2 or 19.3,
whichever occurs first, either Party shall notify the other [c.i.] prior to the
commencement of any clinical trial conducted or sponsored by or in cooperation
with itself or its Affiliates in which ALA is to be used.
8.9 Substitution. Notwithstanding the restrictions in Section 8.5
above, the Parties acknowledge the possibility, although potentially remote,
that Collaboration Products sold by DUSA for use outside the Field or Rejected
Products sold for use inside the Field could be substituted for uses within the
Field by pharmacists, health care providers or others, and similarly,
Collaboration Products sold by or under authority of Schering for use within the
Field could be substituted for uses outside the Field. Accordingly, to
compensate the Parties at least in part for the negative impacts of such
substitution, the following provisions shall apply:
8.9.1 Substitution within the Field. If in any [c.i.]
consecutive [c.i.] the total dollar Substitution Sales by DUSA, its Affiliates
and Sublicensees of a Collaboration Product or Rejected Product in the
applicable Product Territory for uses within the Field (as measured by a
reputable, independent market surveillance firm agreed upon by the Parties),
[c.i.] of [c.i.] of the Collaboration Product, then DUSA shall pay to Schering
[c.i.] of the Substitution Proceeds received by DUSA or its Affiliate; provided
that if DUSA reasonably demonstrates that the negative profit impact to
Schering, its Affiliates and Sublicensees is less than the amount so required to
be paid to Schering, the foregoing percentage of such Substitution Proceeds to
be so paid to Schering shall be reduced to reasonably equate to such negative
profit impact.
8.9.2 Substitution Outside the Field. If in any [c.i.]
consecutive [c.i.], the total dollar Net Sales by Schering, its Affiliates and
Sublicensees of a Collaboration Product in the applicable Product Territory for
uses outside the Field (as measured by reputable, independent market
surveillance, e.g. [c.i.]) [c.i.] of [c.i.] of the Collaboration Product in the
applicable Product Territory, then Schering shall pay to DUSA [c.i.] of the
Substitution Proceeds received by Schering or its Affiliates; provided that if
Schering reasonably demonstrates that the negative profit impact to DUSA, its
Affiliates, or Sublicensees, of such substitution is less than the amount so
required to be paid to DUSA, the foregoing percentage of such Substitution
Proceeds shall be reduced to reasonably equate to such negative profit impact.
8.9.3 Dispute. In the event the Parties are unable to
agree upon the percentages of Substitution Proceeds payable under Section 8.9.1
or 8.9.2 above, then such percentages shall be determined by an arbitrator
pursuant to Section 20.2.3 below, [c.i.] after a request by either Party to
initiate such arbitration. In determining the appropriate rate, which shall not
exceed the maximum rates specified in this Section 8.9, the arbitrator(s) shall
take into account, among other considerations, any negative financial impact of
such substitution as well as any positive effects of
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the substitution on the market for the Collaboration Product (such as overall
increased sales of the Collaboration Product, by reason of greater market
awareness of the Collaboration Product or other positive effects).
8.9.4 Adjustment. After a Party becomes obligated to make
payments under this Section 8.9 with respect to a Collaboration Product, if in
any [c.i.] consecutive [c.i.] the conditions for invoking such payments
specified in Section 8.9.1 or 8.9.2, respectively, do not exist, then from and
after the end of such subsequent [c.i.] period, the payments under such Section
shall no longer be due; it being understood, however, that substitution in later
periods may again trigger a new adjustment pursuant to this Section 8.9.
Similarly, in the event DUSA or Schering believes that a change in circumstances
after a percentage was established under this Section 8.9 warrants a different
percentage, either Party may request that the percentage be renegotiated, and if
the Parties cannot agree on an adjustment to such percentage, the same shall be
established in accordance with Section 8.9.3 and 20.2.3.
8.9.5 Certain Terms. As used in this Section 8.9, the
following terms shall have the following meanings:
(a) "Substitution Sales" shall mean the total amount
invoiced to third parties with respect to sales of Collaboration Products or
Rejected Products, as the case may be, for final sale and consumption in the
applicable Product Territory by DUSA, its Affiliates and Sublicensees,
determined on the same basis as the calculation of Net Sales for Schering
specified in Section 1.33 above (i.e., substituting in such Section 1.33 "DUSA"
for each reference to "Schering," and similarly substituting "DUSA" for each
reference to "Schering" in the corresponding definitions of Sublicensee).
(b) "Substitution Proceeds" shall have the following
meanings: (i) with respect to amounts received by Schering for purposes of
determining the payments due to DUSA under Section 8.9.2 above, "Substitution
Proceeds" shall mean [c.i.] of Net Sales [c.i.] by Schering and its Affiliates
with respect to sales of Collaboration Products used outside the Field; and (ii)
with respect to amounts received by DUSA for purposes of determining the
payments to due to Schering under Section 8.9.2 above, "Substitution Proceeds"
shall mean [c.i.] of Substitution Sales [c.i.] by DUSA and its Affiliates with
respect to Substitution Sales; provided that in each of cases (i) and (ii),
Substitution Proceeds shall be [c.i.] by [c.i.] by Schering and DUSA,
respectively, for the Collaboration Product or Rejected Product that generated
such Substitution Proceeds. It is understood and agreed that in each case
Substitution Proceeds shall not include amounts received by a Sublicensee on
sales of a Collaboration Product or Rejected Product, as the case may be, but
shall instead include the sales price received by Schering and DUSA,
respectively (and their respective Affiliates) on sales of the particular
Collaboration Product or Rejected Product, as the case may be, to their
respective Sublicensees for final sale and consumption in the applicable Product
Territory, as well as royalty payments received by Schering and DUSA,
respectively (and their respective Affiliates) from Sublicensees calculated on
sales of Collaboration Products or Rejected Products, as the case may be, in
such Product Territory by or under authority from such Sublicensees.
Substitution Proceeds shall not include any up-front license fees or any other
amount that is not the purchase price of a Collaboration Product or Rejected
Product, as the case may be, in such Product
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Territory or running royalties calculated on the basis of such purchase price
and payable on a per-unit basis (i.e., as a percentage of such sales or a
per-unit amount).
(c) In the event that the Parties are unable to
agree upon the level of Substitution Sales (i.e., as to whether payments are due
under this Section 8.9) or as to the level of Substitution Proceeds, in each
case by reason of the inability to agree on the level of sales of the particular
Collaboration Product or Rejected Product outside or inside the Field, then such
levels shall be determined by a mutually agreed third party market share
auditing firm. If the Parties cannot agree on such firm, it shall be appointed
by an arbitrator under the procedures established pursuant to Section 20.2.3
below. The costs of such audit shall be [c.i.].
ARTICLE 9
MANUFACTURE AND SUPPLY
9.1 Manufacturing Rights. Except as otherwise provided herein, DUSA
shall have the exclusive right to manufacture or have manufactured Collaboration
Products for use within the Field.
9.2 Supply
9.2.1 Generally. Subject to the terms and conditions of
this Article 9, DUSA shall supply Schering with Finished Products for sale in
the U.S. and with Collaboration Products (in bulk) for sale in the ex-U.S. part
of the Product Territory for use within the Field, and Schering shall purchase
from DUSA all of Schering's requirements of Collaboration Products. It is
understood that Light Sources for use with the Collaboration Products in the
Field are not covered by this Article 9, but instead shall be supplied in
accordance with the Light Source Agreement.
9.2.2 Packaging. Schering and DUSA shall agree upon the
packaging of the Finished Products for the U.S., and DUSA shall supply the
Finished Products packaged as so agreed. For the ex-U.S. part of the applicable
Product Territory, DUSA shall supply Schering with the Collaboration Products in
bulk, and Schering will perform final packaging.
9.3 Forecasts. Schering's initial forecast of the quantities of
Collaboration Products estimated to be required on [c.i.] during the [c.i.]
after the Execution Date (and which shall serve as the [c.i.] forecast required
by this Section) is attached as Exhibit 9.3. Thereafter, [c.i.] prior to the
start of each calendar quarter ("Q1") beginning after [c.i.] (i.e., [c.i.]),
Schering shall provide DUSA with a [c.i.] forecast of the quantities of
Collaboration Products estimated to be required on a month-by-month basis during
Q1 and the next three (3) quarters ("Q2", "Q3" and "Q4", respectively). Each
forecast shall indicate the estimated quantities of Collaboration Products
identified by the SKU numbers (if applicable) designated by DUSA (which shall be
categorized, among other things, by whether the unit is for sale to the trade or
is a Sample, as "Sample" is defined below in Section 10.4). Each forecast shall
also identify each anticipated launch date for a Collaboration Product in any
country in the Territory during the upcoming [c.i.]. Schering shall only be
obligated to purchase the quantities set forth in such forecast to the extent
stipulated in Section 9.4.2 below.
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9.4 Orders.
9.4.1 Orders. Together with each forecast provided under
Section 9.3 above (other than the initial forecast provided as Exhibit 9.3) (the
"Current Forecast"), Schering shall place its firm order with DUSA, setting
forth trade units, delivery dates and shipping instructions with respect to each
shipment, for delivery in Q1 of that quantity of Collaboration Products equal to
or greater than (i) the quantity of Collaboration Products reflected for Q1 in
the Current Forecast, (ii) [c.i.] of the quantity of Collaboration Products
forecast for Q2 in the Forecast provided under 9.3 above for the immediately
preceding calendar quarter (the "First Preceding Forecast"), and (iii) [c.i.] of
the quantity of Collaboration Products forecast for Q3 in the Forecast
immediately preceding the First Preceding Forecast (the "Second Preceding
Forecast"). DUSA shall accept such orders from Schering, subject to Section 9.5
and the remaining terms and conditions of this Agreement, provided that DUSA
shall not be obligated to accept orders for Q1 to the extent the quantity
ordered exceeds the lesser of (i) [c.i.] of the quantity of Collaboration
Products forecast for Q1 of the Current Forecast; (ii) [c.i.] of the quantity of
Collaboration Products forecast for Q2 in the First Preceding Forecast, or (iii)
[c.i.] of the quantity of Collaboration Products forecast for Q3 in the Second
Preceding Forecast, but shall use [c.i.] efforts to fill orders for such excess
quantities from available supplies. For the Initial Product, all orders shall
take into account the batch size, which is [c.i.] units (i.e., all orders shall
be in multiples of [c.i.]); for Collaboration Products other than the Initial
Product, the Parties shall agree upon a minimum batch size consistent with
manufacturing requirements.
9.4.2 Form of Order. Schering's orders shall be made
pursuant to a purchase order which is in a form mutually acceptable to the
Parties, and shall provide for shipment in accordance with reasonable delivery
schedules. DUSA shall notify Schering within [c.i.] from receipt of an order of
its ability to fill any amounts of such order in excess of the quantities that
DUSA is obligated to supply. ANY TERMS OR CONDITIONS OF ANY PURCHASE ORDER OR
ACKNOWLEDGMENT GIVEN OR RECEIVED WHICH ARE ADDITIONAL TO OR INCONSISTENT WITH
THIS AGREEMENT SHALL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY
EXCLUDED.
9.5 Delivery. DUSA shall ship quantities of Finished Products (or
Collaboration Products, as the case may be) that DUSA is obligated to supply
pursuant to Section 9.2 to arrive on or about the dates specified in Schering's
purchase orders submitted and accepted in accordance with Section 9.4 above and
as required by Section 9.7; provided, however, that DUSA shall only be required
to use [c.i.] efforts to ship, in any [c.i.], quantities of Finished Products
(or Collaboration Products, as the case may be) ordered in excess of: (i) [c.i.]
increase over the amount ordered by Schering for delivery in the immediately
preceding [c.i.] or (ii) a [c.i.] increase over the amount ordered by Schering
for delivery in the immediately preceding [c.i.], whichever is greater. All
Finished Products (or Collaboration Products, as the case may be) delivered
pursuant to the terms of this Agreement shall be suitably packed for shipment by
DUSA and marked for shipment to the destination point indicated in Schering's
purchase order. Each shipment of Finished Products (or Collaboration Products,
as the case may be) hereunder shall be accompanied by the documentation
specified in Section 9.8(e). All Finished Products (or Collaboration Products,
as the case may be) will be delivered [c.i.] designated by [c.i.]. The carrier
shall be selected by [c.i.]. The packaging for
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shipment shall be in accordance with good commercial practice with respect to
protection of the Finished Products (or Collaboration Products, as the case may
be) during transportation. All shipping shall be [c.i.]. [c.i.] will be
responsible for the insurance of the Finished Products (or Collaboration
Products, as the case may be) during the transportation at its own cost and
discretion.
9.6 Quality Guidelines.
9.6.1 Compliance with Manufacturing Standards and
Specifications. All Finished Products (or Collaboration Products, as the case
may be) supplied by DUSA hereunder shall comply with the Manufacturing Standards
and Specifications in accordance with the regulatory specifications and methods
described and approved in the Marketing Approval.
9.6.2 Changes to Regulatory Requirements. In the event
that Schering notifies DUSA of (i) additional standards for the manufacture of a
Finished Product (or Collaboration Products, as the case may be) that are
required to comply with the laws or regulations of any country of the applicable
Product Territory (other than the U.S.), or (ii) additional specifications for a
Collaboration Product that are required by a Marketing Approval in a country of
the applicable Product Territory (other than the U.S.) to comply with the laws
or regulations of such country, the Parties shall modify the Manufacturing
Standards and the Specifications, respectively, for such Finished Product and/or
Collaboration Product to incorporate such additional standards and
specifications; provided that Schering [c.i.] DUSA for the [c.i.] of
implementing such additional standards and specifications (i.e., in addition to
the [c.i.]) and provided that such modified Manufacturing Standards and
Specifications would become effective after a mutually agreed period of time or
within the period specifically required and requested by the applicable
regulatory authority. It is understood that the [c.i.] to be so [c.i.] Schering
would be [c.i.] required to [c.i.] and [c.i.], but the [c.i.] produced in
compliance with such additional Manufacturing Standards and Specifications shall
be [c.i.] within the [c.i.] for the Finished Products and Collaboration Products
produced for the particular country; in no event shall Schering be [c.i.] DUSA
for any [c.i.] more than once.
9.6.3 Modification of Manufacturing Process. DUSA will
notify Schering in writing prior to modifying any process or procedure contained
in the Manufacturing Standards or Specifications or changing the equipment used
in the manufacture of a Finished Product and/or Collaboration Product. Schering
shall have [c.i.] after receipt of DUSA's notice to determine whether or not
such modification or change will require affirmative approval of the FDA or
other health regulatory authority of a country in the Product Territory in which
the Finished Product and/or Collaboration Product is being marketed prior to
implementing the modification. If Schering determines that such modification or
change will not require such affirmative approval or fails to notify DUSA [c.i.]
period that Schering has determined that such approval is required, then DUSA
may proceed with such change or modification. If Schering determines that such
modification or change will require such affirmative approval in such countries,
then Schering shall have [c.i.] to approve such modification or change,
including securing the approval of the MAA holder for the affected Product
Territory.
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9.6.4 Third Party Complaints. If Schering communicates to
DUSA material objections by physicians, consumers, or health regulatory agencies
to the quality of a Collaboration Product, DUSA will review the batch
documentation, carry-out tests as necessary and present Schering the results
[c.i.] after receipt of notice of the objections from Schering, addressing in
detail the reasons for the defects and information on the measures taken by DUSA
to ensure that such defects will be prevented in the future.
9.6.5 Recalls and Withdrawals. In the event that Schering
or DUSA is required by any health regulatory agency to recall a Collaboration
Product, or the Parties mutually agree to withdraw a Collaboration Product from
any country in the Territory, in either case if the action is the result of a
breach of this Agreement by a Party, then that Party shall bear the expenses of
such recall or withdrawal, and otherwise [c.i.] shall [c.i.] for such costs.
Furthermore, each Party at its sole discretion and expense, after consultation
with the respective other Party, shall have the right to recall or withdraw a
Collaboration Product from any country in the Territory, provided, however, if
such recall or withdrawal is a result of a breach by a Party, then the breaching
Party shall bear the expenses of such recall or withdrawal. The foregoing does
not restrict either Party's ability to recover such costs from a third-party, in
which case any recovery shall [c.i.].
9.6.6 Lab-to-Lab Validation. Other than for the Initial
Product, DUSA shall conduct a lab-to-lab validation of all validated test
methods, involving those departments of Schering and DUSA which are responsible
for quality control. DUSA will confirm to Schering the successful lab-to-lab
validation in writing. This confirmation is the pre-condition for the use of the
test methods for quality testing and the release of Collaboration Products
(other than the Initial Product) by Schering. [c.i.] shall [c.i.] for [c.i.]
pursuant to this Section, which [c.i.] is not part of the Development Program.
9.6.7 Annual Product Reviews. DUSA shall conduct an annual
product review for annual evaluation of the quality standards for each
Collaboration Product to determine the need for changes in the Specifications or
manufacturing or control procedures. DUSA shall submit a copy of such annual
product review to Schering.
9.6.8 Stability Data. DUSA shall annually make available
to Schering copies of stability data for the Collaboration Products. Any
significant trends should be promptly reported.
9.7 Collaboration Product Acceptance/Rejection.
(a) Schering shall, promptly upon receipt of each
shipment perform customary inspection according to the inspection criteria laid
out in Exhibit 9.7. All shipments (i.e., quantities or packaging of Finished
Product and/or Collaboration Product) and [c.i.] shall be deemed correct unless
DUSA receives from Schering, [c.i.] after Schering's receipt of a given shipment
(except with respect to Finished Product and/or Collaboration Product containing
latent defects, in which case the [c.i.] shall commence at such time as Schering
becomes aware of such latent defects), a written notice specifying the shipment,
the purchase order number, and the exact nature of the discrepancy between the
order and the shipment or the exact nature of the discrepancy in the shipping or
other charges, as applicable.
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(b) DUSA shall, within the shortest possible time,
deliver replacement quantities of such Finished Product and/or Collaboration
Product to Schering , but [c.i.] after receipt of the returned Finished Product
and/or Collaboration Product. The replacement of returned Finished Products
and/or Collaboration Products shall have priority over the supply of Finished
Products Products and/or Collaboration Products ordered for shipment. DUSA shall
give Schering written instructions as to how Schering should, [c.i.], dispose of
or rework any non-conforming Finished Product and/or Collaboration Product, and
such instructions shall comply with all appropriate governmental requirements.
(c) DUSA shall analyze Finished Product and/or
Collaboration Product rejected by Schering for nonconformity and shall inform
Schering [c.i.] upon receipt of the rejected unit of Finished Product and/or
Collaboration Product of the results of the analysis, including DUSA's
determination of the reasons for the defect/nonconformity, if so confirmed by
DUSA, and the measures taken or to be taken to ensure that such
defect/nonconformity will not occur again. In the event that either Party
becomes aware that any shipment of Collaboration Product and/or Finished Product
has a nonconformity, despite DUSA's testing and quality assurance activities and
despite Schering's acceptance, such Party shall immediately notify the other
Party. In the event that Schering and DUSA agree (or there is an independent
finding) that any quantity of Finished Product and/or Collaboration Product
failed to comply with such Specifications and Manufacturing Standards at the
time of shipment to Schering, the [c.i.] will [c.i.]. In case of a disagreement
between the Parties, the claim shall be [c.i.] and [c.i.] to an [c.i.] which
[c.i.] or a [c.i.] within the [c.i.] mutually agreed upon by the Parties (the
"[c.i.]"), the [c.i.] of which shall not be unreasonably withheld or delayed by
either Party. The [c.i.] of such [c.i.] with respect to all or part of any
shipment of Finished Product and/or Collaboration Product shall be [c.i.] the
Parties. The [c.i.] of the [c.i.] making such [c.i.] shall be [c.i.] the [c.i.]
9.8 Documentation. DUSA agrees to comply with the following, provided
that Schering agrees to promptly reimburse DUSA for its costs of such compliance
(at DUSA's Cost of Goods, where applicable), to the extent this Section 9.8
imposes requirements greater than those required by the FDA, the Manufacturing
Standards or the Specifications:
(a) For Collaboration Products for
commercialization, DUSA shall retain appropriately identified reserve samples
that are representative of each lot in each shipment of each active ingredient.
The amount of samples retained shall be [c.i.] the quantity (in case of
Collaboration Products for use in the U.S.) and [c.i.] the quantity (in case of
Collaboration Products for use outside the U.S.) necessary for all tests
required to determine whether the active ingredient meets the Specifications,
except for sterilization and pyrogen testing. Schering shall be [c.i.] of the
retained reference samples, and they [c.i.] to Schering upon Schering's request.
DUSA shall retain the samples for [c.i.] after the [c.i.] of the [c.i.] of the
Collaboration Products containing the active ingredient. Thereafter, DUSA shall
[c.i.].
(b) For Collaboration Products for
commercialization, DUSA shall retain appropriately identified reserve samples
that are representative of each lot or batch of Collaboration Product and shall
store these under conditions consistent with product labeling. The samples shall
be stored in the same immediate container closure system in which the
Collaboration
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Product is marketed. The amount of samples retained shall be [c.i.] the quantity
(in case of Collaboration Products for use in the U.S.) and [c.i.] the quantity
(in case of Collaboration Products for use outside the U.S.) necessary for all
tests required to determine whether the Collaboration Product meets the
Specifications, except for sterilization and pyrogen testing. Schering shall be
[c.i.] of the retained reference samples, and they [c.i.] to Schering upon
Schering's request. DUSA shall retain the samples for [c.i.] after the [c.i.]of
the [c.i.] of the Collaboration Product. Thereafter, DUSA shall [c.i.]
(c) DUSA shall retain any production, control or
distribution record that is specifically associated with a batch of a
Collaboration Product for [c.i.] after the [c.i.] of the Collaboration Product.
(d) For Collaboration Products for development
purposes, DUSA shall retain the manufacturing records (including batch records)
and reports for [c.i.] after the Collaboration Product has received Marketing
Approval; or, if an MAA is not approved for the drug, until [c.i.] after
shipment and delivery of the Collaboration Product for investigational use is
[c.i.] and [c.i.]
(e) Each shipment of Finished Product and/or
Collaboration Product shall be accompanied by the following written
documentation: (A) the date of manufacture, (B) delivered amount of Finished
Product units (or bulk Collaboration Product, as the case may be), (C) a
certificate of analysis setting forth the results of tests performed by DUSA as
reasonably required by Schering in accordance with the Specifications and
Manufacturing Standards, (D) a certificate of compliance from DUSA, stating that
the Finished Products and/or Collaboration Product were manufactured in
compliance with the respective Specifications and Manufacturing Standards, that
the quality was tested according to the testing standards and Specifications and
that the results meet the agreed testing standards and Specifications as
provided for in the Marketing Approval, and (E) complete batch documentation for
manufacturing and packaging.
(f) DUSA will inform Schering by attachment to the
batch record in writing if DUSA determines there has been a substantive
deviation of a batch of Finished Product and/or Collaboration Product shipped to
Schering from the respective Manufacturing Standards, the manufacturing process,
the in-process controls or the testing or the Specifications. This duty of
information will not limit DUSA's contractual obligations under this Agreement.
9.9 Schering Right of Audit and Inspection. DUSA shall, upon written
request of Schering, permit Schering's authorized representatives (the number of
which is subject to any restrictions in DUSA's agreements with applicable
third-party manufacturers or suppliers) to audit and inspect the following: (i)
all manufacturing and quality control records for the manufacture of the
Finished Products and/or Collaboration Products; (ii) quality control records of
all starting materials and packaging materials used in the manufacture of the
Finished Products and/or Collaboration Product; (iii) all process, cleaning and
method validation documents associated with the manufacturing, packaging and
testing of the Collaboration Products; and (iv) all stability data for the
Collaboration Product; provided that, in each case (unless otherwise agreed)
such inspection shall be limited to the extent necessary to determine compliance
with cGMP, the applicable
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Manufacturing Standards and Specifications. In addition, Schering shall be
entitled during normal working hours and upon [c.i.] prior notice to DUSA to
audit and inspect all DUSA facilities utilized for the manufacture, storage or
quality control of Finished Products and/or Collaboration Products or such
facilities of any third party manufacturer or quality control operations engaged
by DUSA; provided that such inspection shall similarly be limited to determining
compliance of the facility and procedures applied with cGMP, the Manufacturing
Standards and Specifications, and in the number of authorized representatives.
DUSA shall promptly inform Schering in writing of the results of any inspection
by relevant authorities of manufacturing, storage, or quality control facilities
of DUSA or of any third party manufacturer and shall provide copies to Schering
of any FDA Form 483 observations, warning letters, field alerts and any
associated correspondence. All of Schering's representatives shall have agreed
to be bound by the confidentiality provisions of Article 17.
9.10 Suppliers.
9.10.1 Third Party Contractors. Without limiting DUSA's
responsibility under this Agreement, DUSA shall have the right at any time to
enter into agreements with third parties engaged to perform services or supply
facilities or goods in connection with the manufacture, testing, and/or
packaging of Finished Products (or Collaboration Products, as the case may be)
subject to sentences three and four of this Section 9.10.1. Schering
acknowledges that DUSA currently engages North Safety Products, Rhode Island, to
supply the Applicator and that DUSA intends to manufacture the Applicator
through a third party or itself as a second source of supply. Prior to using a
third party other than North Safety Products as the primary final producer of
Finished Product and/or Collaboration Product (i.e., not other vendors that
supply component parts or services) for DUSA with respect to units to be shipped
to Schering, DUSA shall notify Schering in writing [c.i.]; DUSA's use of such
alternative supplier [c.i.] to [c.i.] Schering, which [c.i.], and in any event
[c.i.] unless Schering establishes that such alternative supplier would not be a
competent subcontractor. In the event that Schering [c.i.] in writing, stating
the reasons [c.i.], [c.i.] after receipt of DUSA's notice, such alternative
supplier [c.i.] Schering. In any event DUSA shall use reasonable efforts to
undertake such manufacture or qualify a second source for supply of the
Applicator by the end of [c.i.]. DUSA shall ensure that all such facilities
comply with the applicable Manufacturing Standards and cGMP and that such
facilities are approved by FDA and will give Schering prior written notice, in
accordance with Section 9.6.3, of any such arrangement to the extent that such
arrangement would require changes to any Marketing Approval for the Territory.
9.10.2 Maintenance of Inventory. Until such time as DUSA
has qualified a second source for ALA besides the current supplier Sochinaz
S.A., Switzerland, DUSA agrees to maintain a level of inventory reasonably
calculated [c.i.] of ALA for supply of Collaboration Products or Finished
Products, as the case may be, to Schering, based on the minimum quantities that
Schering is obligated to order under Section 9.4 above, and taking into
consideration [c.i.] of Collaboration Products or Finished Products, as the case
may be, held by DUSA and by Schering and [c.i.] of bulk ALA held by DUSA for the
supply of Collaboration Products to Schering. Inventory held by [c.i.] shall be
[c.i.]
9.10.3 Schering Qualification. Schering [c.i.] to qualify
itself, or a third party on behalf of itself, as a supplier of ALA, subject to
DUSA's rights to supply Collaboration Products
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and [c.i.] of supply under the agreement between DUSA and Sochinaz S.A.
providing Sochinaz S.A. [c.i.] to supply ALA for [c.i.]. If Schering has
qualified itself as a second source of supply of ALA, upon Sochinaz S.A.'s
[c.i.] as supplier of ALA to DUSA, by way of [c.i.] between the parties or
otherwise, Schering may supply a portion of DUSA's requirements of ALA for use
in Collaboration Products and/or Finished Products to be supplied to Schering,
and provided that such supply is at a price, and on terms and conditions [c.i.]
to DUSA than DUSA could obtain elsewhere, and provided that both Schering and
DUSA agree, each at their own discretion, that Schering's acting as such a
supplier is in both Schering's and DUSA's best interests.
9.11 Invoicing. DUSA shall submit the respective invoice to Schering
upon shipment of Finished Products and/or Collaboration Products ordered by
Schering hereunder. All invoices shall be sent to Schering's address for notices
hereunder, and each such invoice shall state DUSA's Cost of Goods for Finished
Products and/or Collaboration Products in a given shipment, [c.i.] or [c.i.]
incident to the purchase or shipment [c.i.] but to [c.i.] pursuant to Section
[c.i.].
9.12 Shortage of Supply.
9.12.1 Joint Efforts.
(a) The Parties shall establish a committee (the
"Joint Manufacturing Committee") to oversee the manufacturing activities, and
formulate strategic manufacturing and capacity plans, relating to the production
of Collaboration Products for the applicable Product Territory and only with
respect to addressing such events. The Committee will consist of two
representatives from each Party but shall not be constituted until such time as
the events described in Section 9.12.1(b) have occurred. Decisions of the Joint
Manufacturing Committee shall be by majority approval, with an equal number of
representatives of both Schering and DUSA voting on the matter; provided,
however, if the Joint Manufacturing Committee cannot reach agreement on a
matter, the dispute shall be referred to a designated senior executive officer
of each Party with overall responsibility for the Collaboration Products, who
shall meet promptly and negotiate in good faith to resolve the dispute.
(b) If at any time DUSA becomes aware of a
deficiency in its manufacturing capabilities or the manufacturing capabilities
of any third party which is supplying DUSA, and concludes that such deficiency
will result in the inability to supply Schering's requirements for Finished
Products or Collaboration Products as required pursuant to Section 9.4, or the
Parties conclude the same, then in such event the Joint Manufacturing Committee
shall immediately convene to address the problem, which may include [c.i.] and
[c.i.] to [c.i.] and identifying other actions necessary to resolve the problem.
DUSA [c.i.] established by the Joint Manufacturing Committee to prevent
potential shortage.
(c) In the event there is a disagreement among the
Joint Manufacturing Committee that cannot be resolved by the senior executives
of DUSA and Schering as to commercially reasonable efforts that should be
undertaken to remedy or prevent a shortfall, the matter shall be resolved in
accordance with Section 20.2 below.
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9.12.2 Allocation. In the event that DUSA is selling or has
additional distributors of a Finished Product or a Collaboration Product (either
outside the Field or outside the applicable Product Territory) and, despite the
foregoing measures, is unable to supply all of the worldwide requirements of a
Finished Product or a Collaboration Product (on a product-by-product basis), if
any, and quantities ordered by Schering under Section 9.4 above due to force
majeure or otherwise, DUSA shall allocate the quantities of Finished Product
and/or Collaboration Product that DUSA has in inventory, and that DUSA is able
to produce, so that [c.i.] of available supplies as determined based on
reasonable forecasts (taking into consideration past sales and sales performance
against forecast) of Schering, DUSA and DUSA's other distributors.
9.12.3 Right to [c.i.]. If for any [c.i.] consecutive [c.i.], or
for [c.i.] out of any [c.i.] consecutive [c.i.], beginning [c.i.] after the
First Commercial Sale of the first Finished Product or the first Collaboration
Product, as the case may be, in the first Major Country (and such [c.i.] period
beginning again for each new Collaboration Product if such Collaboration Product
requires a significant change in the manufacturing process or for a change in
manufacturer of such Collaboration Product), DUSA [c.i.] Schering's requirements
of such Finished Product (and/or bulk Collaboration Product) as required
pursuant to Section 9.4, provided that [c.i.] or [c.i.] of [c.i.] of such
Finished Product or Collaboration Product, as the case may be, to the [c.i.] and
is [c.i.] to action or inaction of [c.i.], and the Joint Manufacturing Committee
determines that [c.i.] will [c.i.] the [c.i.] within [c.i.], then Schering
[c.i.] pursuant to Section 9.13 below the quantity of Finished Products or
Collaboration Products, as the case may be, for sale in the Territory for use
within the Field. Such right in such event shall [c.i.] for a period [c.i.] from
the date Schering [c.i.] a unit of Finished Product or Collaboration Product, as
the case may be, [c.i.] to Schering's [c.i.] as defined below under Section
9.13; provided that DUSA may [c.i.] of Schering prior to the end of [c.i.] if
DUSA agrees to [c.i.] Schering for the [c.i.] incrementally [c.i.] Schering in
establishing Schering's [c.i.] such Finished Products or Collaboration Products,
as the case may be, and provided further that Schering is able to [c.i.] which
Schering might have [c.i.], when DUSA provides Schering [c.i.] and demonstrates
that it is able to [c.i.] Schering's requirements of Finished Products or
Collaboration Products, as the case may be, for the Territory. A [c.i.]
Schering's requirements" shall mean, with respect to a particular Finished
Product and/or Collaboration Product, a [c.i.] Schering, in any [c.i.] such
[c.i.], [c.i.] of the lesser of: (i) [c.i.] Schering for such [c.i.] as
calculated based upon the [c.i.] by Schering under Section [c.i.] above prior to
such [c.i.] period, and (ii) the [c.i.] that DUSA is [c.i.] under Section [c.i.]
above for such [c.i.].
9.12.4 Exclusive Remedies: Disclaimer. EXCEPT FOR WILLFUL BREACH
BY DUSA OF ITS OBLIGATIONS TO SUPPLY SCHERING THE QUANTITIES OF FINISHED PRODUCT
AND/OR COLLABORATION PRODUCT ORDERED PURSUANT TO SECTION 9.4 ABOVE OR REQUIRED
BY SECTION 9.12.2 ABOVE, WHICHEVER IS LESS, (A) DUSA'S LIABILITY FOR ANY
MATERIAL BREACH BY DUSA OF ITS OBLIGATIONS TO SUPPLY FINISHED PRODUCT AND/OR
COLLABORATION PRODUCT TO SCHERING IN ACCORDANCE WITH THIS AGREEMENT SHALL NOT
EXCEED [c.i.] FOR DAMAGES UNDER THIS AGREEMENT AND SHALL NOT EXCEED [c.i.] FOR
DAMAGES WITH RESPECT TO [c.i.] FOR A TOTAL NOT TO EXCEED [c.i.], AND (B) DUSA
SHALL NOT BE LIABLE FOR [c.i.] DAMAGES INCURRED BY SCHERING AS A RESULT OF SUCH
A FAILURE.
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9.13 Schering's [c.i.] DUSA hereby [c.i.] Schering, and Schering
hereby [c.i.] (the "[c.i.]") under [c.i.] necessary to [c.i.] anywhere in the
world (which [c.i.]) for [c.i.] within the Field in the applicable Product
Territory. Such [c.i.] shall be subject to all other terms and conditions of
this Agreement and the following:
9.13.1 Exercise of [c.i.]. Schering agrees to [c.i.] under the
[c.i.], only to the extent expressly permitted in Section 9.12.3 above or
Section 19.4.2(c) below. In such event, DUSA shall provide to Schering, no later
than [c.i.], copies of all documentation within DUSA's control that is
reasonably necessary for Schering to [c.i.] Finished Products and/or
Collaboration Products, and shall reasonably cooperate with Schering to
establish [c.i.], including [c.i.]. In the event that Schering has Collaboration
Products [c.i.], such [c.i.] shall enter into a [c.i.] with DUSA to protect
against the [c.i.] and [c.i.] of DUSA's [c.i.].
9.13.2 [c.i.]. In the event of [c.i.] by or under authority of
Schering pursuant to the [c.i.], Schering's [c.i.] to DUSA, set forth in Section
[c.i.] of this Agreement shall not be operative. Instead, Schering [c.i.] to
DUSA an [c.i.] (the "[c.i.]") on [c.i.] of such Collaboration Products by
Schering, its Affiliates and Sublicensees, which [c.i.] shall be [c.i.] to
[c.i.] that would have been [c.i.] under Article [c.i.] below, [c.i.] of [c.i.]
by Schering or a third party pursuant to this Section 9.13.
9.14 Supply of Light Source. The Parties have entered into a separate
agreement governing supply of the Light Source in the U.S. as of the Execution
Date in connection with the Initial Product. The Parties agree that
Collaboration Products may be promoted with alternate light sources, but for
safety and health regulatory reasons, such alternate light sources must be of
similar safety and efficacy and approved by the appropriate regulatory
authorities, the Collaboration Products must be specifically labeled for use
with such alternate light sources, and the protocols used to gather data for
approval of the light source must have been approved by the Development
Committee. It is understood and agreed that any [c.i.] with respect to [c.i.]
shall be the [c.i.] and shall not be included as part of the Development Program
unless otherwise agreed in writing.
ARTICLE 10
COLLABORATION PRODUCT PAYMENTS TO DUSA
10.1 Prices. The supply price to Schering for each of the Collaboration
Products shall be as follows (the "Supply Price", which shall mean, as
applicable, the Commercial Supply Price, Minimum Supply Price or Samples Supply
Price).
10.2 Commercial Sales. With respect to Collaboration Products intended
for commercial sale, Schering shall pay to DUSA the amounts provided in 10.2.1
or 10.2.2, depending upon whether such Collaboration Products are sold for use
in the United States or countries other than the United States.
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<PAGE> 49
10.2.1 U.S. Sales. For Collaboration Products that are sold for
use in the U.S., the Supply Price shall be equal to the sum of the amounts set
forth in (a) and (b) below for U.S. sales, (the "Commercial Supply Price"):
(a) an amount equal to [c.i.] of the Net Sales price of such
unit of Collaboration Product (the "Product Component"); plus
(b) an amount equal to a percentage of the Net Sales price of
such unit of Collaboration Product, with such percentage determined in
accordance with the following percentages of Annual U.S. Net Sales in the
particular calendar year (the "Royalty"):
<TABLE>
<CAPTION>
Annual U.S. Net Sales Royalty
- --------------------- -------
<S> <C>
[c.i.] of Annual U.S. Net Sales [c.i.] of such Annual U.S.
Net Sales
Annual U.S. Net Sales greater [c.i.]of such Annual U.S.
than [c.i.] Net Sales
Annual U.S. Net Sales greater [c.i.] of such Annual U.S.
than [c.i.] Net Sales
</TABLE>
10.2.2 ROW Sales. With respect to Collaboration Products sold for
use in a country other than the U.S., the Supply Price shall equal the sum of
the amounts set forth in (a) and (b) below, subject to paragraphs (c) and (d)
below (the "Commercial Supply Price").
(a) [c.i.] of such Collaboration Products; plus
(b) the Applicable Percentage (as defined below) of the
Total Gross Margin (as defined below) from sales of such Collaboration Product
in such country (the amount calculated by multiplying the Applicable Percentage
by the Total Gross Margin being referred to as the "Gross Margin Percentage").
For such purposes:
(i) The "Total Gross Margin" means the Net Sales
of such Collaboration Product in the particular country, less DUSA's Cost of
Goods for such Collaboration Product.
(ii) The "Applicable Percentage" shall vary
depending upon the Annual ROW Net Sales during the particular calendar year, as
follows:
<TABLE>
Annual ROW Net Sales Applicable Percentage
- -------------------- ---------------------
<S> <C>
[c.i.] of Annual ROW Net Sales [c.i.]
</TABLE>
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<PAGE> 50
<TABLE>
<S> <C>
Annual ROW Net Sales greater [c.i.]
than [c.i.]
Annual ROW Net Sales greater [c.i.]
than [c.i.]
</TABLE>
(c) Notwithstanding the foregoing, for the [c.i.]
of Annual ROW Net Sales, the Commercial Supply Price for a unit of Collaboration
Product included in such Annual ROW Net Sales shall [c.i.] of the [c.i.] of such
unit (subject to Section 10.3 below).
(d) In addition, Schering may offset against the
Gross Margin Percentage from Net Sales of Collaboration Products in a particular
country up to [c.i.] of the Recoupable Development Costs (as defined below) for
such Collaboration Product in such country; provided that the amount of the
Gross Margin Percentage shall not be so reduced [c.i.]. However, this paragraph
(d) shall not apply with respect to any units of a Collaboration Product for
which the Commercial Supply Price is capped according to paragraph (c) above
(i.e., Section 10.2.2(c)). "Recoupable Development Costs" for a country means
[c.i.] by Schering [c.i.] with respect to the development of Collaboration
Products and obtaining Marketing Approvals in such country; provided that [c.i.]
costs that may be included in Recoupable Development Costs for all countries
combined in any particular calendar year may not exceed [c.i.] (and any such
costs so excluded [c.i.] and [c.i.] to Recoupable Development Costs [c.i.]).
Schering shall provide to DUSA [c.i.] after the end of each calendar year an
accounting of all Recoupable Development Costs for such Collaboration Product in
each country, and any costs that are not so included in such a report may not
later be included in Recoupable Development Costs. This paragraph (d) shall not
operate to reduce the Supply Price below the applicable Minimum Supply Price.
10.2.3 Certain Terms. For purposes of this Agreement, "Annual
U.S. Net Sales" shall mean all Net Sales of all Collaboration Products hereunder
(i.e., combined) that are sold for use in the U.S. in the calendar year; and
"Annual ROW Net Sales" shall mean all Net Sales of Collaboration Products
hereunder (combined) that are sold for use in the Product Territory outside the
U.S. in the calendar year. Units of Collaboration Product shall be considered
sold when the units are invoiced to a customer. It is understood that if the
Cost of Goods for units of a Collaboration Product shall be determined on a unit
by unit basis, so that if the Cost of Goods for units of a Collaboration Product
sold for use in a particular country is different from the Cost of Goods for
another country, the actual Cost of Goods of the particular unit shall be used
for purposes of this Article 10. Where Cost of Goods is referred to in this
Article 10, it is understood that such term refers to the Cost of Goods of the
Collaboration Product in the form of Finished Product. For purposes of the
Agreement, references to the "Royalty" portion of the Supply Price shall refer
only to that portion of the Commercial Supply Price calculated on Annual U.S.
Net Sales under Section 10.2.1(b) above.
10.3 Minimum Supply Prices. Notwithstanding Section 10.2 above, the
Supply Price to be paid to DUSA for units of Collaboration Products sold for
commercial use during a calendar year shall not be less than the following
minimum price ("Minimum Supply Price"):
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<PAGE> 51
10.3.1 U.S. Sales. For Collaboration Products sold for use in the
United States, the Minimum Supply Price shall be as follows:
(a) with respect to each Collaboration Product other than
the Initial Product, (i) the Minimum Supply Price shall equal [c.i.] for such
units [c.i.]of [c.i.], or (ii) for the Initial Product, the Minimum Supply Price
shall equal [c.i.]), [c.i.] of which represents payment of the Product Component
and [c.i.] of which represents the Royalty.
(b) The Minimum Supply Price set forth in clause (ii) of the
preceding paragraph (i.e., Section 10.3.1(a)(ii)) for the Initial Product shall
be adjusted commencing at the end of each calendar year to reflect the aggregate
change, if such change is in excess of [c.i.]), in the Producer Price Index for
Pharmaceutical Manufacturers ([c.i.]) (the "PPI") during the preceding year. If
the change in the PPI during such period is [c.i.], then the PPI shall be
reviewed every year thereafter until the aggregate change since [c.i.] is
[c.i.], at which time such adjustment shall be made. Thereafter, the PPI shall
be reviewed every year and the Minimum Supply Price set forth in Section
10.3.1(a)(ii) shall be adjusted at the end of each such calendar year to reflect
the aggregate change, if such change is [c.i.], in the PPI during the period
since the immediately preceding adjustment. The Parties recognize that PPI
figures are published by the United States government, and that calendar year
figures are not available until some time after the end of the applicable
calendar year. As a result, year end adjustments will be made when PPI figures
are available, and will be retroactive to the beginning of the relevant calendar
year.
10.3.2 ROW Sales. For Collaboration Products sold for use in
countries other than the United States, the Minimum Supply Price shall equal the
[c.i.] for such Collaboration Product, plus [c.i.] of [c.i.] of such
Collaboration Product in such country. If Schering shall choose not to market a
Collaboration Product because the Minimum Supply Price would render such sales
as not commercially viable, such Collaboration Product shall be deemed an
Abandoned Product for the purposes of this Agreement, and DUSA agrees that it
[c.i.] the [c.i.] to any other third party [c.i.] any more [c.i.] than those
[c.i.] to Schering.
10.3.3 Certain Other Terms. Notwithstanding any other provision
of this Agreement, in no event shall the Commercial Supply Price paid to DUSA
under this Article 10 be less than the applicable Minimum Supply Price, and in
no event shall the Royalty be [c.i.] by [c.i.]).
10.4 Certain Quantities. With respect to quantities described in the
following Sections 10.4.1 through 10.4.3, the Supply Price shall be as follows:
10.4.1 Samples. With respect to Collaboration Products intended
for uses other than commercial sale, including without limitation as samples for
training programs, educational programs or customer demonstration (collectively,
"Samples") Schering shall pay to DUSA an amount [c.i.] for such Samples (the
"Samples Supply Price"); provided that units ordered as Samples shall be
designated as Samples at the time of order.
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<PAGE> 52
10.4.2 Obsolete Inventory. With respect to any units of
Collaboration Products originally purchased for commercial sale that expire or
that are accidentally destroyed by Schering, Schering shall pay to DUSA [c.i.].
10.4.3 Clinical Trial Materials. The cost applicable to
Collaboration Products supplied for use in connection with the Development
Program shall be [c.i.] for such units and to the extent such materials are used
in the performance of the Development Program pursuant to the Development Plan
and Budget, the applicable cost shall be included within the Development Cost to
be reimbursed pursuant to Article 6 above.
10.5 Discounting. If Schering or its Affiliate or Sublicensee sells any
Collaboration Product to a customer who also purchases other products or
services from Schering, its Affiliates or Sublicensees, Schering agrees not to,
and to require its Affiliates and Sublicensees not to, discount or price the
Collaboration Products in a manner that would disadvantage the Collaboration
Products in order to benefit sales or prices of other products offered for sale
by Schering, its Affiliates or Sublicensees to such customer.
10.6 Payments. Payments due to DUSA under Sections 10.1 through 10.4
above shall be made as follows:
10.6.1 On Delivery. [c.i.] of delivery to Schering of each unit
of Finished Product and/or bulk shipment of Collaboration Product and invoice,
Schering shall pay to DUSA, [c.i.], on a [c.i.] basis.
10.6.2 Reconciliation.
(a) Not later than [c.i.] following the end of each [c.i.],
Schering shall: (i) deliver to DUSA a report summarizing the Net Sales of
Collaboration Products for such [c.i.] on a product-by-product and
country-by-country basis, such report also setting forth a calculation of the
Supply Price for all quantities sold by Schering in such [c.i.]; and (ii) pay to
DUSA an amount equal to the Supply Price sold in such [c.i.], less the amount
paid as [c.i.] pursuant to 10.6.1 above with respect to such units.
(b) Not later than [c.i.] following the end of each [c.i.],
Schering shall prepare and deliver to DUSA a final report summarizing the Net
Sales of Collaboration Products on a product-by-product and country-by-country
basis for the immediately preceding [c.i.]. The amounts paid pursuant to (a)
above for the applicable [c.i.] shall be reconciled to the Supply Price pursuant
to Sections 10.1 through 10.4 as determined using the actual Net Sales of
Collaboration Products for the applicable [c.i.] In the event the payments made
by Schering under (a) above for such [c.i.] are less than the amounts actually
payable under such Sections, Schering shall be required to pay to DUSA such
shortfall [c.i.] such [c.i.] sales report and reconciliation is due. In the
event the payments made by Schering under Section 10.6 and 10.6.2 (a) above for
such [c.i.] are greater than the amounts actually payable under such Sections,
DUSA shall be required to pay to Schering such excess [c.i.] after delivery of
the [c.i.] sales report and reconciliation.
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<PAGE> 53
10.7 Adjustment to Commercial Supply Price [c.i.] In the event that:
(i) a Collaboration Product [c.i.], or [c.i.], [c.i.] with respect to the [c.i.]
included in a Collaboration Product for an approved indication in any country in
the applicable Product Territory during the term of this Agreement (e.g., due to
the [c.i.], and/or [c.i.]), (ii) [c.i.] are [c.i.] for [c.i.] in such country,
and (iii) such [c.i.] represents a [c.i.] for [c.i.] of [c.i.] of such
Collaboration Product and such [c.i.] in the aggregate, in such country in any
[c.i.], determined by the [c.i.] given for such Collaboration Product and such
[c.i.], in the aggregate, during such [c.i.] (as measured by a [c.i.] or other
mechanism agreed upon by the Parties) and Schering reasonably determines that
Schering is [c.i.] such [c.i.] (a "[c.i.]"), then Schering shall thereafter
[c.i.] to DUSA an adjusted Commercial Supply Price for Net Sales of such
Collaboration Product in such country [c.i.] to the [c.i.] in the [c.i.] or
[c.i.] of such Commercial Supply Price otherwise payable pursuant to Section
10.2.1(b) and pursuant to Section 10.2.2(b).
10.8 Undue Hardship. If the terms of this Article 10 impose an
unanticipated burden on Schering or DUSA, and in particular if such performance
would create a material, adverse imbalance of the economic result hereunder,
then the terms and conditions of this Article 10 shall be equitably adjusted by
the Parties to remedy such burden or imbalance.
ARTICLE 11
THIRD PARTY ROYALTIES
If, after the Execution Date, Schering and DUSA through the
Development Committee agree to utilize in connection with a Collaboration
Product other technologies licensed or acquired after the Execution Date from
third parties by DUSA, or by Schering, then Schering and DUSA shall share the
costs associated with acquiring such technologies including any royalties,
license fees, or milestone payments due to third parties with respect to such
technologies as mutually agreed. It is understood that unless the Parties so
agree, such other acquired technologies or intellectual property shall be
excluded from the DUSA Technology for purposes of this Agreement. If the Parties
do agree to so utilize technologies or intellectual property licensed or
acquired from a third party, DUSA's and Schering's rights in such technologies
and intellectual property shall be, as between DUSA and Schering, as mutually
agreed in writing between them.
ARTICLE 12
PAYMENTS; BOOKS AND RECORDS
12.1 Payment Method. All payments under this Agreement shall be made by
bank wire transfer in immediately available funds to an account designated by
the Party to which such payments are due. All dollar amounts specified in this
Agreement, and all payments made hereunder, are and shall be made in U.S.
dollars. Any payments due under this Agreement which are not paid by the date
such payments are due under this Agreement shall bear interest to the extent
permitted by applicable law at the [c.i.] publicly announced by [c.i.]on [c.i.]
on the date such payment is due, [c.i.], computed on the basis of a three
hundred sixty (360) day year, actual days elapsed. The applicable interest rate
shall be adjusted each time there shall be a change in the [c.i.]
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<PAGE> 54
announced by [c.i.]. This Section 12.1 shall in no way limit any other remedies
available to the Parties.
12.2 Currency Conversion. Where payments to DUSA by Schering under this
Agreement are based on Net Sales in countries other than the U.S., the amount of
such Net Sales expressed in the currency of each country shall be converted into
[c.i.] at the exchange rate of the last day of the applicable [c.i.]. The
applicable exchange rate will be the [c.i.] published by [c.i.]. If no [c.i.] is
determined for the relevant currency, the Parties shall agree upon another
reference rate. Finally, the [c.i.] shall be [c.i.] at the [c.i.] published by
the [c.i.] or a successor thereto, and on [c.i.] on the last day of the
applicable [c.i.].
12.3 Taxes. In the event that Schering is required to withhold any tax
to the tax or revenue authorities in any country in the Territory regarding any
payment to DUSA due to the laws of such country, such amount shall be deducted
from the payment to be made by Schering and Schering shall notify DUSA and
promptly furnish DUSA with copies of any tax certificate or other documentation
evidencing such withholding. Each Party agrees to cooperate with the other Party
in claiming exemptions from such deductions or withholdings under any agreement
or treaty from time to time in effect. Likewise, if DUSA has the legal
obligation to collect and/or pay any sales, use, excise or value added taxes,
the appropriate amount shall be added to Schering's invoice and paid by
Schering, unless Schering provides DUSA with a valid tax exemption certificate
authorized by the appropriate taxing authority.
12.4 Records; Inspection
12.4.1 Schering. Schering shall keep, and require its Affiliates
and Sublicensees to keep, complete, true and accurate books of accounts and
records for the purpose of determining the amounts payable pursuant to this
Agreement. Such books and records shall be kept at the principal place of
business of Schering, its Affiliates and Sublicensees for [c.i.] following the
end of the [c.i.] to which they pertain. Such records will be open for
inspection during such [c.i.] by an independent auditor chosen by DUSA and
reasonably acceptable to Schering for the purpose of verifying the amounts
payable by Schering hereunder Such inspections may be made no more than [c.i.],
at reasonable times and on reasonable notice. The independent auditor shall be
obligated to execute a reasonable confidentiality agreement prior to commencing
any such inspection. Inspections conducted under this Section 12.4.1 shall be at
the expense of DUSA, unless a variation or error producing an underpayment in
amounts payable [c.i.] of the amount paid for any period covered by the
inspection is established in the course of any such inspection, whereupon all
costs relating to the inspection for such period and any unpaid amounts that are
discovered shall be paid by Schering, together with interest on such unpaid
amounts at the rate set forth in Section 12.1 above. The Parties will endeavor
to minimize disruption of Schering's normal business activities to the extent
reasonably practicable.
12.4.2 DUSA. DUSA shall keep complete, true and accurate books of
accounts and records for the purpose of determining payments due pursuant to
this Agreement. Such books and records shall be kept open at the principal place
of business of DUSA and be for [c.i.] following the end of the [c.i.] to which
they pertain. Such records will be open for inspection during such [c.i.] by
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<PAGE> 55
an independent auditor chosen by Schering and reasonably acceptable to DUSA for
the purpose of verifying the amounts payable by Schering hereunder. Such
inspections may be made no more than [c.i.], at reasonable times and on
reasonable notice. Schering's independent auditor shall be obligated to execute
a reasonable confidentiality agreement prior to commencing any such inspection.
Inspections conducted under this Section 12.4.2 shall be at the expense of
Schering, unless a variation or error producing an overpayment in amounts
payable [c.i.] of the amount paid for any period covered by the inspection is
established in the course of any such inspection, whereupon all costs relating
to the inspection for such period and any overpaid amounts that are discovered
will be paid by DUSA, together with interest on such overpaid amounts at the
rate set forth in Section 12.1 above. The Parties will endeavor to minimize
disruption of DUSA's normal business activities to the extent reasonably
practicable.
ARTICLE 13
MARKETING EFFORTS
13.1 Marketing Efforts.
13.1.1 General. Schering agrees to use [c.i.] efforts (a) to
launch each Collaboration Product in each Key Market of each Region of the
applicable Product Territory, as soon as possible after receipt of Marketing
Approval for such Collaboration Product in such country, and in each other
country of the applicable Product Territory as soon as [c.i.]; and (b) after the
First Commercial Sale of a Collaboration Product in a country of the applicable
Product Territory within the Field, maximize Net Sales in such country.
13.1.2 Minimum Royalties.
(a) Without limiting the foregoing, in the event that the
sum of the Royalties and Gross Margin Percentage paid to DUSA by Schering with
respect to all Collaboration Products (combined) sold by Schering throughout the
Product Territory in a particular Year (as defined below) fails to meet the
minimum amounts set forth below for such Year ("Minimum Royalties"), then DUSA
may terminate this Agreement upon [c.i.] notice; provided that such right of
termination shall not be operative (i) during any [c.i.] in which [c.i.] remains
in effect, or (ii) in the event Minimum Royalties were not achieved, Schering
makes payments to DUSA, [c.i.] after receipt of such termination notice, in the
amount of the shortfall between actual Royalties and Gross Margin Percentage and
the Minimum Royalty amounts set forth below for the respective period. Provided
further that [c.i.] to [c.i.] shall not apply if Schering's failure to achieve
Minimum Royalties is due to: (i) a [c.i.] to [c.i.] such Collaboration Products
as required under Article [c.i.]; or (ii) [c.i.] of the Light Source Agreement
which [c.i.] Schering's [c.i.] the Initial Product in the U.S.. In either case
the foregoing right of termination [c.i.] and [c.i.].
<TABLE>
<CAPTION>
Minimum
Year Royalties
---- ---------
<S> <C>
[c.i.] [c.i.]
</TABLE>
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<PAGE> 56
<TABLE>
<CAPTION>
<S> <C>
[c.i.] [c.i.]
[c.i.] [c.i.]
[c.i.] [c.i.]
[c.i.] [c.i.]
[c.i.] [c.i.]
</TABLE>
(b) In addition to the provisions of paragraph (a) above,
the following shall apply:
(i) Beginning with Year 1, in the event that the
total Royalties and Gross Margin Percentage paid to DUSA by Schering with
respect to all Collaboration Products (combined) in a particular Year are less
than the Minimum Royalties for that year and Schering does not make up the
shortfall amount as provided by Section 13.2.1(a) above, then notwithstanding
any other provision of this Agreement, DUSA shall have the right (directly
and/or through third parties) to promote the Collaboration Products which have
been [c.i.] for a [c.i.], in the applicable Product Territory.
(ii) Should DUSA exercise its right to promote the
applicable Collaboration Product, it is understood that Schering [c.i.] the
[c.i.] to sell and distribute the applicable Collaboration Product in the
applicable Product Territories, so that DUSA's right to promote would be [c.i.]
of a [c.i.], in which DUSA and/or its designee promote the applicable
Collaboration Product (including the Initial Product),[c.i.]. It is further
understood, however, that DUSA will have the right to control the promotion
activities undertaken pursuant to this right.
(iii) In the event that DUSA exercises its right
to [c.i.] of a Collaboration Product pursuant to this Section 13.1.2(b), then
for each Year in which DUSA exercises such right, Schering shall pay to DUSA an
amount of the Co-Promotional Net Sales of such Collaboration Product in such
Year in the countries in which DUSA exercises such right which is proportional
to the level of effort expended by DUSA (relative to Schering) in exercising
such right, but in no event [c.i.] of such total amount. For such purposes,
"Co-Promotional Net Sales" shall mean the Net Sales of such Collaboration
Product in such country in such Year, less the Net Sales of the Collaboration
Product in such country in the Year immediately preceding the Year in which DUSA
first exercised its promotion right in such country. In the event that DUSA
exercises such right for less than a full Year, the Co-Promotional Net Sales
shall be calculated on a pro rata temporis basis. The Parties' relative level of
effort shall be measured by auditing and comparing the incremental costs
incurred by DUSA and Schering in promoting such Collaboration Product in the
countries in which DUSA has exercised such right. In particular, the incremental
costs for Schering will be determined by comparing its marketing costs for such
Collaboration Product in such countries before DUSA exercised its co-promotion
right to such Collaboration Products in such countries to its costs for the same
Collaboration Products and countries after DUSA's exercise of its co-promotion
right. Such comparison shall be completed [c.i.] after the end of each calendar
year in which DUSA exercises this right.
(c) For purposes of this Section 13.1, "Year 1" shall mean
the first calendar year in which the First Commercial Sale of the Initial
Product occurs, provided that if the
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first Commercial Sale occurs after September 30 of any year, "Year 1" shall be
the following calendar year; "Years" 2, 3, 4, 5, shall mean the successive
calendar years after Year 1.
(d) Such termination pursuant to this Section 13.1 shall be
effective [c.i.] written notice and shall be deemed a termination of the
Agreement under Section 19.3 below.
13.2 (a) Failure to File. Subject to Section 13.2.1, if Schering fails
to file an MAA in any country [c.i.] after the first filing of an MAA for such
Collaboration Product (except for the Initial Product, for which the period
shall be [c.i.] after [c.i.]) in the first Major Country, or if Schering
thereafter fails to continue using reasonable efforts to obtain and maintain a
Marketing Approval for such Collaboration Product in such country, then in
either such event such Collaboration Product shall be deemed an Abandoned
Product in such country; and such country shall be deemed an "Abandoned Country"
for such Abandoned Product. In addition, if Schering determines that it is
commercially unreasonable to file an MAA or thereafter maintain such MAA or
Marketing Approval for a Collaboration Product in any country of the Product
Territory on the terms of this Agreement, Schering may, upon reasonable notice
to DUSA, terminate its rights and obligations under this Agreement with respect
to such Collaboration Product for such country, and such country shall cease to
be a part of the Product Territory with respect to such Collaboration Product
for all purposes of this Agreement and all rights to distribute such
Collaboration Product in such country shall revert to DUSA as of DUSA's receipt
of Schering's notice of cancellation. This Section 13.2 shall not limit any
other remedies DUSA may have under applicable law.
(b) MAA Filing after Additional Trial. If, because of
marketing considerations or regulatory requirements in a specific country,
additional development activities for a Collaboration Product are necessary
before Schering can file an MAA for such Collaboration Product in such country,
then [c.i.] described under Section 13.2(a) shall not be applicable. Instead, a
period of [c.i.] is complete or [c.i.] after the clinical follow-up work on the
last patient of such trial is complete (as determined by the protocol for such
trial), whichever is less, shall be the applicable deadline for filing of such
MAA for such Collaboration Product in such country.
13.3 Failure to Sell. If Schering fails to launch a Collaboration
Product in any country [c.i.] from the date of Marketing Approval for such
Collaboration Product in such country, then such country shall be deemed an
Abandoned Country for such Collaboration Product and such Collaboration Product
shall be deemed an Abandoned Product in such country; provided that such failure
is not due to [c.i.] as required by Article [c.i.] (or due to [c.i.] of the
Light Source Agreement which [c.i.] the Initial Product in the U.S.). In
addition, if Schering determines that [c.i.] to [c.i.] of a Collaboration
Product in a particular country on the terms of this Agreement Schering may,
upon [c.i.] notice to DUSA, [c.i.] or [c.i.] in such country and such country
shall cease to be a part of the Product Territory for such Collaboration Product
for all purposes of this Agreement, and all rights to distribute such
Collaboration Product in such country shall revert to DUSA as of DUSA's receipt
of Schering's notice [c.i.] This Section 13.3 shall not limit any other remedies
DUSA may have under applicable law.
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13.4 Other. It is understood that if a country is deemed an Abandoned
Country under this Article 13 with respect to a Collaboration Product, such
Collaboration Product shall be deemed an Abandoned Product in such Abandoned
Country.
ARTICLE 14
INTELLECTUAL PROPERTY
14.1 Licenses to Schering. Subject to the terms and conditions of this
Agreement, including Article 9 above, DUSA hereby grants to Schering a license
under the DUSA Technology to (i) promote, market, sell, have sold, import and
otherwise distribute Collaboration Products for use solely within the Field in
the applicable Product Territory, and (ii) to carry out those activities
assigned to Schering under the Development Program in accordance with the
Development Plan and Budget in effect from time to time hereunder. The license
granted in (i) shall be exclusive, and the license granted in (ii) shall be
non-exclusive (it being understood that such non-exclusivity shall not limit
Schering's obligations under Section 16.2), and in each case shall include the
right to grant sublicenses, subject to the other terms and conditions of this
Agreement, including without limitation Section 8.5 above.
14.2 Ownership of Inventions. Title to all inventions and other
intellectual property made solely by Schering personnel in connection with the
Development Program shall be owned by Schering. Title to all inventions and
other intellectual property made solely by DUSA personnel in connection with the
Development Program shall be owned by DUSA. Title to all inventions and other
intellectual property made jointly by personnel of DUSA and Schering in
connection with the Development Program shall be jointly owned by Schering and
DUSA. Except as expressly provided in this Agreement, it is understood that
neither Party shall have any obligation to account to the other for profits, or
to obtain any approval of the other Party to license or exploit a joint
invention, by reason of joint ownership of any invention or other intellectual
property.
14.3 Patent Prosecution.
14.3.1 Solely Controlled.
(a) Prosecution by DUSA.
(i) DUSA and Schering shall establish a patent
review committee to consider joint funding of patent prosecution and maintenance
activities (e.g., the conducting of any interferences, re-examinations,
reissues, oppositions or requests for patent term extensions relating to the
DUSA Technology using counsel of its choice) for those core DUSA Patents listed
in Exhibit 14.3 and of prosecution and maintenance for those additional DUSA
Patents not listed in Exhibit 14.3 which DUSA brings forward, in its sole
discretion, to the committee. This patent review committee shall be composed of
an equal number of representatives from each of DUSA and Schering, with a total
number of members as the Parties may agree. Each of the Parties may replace its
members upon notice to the other Party. The patent review committee shall meet
on an ad hoc basis, as requested by DUSA upon reasonable notice.
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(ii) The patent review committee shall consider
those patent issues brought before it by DUSA and shall make recommendations, on
a majority basis, regarding any joint funding for the issues brought before it.
DUSA shall not be obligated to adopt the patent review committee's
recommendations, but such adoption, if it includes joint funding by the Parties,
shall obligate Schering to reimburse DUSA, [c.i.] of [c.i.] for such activities,
for [c.i.] of the costs [c.i.], however, if DUSA enters into a license agreement
or research and development collaboration with a third party or parties
involving products covered by a patent or patent application that is the subject
of such DUSA Patents and such third party pays a portion of the costs,
Schering's reimbursement shall be reduced proportionately on a pro rata basis
(e.g., Schering's percentage would be reduced to [c.i.] if DUSA enters into
[c.i.], or [c.i.] if DUSA enters into [c.i.]). Notwithstanding the foregoing, in
case the patent review committee does not reach agreement with respect to
funding patent related expenses for DUSA's core patents listed in Exhibit 14.3.
Schering's share of patent expenses related to DUSA's core patents shall be
[c.i.], unless a majority of the committee has a reasonable basis to allocate a
different share.
(iii) The Parties acknowledge that the DUSA
Patents listed in Exhibit 14.3 shall remain DUSA Patents for the purpose of this
Agreement regardless of whether or not Schering reimburses DUSA for
patent-related costs.
(iv) With respect to DUSA Patents or proposed
patents not listed in Exhibit 14.3, if the patent review committee does not
recommend joint funding for a proposed patent activity, then Schering shall not
be obligated to contribute a [c.i.] share of the resulting costs for such patent
activity and such patent shall be excluded from the terms of this Agreement (and
such patent or application (and any patents issuing on such application) shall
thereafter be excluded from the definition of DUSA Patents hereunder), and
Schering shall have no right or license under this Agreement with respect to
such patent or patent application (or any patent issuing thereon) ("Rejected
Patents"). Notwithstanding the foregoing, [c.i.] such Rejected Patents [c.i.] of
this Agreement by [c.i.] of the [c.i.] incurred by [c.i.] with respect to such
DUSA Patents from the date on which the patent review committee declined to
recommend joint funding of such Rejected Patent and [c.i.] of the [c.i.].
(v) Irrespective of recommendations of the patent
review committee, DUSA retains the right, at its expense, to control the
preparing, filing, prosecuting and maintaining of solely owned patent
applications and patents within the DUSA Technology worldwide, in such countries
as it deems appropriate, and the conducting of any interferences,
re-examinations, reissues, oppositions or requests for patent term extensions
relating to the DUSA Technology using counsel of its choice. DUSA shall be
obligated to maintain the DUSA Patents listed in Exhibit 14.3 in those countries
where they have been filed as of the Execution Date.
(b) Prosecution by Schering. In the event that DUSA declines
to file or, having filed, declines to further prosecute and maintain any such
patent applications or patents in accordance with 14.3.1(a) above, or conduct
any interferences or oppositions, or request any re-examinations, reissues or
extensions of patent term with respect to the DUSA Patents, Schering shall have
the right to file, prosecute and maintain such patent applications or patents or
conduct
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such interferences, at its own expense, in the name of DUSA in any country. If
DUSA declines to pursue prosecution of a pending patent application in any
country, or not to maintain an issued patent in any country, it shall notify
Schering [c.i.] prior to the date the next action or filing is due to be taken
with respect to the subject patent application or patent. Notwithstanding the
foregoing, Schering shall not take any such action that could adversely affect a
patent or application owned by DUSA, unless such action is mutually agreed by
the Parties.
14.3.2 Joint Inventions. DUSA shall have the first right to
pursue patent or other intellectual property protection for inventions that are
owned jointly by Schering and DUSA under Section 14.2 above. To exercise this
right, DUSA shall propose such action to the patent review committee (as
established by Section 14.3.1(a)). If the committee recommends joint funding,
Schering shall promptly reimburse DUSA for [c.i.] of [c.i.] in connection with
such activities as they are incurred, and all right, title and interest in and
to such patent or application (as the case may be) and any patents issuing
thereon will be jointly owned. If the committee does not recommend such joint
funding and either Party chooses to pursue patent protection for such joint
invention in a particular country, then all right, title and interest in and to
such patent or application (as the case may be) and any patents issuing thereon
shall be owned by the Party pursuing such patent or application DUSA shall
notify Schering [c.i.] prior to the date the next action or filing is due to be
taken with respect to a jointly owned invention, patent application or patent,
as to whether DUSA intends to take any of the foregoing actions with respect to
such invention, patent application or patent. If, at that time, DUSA chooses not
to propose patent protection for such joint invention to the patent review
committee, then Schering may exercise its right hereunder to do so.
14.3.3 Cooperation. DUSA shall keep Schering reasonably
informed as to the status of patent matters pertaining to the DUSA Technology,
including providing to Schering upon request copies of any significant documents
that such Party receives from or sends to patent offices, such as notices of
interferences, re-examinations, oppositions or requests for patent term
extensions, all as reasonably requested by the other Party. DUSA and Schering
shall each cooperate with and assist the other in connection with such
activities.
14.4 Defense of Third Party Infringement Claims.
14.4.1 Defense. If the production, sale or use of any
Collaboration Product within the Field pursuant to this Agreement results in a
claim, suit or proceeding alleging patent infringement against DUSA or Schering
(or their respective Affiliates or Sublicensees) (collectively, "Actions"), such
Party shall promptly notify the other Party hereto in writing. The Party subject
to such Action shall have the exclusive right to defend and control the defense
of any such Action (including the conclusion of a potential settlement (but
limited to the rights granted pursuant to this Agreement)) using counsel of its
own choice, and the Action, subject to Sections 18.1 and 18.2, shall be at such
Party's own expense; provided, however, that the other Party may participate in
the defense and/or settlement thereof at its own expense with counsel of its
choice. The Party in the Action agrees to keep the other Party hereto reasonably
informed of all material developments in connection with any such Action.
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14.4.2 [c.i.]. [c.i.] shall have the [c.i.] the [c.i.] payable
to [c.i.] hereunder with respect to the Collaboration Product that is the
subject of such Action (including a [c.i.] pursuant to Section [c.i.]), [c.i.]
of [c.i.] in an Action, and [c.i.] of the [c.i.] such Action (including the
[c.i.] and other reasonable [c.i.]).
14.5 Enforcement. Subject to the provisions of this Section 14.5, in
the event that Schering reasonably believes that any DUSA Technology necessary
for the manufacture, use or sale of a Collaboration Product within the Field is
infringed or misappropriated by a third party or is subject to a declaratory
judgment action arising from such infringement in such country, in each case
with respect to the manufacture, sale or use of a product in the Territory with
application within the Field, Schering shall promptly notify DUSA. In such
event, DUSA shall have the initial right (but not the obligation) to enforce
DUSA Patents with respect to such infringement, or defend any declaratory
judgment action with respect thereto (for purposes of this Section 14.5, an
"Enforcement Action").
14.5.1 Initiating Actions. In the event that DUSA fails to
initiate an Enforcement Action to enforce the DUSA Patents, against a
commercially significant infringement by a third party in a country in the
Territory, which infringement consists of the manufacture, sale or use of a
product in the Field in such country, within [c.i.] of a request by Schering to
initiate such Enforcement Action, Schering may initiate an Enforcement Action
against such infringement with DUSA's prior written approval, which approval
shall not be unreasonably withheld. DUSA shall cooperate in such Enforcement
Action at Schering's expense, provided that Schering indemnifies DUSA against
any liability arising therefrom. The Party initiating or defending any such
Enforcement Action shall keep the other Party hereto reasonably informed of the
progress of any such Enforcement Action, and such other Party shall have the
right to participate with counsel of its own choice.
14.5.2 DUSA Enforcement. With respect to Enforcement Actions
initiated by DUSA in a country, with [c.i.] and [c.i.], Schering shall [c.i.] of
the costs and expenses (including [c.i.] and [c.i.]) of such Enforcement Action.
Any recovery received as a result of any Enforcement Action to enforce DUSA
Patents pursuant to this Section 14.5 shall be used first to reimburse the
Parties for the costs and expenses (including [c.i.] and [c.i.]) incurred in
connection with such Enforcement Action, and the remainder of the recovery shall
be shared (to the extent the same represents damages from sales of products
within the Field) equally between the Parties; provided, however, if either
Party initiates the Enforcement Action and the other Party does not agree [c.i.]
of the costs and expenses thereof, the non-funding Party shall not be entitled
to any amount recovered in such Enforcement Action to the extent the same
represents damages from sales of products within the Field.
14.6 Third Party Rights. The foregoing provisions of Sections 14.3
through 14.5 shall be subject to and limited by any agreements pursuant to which
DUSA acquired or licensed any particular DUSA Technology, all of which that
exist as of the Execution Date are listed on Exhibit 14.6.
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14.7 No Rights Beyond Collaboration Products. Except as expressly
provided herein, nothing in this Agreement shall be deemed to grant to Schering
rights in products or technology other than the Collaboration Products; nor
shall any provision of this Agreement, be deemed to restrict DUSA's right to
exploit any DUSA Technology in products other than Collaboration Products or
outside the Field or outside the Territory or applicable Product Territory.
14.8 Covenants. It is understood that, with respect to any particular
Collaboration Product, whether or not the manufacture, use or sale of such
Collaboration Product by DUSA and/or Schering in any country requires a license
under intellectual property rights of the other, neither DUSA nor Schering shall
market, sell or distribute a Collaboration Product anywhere in the world except
in accordance with this Agreement, including Article 8.
14.9 Patent Marking. Schering agrees to mark and have its Affiliates
and Sublicensees mark all patented Collaboration Products they sell or
distribute pursuant to this Agreement in accordance with the applicable patent
statutes or regulations in the country or countries of manufacture and sale
thereof.
ARTICLE 15
TRADEMARKS
15.1 Display. All packaging materials, labels and promotional materials
for the Initial Product sold in the U.S. shall display the Levulan Trademark and
the Kerastick Trademark, and the Parties shall agree as to which trademarks
shall be displayed on such labels and materials for other Collaboration Products
sold in the U.S. [c.i.] the trademarks to be displayed on packaging materials,
labels and promotional materials for Collaboration Products sold ex-U.S. In
addition, all such materials and labels shall display the trade name of Schering
and DUSA, it being understood that the [c.i.] name shall be the more prominently
displayed of the two names. The Schering trademarks, the Alternative Schering
Marks (as defined below), trade dress, style of packaging and the like with
respect to each Collaboration Product may be determined by Schering so as to be
consistent with Schering's standard trade dress and style.
15.2 License. DUSA hereby grants to Schering a [c.i.] license, to use
the Levulan Trademark, Kerastick Trademark and DUSA trade name (collectively,
the "DUSA Marks"), in each country of the Territory for the term of this
Agreement in connection with the marketing and promotion of Collaboration
Products for use and sale within the Field as contemplated in this Agreement.
Such license shall be exclusive for use and sale within the Field. DUSA shall
grant Schering a [c.i.] license to use such additional trade names as may be
developed by DUSA for Collaboration Products pursuant to this Agreement, which
shall also be included within the DUSA Marks. The ownership and all goodwill
from the use of the DUSA Marks shall vest in and inure to the benefit of DUSA.
DUSA reserves all rights not expressly granted herein.
15.3 Registration. DUSA agrees to file, register and maintain a
registration for the DUSA Marks in such countries of the Territory listed in
Exhibit 15.3 hereto and such other countries as are agreed by the Parties, for
the term of this Agreement, at DUSA's expense, for use with Collaboration
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Products. In those countries of the Territory where "Levulan" or "Kerastick" is
not selected [c.i.] for use and registration in connection with Collaboration
Products, Schering will develop, file, register and maintain a registration for
such alternative trademark [c.i.] In such event, such alternative mark shall be
deemed an "Alternative Schering Mark", and, notwithstanding the other Sections
of Article 15, the following provisions shall apply:
(i) Schering shall grant DUSA a royalty-free license for the
term of this Agreement to use such Alternative Schering Marks for each
Abandoned Product in each Abandoned Country in which they are registered.
Goodwill from the use of the Alternative Schering Marks shall vest in and
inure to the benefit of Schering.
(ii) DUSA agrees that at no time during or after term of this
Agreement will DUSA challenge or assist others to challenge the Alternative
Schering Marks or the registration thereof or attempt to register any
trademarks, marks or trade names confusingly similar to such Alternative
Schering Marks.
15.4 Ownership. DUSA recognizes the exclusive ownership by Schering of
any proprietary Schering name, logo, or trademark furnished by Schering (or
Schering's Affiliates) or Alternative Schering Mark for use in connection with
the Collaboration Products. DUSA shall not, during the term of this Agreement or
thereafter, register, use, or attempt to obtain any right in and to any such
name, logo, Alternative Schering Mark or trademark (other than those rights
granted herein) or in and to any name, logo or trademark confusingly similar
thereto. Schering hereby acknowledges DUSA's exclusive 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.
15.5 Recordation. In those countries where a trademark license must be
recorded, DUSA will provide and record a separate trademark license for Schering
for the DUSA Marks. Schering shall cooperate in the preparation and execution of
such documents. In those countries where a trademark license must be recorded,
Schering will provide and record a separate trademark license for DUSA for the
Alternative Schering Marks. DUSA shall cooperate in the preparation and
execution of such documents.
15.6 Mark Infringement. Each Party shall notify the other promptly upon
learning of any actual, alleged, or threatened infringement of a DUSA Mark or an
Alternative Schering Mark applicable to a Collaboration Product or of any unfair
trade practices, trade dress imitation, passing off of counterfeit goods, or
similar offenses.
15.7 Approval of Representation of DUSA Marks All representations of
DUSA Marks that Schering intends to use shall first be submitted to DUSA for
approval (which [c.i.]) of design, color, and other details or shall be exact
copies of those used by DUSA and shall in any event comply with DUSA's usage
guidelines as established from time to time. Schering shall submit
representative promotional materials, packaging and Collaboration Product using
any DUSA Mark
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to DUSA for DUSA's review and comment prior to their first use and prior to any
subsequent change or addition to such promotional materials.
15.8 Termination. Schering's right to use the DUSA Marks shall
terminate in each country of the Territory in which Schering's rights to
distribute the Collaboration Product are terminated in accordance with this
Agreement (subject to Section 19.4.3 below). Schering shall cooperate in the
cancellation of any trademark licenses recorded or entered into in such
countries. If Schering's rights to distribute a Collaboration Product in a
country in the Territory are terminated and an Alternative Schering Mark was
used in connection with the marketing and promotion of such Collaboration
Product in such country, then Schering shall execute an irrevocable assignment
of the Alternative Schering Mark in such country in favor of DUSA and cooperate
with DUSA in accomplishing such assignment, including any documents necessary to
transfer the registration of such Alternative Schering Mark in such country to
DUSA.
ARTICLE 16
REPRESENTATIONS AND WARRANTIES
16.1 General Warranties.
16.1.1 DUSA Warranties. DUSA warrants and represents to Schering
that:
(a) it has the full right and authority to enter into this
Agreement and grant the rights and licenses granted herein;
(b) it has not previously granted and will not grant any
rights in conflict with the rights and licenses granted herein;
(c) as of the date of the Agreement DUSA has not received
from a third party notice that the manufacture, sale or use of a Collaboration
Product within the Field would infringe any intellectual property rights of such
third party and to its knowledge and belief, no action, suit or claim has been
initiated or threatened against DUSA with respect to the DUSA Technology or
DUSA's right to enter into and perform its obligations under this Agreement,
other than the Japanese patent opposition received by DUSA on February 12, 1999
and previously disclosed to Schering;
(d) it has not previously granted, and will not grant during
the term of this Agreement, any right, license or interest in or to the DUSA
Technology, or any portion thereof, to manufacture, sell or use a Collaboration
Product that is in conflict with the rights or licenses granted under this
Agreement.
(e) to the best of its knowledge, as of the Execution Date,
it is not aware of any prior act or any fact which causes it to conclude that
any DUSA Patent is invalid or unenforceable, PROVIDED, HOWEVER, THAT DUSA
EXPRESSLY DOES NOT WARRANT THAT ANY DUSA PATENT IS VALID OR ENFORCEABLE;
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(f) it has complied in all material respects with each license
agreement under which DUSA obtained DUSA Technology including but not limited to
the PARTEQ License Agreement, and during the term hereof will comply in all
material respects, and use all reasonable efforts to keep in full force and
effect, each such license agreement; neither this Agreement, nor any of the
transactions contemplated hereby will, with the giving of notice, constitute a
default or breach of any such license agreement, and
(g) except for those agreements listed on Exhibit 14.6, (i) DUSA
has obtained all right, title and interest in and to the DUSA Technology and
(ii) the DUSA Technology is free and clear of any liens, encumbrances or rights
to repurchase, and is subject only to obligations of DUSA under the agreements
specified in Exhibit 14.6;
(h) during the term hereof, DUSA will not grant a lien or other
encumbrances on any of the subject matter of this Agreement or on any of DUSA's
rights, benefits, or obligations hereunder or on the DUSA Technology, which
would conflict with the rights of Schering hereunder;
(i) it has provided to Schering all material Data and other
information in its possession or of which DUSA is aware as of the Execution
Date, concerning efficacy, side effects, injury, toxicity, or sensitivity,
reaction and incidents or severity thereof, associated with any preclinical use,
clinical use, studies, investigations, or tests with Collaboration Products
(humans or animals). Such disclosure includes information contained in publicly
available filings with the U.S. Securities and Exchange Commission;
(j) it has conducted or has caused its contractors or consultants
to conduct, and will in the future conduct, the preclinical and clinical studies
of Collaboration Products and those activities which it is responsible for under
the Development Program, in accordance with applicable United States law, known
or published standards of the FDA and with respect to future conduct, standards
of the EMEA specifically agreed upon by the Development Committee, as
applicable, and the scientific standards applicable to the conduct of such
studies and activities in the United States;
(k) it has employed and will in the future employ individuals of
appropriate education, knowledge, and experience to conduct or oversee the
conduct of DUSA's clinical and preclinical studies of Collaboration Products and
DUSA's activities under the Development Program;
(l) it has not employed (and, to the best of its knowledge, has
not used a contractor or consultant that has employed) and in the future will
not employ (or, to the best of its knowledge, use any contractor or consultant
that employs) any individual or entity debarred by the FDA (or subject to a
similar sanction of EMEA), or, to the best knowledge of DUSA, any individual who
or entity which is the subject of an FDA debarment investigation or proceeding
(or similar proceeding of EMEA), in the conduct of the preclinical or clinical
studies of Collaboration Products and DUSA's activities under the Development
Program; and
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(m) in the course of Developing Collaboration Products, it
has not conducted (other than as has been disclosed to Schering regarding
activities at Sochinaz S.A.), and during the course of this Agreement it will
not conduct, any material development activities in violation of good laboratory
and clinical practices and cGMP, in each case as applicable under the laws and
regulations of the country where such activities are conducted, and will conduct
such activities in accordance with Section 4.1.3(d).
16.1.2 Schering Warranties. Schering warrants and represents to
DUSA that (i) it has the full right and authority to enter into this Agreement
and grant the rights granted herein; (ii) to the best of its knowledge as of the
Execution Date, Schering is not engaged in contract negotiations with respect to
in-licensing or acquiring any specific product or technology in the Field; and
(iii) in the course of performing those activities assigned to it under the
Development Program, Schering will not conduct any material activities in
violation of good laboratory and clinical practices and cGMP, in each case as
applicable under the laws and regulations of the country where such activities
are conducted, and will conduct such activities in accordance with Section
4.1.3(d).
16.1.3 Mutual Warranty. Each Party warrants and represents to the
other that the Agreement is a legal and valid obligation binding upon such Party
and enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it is bound, nor to such Party's knowledge, violate any law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.
16.2 Mutual Covenants of Exclusivity. During the Term of the
Development Program, Schering covenants that neither Schering nor any of its
Affiliates shall research or develop a Collaboration Product outside the
Development Program or except as pursuant to this Agreement. Without limiting
the operation of Sections 3.2.3 and 3.3.2 above, during the Term of the
Development Program, DUSA covenants that neither DUSA nor any of its Controlled
Affiliates shall research or develop a Collaboration Product inside the Field
inside the applicable Product Territory except as is permitted herein.
16.3 Warranties Regarding Products. DUSA represents and warrants that:
(i) all quantities of Finished Products and/or Collaboration Products will
comply with all applicable Specifications and Manufacturing Standards at the
time of shipment to Schering and through the applicable expiration date; and
(ii) the Initial Product will be having a [c.i.] of [c.i.] from date of
shipping.
16.4 Notice.
16.4.1 DUSA agrees to provide Schering prompt written notice of
any condition or circumstance which DUSA concludes would likely give rise to a
condition of breach or any notice or in the event DUSA receives a notice of an
alleged breach by DUSA under the PARTEQ License Agreement which, if uncured,
would entitle PARTEQ to terminate the PARTEQ License Agreement. In such event,
if DUSA is [c.i.] Schering [c.i.] to [c.i.] to PARTEQ [c.i.] DUSA shall provide
Schering with [c.i.] to Schering's [c.i.] within [c.i.] of the Effective Date.
Schering shall
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[c.i.] against [c.i.] to PARTEQ or any other party to the extent [c.i.] were
[c.i.] to cure the default and were [c.i.] to PARTEQ or any other party [c.i.].
16.5 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY
OF ANY PATENTS ISSUED OR PENDING.
ARTICLE 17
CONFIDENTIALITY
17.1 Confidential Information. Except as expressly provided herein, the
Parties agree that the receiving Party shall not publish or otherwise disclose
and shall not use for any purpose any information furnished to it by the other
Party hereto pursuant to this Agreement which if disclosed in tangible form is
marked "Confidential" or with other similar designation to indicate its
confidential or proprietary nature or if disclosed orally 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 a reasonable time after such
disclosure (collectively, "Confidential Information"). Notwithstanding the
foregoing, Confidential Information shall not include information that, in each
case as demonstrated by written documentation:
17.1.1 was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure or, as shown by
written documentation, was developed by the receiving Party independent of
disclosure by the disclosing Party;
17.1.2 was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;
17.1.3 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; or
17.1.4 was subsequently lawfully disclosed to the receiving Party
by a person other than a Party or developed by the receiving Party without
reference to any information or materials disclosed by the disclosing Party.
17.2 Permitted Disclosures. Notwithstanding the provisions of Section
17.1 above, each Party hereto may disclose the other Party's Confidential
Information to the extent such disclosure is reasonably necessary to exercise
the rights granted to it, or reserved by it (including without limitation in the
case of Schering use of Data and DUSA Know-How to support marketing and sales
activities, public relations activities, professional services activities, and
medical education activities for Collaboration Products in the Field in the
applicable Product Territory), under this Agreement (including the right to
grant sublicenses, as applicable), prosecuting or defending litigation,
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complying with applicable governmental regulations, submitting information to
tax or other governmental authorities, or conducting clinical trials hereunder
with respect to Collaboration Products, provided that if a Party is required to
make any such disclosure of the other Party's Confidential Information, to the
extent it may legally do so, it will give reasonable advance notice to the
latter Party of such disclosure and, save to the extent inappropriate in the
case of patent applications or otherwise, will use its reasonable efforts to
secure confidential treatment of such information prior to its disclosure
(whether through protective orders or otherwise). If the Party whose
Confidential Information is to be disclosed has not filed a patent application
with respect to such Confidential Information, it may require the other Party to
delay the proposed disclosure (to the extent the disclosing Party may legally do
so), for [c.i.] to allow for the filing of such an application. This Article 17
shall not limit either Party's right under Article 7 to use and disclose Data.
17.3 Prior Non-Disclosure Agreements. Upon execution of this Agreement,
the terms of this Article 17 shall supercede any prior non-disclosure, secrecy,
or confidentiality agreement between the Parties.
ARTICLE 18
INDEMNIFICATION
18.1 Indemnification of DUSA. Schering shall indemnify and hold
harmless each of DUSA and its Affiliates and the directors, officers, and
employees of DUSA and such Affiliates and the successors and assigns of any of
the foregoing (the "DUSA Indemnitees"), from and against any and all
liabilities, damages, settlements, claims, actions, suits, penalties, fines,
costs or expenses (including, without limitation, reasonable attorneys' fees and
other expenses of litigation) (any of the foregoing, a "Claim") incurred by any
DUSA Indemnitee, arising from or occurring as a result of: (a) bodily injury or
death of a human being caused by the use, marketing, distribution or sale of any
Finished Product and/or Collaboration Product by Schering, its Affiliates or
Sublicensees in the applicable Product Territory, but solely to the extent that
such bodily injury or death arise out of or result from (i) the negligence or
willful misconduct of Schering, or (ii) the breach by Schering of any warranties
by Schering given in Article 16 above; or (b) infringement claims brought by
third parties with respect to DUSA's manufacture or preparation of Finished
Products and/or Collaboration Products hereunder or conduct of the Development
Program (subject to [c.i.] pursuant to Section 14.4.2 above); (c) breach of any
warranties by Schering in Article 16 above; or (d) the negligence or willful
misconduct of Schering in the performance of its obligations under this
Agreement.
18.2 Indemnification of Schering. DUSA shall indemnify and hold
harmless each of Schering and its Affiliates and Sublicensees and the directors,
officers, and employees of Schering and its Sublicensees and of such Affiliates
and the successors and assigns of any of the foregoing (the "Schering
Indemnitees") from and against any and all Claims incurred by any Schering
Indemnitee, arising from or occurring as a result of (a) bodily injury or
death of a human, being caused by the manufacture, marketing, use, distribution
or sale of any Finished Product and/or Collaboration Product, but solely to the
extent that such bodily injury or death arise out of or result from (i) such
Finished Product and/or Collaboration Product not having been manufactured in
compliance with the
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applicable Manufacturing Standards or not complying with the applicable
Specifications through its applicable expiration date; (ii) the negligence or
willful misconduct of DUSA, or (iii) the breach by DUSA of any warranties given
by DUSA in Article 16 above; (b) any breach of any warranty by DUSA in Article
16 above or (c) the negligence or willful misconduct of DUSA in the performance
of its obligations under this Agreement.
18.3 General Indemnification of DUSA. Schering shall indemnify and hold
harmless any of the DUSA Indemnitees from and against any and all Claims
incurred by a DUSA Indemnitee resulting from or arising out of the use,
marketing, distribution or sale of any Finished Product and/or Collaboration
Product (excluding in each case the Initial Product) by Schering, its Affiliates
or Sublicensees in the applicable Product Territory to the extent that such
Claims incurred by such DUSA Indemnitee are not within the provisions of Section
18.1 or 18.2 and to the extent that such Claim exceeds any amount recoverable by
the DUSA Indemnitee under any applicable DUSA Indemnitee insurance; [c.i.] that
Schering's liability under this Section 18.3 [c.i.] of such Claims incurred by
the DUSA Indemnitee.
18.4 General Information of Schering. DUSA shall indemnify and hold
harmless any of the Schering Indemnitees from and against any and all Claims
incurred by a Schering Indemnitee resulting from or arising out of the
manufacture, use, marketing, distribution or sale of any Finished Product and/or
Collaboration Product in the applicable Product Territory to the extent that
such Claims incurred by such Schering Indemnitee are not within the provisions
of Section 18.1 or 18.2 and to the extent that such Claim exceeds any amount
recoverable by the Schering Indemnitee under any applicable Schering Indemnitee
insurance; [c.i.] that DUSA's liability under this Section 18.4 [c.i.] of such
Claims incurred by the Schering Indemnitee.
18.5 Procedure. A Party that intends to claim indemnification under
this Article 18 (the "Indemnitee") shall promptly notify the other Party (the
"Indemnitor") in writing of any Claim, in respect of which the Indemnitee
intends to claim such indemnification, and except for matters described in
Section 18.1(b) above (which is subject to Section 14.4), the Indemnitor shall
have sole control of the defense and/or settlement thereof. The indemnity
arrangement in this Article 18 shall not apply to amounts paid in settlement of
any action with respect to a Claim, if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver written notice to the Indemnitor within a reasonable time
after the commencement of any action with respect to a Claim, if prejudicial to
its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 18 but the omission so to deliver
written notice to the Indemnitor shall not relieve the Indemnitor of any
liability that it may have to any Indemnitee otherwise than under this Article
18. The Indemnitee under this Article 18, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action with
respect to a Claim covered by this indemnification.
18.6 Insurance. DUSA maintains and will continue to maintain a general
liability/product liability insurance policy providing coverage of at least
$1,000,000 per incident, $2,000,000 aggregate and $4,000,000 excess at its cost.
Schering shall obtain by the date of the first Marketing Approval for a
Collaboration Product, at its cost, a general liability/product liability
insurance policy providing coverage for damages in humans at a level which is
customary in the pharmaceutical
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industry and to maintain such insurance for the term of this Agreement. Schering
shall alternatively have the right to satisfy the obligation under this Section
18.6 through a reasonable program of self-insurance. Both Parties shall provide
written evidence of such insurance coverage to the other Party upon request.
ARTICLE 19
TERM AND TERMINATION
19.1 Term. This Agreement shall become effective as of the Execution
Date and, unless earlier terminated pursuant to the other provisions of this
Article 19, shall expire as follows:
19.1.1 Product-by-Product. As to each Collaboration Product in
each country in the applicable Product Territory, this Agreement shall expire on
the later of (i) [c.i.] after the First Commercial Sale of such Collaboration
Product in such country, or (ii) the date that neither the manufacture, sale nor
use of such Collaboration Product [c.i.] by a [c.i.] in such country.
19.1.2 Entire Agreement. This Agreement shall expire in its
entirety upon the expiration of this Agreement with respect to all Collaboration
Products in all countries in the Territory (it being understood, however, that
certain provisions of this Agreement shall survive, as expressly set forth in
Section 19.4.3 below).
19.2 Termination for Cause.
19.2.1 Breach. Either Party to this Agreement may terminate this
Agreement in the event the other Party shall have materially breached or
defaulted in the performance of any of its material obligations hereunder, and
such default shall have continued for [c.i.] after written notice thereof was
provided to the breaching Party by the non-breaching Party. The Parties agree
that [c.i.] of the [c.i.] which shall not have been cured within any applicable
cure period, shall be deemed a breach of this Agreement for purposes of this
Section 19.2.1. Any termination shall become effective at the end of such [c.i.]
unless the breaching Party (or any other Party on its behalf) has cured any such
breach or default prior to the expiration of the [c.i.] Notwithstanding the
foregoing, in the event of a non-monetary breach or default, if the default is
not reasonably capable of being cured within the [c.i.] cure period by the
breaching Party and such breaching Party is making a good faith effort to cure
such breach or default, the notifying Party may not terminate this Agreement,
provided, however, that the notifying Party may terminate this Agreement if such
breach or default is not cured within [c.i.] of such original notice of breach
or default. The right of either Party to terminate this Agreement as hereinabove
provided shall not be affected in any way by its waiver of, or failure to take
action with respect to, any previous default.
19.2.2 Termination for Insolvency.
(a) In the event that one of the Parties hereto shall be
declared insolvent or go into liquidation, a receiver or a trustee be appointed
for substantially all of the property or estate of that Party and said receiver
or trustee is not removed within sixty (60) days, or the Party makes a
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general assignment for the benefit of creditors (collectively, a "Bankruptcy
Event"), and whether any of the aforesaid Bankruptcy Events be the outcome of
the voluntary act of that Party, or otherwise, the other Party shall be entitled
to terminate this Agreement (or in the event DUSA suffers such a Bankruptcy
Event, Schering may effect its rights described in Section 19.2.2(b) forthwith
by giving a written notice to DUSA). Each Party agrees (to the extent it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim to take the benefit or advantage of, any stay or
extension law or any other law wherever enacted, now or at any time hereafter in
force, which would prohibit the termination of this Agreement or in any way
modify the effects thereof as provided herein; and each Party (to the extent it
may lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the other Party, but will suffer and permit the
execution of every power as though no such law had been enacted.
(b) In the event of a Bankruptcy Event Schering may elect in
lieu of terminating this Agreement to declare the [c.i.] pursuant to this
Agreement [c.i.]. From the date of receipt of notice of such election, DUSA
shall have no further rights or obligations under this Agreement, except that
DUSA may enforce any financial obligations of Schering before or after such
election, and Schering may enforce any manufacturing and supply obligations of
DUSA; provided that if such election occurs prior to the First Commercial Sale
of a Collaboration Product, any [c.i.] and [c.i.] incurred by Schering to
Commercialize such Collaboration Product as a result of such election shall
[c.i.] by Schering to DUSA.
19.2.3 Termination Upon Change of Control. In the event (i) fifty
percent (50%) or more of DUSA's outstanding shares of stock entitled to vote for
the election of directors are acquired by a Major Pharmaceutical Company (by
purchase or merger); or (ii) this Agreement is assigned to a Major
Pharmaceutical Company pursuant to Section 20.7 below upon a sale of
substantially all of the assets of DUSA (either event (i) or (ii) being deemed
"Change of Control"); then in any such case Schering may terminate this
Agreement upon [c.i.] written notice to DUSA provided that such notice is given
within [c.i.] after the date DUSA gives Schering written notice of an event
described in (i) or (ii). A "Major Pharmaceutical Company" shall be any third
party (i) whose revenues from sales of pharmaceutical products, on a
consolidated basis in the last full fiscal year prior to the closing of the
Change of Control, were in excess of US $3 Billion; or (ii) that is engaged in
the pharmaceuticals business, whose shares are publicly traded, and whose market
capitalization based on shares outstanding as of the date of the closing of the
Change of Control exceeds US $3 Billion.
19.3 Termination Upon Notice. Schering may terminate this Agreement
[c.i.] written notice to DUSA, provided that such notice is given after [c.i.]
of the Execution Date. In addition, DUSA may terminate this Agreement as
described in Section 13.1.2 (which termination shall be deemed a termination
pursuant to this Section 19.3).
19.4 Effects of Expiration or Termination.
19.4.1 Accrued Obligations. Termination of this Agreement for any
reason shall not release any Party hereto from any liability which, at the time
of such termination, has already accrued to the other Party or which is
attributable to a period prior to such termination nor preclude
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either Party from pursuing all rights and remedies it may have hereunder or at
law or in equity with respect to any breach of this Agreement.
19.4.2 Early Termination.
(a) If this Agreement is terminated pursuant to Section
19.3, or DUSA terminates this Agreement pursuant to Section 19.2.1 by reason of
a breach by Schering, Schering's funding obligation shall continue under Section
6.1 with respect to the Development Plan and Budget for Collaboration Products
then under development until completion of the then-current phase of
development, (i.e., Phase I, Phase II or Phase III) as applicable, for each such
Collaboration Product. In the event that the Development Plan and Budget in
effect at the time of termination does not extend through completion of the
applicable Phase to be completed for each Collaboration Product then being
developed under the Development Program, then the Development Costs to be
reimbursed under this Section 19.4.2 (a) shall be the costs that are incurred by
DUSA in completing the applicable Phase for each such Collaboration Product.
Schering shall not have rights to market any products so funded and no such
products shall be Collaboration Products for purposes of this Agreement.
(b) In the event of a termination by Schering pursuant to
Section 19.2.3 (Termination Upon Change of Control), the term "Collaboration
Products" shall include, for all purposes of this Agreement, only those products
within the Field for which Marketing Approvals have been obtained pursuant to
the Development Program; and the provisions of Articles 2, 7, 8 (other than
8.8), 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, and 20, and of Sections 4.3, 5.1.1,
5.2, 6.3, and 6.4, shall continue in full force and effect with respect to each
Collaboration Product until such time as the term specified in Section 19.1.1
with respect to such Collaboration Product expires (at which time, the
provisions of Section 19.4.3 shall apply).
(c) In the event Schering has the right to terminate this
Agreement pursuant to Section 19.2.1 by reason of a breach by DUSA (other than
by reason of a breach of Article 9), then in lieu of exercising that right,
Schering may elect to instead send a "Notice of Limitation" to DUSA, and to
continue, by its own efforts and at its sole expense, development and marketing
of certain Collaboration Products, as specified below. If Schering sends such
Notice of Limitation to DUSA, the term "Collaboration Products" shall include,
for all purposes of this Agreement, only those products within the Field which
are marketed by Schering or for which MAAs have been filed, or for which Phase
III clinical trials were continuing, in each case at the time of the Notice of
Limitation, pursuant to the Development Program or outside the U.S. under
Schering's direction and in accordance with Section 4.2; and the provisions of
Articles 2, 7, 8 (other than 8.8), 10, 12, 13, 14, 15, 16, 17, 18, 19, and 20,
and of Sections 4.3, 5.1.1, 5.2, 6.3 and 6.4, shall continue in full force and
effect with respect to each Collaboration Product until such time as the term
specified in Section 19.1.1 with respect to such Collaboration Product expires
(at which time, the provisions of Section 19.4.3 shall apply). Unless DUSA so
notifies Schering otherwise, Article 9 also shall continue in effect, and, if
DUSA notifies Schering that Article 9 will not so continue, then Section 9.13
shall survive and [c.i.] shall have [c.i.] the [c.i.]. Notwithstanding the
foregoing, however, Schering shall have the right to prepare and file MAAs in
[c.i.] for such Collaboration Products (i.e., notwithstanding Section [c.i.]
above) and [c.i.] shall be required under [c.i.] of
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Section [c.i.]. Further, Schering shall have the [c.i.] the [c.i.] portion of
any Commercial Supply Price accruing to DUSA after such termination, [c.i.] of
the Recoupable Development Costs incurred by Schering for [c.i.], in the same
manner as is specified in Section [c.i.] above; provided that the [c.i.] may not
be so reduced by [c.i.].
19.4.3 Rights on Expiration. Upon the expiration, but not an
earlier termination, of this Agreement with respect to a particular
Collaboration Product:
(a) Sections 15.1, 15.3, 15.4,15.7 and 15.8 above shall
survive with respect to such Collaboration Product and the DUSA Marks, other
than the DUSA tradename, under which such Collaboration Product was being
marketed as of the date of such expiration; provided, however, that Schering
shall pay to DUSA a royalty equal to [c.i.] of the Net Sales of such
Collaboration Product ("Trademark Royalty"). Such payments shall be made [c.i.]
for so long as Schering retains rights to such DUSA Marks, and Article 12 above
shall survive with respect to such payment obligations. Schering shall have the
right to terminate its license to the DUSA Marks with respect to any particular
Collaboration Product upon [c.i.] notice to DUSA, in which case this Section
19.4.3 shall have no further force or effect from and after the effective date
of such termination (subject to Section 19.5 below).
(b) Sections 15.1, 15.3, 15.4, 15.7 and 15.8 shall
survive with respect to such Collaboration Product and the Alternative Schering
Marks under which such Collaboration Product was being marketed as of the date
of such expiration; provided, however that Schering shall pay to DUSA a
Trademark Royalty as defined above. Such payment shall be made quarterly for so
long as Schering continues to market and promote such Collaboration Product with
an Alternative Schering Mark, and Article 12 above shall survive with respect to
such payment obligations. Schering shall have the right to terminate its use of
the Alternative Schering Marks with respect to any particular Collaboration
Product upon [c.i.] notice to DUSA, in which case this Section
19.4.3 shall have no further force or effect from and after the Effective Date
of such termination (subject to Section 19.5 below).
(c) DUSA shall either continue to supply such Collaboration
Product to Schering in accordance with Articles 9 and 10 above, provided that if
competition from [c.i.] renders such Supply Price [c.i.] then the Supply Price
[c.i.] by mutual agreement so as to be competitive with [c.i.], or if DUSA does
not so elect, or the Parties are unable to agree, Schering shall have a [c.i.],
without the [c.i.], under [c.i.] to [c.i.] such Collaboration Product within the
Field in the Territory (subject to Schering's compliance with paragraph (a)
above with respect to such Collaboration Product). During the period in which
DUSA continues to supply a Collaboration Product to Schering under this Section
19.4.3(c), DUSA agrees that it shall not supply such Collaboration Product to
any third party.
19.4.4 Products in Inventory. Schering and its Affiliates and
Sublicensees shall have the right to distribute Collaboration Products in their
inventories or otherwise in their control as of the expiration or termination of
this Agreement for a period [c.i.] from such expiration or termination,
including pursuant to Section 19.4.3(a) and (b) (the "Trailing Period"), in all
cases subject to the Supply Price payment obligation under Article 10 above.
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19.4.5 Return of Materials. All trademarks, marks, trade names,
patents, copyrights, designs, drawings, formulas or other data, photographs,
samples, literature, and sales and promotional aids of every kind relating to
the Collaboration Products and received from or owned by DUSA shall remain the
property of DUSA. [c.i.] after expiration of the Trailing Period, Schering shall
destroy all tangible items bearing, containing, or contained in, any of the
foregoing, in its possession or control and provide written certification of
such destruction, or prepare such tangible items for shipment to DUSA, as DUSA
may direct, at DUSA's expense. Schering shall not make or retain any copies of
any Confidential Information of DUSA which may have been entrusted to it.
Effective upon expiration of the Trailing Period, Schering shall cease to use
all trademarks and trade names of DUSA. During the term of this Agreement and
after any termination or expiration of this Agreement, without limiting Section
19.5 below, DUSA shall have the right to continue to use and disclose for any
purpose customer lists, customer data and other customer information and any and
all Data relating to the Collaboration Products, which is or was provided or
required to be provided by Schering to DUSA pursuant to this Agreement.
19.4.6 No Renewal, Extension or Waiver. Acceptance of any order
from, or sale or license of, any Collaboration Product to Schering after the
effective date of termination or expiration of this Agreement shall not be
construed as a renewal or extension hereof, or as a waiver of termination of
this Agreement.
19.5 Survival. Articles 1, 17, 18, 19 and 20, and Sections 12.4, 14.2,
14.3.2, 14.3.3, 14.7, the last two sentences of Section 4.3.1(d) and the last
sentence of Section 15.2 and Section 15.3(i) of this Agreement shall survive
expiration or termination of this Agreement for any reason. Except as otherwise
provided in this Article 19 all rights and obligations of the Parties under this
Agreement shall terminate upon expiration or termination of this Agreement for
any reason; provided that the expiration or any termination of this Agreement
shall not release a Party from the obligations to make any payments that were
due or had accrued as to the effective date of such termination.
ARTICLE 20
MISCELLANEOUS
20.1 Governing Law, Venue. This Agreement and any dispute arising from
the performance or breach hereof shall be governed by and construed and enforced
in accordance with, the laws of the State of New York, U.S.A., without reference
to conflicts of laws principles. Any legal action arising under this Agreement
shall be brought in the United States District Court for the Southern District
of New York. The U.N. Convention on the Sale of Goods shall not apply to this
Agreement.
20.2 Particular Disputes.
20.2.1 Section 3.5 and 8.8 Disputes. The Parties agree that it is
important to be able to clarify any disputes regarding Section 3.5 or Section
8.8 quickly. Accordingly, in the event that Schering disputes DUSA's right to
proceed to grant any right or license to a third party, develop products or
otherwise proceed, based upon Section 3.52 or Section 8.8, Schering shall
initiate an
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arbitration proceeding under Section 20.2.3 below [c.i.] after Schering's
receipt of the Notice under Section 3.5, or the Initial Notice under Section
8.8, that is the subject of the dispute, or respectively, [c.i.] after DUSA
notifies Schering that DUSA believes that Section 3.5 or Section 8.8 above does
not apply to any subject matter or that such Section applies in any particular
manner. If Schering does not initiate such arbitration within such [c.i.] or
[c.i.], as applicable, Schering shall have no further right to dispute DUSA's
right to grant any right or license, or otherwise claim rights pursuant to
Section 3.5 or Section 8.8 in or relating to the product within the Field,
Collaboration Product or other subject matter that was the subject of such
dispute.
20.2.2 Arbitration. In the event of a dispute pursuant to Section
9.12.1(c), the matter shall be resolved pursuant to Section 20.2.3 below.
However, notwithstanding Section 9.12.1(c) such arbitration shall be conducted
as a "baseball" style arbitration, so that the only decision of the arbitration
shall be to adopt the proposal of either DUSA or Schering as to the measures
that DUSA must undertake to remedy or prevent a failure to adequately supply
Schering's requirements of Finished Products and/or Collaboration Products in
accordance with this Agreement. In no event, however, shall DUSA be obligated to
undertake measures that are not commercially reasonable or inconsistent with the
terms of this Agreement.
20.2.3 Procedures. Any dispute or claim (i) arising out of or in
connection with Section 8.8 of this Agreement or the performance or breach
thereof, (ii) the application of Section 8.9 or 9.12.1(c) or (iii) the sales
expectation for year three for an additional indication under Section 6.3.1
above, shall be finally settled by binding arbitration in New York, New York
under the Rules of American Arbitration Association by a single arbitrator
appointed in accordance with the Rules; provided however, that upon request by
either Party in the event of a claim or dispute as to the application of Section
8.9 or 9.12.1(c), such arbitration shall be conducted by a panel of three (3)
arbitrators chosen in accordance with such Rules. The decision and/or award
rendered by the arbitrators shall be written, final and non-appealable and may
be entered in any court of competent jurisdiction. The costs of any arbitration,
including administrative fees and fees of the arbitrators, shall be shared
equally by the Parties, unless otherwise determined by the arbitrators. Each
Party shall bear the cost of its own attorneys' and expert fees; provided that
the arbitrators may in their discretion award to the prevailing Party the costs
and expenses incurred by the prevailing Party in connection with the arbitration
proceeding. THE PARTIES AND ARBITRATOR SHALL USE ALL DILIGENT EFFORTS TO
COMPLETE ANY ARBITRATION OF A CLAIM OR DISPUTE DESCRIBED IN (i) ABOVE (I.E.,
WITH RESPECT TO SECTION 8.8) [c.i.] OF APPOINTMENT OF THE ARBITRATOR, AND TO
COMPLETE ANY ARBITRATION OF A CLAIM OR DISPUTE DESCRIBED IN (ii) ABOVE
(I.E.,WITH RESPECT TO SECTION 8.9) [c.i.] AFTER APPOINTMENT OF THE ARBITRATOR
(OR ARBITRATION PANEL, AS APPLICABLE).
20.3 Force Majeure. Nonperformance of any Party 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.
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20.4 No Implied Waivers; Rights Cumulative. No failure on the part of
DUSA or Schering to exercise and no delay in exercising any right under this
Agreement, or provided by statute or at law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, nor shall any
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.
20.5 Independent Contractors. Nothing contained in this Agreement is
intended implicitly, or is to be construed, to constitute DUSA or Schering as
partners in the legal sense. No Party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other Party or to bind any other Party to any contract, agreement or
undertaking with any third party. This agreement does not create a partnership
for USA federal income tax purposes (as defined in Section 761 of the USA
Internal Revenue Code), for any USA state or local jurisdiction, or in any
country other than the USA. Therefore there is no requirement to file Form 1065,
USA Partnership Return of Income, any similar USA state or local income tax
return, or any similar document with tax authorities in any country other than
the USA.
20.6 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other Parties hereto:
<TABLE>
<S> <C>
Schering: Schering AG
D-13342
Berlin, Germany
Attn: Head, Center of Dermatology
With a copy to: Schering AG
D-13342
Berlin, Germany
Attn: Legal Department
DUSA: DUSA Pharmaceuticals, Inc.
25 Upton Drive,.
Wilmington, Massachusetts,
01887, USA
Attn: D. Geoffrey Shulman
Fax: 978-657-9193
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
</TABLE>
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20.7 Assignment. This Agreement shall not be assignable by either Party
to any third party hereto without the written consent of the other Party hereto;
either Party may assign this Agreement without the other Party's consent to an
entity that acquires substantially all of the business or assets of the
assigning Party (or that portion thereof to which this Agreement relates), in
each case whether by merger, acquisition, or otherwise (it being understood that
the foregoing shall not be deemed to limit Schering's rights under Section
19.2.3) the acquiring Party assumes this Agreement in writing or by operation of
law. In addition, either Party shall have the right to assign this Agreement to
an Affiliate upon notice to the non-assigning Party; provided that if the
non-assigning Party reasonably believes such assignment could result in material
adverse tax consequences to the non-assigning Party, such assignment shall not
be made without the non-assigning Party's consent.
20.8 Affiliate Assignment. Subject to the last sentence of Section 20.7
above, Schering may assign any of its rights or obligations under this Agreement
in any country to any of its Affiliates; provided, however, that such assignment
shall not relieve Schering of its responsibilities for performance of all of its
obligations under this Agreement. Schering shall promptly inform DUSA of such
assignment and the terms thereof. Any assignment under this Section must
obligate the assignee to the terms and conditions of this Agreement.
20.9 Modification. No amendment or modification of any provision of
this Agreement shall be effective unless in writing signed by all Parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by all Parties.
20.10 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any jurisdiction, the Parties shall negotiate in
good faith a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the Parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the Parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction. In the event a Party seeks to avoid a provision of this
Agreement by asserting that such provision is invalid, illegal or otherwise
unenforceable, the other Party shall have the right to terminate this Agreement
[c.i.] prior written notice to the asserting Party, unless such assertion is
eliminated and the effect of such assertion cured within such [c.i.] period. Any
termination in accordance with the foregoing sentence shall be deemed a
termination pursuant to Section 19.2 and the Party who made such assertion shall
be deemed the breaching Party for purposes of applying Sections 19.4 and 19.5.
20.11 Publicity Review. Neither Party shall originate any written
publicity, news release or other announcement or statement relating to the
announcement or terms of this Agreement (collectively, a "Written Disclosure"),
without the prompt prior review and written approval of the other Party, which
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, either Party may make any public Written Disclosure it believes in
good faith based upon the advice of counsel is required by applicable law, rule
or regulation or any listing or trading
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agreement concerning its or its Affiliates' publicly traded securities;
provided, however, that such Written Disclosure shall minimize to the extent
possible the financial information disclosed, and that prior to making such
Written Disclosure, the disclosing Party shall provide to the other Party a copy
of the materials proposed to be disclosed and provide the receiving Party with
an opportunity to promptly review the Written Disclosure. Notwithstanding the
foregoing, the Parties shall agree upon a press release to announce the
execution of this Agreement, together with a corresponding Question & Answer
outline for use in responding to inquiries about the Agreement; thereafter,
Schering and DUSA may each disclose to third parties the information contained
in such press release and Question & Answer outline without the need for further
approval by the other.
20.12 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and all of which together, shall
constitute one and the same instrument.
20.13 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of or be taken into consideration in
interpreting this Agreement.
20.14 Export Laws. Notwithstanding anything to the contrary contained
herein, all obligations of DUSA and Schering are subject to prior compliance
with United States and foreign export regulations and such other United States
and foreign laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the governments of
the United States and foreign jurisdictions. DUSA and Schering shall cooperate
with each other and shall provide assistance to the other as reasonably
necessary to obtain any required approvals.
20.15 Entire Agreement. This Agreement, the Light Source Agreement, the
Stock Purchase Agreement, the Guaranty, and the Credit Agreement, together with
all the Exhibits thereto, constitute the entire agreement, both written or oral,
with respect to the subject matter hereof, and supersede all prior or
contemporaneous understandings or agreements, whether written or oral, between
DUSA and Schering with respect to such subject matter.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duly executed and delivered in duplicate originals as of the
date first above written.
DUSA PHARMACEUTICALS, INC. SCHERING AG
By: /s/ D. Geoffrey Shulman By: /s/ Klaus Pohle
Name: D. Geoffrey Shulman, MD, FRCPC Name: Prof. Klaus Pohle
Title: President and Chief Executive Officer Title: Vice Chairman of the
Board of Executive
Directors
By: /s/ Hans Maier
Name: Dr. Hans Maier
Title: Head of Center
of Dermatology
71--
<PAGE> 79
<TABLE>
<S> <C>
By:
Name:
Title:
</TABLE>
72--
<PAGE> 80
EXHIBIT 1.4
AMINOLEVULINIC ACID HCL
[c.i.]
1--
<PAGE> 81
EXHIBIT 1.17
DUSA PATENTS
<PAGE> 82
EXHIBIT 1.17
DUSA PATENTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ISSUED PATENTS
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY SERIAL NO. PATENT NO. FILING DATE ISSUE DATE TITLE
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S.A 07/386,414 5,079,262 07/28/89 01/07/92 Method of treatment and detection of malignant and
non-malignant lesions utilizing 5-aminolevulinic acid.
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
U.S.A 07/783,750 5,211,938 10/28/91 05/18/93 Method of detection of malignant and non-malignant
lesions by photochemotherapy of protoporhyrin IX
precursors.
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
U.S.A 07/865,151 5,234,940 04/08/92 08/10/93 Photchemotherapeutic method using 5-aminlevulinic acid
and precursors therof.
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
U.S.A 08/082,113 5,422,093 06/28/93 06/06/95 Photochemotherapeutic method using 5-aminolevulinic
acid and precursors thereof.
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
U.S.A 08/136,831 5,441,531 10/18/93 08/15/95 Illuminator and methods for photodynamic therapy.
Corres to Canada
2,108,654
- ------------- ------------------- ------------- ------------ --------------- ------------------------------------------------------
U.S.A 08/215,273 5,474,528 03/21/94 12/12/95 Combination controller and patch for the photodynamic
therapy of dermal lesion.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 83
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
ISSUED PATENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
U.S.A 08/215,274 5,489,279 03/12/94 02/06/96 Method of applying photodynamic therapy to dermal
lesion.
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
U.S.A 08/215,272 5,505,726 03/21/94 04/09/96 Article of manufacture for the photodynamic therapy of
dermal lesion.
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
U.S.A 08/466,427 5,782,895 06/06/95 07/21/98 Illuminator for photodynamic therapy.
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
U.S.A 08/921,664 5,856,566 09/02/97 01/05/99 Sterilized 5-aminolevulinic acid.
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
U.S.A 08/962,294 5,954,703 10/31/97 09/21/99 Method and Apparatus for Applying ALA
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
U.S.A 08/465,242 5,955,490 06/05/95 09/21/99 Photochemotherapeutic method using 5-aminlevulinic
acid and other precursors of endogenous porhyrins.
CIP of 08/092,925
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
Australia 60343/90 624,985 07/25/90 10/19/92 Method of detection and treatment of malignant and
non-malignant lesions by photochemotherapy.
Corres to USSN
07/386,414
- -------------- --------------------- ------------- ------------ ------------ ------------------------------------------------------
Australia 38832/93 674,310 04/02/93 04/09/97 Photochemotherapeutic method using 5-aminolevulinic
acid and precursors thereof.
Corres to USSN
07/865,151
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 84
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
ISSUED PATENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New Zealand 251,284 251,284 04/02/93 11/10/97 Photochemotherapeutic method using 5-aminolevulinic
acid and precursors thereof.
Corres to USSN
07/865,151
- -------------- --------------------- ------------ ------------ --------------- ----------------------------------------------------
Japan 02-510192 2731032 07/25/90 Granted, but Photochemotherapeutic Method
in opposition
Corres USSN
07/386,414
- -------------- --------------------- ------------ ------------ --------------- ----------------------------------------------------
Korea 700294/1991 178277 07/25/90 Granted Method For Treating Skin Disorders With
Photochemotherapy
Corres USSN
07/386,414
- -------------- --------------------- ------------ ------------ --------------- ----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FOREIGN AND PCT PATENT APPLICATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COUNTRY SERIAL NO. PATENT NO. FILING DATE ISSUE DATE TITLE
- -------------------- -------------------- ------------- ------------- ----------- -------------------------------------------------
Corresponding to USSN 07/386,414 (US Patent No 5,079,262)
- -----------------------------------------------------------------------------------------------------------------------------------
Korea Divisional of 178277 Abandoned Method For Treating Skin Disorders With
Photochemotherapy
700294/1991
- -------------------- -------------------- ------------- ------------- ----------- -------------------------------------------------
[c.i.]
- -------------------- -------------------- ------------- ------------- ----------- -------------------------------------------------
- -------------------- -------------------- ------------- ------------- ----------- -------------------------------------------------
Corresponding to USSN 07/865,151 (US Patent No 5,234,940)
- -----------------------------------------------------------------------------------------------------------------------------------
[c.i.]
- -------------------- -------------------- ------------- ------------- ----------- -------------------------------------------------
</TABLE>
<PAGE> 85
<TABLE>
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
EPO 93907704 04/02/93 Abandoned
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
New Zealand 314801 251284 05/13/97 Granted Photochemotherapeutic Method Using 5-Aminolevulinic
Acid and precursors thereof.
- -----------------------------------------------------------------------------------------------------------------------------------
Corresponding to USSN 08/082,113 (US Patent No 5,422,093)
- -----------------------------------------------------------------------------------------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Corresponding to CASN 2,108,654
- -----------------------------------------------------------------------------------------------------------------------------------
Israel 111,222 10/10/94 Abandoned
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
Mexico 9408,007 188009 10/10/94 Granted Illumination Lamp For Photodynamic Therapy
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Corresponding to USSNs 08/215,272, 08/215,273, 08/215,273
- -----------------------------------------------------------------------------------------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Corresponding to USSN 08/465,242
- -----------------------------------------------------------------------------------------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Corresponding to USSN 08/962,294 (US Patent No 5,954,703)
- -----------------------------------------------------------------------------------------------------------------------------------
[c.i.]
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
- ------------------------ --------------- ----------- ----------- ------------ -----------------------------------------------------
</TABLE>
<PAGE> 86
EXHIBIT 1.21
U.S. STANDARD PACKAGING AND LABELING
<PAGE> 87
DRAFT SPECIFICATION
DUSA PHARMACEUTICALS, INC. WILMINGTON, MA
[c.i.]
[IMAGE]
[c.i.]
[IMAGES]
[c.i.]
<PAGE> 88
EXHIBIT 1.38
INITIAL PRODUCT SPECIFICATIONS
[c.i.]
<PAGE> 89
EXHIBIT 4.1.1
INITIAL PRODUCT PLAN
[c.i.]
<PAGE> 90
EXHIBIT 8.1(b)
<TABLE>
<CAPTION>
REGIONS KEY MARKETS
------- -----------
<S> <C>
</TABLE>
[c.i.]
<PAGE> 91
EXHIBIT 8.6
INITIAL MARKETING PLAN
[c.i.]
<PAGE> 92
EXHIBIT 9.3
SCHERING INITIAL FORECAST
[c.i.]
<PAGE> 93
EXHIBIT 9.7
INITIAL PRODUCT INSPECTION CRITERIA
[c.i.]
<PAGE> 94
EXHIBIT 14.3
CORE PATENTS
<PAGE> 95
EXHIBIT 14.3
CORE PATENTS
#5,079,262 Method of detection and treatment of malignant and non-malignant
lesions utilizing 5-aminolevulinic acid (1/7/92)
#5,211,938 Method of detection of malignant and non-malignant lesions by
photochemotherapy of protoporhyrin IX precursors (5/18/93)
#5,234,940 Photchemotherapeutic method using 5-aminolevulinic acid and
precursors therof (8/10/93)
#5,422,093 Photochemotherapeutic method using 5-aminolevulinic acid and
precursors thereof (6/6/95)
#5,954,703 Method and Apparatus for Applying ALA (9/21/99)
<PAGE> 96
EXHIBIT 14.6
THIRD PARTY LICENSORS
<PAGE> 97
EXHIBIT 14.6
THIRD PARTY LICENSORS
Amended and Restated License Agreement, dated March 11, 1998, between DUSA and
PARTEQ
Co-Development Agreement, dated June 2, 1995, between DUSA and National
Biological Corporation
Purchase and Supply Agreement dated November 5, 1998, between DUSA and National
Biological Corporation
<PAGE> 98
EXHIBIT 15.3
REGISTRATION OF DUSA MARKS
<PAGE> 99
EXHIBIT 15.3
REGISTRATION OF DUSA MARKS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
REGISTRATION REGISTRATION APPLICATION APPLICATION APPLICATION
DUSA MARK COUNTRY/TERRITORY DATE NUMBER PENDING DATE NUMBER
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
DUSA Pharmaceuticals, Inc. United States 3/7/95 1,882,782
================================================================================================================================
Levulan United States 12/23/97 2,124,359
================================================================================================================================
Levulan Europe 2/1/99 572,263
================================================================================================================================
Kerastick United States TBD TBD x 10/27/97 75/379489
================================================================================================================================
Kerastick Europe TBD TBD x 04/26/99 001152347
================================================================================================================================
BLU-U United States TBD TBD x 10/27/99 75/379349
================================================================================================================================
BLU-U Europe TBD TBD x 04/26/99 001151844
================================================================================================================================
</TABLE>
<PAGE> 1
Exhibit 10.2
COMMON STOCK PURCHASE AGREEMENT
Common Stock Purchase Agreement (the "Stock Agreement") dated as of
November 22, 1999 by and between DUSA Pharmaceuticals, Inc., a New Jersey
corporation ("DUSA"), and Schering Berlin Venture Corporation (the "Purchaser"),
an affiliate of Schering AG.
R E C I T A L S:
A. DUSA and Schering AG are concurrently with this Stock Agreement
entering into a Marketing, Development and Supply Agreement with respect to
certain products utilizing Levulan(R) (the "MD&S Agreement"). Capitalized terms
used but not otherwise defined in this Stock Agreement shall have the meanings
defined in the MD&S Agreement.
B. According to the terms and conditions of the MD&S Agreement, the
Purchaser agrees to make certain equity investments in DUSA upon the occurrence
of certain milestones.
C. Subject to the terms and conditions set forth in this Stock
Agreement, DUSA agrees to issue and sell, and the Purchaser agrees to purchase,
a certain number of shares of DUSA's common stock, no par value ("Common
Stock").
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, DUSA and the Purchaser
hereby agree as follows:
1. PURCHASE AND SALE OF SHARES
(a) Subject to the terms and conditions set forth in this Agreement and
in reliance upon DUSA's and the Purchaser's representations set forth herein,
DUSA shall issue and sell to the Purchaser, and the Purchaser shall purchase
from DUSA, for an aggregate purchase price of $6,250,000 (the "Stock Purchase
Price), the number of shares of Common Stock (the "DUSA Shares") obtained by
dividing the Stock Purchase Price by (A) the average closing price of the Common
Stock as quoted on the Nasdaq National Market for [c.i.] preceding the [c.i.] of
the [c.i.]. The sale and purchase shall be effected by DUSA delivering to the
Purchaser a duly executed stock certificate registered in the name of the
Purchaser (or its designee) evidencing the DUSA Shares to be purchased
contemporaneously, or as soon as practicable thereafter, against delivery by the
Purchaser to DUSA of cash by wire transfer of immediately available funds to the
following account (or to such other account as may be specified by DUSA):
Account Name: [c.i.]
Bank Name: [c.i.]
Bank Address: [c.i.]
ABA#: [c.i.]
Account #: [c.i.]
(b) The Purchaser shall be obligated hereunder only with respect to the
number of
Initials
<PAGE> 2
DUSA Shares for which it has subscribed (as set forth above). The Purchaser may,
by notice in writing to DUSA, designate an Affiliate of the Purchaser to be the
purchaser of the DUSA Shares; provided the Affiliate also becomes bound to the
terms and obligations of the Purchaser under this Stock Agreement.
(c) DUSA shall not be required to issue fractions of DUSA Shares. If
any fraction of a share would be issuable upon the calculation of the number of
DUSA Shares to be purchased upon the occurrence of a respective milestone, DUSA
may issue a whole share in lieu of such fraction or DUSA may purchase such
fraction for an amount in cash equal to the same fraction of the Stock Purchase
Price of such DUSA Shares on the Stock Closing Date.
2. THE STOCK CLOSING
The closing of the sale and purchase of the DUSA Shares hereunder (the
"Stock Closing") shall take place at the offices of DUSA or such other location
agreed to by the parties not later than ten (10) business days following the
achievement of Milestone 2 pursuant to Section 6.3 of the MD&S Agreement, in any
event no later than the time a Collaboration Product receives Marketing Approval
in the United States, provided, that, the conditions set forth in Article 5
hereof shall have been satisfied or waived or if the conditions set forth in
Article 5 hereof have not been satisfied or waived as of such date, as promptly
as practicable following the satisfaction or waiver of such conditions (the
"Stock Closing Date") and further provided, that if an event occurs which allows
Schering AG to delay the cash payment under Milestone 2 pursuant to the MD&S
Agreement, then the Stock Closing hereunder shall be delayed for the same
period.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.
The Purchaser acknowledges, represents, warrants and covenants as
follows:
(a) RECEIPT OF CORPORATE INFORMATION. All requested publicly-available
documents, records and books pertaining to DUSA and the offer and sale hereby of
the DUSA Shares, including, without limitation, DUSA's Annual Report on Form
10-K for the Year Ended December 31, 1998 (the "Form 10-K"), as amended, the
Proxy Statement dated April 28, 1999, Exhibits 4.2, 4.3, 4.4 and 4.5 to the
Registration Statement No. 333-73039 on Form S-3, as amended and filed on June
18, 1999 (the "Form S-3"), the current Prospectus relating to an offering of
2,217,608 shares of Common Stock by certain selling shareholders dated August 3,
1999 (the "Prospectus"), Form 8-Ks dated June 11, June 29 and October 14, 1999,
(the "Form 8- Ks") and Quarterly Reports on Form 10-Q for the Quarters Ended
March 31, June 30, and September 30,1999 (the "Form 10-Qs"), and together with
the Proxy Statement, Prospectus, Form 8-Ks and Form 10-K, and documents
incorporated by reference therein and all exhibits thereto, (the "SEC
Documents"), have been delivered to the Purchaser and/or its advisors, and all
of the Purchaser's questions and requests for information have been answered to
the Purchaser's satisfaction.
Initials
<PAGE> 3
(b) RISKS. The Purchaser acknowledges and understands that the purchase
of the DUSA Shares involves a high degree of risk and is suitable only for
persons of adequate financial means who have no need for liquidity in this
investment in that (i) the Purchaser may not be able to liquidate the investment
in the event of an emergency; (ii) transferability is extremely limited; and
(iii) in the event of a disposition, the Purchaser could sustain a complete loss
of its entire investment. The Purchaser is sufficiently experienced in financial
and business matters to be capable of evaluating the merits and risks of an
investment in DUSA; has evaluated such merits and risks, including risks
particular to the Purchaser's situation; and the Purchaser has determined that
this investment is suitable for the Purchaser. The Purchaser has adequate
financial resources and can bear a complete loss of the Purchaser's investment.
(c) ACCREDITED INVESTOR STATUS. The Purchaser is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act").
(d) INVESTMENT INTENT. The Purchaser hereby represents that the DUSA
Shares are being acquired for the Purchaser's own account with no present
intention of distributing such securities to others. The Purchaser has no
contract, undertaking, agreement or arrangement with any person to sell,
transfer or otherwise distribute to any person or to have any person sell,
transfer or otherwise distribute the DUSA Shares for the Purchaser.
(e) COMPLIANCE WITH FEDERAL AND STATE SECURITIES LAWS. The Purchaser
understands that the DUSA Shares have not been registered under the Securities
Act. The Purchaser understands that the DUSA Shares must be held indefinitely
unless the sale or other transfer thereof is subsequently registered under the
Securities Act or an exemption from such registration is available. Moreover,
the Purchaser understands that its right to transfer the DUSA Shares will be
subject to certain restrictions, which include restrictions against transfer
under the Securities Act and applicable state securities laws. In addition to
such restrictions, the Purchaser realizes that it may not be able to sell or
dispose of the DUSA Shares as there may be no public or other market for them.
The Purchaser understands that certificates evidencing the DUSA Shares shall
bear a legend substantially as follows:
The shares of Common Stock represented by this certificate have not
been registered under the Securities Act of 1933 or any applicable
state securities law. They may not be offered for sale, sold,
transferred or pledged unless registered under the Securities Act of
1933 and any applicable state securities law or pursuant to an
exemption from such registration requirements.
After a period of one year from the Stock Closing, upon request of the
Purchaser (or its designee) of any of the DUSA Shares, DUSA will promptly
arrange for such legend to be removed from the certificate or certificates
evidencing such DUSA Shares or for new certificates therefor to be issued to
such holder free of such legend, if, with such request, DUSA shall have received
an opinion of the holder's counsel, which opinion is reasonably satisfactory to
DUSA, to the effect that any transfer of the DUSA Shares by such holder may be
effected without registration under the Securities Act.
Initials
<PAGE> 4
(f) AUTHORITY; ENFORCEABILITY. The Purchaser has the full right,
corporate power, and authority to execute and deliver this Stock Agreement and
to perform all of its obligations, covenants and agreements hereunder; and this
Stock Agreement, when executed and delivered by the Purchaser, will constitute a
legal, valid and binding obligation enforceable against the Purchaser in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by the principles governing the availability of
specific performance, injunctive relief and other equitable remedies (regardless
of whether such enforceability is considered in equity or at law), including
requirements of reasonableness and good faith in the exercise of rights and
remedies thereunder; and the execution and delivery of this Stock Agreement by
the Purchaser, the performance by the Purchaser of its covenants and agreements
hereunder and the consummation of the transactions by the Purchaser contemplated
hereby have been duly authorized by all requisite corporate or other necessary
action on the part of the Purchaser.
(g) NONCONTRAVENTION. Neither the execution of this Stock Agreement,
nor the consummation of the transactions contemplated hereby, will constitute a
violation of or default under, or conflict with, any judgment, decree, statute
or regulation of any governmental authority applicable to the Purchaser, or any
contract, commitment, agreement or restriction of any kind to which the
Purchaser is a party or by which its assets are bound.
(h) APPROVALS. Except as may be required under federal and state
securities laws (which have been or, in the case of compliance required on a
post-sale basis, will be complied with), to the knowledge of Purchaser, no
approval, authorization, consent, order or other action of, or filing with, any
person, firm or corporation or any court, administrative agency or other
governmental authority is required in connection with the execution and delivery
of this Stock Agreement by the Purchaser or the consummation of the transaction
as contemplated hereby.
(i) STANDSTILL During the period from the date hereof through the
[c.i.] of the Stock Closing, (the "Standstill Period"), the Purchaser and its
Affiliates will not, without the prior written consent of DUSA:
(i) acquire, directly or indirectly, by purchase or otherwise,
of record or beneficially, ownership of any Common Stock or other voting
securities of DUSA if, as a result of such acquisition, the Purchaser and its
Affiliates would own [c.i.] of the Common Stock or other voting securities of
DUSA then outstanding;
(ii) make, or in any way participate in, directly or
indirectly, any [c.i.] of [c.i.] (as such terms are defined or used in [c.i.]
under the Securities Exchange Act of 1934 (the "Exchange Act")) to vote shares
of Common Stock, or become a [c.i.] in any [c.i.] (as such terms are used in
[c.i.] under the Exchange Act) with respect to DUSA,
(iii) initiate or propose or otherwise [c.i.] for [c.i.] to a
[c.i.] of [c.i.] with respect to DUSA; or
Initials
<PAGE> 5
(iv) take any action, individually or jointly with any
partnership, limited partnership, syndicate or other group or assist any person,
corporation, entity or group in taking any action it could not take individually
under the terms of this Agreement; provided, that nothing in this Article will
prohibit the Purchaser or its Affiliates from:
[i] participating in any of the activities
contemplated by this Stock Agreement or the MD&S Agreement;
[ii] engaging in any unsolicited discussion initiated
by persons other than the Purchaser or its Affiliates and communicating the
substance of any such discussion to DUSA if deemed appropriate;
[iii] communicating with members of the Board of
Directors of DUSA from time to time in a manner similar to other shareholders
concerning the views of the Purchaser regarding DUSA's business policies;
[iv] filing such documents as are required by
applicable law and not otherwise inconsistent with the terms of this Stock
Agreement.
In addition, prior to the expiration of the Standstill Period, unless
such shall have been specifically invited in writing by DUSA, Purchaser will
not, and will cause each of Purchaser's Affiliates not to, directly or
indirectly seek or offer to negotiate with or make any statement of proposal to
DUSA, its representatives or to any shareholder of DUSA, or otherwise make any
public announcement with respect to (i) any [c.i.] of [c.i.] or any similar
transaction involving DUSA; (ii) any [c.i.] of [c.i.] or similar transaction
with respect to DUSA; (iii) any request to [c.i.] the provisions of [c.i.] or
(iv) any proposal or other statement inconsistent with the terms of this Stock
Agreement. Notwithstanding the foregoing, nothing in this Stock Agreement shall
prohibit (a) the Chief Executive Officer or other senior executive officer of
the Purchaser from contacting the Chief Executive Officer of DUSA to determine
whether DUSA desires to pursue any of the transactions enumerated in (i) through
(iv); or (b) the Purchaser from taking any action described in this Section 3(i)
if any person unaffiliated with the Purchaser shall have previously taken or
announced its intention to take any such action.
(j) The Purchaser certifies that the representations set forth herein
are true and correct as of the date hereof and shall be true and accurate as of
the Stock Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF DUSA.
DUSA acknowledges, represents, warrants and covenants as follows:
(a) CORPORATE ORGANIZATION. DUSA is duly organized, validly existing
and in good standing under the laws of the State of New Jersey and has full
corporate power, authority and legal right to own, operate and lease its
properties and assets and to conduct the businesses in which it is now engaged.
DUSA is duly licensed or qualified to transact business as
Initials
<PAGE> 6
a foreign corporation and is in good standing in Massachusetts and Ontario,
Canada. DUSA is not qualified as a foreign corporation to transact business in
any other jurisdiction. DUSA has one subsidiary, DUSA Pharmaceuticals, New York,
Inc. which is duly incorporated, validly existing, and in good standing as a
domestic corporation under the laws of the State of New York. This subsidiary is
not qualified as a foreign corporation to transact business in any other
jurisdiction. The absence of such qualifications will not have a Material
Adverse Effect on the operations of DUSA and its subsidiary, when considered as
one enterprise.
(b) AUTHORITY. DUSA has full right, corporate power and authority to
execute and deliver this Stock Agreement and to perform all of its obligations,
covenants and agreements hereunder. The execution and delivery of this Stock
Agreement by DUSA, the performance by DUSA of its covenants and agreements
hereunder, including, without limitation, the issuance and sale of the DUSA
Shares and the consummation by DUSA of the transactions contemplated hereby have
been duly authorized by all necessary corporate action.
(c) ENFORCEABILITY. This Stock Agreement has been duly executed and
delivered and constitutes the valid and legally binding obligation of DUSA,
enforceable against DUSA in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws affecting the enforcement of creditors' rights generally or by the
principles governing the availability of specific performance, injunctive relief
and other equitable remedies (regardless of whether such enforceability is
considered in equity or at law), including requirements of reasonableness and
good faith in the exercise of rights and remedies thereunder.
(d) CAPITAL STOCK. The authorized capital stock of DUSA consists of
100,000,000 shares, 40,000,000 of which have been designated of Common Stock,
and 60,000,000 of which may be designated into classes or series. As of
September 30, 1999, there are 11,127,449 shares of Common Stock duly and validly
issued, fully paid, nonassessable and outstanding, 1,745,300 shares of Common
Stock are reserved for issuance upon the exercise of stock options granted under
DUSA's stock option and 401(k) plans, 968,608 shares of Common Stock are
reserved for issuance upon the exercise of warrants or other options issued by
DUSA and 1,112,744 shares of Common Stock are reserved pursuant to DUSA's
Shareholder Rights Plan. Except as set forth above,
(i) there are no shares of capital stock or other equity securities of
DUSA outstanding; and
(ii) except as disclosed in the SEC Documents, there are no outstanding
warrants, options, agreements, convertible or exchangeable securities or other
commitments (other than this Stock Agreement) pursuant to which DUSA is or may
become obligated to issue, sell, purchase, return or redeem any shares of
capital stock or other securities of DUSA, and there are not any equity
securities of DUSA reserved for issuance for any purpose.
(e) DUSA SHARES.
Initials
<PAGE> 7
(i) The DUSA Shares have been duly authorized and, upon issuance in
accordance with this Stock Agreement, will be validly issued, fully paid and
nonassessable shares of DUSA, and no Person has or will have any preemptive
rights to subscribe for such shares.
(ii) Assuming that the representations and warranties of the Purchaser
set forth in this Stock Agreement are true and correct and that any certificates
evidencing securities shall contain a legend substantially similar to that set
forth in Article 3(e) hereof, the issuance and sale of the DUSA Shares are and
will be exempt from the registration and prospectus delivery requirements of the
Securities Act as currently in effect, and have been or will be registered or
qualified (or exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws as currently in effect.
(f) NO CONSENT. Except as may be required under federal and state
securities laws (which have been or, in the case of compliance required on a
post-sale basis, will be complied with) and except for the filing of an
Additional Listing Application with the Nasdaq Stock Market, Inc. and compliance
with NASD Rule 4460(i)(1)(d), if applicable, the execution, delivery and
performance of this Stock Agreement by DUSA does not require (i) the consent,
waiver, approval, license or authorization of or any filing, registration or
qualification with any person or any governmental authority; or (ii) the
approval or authorization of the shareholders of DUSA.
(g) LITIGATION. Except as disclosed in the SEC Documents, there are no
actions, suits, proceedings or investigations pending or, to the best of DUSA's
knowledge and belief, threatened against DUSA or having a Material Adverse
Effect. DUSA is not a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality. There is no action, suit, proceeding or investigation by DUSA
currently pending or which DUSA intends to initiate.
(h) REGULATORY; NO VIOLATION.
(i) DUSA to its best knowledge and belief, has in all material
respects duly complied with, and is presently in due compliance with, and has
received no notice of any noncompliance, violation or default in any material
respect under any applicable law, ordinance, code, rule, statute, regulation,
judgment, decree, writ, ruling, injunction, order or any other requirement of
any Governmental Authority relating in any way or applicable in any manner to
DUSA, its properties or business (collectively, "Legal Requirements"), except
those disclosed on Schedule A, hereto, including, without limitation, all Legal
Requirements relating to, in the United States, the Federal Food, Drug and
Cosmetic Act, the Federal Trade Commission Act, and all regulations issued
thereunder, and there is no pending claim by the Food and Drug Administration,
the Federal Trade Commission or any other Governmental Authority, whether
national, state or local, in the United States or elsewhere, that DUSA is not in
such compliance or is in such breach, except for such Legal Requirements that
have not had and would not reasonably be expected to have a Material Adverse
Effect on DUSA. DUSA holds, and is in compliance with, all licenses, permits,
waivers, registrations, certificates, consents, approvals or authorizations
required by any applicable Legal Requirement (collectively, "Permits") and has
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not received any notice asserting any noncompliance with, or breach or violation
of, any Permit except for such Permits without which a Material Adverse Effect
could occur. DUSA has no reason to believe that it will be unable to obtain any
Permits which are required for the future conduct of such business.
(ii) DUSA is not in violation or default of any provisions of
its Certificate of Incorporation (the "Certificate") or its By-laws (the
"By-laws").
(iii) The execution, delivery and performance of this Stock
Agreement will not result in any violation of, be in conflict with, or
constitute a default under, with or without the passage of time or the giving of
notice: any Legal Requirement or Permit, any material contract, obligation or
commitment to which DUSA is a party or by which it is bound or the Certificate
or the By-Laws.
(iv) The execution, delivery and performance of the Stock
Agreement will not result in the creation or imposition of any Lien on any asset
of DUSA which could reasonably be expected to have a Material Adverse Event on
DUSA.
(i) NO REGISTRATION RIGHTS. Except as disclosed in the SEC Documents
and as provided in this Stock Agreement, DUSA is under no contractual obligation
to register (now or in the future, whether contingent or not) under any
applicable securities laws any of its presently outstanding Securities or any of
its Securities that may subsequently be issued.
(j) SEC FILINGS, ETC. DUSA has delivered to the Purchaser correct and
complete copies of the SEC Documents. The SEC Documents were true and correct in
all material respects at the time filed; and such reports, as amended,
supplemented, or updated by subsequent filings, are true and correct as of the
date so amended, supplemented or updated in all material respects, do not
contain any misstatement of a material fact and do not omit to state a material
fact or any fact required to be stated therein or necessary to make the
statements contained therein not materially misleading; and all amendments or
supplements thereto required to be filed under the federal securities law have
been so filed. DUSA's consolidated financial statements included in the SEC
Documents (the "Financial Statements") complied, in all material respects, when
filed, with the then-applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may have been indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-Q
promulgated by the SEC) and fairly presented (subject in the case of the
unaudited statements, to normal year-end audit adjustments) DUSA's financial
position at the dates thereof and the consolidated results of the operations and
statement of changes in financial position for the periods then ended.
(k) NO CHANGE. Except as disclosed in the SEC Documents, since
September 30, 1999 there has not been (i) any material adverse change in the
condition (financial or otherwise), operations, results of operations, assets,
liabilities, business or prospects of DUSA taken as a whole; (ii) any material
liability or obligation (contingent or otherwise) incurred by DUSA, other than
current liabilities (or obligations) or capital leases incurred in the ordinary
of business; (iii)
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any asset or property of DUSA made subject to a lien of any kind, except (a)
liens for taxes not yet due or which are being contested in good faith and by
appropriated proceedings provided adequate reserves with respect thereto are
maintained on DUSA's books in accordance with generally accepted principles, (b)
liens incurred in the ordinary course of business consistent with past
practices, (c) landlords', carriers', warehousemen's, mechanics', material
men's, repairmen's or other like liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or which are
being contested in good faith and by appropriate proceedings, (d) pledges or
deposits in connection with workers' compensation, unemployment insurance and
other social security legislation, (e) deposits to secure the performance of
contracts, bids, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, and (f) liens which in the
aggregate do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of DUSA's business; (iv) any
waiver of any material valuable right of DUSA, or the cancellation of any
material debt or claim held by DUSA; (v) any payment of dividends on, or other
distributions with respect to, or any direct or indirect redemption or
acquisition of, any shares of the Common Stock of DUSA, or any agreement or
commitment therefor; (vi) any mortgage, pledge, sale, assignment or transfer of
any tangible or intangible assets of DUSA, except, with respect to tangible
assets, in the ordinary course of business; (vii) any loan by DUSA to any
officer, director, employee or shareholder of DUSA, or any agreement or
commitment therefor; (viii) any material damage, destruction or loss (whether or
not covered by insurance) which does or may adversely affect the condition
(financial or otherwise), operations, results of assets, property, business or
prospects of DUSA; (ix) any transaction entered into other than of the usual and
ordinary course of business except for this Stock Agreement, the Light Source
Agreement, the MD&S Agreement, the Secured Line of Credit Promissory Note, the
Security Agreement and the Guaranty and the implementation of rights under these
agreements; or (x) any change in the accounting methods or practices followed by
DUSA.
(l) TAXES. To its knowledge, all required tax returns of DUSA have been
accurately prepared and duly filed, and all taxes required to be paid with
respect to the periods covered by such returns have been paid. DUSA has not been
delinquent in the payment of any tax, assessment or governmental charge, except
for any such delinquencies that have been fully remedied. For these purposes,
references to "tax returns" shall be interpreted broadly to include any Federal,
state or local tax return, and any tax return, or equivalent of any taxing
jurisdiction outside of the United States.
(m) RELATED PARTY TRANSACTIONS. Except as described in the SEC
Documents, no current principal shareholder or current or former director,
officer or employee of DUSA nor any "affiliate" (as defined in the rules and
regulations promulgated under the Exchange Act), of any such person, is
currently, or since September 30, 1999 has been, directly or indirectly through
his affiliation with any other person or entity, a party to any transaction
(other than as an employee, consultant or shareholder) with DUSA providing for
the furnishing of services by, or rental of real or personal property from, or
otherwise requiring cash payments from or to any such person.
(n) DUSA certifies that the representations set forth herein are true
and correct as of
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the date hereof; and the representations set forth in Sections 4(a)-(c), (d) (as
of the Stock Closing Date), (e), (f), and (j)-(m) of this Stock Agreement, and
the representations set forth in Article 16.1.1 (a), (b), (d) and (g) of the
MD&S Agreement shall also be true and correct as of the Stock Closing Date.
5. CONDITIONS
(a) EFFECTIVE DATE. The obligations of DUSA and the Purchaser,
respectively, hereunder shall not become effective until the date on which each
of the following conditions is satisfied or waived:
(i) Each party shall have received from the other an executed
counterpart of this Stock Agreement signed on their own behalf.
(ii) The Purchaser shall have received such documents and
certificates as it or its counsel may reasonably request relating to the
organization, existence and good standing of DUSA, the authorization of the
transactions contemplated by this Stock Agreement and the MD&S Agreement, all in
form and substance satisfactory to the Purchaser and its counsel;
(iii) Each party shall have executed and delivered to the
other the MD&S Agreement, the Light Source Agreement, and any further documents
required in connection therewith.
(iv) The Purchaser shall have provided DUSA with such
financial information reasonably satisfactory to DUSA, evidencing sufficient
liquidity for Purchaser to meet its' financial obligations hereunder.
(b) THE STOCK CLOSING. The obligations of DUSA and of the Purchaser
shall, in the case of the obligations of the Purchaser, be subject to each of
the conditions set forth in subparagraphs (i) through (v) below having been
satisfied or waived on or prior to the Stock Closing Date and, in the case of
the obligations of DUSA, be subject to the conditions set forth in paragraph
(vi) and (vii) having been satisfied or waived on or prior to the Stock Purchase
Date.
(i) Legal Opinions. The Purchaser shall have received an
opinion of counsel to DUSA, dated as of the Stock Closing Date, in a form and
substance reasonably acceptable in all respects to the Purchaser to the effect
that:
(aa) DUSA is duly incorporated, validly existing and
in good standing under the laws of the State of New Jersey and has full
corporate power, authority and legal right to own, operate and lease its
properties and assets and to conduct the businesses in which it is now engaged,
and it is duly licensed or qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in Massachusetts and
Ontario, Canada. DUSA is not qualified as a foreign corporation to transact
business in any other jurisdiction. DUSA has one subsidiary, DUSA
Pharmaceuticals, New York, Inc. which is duly incorporated, validly existing,
and in good standing as a domestic corporation under the laws of the State of
New York. This
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subsidiary is not qualified as a foreign corporation to transact business in any
other jurisdiction. The absence of such qualifications will not have a Material
Adverse Effect on the operations of DUSA and its subsidiary, when considered as
one enterprise;
(bb) the DUSA Shares, issued pursuant to this Stock
Agreement, when so issued for the consideration herein set forth, shall
constitute duly authorized, validly issued, fully paid and nonassessable shares
of capital stock of the Company;
(cc) the certificate representing the DUSA Shares,
issued pursuant to this Stock Agreement is in due and proper form and has been
duly and validly executed as required by law;
(dd) the execution and delivery by DUSA of this Stock
Agreement and the MD&S Agreement and the performance by DUSA of its obligations
hereunder and thereunder (i) have been duly authorized by all requisite
corporate action on the part of DUSA and (ii) will not conflict with, result in
a breach of or constitute a default under (A) the Certificate or the By-Laws,
(B) in any material manner any securities law, rule or regulation of the United
States of America or the State of New Jersey, or (C) the provisions of any
material agreement of DUSA, or (D) any order or decree of any court or
government agency or instrumentality;
(ee) no authorization, approval or other action by,
and no notice to, consent or order of, registration, designation, or
qualification by or filing with, any United States Federal (other than the
listing of the DUSA Shares pursuant to the rules and regulations of the NASDAQ
Stock Market) or New Jersey authority is required to be made prior to the Stock
Closing Date, other than those that have been made or obtained and are in full
force and effect;
(ff) subject to the representations of DUSA and the
Purchaser contained in this Stock Agreement, the offer and sale of the DUSA
Shares, pursuant to the terms of this Stock Agreement are exempt from the
registration requirements of the Securities Act;
(gg) except as disclosed in the SEC Documents, such
counsel is not aware of any action, proceedings or investigation pending against
DUSA, or that DUSA has received any threat thereof, which questions the validity
of this Stock Agreement, or the right of DUSA to enter into this Stock Agreement
or fulfill its obligations hereunder; and
(hh) the Certificate and the By-Laws are not in
violation of any provision of the laws of the State of New Jersey and, to the
best of such counsel's knowledge, DUSA is not in violation of any provision of
such documents.
(ii) Representation and Warranties of DUSA.
(aa) The representations and warranties of DUSA in
Section set forth 4(a)- (c), (d) (as of the Stock Closing Date), (e), (f), and
(j)-(m) in this Stock Agreement shall be true and correct on and as of the Stock
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Execution Date.
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(bb) The representations and warranties of DUSA set
forth in Article 16.1.1 (a), (b), (d), and (g) of the MD&S Agreement shall be
true and correct on and as of the Stock Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Execution Date.
(iii) Execution Date: Performance. The Execution Date shall
have occurred; DUSA shall have performed and complied with all agreements,
obligations and conditions contained in this Stock Agreement that are required
to be performed or complied with by it on or before the Stock Closing Date and
DUSA shall not be (with or without the lapse of time or the giving of notice or
both) in material breach or default of this Stock Agreement or the MD&S
Agreement.
(iv) Consents. DUSA shall have delivered to the Purchaser any
necessary contractual or governmental consents and approvals, in each case
satisfactory to the Purchaser in its sole discretion.
(v) Compliance Certificate. DUSA shall have delivered to the
Purchaser a certificate dated as of the Stock Closing Date executed by an
executive officer of DUSA and in a form reasonably acceptable to the Purchaser,
certifying that the conditions set forth in paragraphs (ii), (iii) and (iv) of
this Section 5 have been satisfied and that there has been no material adverse
effect on (a) the ability of DUSA to perform any of its obligations under this
Stock Agreement or (b) the rights of or benefits available to the Purchaser
under this Stock Agreement, in each case since the date of this Stock Agreement.
(vi) Representations and Warranties of the Purchaser. The
representations and warranties of the Purchaser contained in this Stock
Agreement shall be true on and as of the Stock Closing Date with the same effect
as though such representations and warranties had been made on and as of the
Stock Closing Date.
(vii) Receipt of Stock Purchase Price. DUSA shall have
received the Stock Purchase Price against delivery of the Stock Certificate for
the DUSA Shares.
6. COVENANTS OF DUSA.
(a) INSURANCE. DUSA shall maintain with financially sound and reputable
insurance companies insurance on the business and properties of DUSA in at least
such amounts and against at least such risks as are usually insured against by
similarly situated companies engaged in similar businesses.
(b) INSPECTION. DUSA shall allow the Purchaser from time to time, at
the Purchaser's expense and at reasonable times, on reasonable notice, but no
more than once per year, to visit DUSA's properties. To the extent provided by
New Jersey law under NJSA:14A:5-28, DUSA shall allow the Purchaser to examine
its books of account and records and to discuss DUSA's affairs, finances and
accounts with DUSA's officers.
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(c) FINANCIAL AND BUSINESS INFORMATION. So long as the Purchaser or any
Affiliate of the Purchaser holds any of the DUSA Shares, DUSA shall promptly
furnish to the Purchaser or such Affiliate a copy of all filings made with the
SEC.
(d) REGISTRATION RIGHTS. DUSA shall provide the registration rights set
forth in Annex A hereto and perform all of its obligations related thereto.
7. INDEMNIFICATION.
(a) The Purchaser understands the meaning and legal consequences of the
representations and warranties made by it in this Stock Agreement, and agrees to
indemnify and hold harmless DUSA and each of the DUSA directors, officers,
employees, counsel, agents, successors and assignees from and against any and
all loss, damage, liability or expense (including, without limitation,
reasonable attorneys' fees), as and when incurred, due to or arising out of (in
each case in whole or in part) any material breach of any representation or
warranty made by the Purchaser set forth herein or any failure by the Purchaser
to fulfill any of its covenants or agreements set forth herein, or rising out of
the resale or distribution by the Purchaser of the DUSA Shares or any portion
thereof in violation of the Act or any applicable foreign or state securities or
"blue sky" law.
(b) DUSA understands the meaning and legal consequences of the
representations and warranties made by it in this Stock Agreement, and agrees to
indemnify and hold harmless the Purchaser and each of its directors, officers,
employees, counsel, agents, successors and assigns from and against any and all
loss, damage, liability or expense (including, without imitation, reasonable
attorneys' fees), as and when incurred, due to or arising out of (in each case
in whole or in part) any material breach of any representation or warranty made
by DUSA set forth herein, or any failure by DUSA to fulfill any of its
covenants, obligations or agreements set forth herein.
(c) Notwithstanding the language contained in subparagraphs (a) and (b)
above, this indemnification shall not apply to breaches, failures or violations
which may arise under the MD&S Agreement.
8. NOTICES.
All notices, reports and other communications to the Purchaser, or DUSA
shall be in writing, shall refer specifically to this Stock Agreement and shall
be sent by facsimile transmission or by overnight courier, registered mail or
certified mail, return receipt requested, postage prepaid, in each case to the
respective persons and addresses specified below (or to such other persons or
addresses as may be specified in writing to the other party):
If to the Purchaser, to: Schering Berlin Venture Corporation
340 Changebridge Road
P.O. Box 1000
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Montville, New Jersey 07045
Attn: General Counsel
With a copy to: Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019-7475
Attn: Peter S. Wilson, Esq.
Fax No: (212) 474-3700
If to DUSA: DUSA Pharmaceuticals, Inc.
25 Upton Drive
Wilmington, Massachusetts 01887
Dr. D. Geoffrey Shulman
President
Fax:(978) 657-9193
With a copy to: Lane and Mantell
991 U.S. Highway 22 West
Suite 102, P.O. Box 8539
Somerville, NJ 08876
Attn: Nanette W. Mantell, Esq.
Fax No.: (908) 253-9339
Any notice or communication given in conformity with this Section 8
shall be deemed to be effective when received by the addressee if delivered by
hand or overnight courier and three days after mailing, if mailed.
9. NO IMPLIED WAIVERS; RIGHTS CUMULATIVE.
No failure on the part of the Purchaser, or DUSA to exercise and no
delay in exercising any right, power, remedy or privilege under this Stock
Agreement or provided by statute or at law or in equity or otherwise, including,
without limitation, the right or power to terminate this Stock Agreement, shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach of this Stock Agreement or
as an acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise thereof or the exercise of any other right, power, remedy or
privilege.
10. AMENDMENTS.
No amendment, modification, waiver, termination or discharge of any
provision of this Stock Agreement, nor consent to any departure therefrom, shall
in any event be effective unless the same shall be in writing specifically
identifying this Stock Agreement and the provision(s)
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intended to be amended, modified, waived, terminated or discharged and signed by
the Purchaser, and DUSA, and each amendment, modification, waiver, termination
or discharge shall be effective only in the specific instance and for the
specific purpose for which given. No provision of this Stock Agreement shall be
varied, contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Purchaser, and DUSA.
11. INTEGRATION.
This Stock Agreement, including Annex A, the Light Source Agreement,
the Secured Line of Credit Promissory Note, the Security Agreement, the Guaranty
and the MD&S Agreement and all Exhibits thereto represent the entire
understanding and agreement of the parties with respect to the subject matter
hereof. No other representations, statements or warranties have been made, other
than as set forth herein.
12. ATTORNEYS' FEES.
Except as otherwise set forth herein, all costs and expenses, including
reasonable attorneys' fees, incurred in the enforcement of this Stock Agreement,
shall be paid to the prevailing party by the non-prevailing party, upon demand.
13. COUNTERPARTS.
This Stock Agreement may be executed in two counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and
the same instrument.
14. GOVERNING LAW.
This Stock Agreement shall be enforced, governed and construed in all
respects in accordance with the internal laws, and not the laws pertaining to
conflicts or choice of laws, of the State of New York.
15. ASSIGNMENT.
This Stock Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted assigns. Subject to Section
1.8 of Annex A, this Stock Agreement shall not be assigned by either party
without the written consent of the other; provided however, that either Party
may assign this Stock Agreement without the other Party's consent to an entity
that acquires substantially all of the business or assets of the assigning Party
(or that portion thereof to which this Stock Agreement relates), in each case
whether by merger, acquisition, or otherwise.
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16. TERMS DEFINED.
As used in this Stock Agreement, the following terms have the
respective meanings set forth below:
"Affiliate" shall have the meaning set forth in Rule 405 under the
Securities Act;
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity, whether foreign or domestic, exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government;
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset;
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
DUSA, (b) the ability of DUSA to perform any of its obligations under this Stock
Agreement or (c) the rights of or benefits available to the Purchaser under this
Stock Agreement.
"Person" shall mean an individual, partnership, joint-stock company,
corporation, trust, unincorporated organization or other entity, and a
government or agency or political subdivision thereof;
"Security" or "Securities" shall have the meaning set forth in Section
2(i) of the Securities Act;
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
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IN WITNESS WHEREOF, the parties hereto, through their duly authorized
officers, have executed this Stock Agreement as of the date first written above.
DUSA:
DUSA PHARMACEUTICALS, INC.
By:/S/ D. Geoffrey Shulman
_______________________
D. Geoffrey Shulman
Title: President
PURCHASER:
SCHERING BERLIN VENTURE CORPORATION
By: /S/ John Nicholson
___________________________________
Name John Nicholson
Title Treasurer
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ANNEX A
1. REGISTRATION RIGHTS.
1.1 Definitions. As used in this Section 1:
(a) the terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering of
effectiveness of such registration statement;
(b) the term, "Registrable Securities" means the then
outstanding shares of Common Stock purchased by the Purchaser pursuant to this
Stock Agreement as well as any capital stock of DUSA issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of,
such shares;
(c) the term "Holder" shall mean the Purchaser, its Affiliates
or any permitted transferee pursuant to Section 1.8;
(d) "Registration Expenses" shall mean all expenses incurred
by DUSA in compliance with Sections 1.2, 1.3, 1.4 and 1.5 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for DUSA, blue sky fees and expenses and the
expense of any special audits of DUSA not caused by any special audit of
Purchaser and Holder incident to or required by any such registration (but
excluding the compensation of regular employees of DUSA, which shall be paid in
any event by DUSA; and
(e) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders.
1.2 Requested Registration.
(a) Request for Registration. If DUSA shall receive from one
or more Holders, representing a majority of the DUSA Shares purchased pursuant
to the Common Stock Purchase Agreement dated November 22, 1999, (the "Stock
Agreement") at any time after the date which is [c.i.] from the date of the
Stock Agreement, a written request that DUSA effect a registration of
Registrable Securities, DUSA shall as soon as practicable use its diligent best
efforts to effect such registration under the Securities Act (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as may be so requested and as would permit or facilitate the
sale and distribution of such Registrable Securities as are specified in such
request; provided, however, that DUSA shall not be obligated to effect or take
any action to effect, (A) [c.i.] registrations pursuant to this Section 1.2
(provided, however, that DUSA shall be responsible for Registration Expenses for
[c.i.] such registration pursuant to this Section 1.2, and further provided,
however, that any registration where the registration statement does not become
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effective shall not constitute a registration pursuant to this Section 1.2), or
(B) any registration pursuant to this Section 1.2 in any particular jurisdiction
in which DUSA would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance, unless DUSA
is already subject to such jurisdiction and except as may be required by the
Securities Act or applicable rules or regulations thereunder.
(b) Underwriting. If the Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise DUSA as part of their request made pursuant to Section
1.2(a) and DUSA shall enter into an underwriting agreement in customary form
(including, without limitation, such representations and warranties and
indemnity and contribution provisions as the underwriter or underwriters
customarily require) with the representative of the underwriter or underwriters
selected for such underwriting by the Holders, such underwriter or underwriters
to be acceptable to DUSA.
(c) Blackout Periods. If a request for registration is made
pursuant to this Section 1.2 and at the same time DUSA is engaged or has fixed
and definitive plans to engage in a registered public offering or in any other
activity which, in the good faith determination of DUSA's Board of Directors,
would be adversely affected by the requested registration, DUSA shall have the
right to direct that such request be delayed for a period [c.i.].
(d) Form S-3. DUSA shall use its best efforts to qualify and
remain qualified for effecting registration of its securities on Form S-3 for
secondary sales. Any request by the Purchaser for a registration of Registrable
Securities pursuant to Section 1.2(a) shall be made on Form S-3 so long as DUSA
is qualified to register the Registrable Securities on such form. If DUSA is not
qualified to register the Registrable Securities on Form S-3, or if DUSA
registers the Registrable Securities on Form S-3 and subsequently becomes
ineligible to use such form, then DUSA will register the Registrable Securities
on a registration statement on Form S-1 or other available form and will file
any amendments or supplements to such registration statement as may be necessary
to allow the Purchaser to meet the prospectus delivery requirements of the
Securities in connection with its sales of Registrable Securities under such
registration statement.
(e) Lock-Up. Notwithstanding DUSA's obligation to register the
DUSA Shares as provided in this Annex A, the Purchaser agrees that, for a period
of [c.i.] following the date of issuance of the DUSA Shares, the Purchaser will
not offer, issue, sell, make any short sale of, grant any option for the sale of
or otherwise dispose of, directly or indirectly, any of the DUSA Shares (or any
security or other instrument which by its terms is convertible into, exercisable
for, or exchangeable for shares of Common Stock), without first obtaining the
written consent of DUSA.
1.3 DUSA Registration.
(a) Subsequent to the [c.i.] of the date of issuance of the
DUSA Shares, if DUSA shall determine to register any of its Securities for its
own account or for the account of any other holder of Securities, other than a
registration relating solely to director stock option or employee benefit plans,
or a registration relating solely to a transaction for the type described in
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Rule 145 under the Securities Act, or any successor to Rule 145, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, DUSA will provide prior written notice [c.i.] before the filing with
the Commission of such registration statement. Such notice shall offer to
include in such filing that number of Registrable Securities as the Holders may
request, subject to the conditions hereinafter set forth and to the rights of
other holders entitled to registration rights. If the Holder desires to have
Registrable Securities registered under this Section 1.3, it shall be required
to so advise DUSA in writing within [c.i.] after the date of receipt of such
offer from DUSA, setting forth the number of Registrable Securities for which
registration is requested. DUSA shall thereupon include in such filing the
number of Registrable Securities for which registration is so requested, subject
to its right to reduce the number of Registrable Securities as set forth in
Section 1.3(b) below, and shall use its best efforts to effect registration
under the Securities of such Registrable Securities.
(b) Underwriting. Where the registration of which DUSA gives
notice is for a registered public offering involving an underwriting, DUSA shall
so advise the Holders as part of the written notice given pursuant to Section
1.3(a). In such event, the right of each of the Holders to registration pursuant
to this Section 1.3 shall be conditioned upon such Holders' participation in
such underwriting and the inclusion of such Holders' Registrable Securities in
the underwriting to the extent provided herein. The Holders shall (and it shall
be a condition of their participation in any such registration and underwriting
that any other shareholders distributing Securities through such underwriting
also shall) enter into an underwriting agreement in customary form (including,
without limitation, such indemnity and contribution provisions as the
underwriter or underwriters customarily require) with the underwriter or
underwriters selected for the underwriting by DUSA. Notwithstanding any other
provision of this Section 1.3, if the underwriter determines that marketing
factors require a limitation on the number of shares to be underwritten, the
underwriter may (subject to the allocation priority set forth below) exclude
from such registration and underwriting some or all of the Registrable
Securities which would otherwise be underwritten pursuant hereto. In such a
case, DUSA shall so advise all Holders requesting registration, and
participation in the underwriting by each of DUSA, the Holders and other holders
of Securities shall be reduced, on a pro rata basis, by such minimum number of
shares as is necessary to comply with such limitation. If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to DUSA and the underwriter. Any Registrable
Securities or other securities excluded (in accordance with this Section 1.3(b)
or withdrawn from such underwriting shall be withdrawn from such registration.
1.4 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 1.3 shall be borne by DUSA; except that registration and
filing fees to register or qualify Registrable Securities under Section 1.2
shall only be paid by DUSA on [c.i.]. All Selling Expenses shall be borne by the
Holders.
1.5 Registration Procedures.
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(a) Whenever DUSA effects or is required to effect the
registration of any Registrable Securities, DUSA will as expeditiously as
possible:
(i) prepare and file with the Commission, a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to promptly become and remain
effective for the period set forth in subsection (ii) below and promptly notify
the Holders (x) when such registration statement becomes effective, (y) when any
amendment to such registration statement becomes effective and (z) of any
request by the Commission for any amendment or supplement to such registration
statement or any prospectus relating thereto or for additional information;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the offer of the Registrable Securities covered by such registration
statement during the period required for distribution of the Registrable
Securities, which period shall not be in excess of [i] nine (9) months from the
effective date of such registration statement that is not a shelf registration
filed pursuant to Rule 415; [ii] the period permitted under the Securities Act
with respect to a shelf registration under Rule 415; and [iii] such time as the
Holder becomes eligible to resell the DUSA Shares pursuant to Rule 144(k) under
the Securities Act;
(iii) furnish to the Holders, prior to filing a
registration statement, copies of such registration statement as proposed to be
filed and thereafter, such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus, reports on Forms 10-K, 10-Q
and 8-K or their equivalents which DUSA shall have filed with the Commission,
and financial statements, reports and proxy statements mailed to shareholders of
DUSA) as the Holders may reasonably request in order to facilitate the
disposition of the Registrable Securities being offered by the Holders;
(iv) use reasonable efforts to register or qualify,
not later than the effective date of any filed registration statement, the
Registrable Securities covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the Holders reasonably
request;
(v) make available, upon reasonable notice and during
business hours, for inspection by the underwriter or underwriters (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents, agreements and properties of DUSA (collectively, the "Records") as
shall be reasonably necessary to enable the Inspectors to exercise their due
diligence responsibilities, and cause DUSA's officers, directors and employees
to supply access to all information reasonably requested by any such Inspector
in connection with the registration statement, provided the Inspectors have
signed confidentiality agreements in form and substance reasonably satisfactory
to DUSA;
(vi) if the Securities covered by the Registration
Statement are to be sold
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through one or more underwriters, obtain a comfort letter from DUSA's
independent public accountants dated within five business days prior to the
effective date of the registration statement (and as of such other dates as the
underwriter or underwriters for the Registrable Securities may reasonably
request) in customary form and covering such matters of the type customarily
covered by such comfort letters as such underwriter or underwriters reasonably
request;
(vii) if the Securities covered by the Registration
Statement are to be sold through one or more underwriters, obtain an opinion of
counsel dated the closing of the sale of the Registrable Securities (and as of
such other dates as the underwriter or underwriters for the Registrable
Securities may reasonably request) in customary form and covering such matters
of the type customarily covered by such opinions as counsel designated by such
underwriter or underwriters reasonably requests;
(viii) if the Securities covered by the Registration
Statement are to be sold through one or more underwriters, provide to the
underwriter or underwriters representations and warranties of DUSA, dated the
closing of the sale of the Registrable Securities (and as of such other dates as
the underwriter or underwriters for the Registrable Securities may reasonably
request) in customary form and covering such matters of the type customarily
covered by such representations and warranties as counsel designated by such
underwriter or underwriters reasonably requests;
(ix) during the period when the registration
statement is required to be effective, notify the Holders of the happening of
any event as a result of which the prospectus included in the registration
statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and DUSA will forthwith prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(x) cause such Registrable Securities to be listed
for trading on each securities exchange on which similar Securities of the same
class issued by DUSA are then traded, provided that DUSA is eligible to do so
under applicable listing requirements;
(xi) except as DUSA is otherwise obligated, in the
case of an underwriting pursuant to Section 1.2(b), refrain from filing any
registration statement to register capital stock of DUSA for its own account or
for the account of any other holder of DUSA's Securities during the period
commencing with the date of the signing of the underwriting Stock Agreement (the
"Sale Date") and ending at the earlier of (A) the date [c.i.] subsequent to the
Sale Date or (B) such date as the underwriter agrees, except for such
registration statement which shall already be under active preparation by DUSA
at the time of receipt of such request; and
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(xii) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission.
(b) The Holder shall timely furnish to DUSA such information
regarding the distribution of such Registrable Securities as DUSA may from time
to time reasonably request.
(c) The Holder agrees that upon the receipt of any notice from
DUSA of the happening of any event of the kind described in paragraph (a) (ix)
above, the Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until receipt by the Holder of the copies of the supplemented or
amended prospectus contemplated by paragraph (a) (ix) above.
1.6 Indemnification. (a) DUSA will indemnify each of the
Holders, as applicable, each of its officers, directors and partners, and each
person controlling each of the Holders, with respect to each registration which
has been effected pursuant to this Section 1 and each underwriter, if any, and
each Person who controls any underwriter, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
DUSA of the Securities Act or any rule or regulation thereunder applicable to
DUSA and relating to action or inaction required of DUSA in connection with any
such registration qualification or compliance, and will reimburse, to the extent
permitted by law, each of the Holders, each of its officers, directors and
partners, and each Person controlling each of the Holders, each such underwriter
and each Person who controls any such underwriter, for reasonable legal and
other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that DUSA
will not be liable in any such case to any Holder or underwriter or person
controlling such Holder or underwriter to the extent that any such claim, loss,
damage, liability or expense arises out of or is based on any untrue statement
or omission based upon written information furnished in writing to DUSA by such
Holder or underwriter or Person controlling such Holder or underwriter.
(b) Each of the Holders will, if Registrable Securities held
by it are included in the Securities as to which such registration,
qualification or compliance is being effected, indemnify DUSA, each of its
directors and officers and each underwriter, if any, of DUSA's Securities
covered by such a registration statement, each Person who controls DUSA or such
underwriter within the meaning of the Securities and the rules and regulations
thereunder, each other holder of Securities in respect of which such
registration, qualification or compliance is being effected ("Other
Shareholder") and each of their officers, directors, and partners, and each
Person controlling such Other Shareholder against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other document
made by such Holder or any violation by the Purchaser of the
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Securities Act or any rule or regulation thereunder applicable to the Purchaser
and relating to action or inaction required of the Purchaser in connection with
any such registration, qualification or compliance, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading by such Holder, and will
reimburse DUSA and such Other Shareholders, directors, officers, partners,
Persons, underwriters or control persons for reasonable legal or other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to DUSA by such Holder.
(c) Each party entitled to indemnification under this Section
1.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless [i] the employment of counsel by such
Indemnified Party has been authorized by the Indemnifying Party, or [ii] the
Indemnified Party shall have reasonably concluded that there may be a conflict
of interest between the Indemnifying Party and the Indemnified Party in the
defense of such action, in each of which cases the fees and expenses of one law
firm serving as counsel for each Indemnified Party shall be at the expense of
the Indemnifying Party), and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.6 unless such failure
or any delay in providing such notice results in the loss of material defenses
or rights. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party (which
consent shall not be unreasonably withheld), consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
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considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in a negotiated
underwriting agreement entered into in connection with an underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall be controlling.
1.7 Information by the Holders. In connection with any request
for registration, the Holders shall be required to furnish DUSA forthwith with
all relevant information concerning the proposed method of sale or other
disposition of the Registrable Securities, the identity of and compensation to
be paid to any underwriters proposed to be employed in connection therewith, and
such other information as may be reasonably required by DUSA to properly prepare
and file such registration statement in accordance with applicable provisions of
the Securities Act and the rules and regulations thereunder. Upon request of
DUSA, such information shall be furnished by the Holders in writing.
1.8 Assignability of Registration Rights. The registration
rights granted pursuant to this Section 1 shall be assignable at the option of
each of the Holders, in whole or in part, to any Affiliate of the Purchaser or
to any permitted transferee of the Registrable Securities.
1.9 "Market Stand-Off" Agreement. Each Holder hereby agrees
that, during the [c.i.] period following the effective date of a registration
statement of DUSA filed under the Securities Act, it shall not, to the extent
requested by DUSA and its underwriter, directly or indirectly sell, offer to
sell, contract to sell (including, without limitation, any short sale), grant
any option to purchase or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any securities of DUSA held by it at any time
during such period except Registrable Securities included in such registration.
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SCHEDULE A
1. FDA correspondence issued to Sochinaz on February 22, 1999 regarding Form 483
a copy of which has previously been provided to Schering AG; together with FDA
correspondence dated November 1, 1999 indicating that the facility is
"acceptable".
2. [c.i.], a copy of which has been previously provided to Schering AG.
3. The DUSA Pharmaceuticals, Inc. facilities at 25 Upton Drive, Wilmington,
Massachusetts have not yet been inspected by the FDA. DUSA is working towards
compliance with the FDA's design controls regulations prior to FDA inspection
with respect to the manufacture of the Light Source.
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TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 DEFINITIONS.........................................................................................2
1.1 Terms Defined in the MD&S Agreement.................................................................2
1.2 "Approval"..........................................................................................2
1.3 "Cost of Goods".....................................................................................2
1.4 "DUSA IP"...........................................................................................2
1.5 "End User"..........................................................................................3
1.6 "Light Source"......................................................................................3
1.7 "QSR"...............................................................................................3
1.8 "Services"..........................................................................................3
1.9 "Specifications"....................................................................................3
1.10 "Training Materials"................................................................................3
ARTICLE 2 PROMOTION AND SOLICITATION RIGHTS...................................................................4
2.1 Appointment.........................................................................................4
2.2 Lease...............................................................................................4
2.3 Promotion...........................................................................................4
2.4 Promotion Conveys No Right to Sell, Manufacture, or Modify..........................................4
2.5 Reporting Adverse Experiences.......................................................................4
ARTICLE 3 MANUFACTURE AND SUPPLY..............................................................................5
3.1 Manufacturing Rights................................................................................5
3.2 Supply..............................................................................................5
3.3 Forecasts...........................................................................................5
3.4 Inventory/Delivery..................................................................................6
3.5 Suppliers...........................................................................................6
3.6 Shortage of Supply..................................................................................7
ARTICLE 4 MAINTENANCE SERVICES/TRAINING MATERIALS/TECHNICAL DEVELOPMENT.......................................8
4.1 General.............................................................................................8
4.2 Maintenance Service.................................................................................8
4.3 Exclusions from Maintenance Service.................................................................8
4.4 Technical Support...................................................................................8
4.5 Training Materials..................................................................................9
4.6 Technical Improvement...............................................................................9
</TABLE>
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TABLE OF CONTENTS
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ARTICLE 5 GUARANTY............................................................................................9
5.1 Guaranty............................................................................................9
5.2 Maximum Cost of Goods..............................................................................10
ARTICLE 6 WARRANTIES/REMEDIES................................................................................10
6.1 General Warranties.................................................................................10
6.2 Quality............................................................................................11
6.3 Quality Control....................................................................................11
6.4 Returns............................................................................................11
6.5 Disclaimer of Warranties...........................................................................11
6.6 Exclusive Remedies.................................................................................11
ARTICLE 7 INTELLECTUAL PROPERTY..............................................................................12
7.1 Patent Expenses....................................................................................12
7.2 Notification of Infringement.......................................................................12
7.3 No Rights Beyond Light Sources.....................................................................12
ARTICLE 8 INDEMNIFICATION....................................................................................12
8.1 Indemnification of Schering........................................................................12
ARTICLE 9 TERM AND TERMINATION...............................................................................12
9.1 Term...............................................................................................12
9.2 Effects of Expiration or Termination...............................................................13
9.3 Survival...........................................................................................13
ARTICLE 10 MISCELLANEOUS......................................................................................13
10.1 Governing Law......................................................................................13
10.2 Force Majeure......................................................................................13
10.3 No Implied Waivers; Rights Cumulative..............................................................14
10.4 Independent Contractors............................................................................14
10.5 Notices............................................................................................14
10.6 Assignment.........................................................................................15
10.7 Affiliate Assignment...............................................................................15
10.8 Modification.......................................................................................15
10.9 Severability.......................................................................................15
10.10 Publicity..........................................................................................15
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TABLE OF CONTENTS
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10.11 Counterparts.......................................................................................16
10.12 Headings...........................................................................................16
10.13 No Implied Licenses................................................................................16
10.14 No Third Party Beneficiary Rights..................................................................16
10.15 Export Laws........................................................................................16
10.16 Entire Agreement...................................................................................16
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EXHIBIT 1.4.1 DUSA PATENT RIGHTS
EXHIBIT 1.9 SPECIFICATIONS
EXHIBIT 3.3 INITIAL BINDING FORECAST
-iii-
<PAGE> 4
Exhibit 10.3
LIGHT SOURCE AGREEMENT
This Light Source Agreement (the "Agreement"), dated as of November 22, 1999, is
made by and between DUSA Pharmaceuticals, Inc., a New Jersey corporation, having
executive offices at 25 Upton Drive, Wilmington, MA 01887 ("DUSA"), and Schering
AG, a German corporation, having offices at 13342 Berlin, Germany ("Schering").
BACKGROUND
A. DUSA and Schering have entered into a certain Marketing, Development
and Supply Agreement of even date herewith (the "MDS Agreement") pursuant to
which Schering and DUSA will collaborate on the development and
commercialization of certain Collaboration Products utilizing aminolevulinic
acid HCl (Levulan(R)) for use in the Field, all on the terms and conditions set
forth in the MDS Agreement.
B. Use of certain Collaboration Products within the Field will require
certain Light Sources (as defined below). DUSA has engaged a third party to
manufacture such Light Sources.
C. DUSA is willing to lease the Light Sources to End Users (as defined
below) for use with Collaboration Products within the Field, and Schering is
willing to promote, and solicit, on DUSA's behalf, End Users to enter into lease
agreements with DUSA for those Light Sources.
D. DUSA is willing to have Light Sources manufactured in quantities
based on orders made by Schering, to store such Light Sources, deliver each unit
to End Users upon execution of a lease agreement with an End User, all on the
terms and conditions set forth below.
E. The Parties recognize that [c.i.] of the Light Source for the End
Users will [c.i.] on a [c.i.] and [c.i.] maintenance service, technical support
and training, and DUSA is willing to provide such maintenance service, technical
support and training and to [c.i.] such maintenance service, technical support
and training to comply with changing standards in the medical device industry.
F. The Parties recognize that the commercial viability of the
Collaboration Products will depend the availability of a Light Source with
up-to-date technology, and DUSA is willing to [c.i.] to [c.i.] the operational
and safety features of the Light Source.
G. Schering is willing to guarantee the lease payments made by certain
End Users in an amount equal to DUSA's Cost of Goods (as hereinafter defined)
for certain Light Sources, and has entered into a Guaranty with DUSA of even
date herewith to implement such guarantee.
H. Schering is willing to extend a line of credit of up to one million
dollars to DUSA to finance the Cost of Goods for such Light Sources, to be
repaid over a twelve (12) month period beginning after the first draw-down of
funds, and has entered into a Promissory Note and
<PAGE> 5
Security Agreement with DUSA of even date herewith to implement such financing.
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 Terms Defined in the MDS Agreement. Capitalized terms that are not
otherwise defined in this Agreement shall have the meaning defined in the MDS
Agreement.
1.2 "Approval" shall mean an approval of a New Drug Application,
Premarket Approval Application or similar application, as required under the
U.S. Federal Food, Drug and Cosmetics Act and the regulations promulgated
thereunder, or a comparable approval of a filing for marketing approval in other
countries or with the European Union by the EMEA, in each case with respect to
the Light Source for use with Collaboration Products within the Field. For
purposes of this Agreement, Approval shall also include approval of the Light
Source by electrical safety agencies or authorities, such as Underwriters
Laboratories in the U.S., or equivalents in other countries or the European
Union [such as Certificat Europeenne (CE)].
1.3 "Cost of Goods" shall mean, with respect to units of the Light
Source, the [c.i.] costs of goods incurred by DUSA with respect to such Light
Source, calculated in accordance with GAAP and as used by DUSA for financial
reporting purposes, consistently applied. Such costs shall include, but not be
limited to, the [c.i.] costs of all [c.i.]. Such costs shall exclude, without
limiting the generality hereof, (i) all costs and charges related to or
occasioned by [c.i.] not [c.i.] to be [c.i.] for [c.i.] of the Light Source;
(ii) the [c.i.] of [c.i.] at such Party's facilities; (iii) [c.i.] of [c.i.] not
related to manufacturing of the Light Source; (iv) allocation of [c.i.]; such
Party's [c.i.], whether or not [c.i.] is [c.i.] to the manufacturing of any
Light Source; and (v) any [c.i.] associated with [c.i.]. Cost of Goods shall
also include [c.i.] with respect to the manufacture, sale or use of Light Source
to [c.i.] in [c.i.] by Schering, although any [c.i.] with respect to the Light
Sources are [c.i.].
1.4 "DUSA IP" shall mean DUSA Patent Rights and DUSA Technical
Information.
1.4.1 "DUSA Patent Rights" shall mean all patents and all reissues,
renewals, re- examinations, extensions and supplementary protection certificates
thereof, and patent applications therefor, and any divisions or continuations,
in whole or in part, thereof, which claim the manufacture, sale or use of the
Light Source with Collaboration Productions within the Field and that are
Controlled by DUSA or its Controlled Affiliates during the term of this
Agreement. The DUSA Patent Rights existing as of the Execution Date are listed
on Exhibit 1.4.1. DUSA Patent Rights shall not include DUSA Patents as defined
under the MDS Agreement.
1.4.2 "DUSA Technical Information" shall mean confidential information,
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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, specifications
and/or other documents containing said information and data; in each case that
is possessed by, or the property of, DUSA or its Controlled Affiliates as of the
Effective Date or discovered, developed or acquired by DUSA or its Controlled
Affiliates during the term of this Agreement, to the extent such relates to the
manufacture, lease or use of the Light Sources with Collaboration Products
within the Field and to the extent that DUSA or its Affiliate owns or Controls
the same. DUSA Technical Information shall not include DUSA Know-How as defined
under the MDS Agreement.
1.5 "End User" shall mean an individual physician who, or medical group
that, leases the Light Source from DUSA.
1.6 "Light Source" shall mean the light source meeting the
Specifications, currently known as the BLU-U(R) light source, together with a
stand supporting that light source.
1.7 "QSR" shall mean Quality Systems regulations promulgated by the FDA
for the design, manufacture, processing or packaging of medical devices as the
same may be amended or supplemented from time to time.
1.8 "Services" shall mean all of the Maintenance Services (as defined
below), technical support, and training services for the Light Sources to be
provided by DUSA as specified in Article 4 below.
1.9 "Specifications" shall mean those specifications for the Light
Source attached hereto as Exhibit A and as set forth in the application for
Approval in the U.S. as the same may be amended or supplemented from time to
time. It is understood, however, that no Approval in the U.S. or any other
country has been obtained for the Light Source as of the date of this Agreement,
and that if an Approval is obtained in the U.S. in which such specifications are
modified; the "Specifications" as used herein shall mean those specifications
for the Light Source set forth in the Approval for the Light Source.
1.10 "Training Materials" shall mean those materials describing the
correct installation and use of the Light Source by an End User, as mutually
agreed by the parties.
ARTICLE 2 PROMOTION AND SOLICITATION RIGHTS
2.1 Appointment. Subject to the terms and conditions of this Agreement
and the MDS Agreement, including without limitation the payment by Schering to
DUSA of the milestone payments set forth in Section 6.3 of the MDS Agreement,
DUSA hereby grants to Schering and its Affiliates and Sublicensees that
distribute Collaboration Products, the right under the DUSA IP to promote the
Light Sources in the United States and to solicit orders from End Users to lease
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such Light Sources. For avoidance of doubt, it is understood that DUSA retains
the right to market, promote, sell, lease, rent and otherwise distribute the
Light Sources for any purpose directly or through third parties.
2.2 Lease. DUSA shall provide Schering with DUSA's guidelines, policies
and procedures on prices and terms and conditions established by DUSA from time
to time regarding leasing of the Light Source ("DUSA's Terms") and a form of
Lease Agreement, the current form of which is attached as Exhibit 1 to the
Guaranty, for use in soliciting End Users. DUSA shall not materially change the
DUSA's Terms or the form of Lease Agreement without the prior written approval
of Schering. Lease Agreements solicited by Schering will be submitted to DUSA
for acceptance. Schering shall not have authority to make commitments with
respect to the Light Source on behalf of DUSA; however, DUSA agrees to accept
Lease Agreements solicited by Schering which are materially consistent with this
Agreement (including, without limitation, Sections 3.3 and 3.4 below) and with
DUSA's Terms. In the event [c.i.] determines that [c.i.] will be enhanced by
[c.i.], of Light Sources, the Parties shall enter into good faith discussions
concerning [c.i.] of the Light Sources [c.i.] to physicians and medical groups,
the terms of which shall include [c.i.] to DUSA for the [c.i.] of [c.i.].
2.3 Promotion. Each Party shall appoint a representative of management
level who shall be the designated contact for coordinating the promotion of the
Light Source. Prior to launch of the Initial Product, and thereafter as
reasonably requested by Schering, DUSA shall provide training on the set-up and
operation of the Light Source for Schering's sales representatives. DUSA shall
provide all necessary trainers, facilities, and associated Training Materials
for such training [c.i.]
2.4 Promotion Conveys No Right to Sell, Manufacture, or Modify.
Schering agrees to promote and offer Light Sources for lease from DUSA only to
End Users. Schering's rights to promote and solicit orders for leases for the
Light Sources hereunder are subject to the condition that such rights do not
convey any license, expressly or by implication, to manufacture, modify,
transfer or duplicate the Light Sources.
2.5 Reporting Adverse Experiences. With respect to adverse experiences
relating to any Light Source, the parties shall promptly report such experiences
to each other in accordance with Section 4.3.2 of the MDS Agreement as if the
same were a Collaboration Product. DUSA shall be responsible for all reporting
of such adverse experiences to the appropriate regulatory authorities.
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ARTICLE 3
MANUFACTURE AND SUPPLY
3.1 Manufacturing Rights. DUSA shall have the exclusive right to
manufacture, or have manufactured, Light Sources for purposes within the Field.
DUSA agrees to modify the Light Source, and if necessary the Specifications, if
such modifications are reasonably necessary to [c.i.] the [c.i.]. Such
modifications are subject to regulatory Approval, as required, and a reasonable
period of time for such additional specifications to be incorporated.
3.2 Supply. During the term of this Agreement, subject to the
terms and conditions of this Article 3, DUSA shall supply to End Users, in
accordance with DUSA's Terms, Light Sources for use with Collaboration Products
within the Field in the United States pursuant to orders solicited by Schering
and accepted by DUSA in accordance with this Agreement, subject to the terms and
conditions of this Agreement. DUSA will secure the appropriate Approval for such
Light Sources prior to launch of the Initial Product.
3.3 Forecasts.
3.3.1 Launch. Schering's initial binding forecast for
quantities of Light Sources, in units, to be ready for shipment to End Users in
connection with launch of the Initial Product and the remainder of the calendar
half-year in which the launch occurs, including demonstration units, is provided
as Exhibit 3.3.
3.3.2 Other. Thereafter, no later than [c.i.] prior
to the first day of each calendar half year ('H1"), Schering shall provide DUSA
with a forecast indicating quantities in units and anticipated shipping
schedules for Light Sources to End Users during H1 and the following calendar
half year, "H2". The quantity indicated for H1 shall be considered a firm order
("Firm Order") and DUSA will manufacture, or have manufactured, Light Sources in
accordance with such Firm Order and existing inventory levels. Firm Orders for
units to be delivered in the United States are to be for a minimum of [c.i.];
provided, however, Schering may place a Firm Order for less than [c.i.] and in
such case Schering shall be responsible for [c.i.] incurred by DUSA under DUSA's
[c.i.] with [c.i.] of the [c.i.] as a result of ordering such lesser quantity.
DUSA shall supply [c.i.] Light Sources in accordance with such Firm Orders from
Schering and shall use commercially reasonable efforts to supply ordered
quantities [c.i.], subject to the remaining terms and conditions of this
Agreement. DUSA shall [c.i.], supply Light Sources [c.i.] set forth in a Firm
Order if so requested by Schering. Notwithstanding the foregoing, beginning
[c.i.] after Schering places the first Firm Order, DUSA shall not be obligated
to satisfy, either from existing inventory or from new manufacture, a Firm Order
for greater than [c.i.] of the quantity in Schering's preceding Firm Order. DUSA
shall use reasonable efforts to notify Schering [c.i.] of receipt of Schering's
request of an increase of units ordered under a Firm Order of its ability to
fill any amounts of such orders in excess of the quantities that DUSA is
obligated to supply.
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3.4 Inventory/Delivery.
3.4.1 Inventory. It is understood that DUSA will
maintain in its (or its designee's) inventory quantities of Light Sources to be
leased to End Users and which have been manufactured pursuant to a Firm Order
under Section 3.3 above. DUSA shall provide Schering a copy of the certificate
of conformance for each Light Source unit placed in inventory under this Section
3.4.1. During the Inventory Period, DUSA agrees to (A) maintain such Light
Source units in good condition at [c.i.] risk and expense, and (B) to [c.i.]
such Light Source units [c.i.]. Schering agrees to provide DUSA with a line of
credit for up to one million dollars ($US1.0M) for financing DUSA's Cost of
Goods of Light Sources manufactured pursuant to Schering's Firm Orders pursuant
to a Credit Agreement entered into of even date herewith and DUSA agrees that
the Light Sources shall be used as security for the repayment of the line of
credit. Subject to the terms of the Credit Agreement, DUSA shall draw-down such
line of credit as payment for the Cost of Goods for each Light Source and shall
repay such amounts not later than twelve (12) months after the first draw-down
of funds. DUSA shall maintain records indicating the total number of Light
Sources available in inventory, and for each Light Source: the length of its
Inventory Period; and if the Light Source has been previously leased and
returned to inventory, the outstanding amount of DUSA's Cost of Goods for that
Light Source. DUSA shall provide such records to Schering on a [c.i.] basis.
3.4.2 Delivery. Upon execution of a Lease Agreement
with an End User, DUSA shall ship Light Sources and Training Materials to such
End User [c.i.]. All Light Sources delivered pursuant to the terms of this
Agreement shall be suitably packed for shipment by DUSA, marked for shipment to
the destination point indicated on the Lease Agreement and shall include
Training Materials, unless otherwise specified by the End User. The shipping and
packaging shall be in accordance with good commercial practice with respect to
protection of the Light Sources and Training Materials during transportation.
[c.i.] will not be responsible for [c.i.] or [c.i.] or any [c.i.]
3.4.3 Returns. Upon termination of a Lease Agreement,
[c.i.] shall make arrangements for the pick-up or shipment of the Light Source
(a "Returned Light Source"), [c.i.], back to the manufacturer. [c.i.] the
Returned Light Source and return it to inventory. Any Returned Light Source
shall be subject to the provisions of Section 3.4.1.. If such Returned Light
Sources are subsequently delivered to a customer pursuant to Section 3.4.2, the
rental payments shall be considered Guaranteed Obligations until the remaining
Cost of Goods, if any, for such Light Source is paid in full, providing that the
Cost of Goods shall not include [c.i.] with the [c.i.] or [c.i.] of a [c.i.].
3.5 Suppliers. DUSA shall have the right at any time to satisfy its
supply obligations to Schering hereunder either in whole or in part through
arrangements with third parties engaged to perform services or supply facilities
or goods in connection with the manufacture, testing, and/or packaging of Light
Sources (each, a "Third-Party Manufacturer"). DUSA shall require that all such
facilities comply with applicable QSR standards. Further, it is understood that
such
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Third-Party Manufacturers shall be subject to Section 6.2. [c.i.], DUSA shall
secure [c.i.] for the supply of components of the Light Sources. Beginning
[c.i.] after the first Firm Order, DUSA shall maintain in inventory additional
light bulbs and other key components for the Light Source in the amount of
[c.i.] beyond the number necessary to fulfill Schering's current Firm Order
(such requirement to apply at the end of each half-year for which the Firm Order
applies).
3.6 Shortage of Supply.
3.6.1 Joint Efforts.
(a) Notice. If at any time DUSA becomes aware of a
deficiency in Light Source manufacturing capabilities and concludes that such
deficiency will result in the inability to supply Schering's requirements for
Light Sources as required pursuant to Section 3.4.1, or the Parties conclude the
same, then in such event the Joint Manufacturing Committee shall immediately
convene to address the problem, which may include [c.i.] and [c.i.] to [c.i.]
and identifying other actions necessary to resolve the problem. DUSA [c.i.]
measures established by the Joint Manufacturing Committee to prevent potential
shortage.
(b) Joint Manufacturing Committee. Promptly following
the Notification given pursuant to Section 3.6.1(a) above, DUSA and Schering
shall establish a committee (the "Joint Manufacturing Committee") to address the
problem, and undertake such efforts as are appropriate under the circumstances,
including (if appropriate) [c.i.] and [c.i.] to [c.i.] of Light Sources and
identifying such other actions necessary to resolve the problem. The Joint
Manufacturing Committee shall consist of two (2) representatives from each Party
and shall meet as mutually agreed, in person or by teleconference. Decisions of
the Joint Manufacturing Team shall be by majority approval, with an equal number
of representatives of both Schering and DUSA voting on any matter. In the event
that the Joint Manufacturing Committee cannot reach agreement on the problem at
hand or the resolution thereof, the dispute shall be referred to the Chief
Executive Officer of DUSA and a Senior Executive of Schering with overall
responsibility for the Collaboration Products, who shall meet promptly and
negotiate in good faith to resolve the dispute. If despite such good faith
efforts, the Parties are unable to resolve such dispute, the matter shall be
resolved through arbitration pursuant to the procedures set forth in 20.2.2 and
20.2.3 of the MDS Agreement.
3.6.2 Allocation. In the event that, despite the
foregoing measures, DUSA is unable to supply Schering's requirements for Light
Sources in the applicable Product Territory, DUSA shall allocate among the
quantities of Light Sources that DUSA has in its inventory and that DUSA is able
to produce, so that Schering has [c.i.] of available supplies available for
leasing to End Users it so solicits, as determined based on past orders for the
Light Sources .
ARTICLE 4
MAINTENANCE SERVICES/TRAINING MATERIALS/TECHNICAL
DEVELOPMENT
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4.1 General. The Parties recognize that [c.i.] of the Light
Source for the End Users and thus [c.i.] of the Collaboration Products will
[c.i.] on a [c.i.] and [c.i.] maintenance service, technical support and
training. This will [c.i.] the standards of the maintenance service, the
technical support and the training. DUSA agrees to [c.i.] during the term of
this Agreement to [c.i.] the [c.i.] of the maintenance service, the technical
support and the training in order to maintain the maintenance service, the
technical support and the training at a level of [c.i.], and [c.i.] reasonably
[c.i.] in the market for the Collaboration Products. The Parties agree to meet
from time to time at the reasonable request of Schering to review DUSA's [c.i.]
the maintenance service, the technical support and the training for the Light
Source. In the event Schering identifies improvements or changes that need to be
made to the maintenance service, technical support and training provided by DUSA
to End Users [c.i.] the [c.i.] of the Light Source and/or the Collaboration
Products and demonstrates the same to DUSA, then DUSA agrees to [c.i.] to the
maintenance service, technical support and training.
4.2 Maintenance Service. With respect to each Light Source unit
leased to an End User pursuant to this Agreement, and pursuant to the terms and
conditions of the Lease Agreement between DUSA and such End User, DUSA will
agree during the term of the Lease Agreement to correct, modify, repair or
replace in accordance with DUSA's Terms any Light Source failing to meet the
Specifications therefor or to otherwise properly perform for its intended use
("Maintenance Service"). For those Maintenance Services which cannot be
satisfactorily resolved through technical support as described in Section 4.3
herein, DUSA will ship a replacement Light Source to the End User and authorize
the return of the malfunctioning Light Source and shall use [c.i.] efforts to
provide a replacement Light Source to End Users within the U.S. within [c.i.].
DUSA will, when deemed necessary in its sole discretion, provide Maintenance
Services at an End User's location. Such in-person Maintenance Service shall be
performed by DUSA or a designee during normal working hours, excluding generally
recognized holidays.
4.3 Exclusions from Maintenance Service. Notwithstanding anything
herein to the contrary, DUSA shall have no obligation to provide Maintenance
Services for, and may terminate a Lease Agreement with respect to, Light Sources
which have been (i) repaired, maintained or altered, except by or under DUSA's
direction, or (ii) misused, including without limitation, use of the Light
Source for any application or function for which it was not designed, or (iii)
subject to unusual physical or electrical stress, negligence or accident or (iv)
has been damaged by acts of nature, vandalism, burglary or neglect. Such unit
shall then be subject to Section 3.4.3.
4.4 Technical Support. DUSA agrees to provide, [c.i.], a toll-free
(U.S. incoming) telephone support line available Monday through Friday (8:00 AM
to 8:00 PM Eastern Time) and Saturday (8:00 AM to 3:00 PM Eastern Time),
excluding generally recognized holidays, to answer questions by Light Source End
Users concerning the set-up, use and maintenance of the Light Sources for use
with Collaboration Products within the Field. If an incoming call cannot be
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answered immediately, DUSA will use [c.i.] to respond within [c.i.] of receiving
an urgent call via the support line and within [c.i.] of receiving a non-urgent
call, in each case during the hours stated above. DUSA will have such technical
support capability operational by the Launch.
4.5 Training Materials. DUSA shall develop, [c.i.], Training
Materials for both the End Users and Schering's sales representatives for use
with the Light Sources. In connection therewith, DUSA shall consult with
Schering in terms of content and usability of such Training Materials. Schering
agrees to reasonably cooperate with and assist DUSA with the foregoing
activities. As reasonably agreed to by the Parties, DUSA shall provide, [c.i.]
and in the context of a workshop or seminar, training on the set-up and
operation of the Light Source for End Users. DUSA shall provide all associated
Training Materials.
4.6 Technical Improvement. The Parties recognize that the
commercial viability of the Collaboration Products will depend on the
availability of a Light Source that employs up-to-date technology. This will
require [c.i.] the operational and safety features of the Light Source. DUSA
[c.i.] during the term of this Agreement to maintain the Light Source at a
level of technical operation and safety standards reasonably acceptable in
the market for Collaboration Products. The Parties agree to meet from time to
time at the reasonable request of Schering to review [c.i.] the Light Source. In
the event Schering identifies improvements or changes that need to be made to
the Light Source in order to [c.i.] the [c.i.] of the Light Source and/or the
Collaboration Products and demonstrates the same to DUSA, then DUSA agrees to
use reasonable efforts to make such improvements to the Light Source.
ARTICLE 5
GUARANTY
5.1 Guaranty. Schering shall enter into the Guaranty with DUSA of
even date herewith, and pursuant to the Guaranty, Schering shall assume
responsibility for the Guaranteed Obligations (as that term is defined in the
Guaranty). DUSA shall provide Schering with [c.i.] updates to a comprehensive
list of leased Light Sources, End Users, lease payments received by DUSA, and
amounts in arrears, if any, until the Cost of Goods for such Light Sources has
been paid in full. Pursuant to the Guaranty, Schering shall pay its Guaranteed
Obligations to DUSA for Light Sources which are [c.i.] an End User, [c.i.] other
than [c.i.], prior to DUSA receiving lease payments from that End User which
cumulatively total the Cost of Goods for that Light Source and for Light Sources
which were manufactured pursuant to Schering's Firm Order but were not shipped
to an End User [c.i.] after manufacture.
5.2 Maximum Cost of Goods. Notwithstanding the provisions of
Sections 5.1 above, Schering shall not be required to guarantee a Cost of Goods
in excess of [c.i.] per unit, provided that the Firm Order for such Light
Sources is for [c.i.], and in the event the Firm Order is for [c.i.], Schering
shall not be required to guarantee a Cost of Goods in excess of [c.i.] for those
units.
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ARTICLE 6
WARRANTIES/REMEDIES
6.1 General Warranties.
6.1.1 DUSA Warranties. DUSA warrants and represents
to Schering that: (i) it has the full right and authority to enter into this
Agreement and grant the rights granted herein; (ii) as of the date of the
Agreement, DUSA has not received notice from a third party that the manufacture,
sale, lease, transfer or use of the Light Source for use with Collaboration
Products within the Field would infringe any intellectual property rights of a
third party, and to its knowledge and belief, no action, suit or claim has been
initiated or threatened against DUSA with respect to the DUSA IP or DUSA's right
to enter into and perform its obligations under this Agreement; (iii) it has
complied in all material respects with each license agreement under which DUSA
obtained DUSA IP and during the term hereof will comply in all material
respects, and use all reasonable efforts to keep in full force and effect, each
such license agreement; neither this Agreement, nor any of the transactions
contemplated hereby will, with the giving of notice, constitute a default or
breach of any such license agreement; (iv) it has not previously granted, and
will not grant during the term of this Agreement, any right, license or interest
in or to the DUSA IP, or any portion thereof, to manufacture, sell or use the
Light Source that is in conflict with the rights or licenses granted under this
Agreement; (v) to the best of its knowledge, as of the Execution Date, it is not
aware of any prior act or any fact which causes it to conclude that any DUSA
Patent Right is invalid or unenforceable, PROVIDED, HOWEVER, THAT DUSA EXPRESSLY
DOES NOT WARRANT THAT ANY DUSA PATENT RIGHT IS VALID OR ENFORCEABLE; (vi) DUSA
has not and during the term hereof, DUSA will not grant a lien or other
encumbrances on any of the DUSA IP which would conflict with the rights of
Schering hereunder; (vii) during the term hereof DUSA shall charge rental
payments under each Lease Agreement in an amount such that the aggregate rental
payments charged for each Light Source over a [c.i.] shall be not less than the
Cost of Goods with respect to the Light Source; (viii) it has the full right and
authority to manufacture, and have manufactured, and supply the Light Source;
and (ix) the Specifications are consistent with those specifications or
description of the Light Source set forth in the Existing MAA.
6.1.2 Schering Warranties. Schering warrants and
represents to DUSA that (i) it has the full right and authority to enter into
this Agreement; and (ii) to its knowledge and belief, no action, suit or claim
has been initiated or threatened against Schering with respect to its right to
enter into and perform its obligations under this Agreement.
6.2 Quality. DUSA further warrants and represents that: (i) all
Light Sources supplied by or on behalf of DUSA shall meet the Specifications
therefor at the time of shipment and shall be manufactured in accordance with
all applicable QSR manufacturing and record keeping procedures and Approvals for
the Light Sources in the United States and (ii) all Maintenance Services shall
be performed by or on behalf of DUSA in a professional and
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workman-like manner.
6.3 Quality Control. DUSA shall ensure that quality control
testing of Light Sources is performed in accordance with the Specifications as
are in effect from time to time and such other quality control testing
procedures mutually agreed to by the parties from time to time (the "Testing
Methods"). DUSA shall reasonably retain records pertaining to such testing. Each
shipment of Light Sources hereunder shall be accompanied by a certificate of
conformance for each Light Source therein as well as such customs and other
documentation as is necessary or appropriate.
6.4 Returns. In the event that any Light Source fails to perform
for an End User in accordance with its intended purpose and the Specifications,
the End User shall be able to notify DUSA of such failure and obtain a Return
Material Authorization ("RMA") from DUSA. DUSA shall then make arrangements,
within its sole discretion, for the pick-up or shipment of the Light Source,
freight collect, back to the manufacturer. DUSA shall, [c.i.], promptly provide
a replacement Light Source to that End User. DUSA may, repair and/or refurbish
the returned Light Source and return the same to inventory for shipment to
another End User, in which case such Light Source shall be deemed a Returned
Light Source.
6.5 Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS
AGREEMENT, DUSA EXPRESSLY DISCLAIMS ANY WARRANTIES OR CONDITIONS, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE DUSA IP, THE LIGHT SOURCES
AND SERVICES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,
NONINFRINGEMENT, OR FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF DUSA IP,
PATENTED OR UNPATENTED, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS
OF THIRD PARTIES.
6.6 Exclusive Remedies.
6.6.1 NEITHER DUSA NOR SCHERING SHALL BE LIABLE TO
EACH OTHER FOR [c.i.] DAMAGES INCURRED BY SCHERING AND/OR DUSA, AS THE CASE MAY
BE, AS A RESULT OF A MATERIAL BREACH OF THEIR OBLIGATIONS UNDER THIS AGREEMENT.
6.6.2 DUSA shall have committed a material breach of
its obligation to supply Light Sources pursuant to Article 3 only if, for
[c.i.], or for [c.i.] out of [c.i.], beginning [c.i.] after [c.i.] of a Light
Source to an End User, DUSA is unable to deliver to End Users, in any [c.i.] of
the lesser of: (i) the quantity of Light Sources ordered by Schering (and which
DUSA is obligated to have manufactured) to be ready for shipment to End Users
during such [c.i.], and (ii) the maximum quantity of Light Sources that DUSA is
obligated to deliver pursuant to Section 3.4 above during such [c.i.].
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6.6.3 EXCEPT FOR WILLFUL BREACH BY DUSA OF ITS
OBLIGATIONS UNDER SECTIONS 6.2 AND 6.3, SECTION 6.4 ABOVE IS SCHERING'S SOLE
AND EXCLUSIVE REMEDY FOR A BREACH BY DUSA OF ITS OBLIGATIONS UNDER THOSE
SECTIONS 6.2 AND 6.3.
ARTICLE 7
INTELLECTUAL PROPERTY
7.1 Patent Expenses. DUSA shall have the right, [c.i.], to control
the preparing, filing, prosecuting and maintaining of solely owned patent
applications and patents within the DUSA IP worldwide, in such countries as it
deems appropriate, and conducting of any interferences, re-examinations,
reissues, oppositions or requests for patent term extensions relating to the
DUSA IP using counsel of its choice.
7.2 Notification of Infringement. In the event that Schering
reasonably believes that any DUSA IP necessary for the manufacture, use,
marketing, promotion or solicitation for lease of a Light Source within the
Field in the United States is infringed or misappropriated by a third party or
is subject to a declaratory judgment action arising from such infringement,
Schering agrees to promptly notify DUSA.
7.3 No Rights Beyond Light Sources. Except as expressly provided
herein, nothing in this Agreement shall be deemed to grant to Schering rights in
products or technology other than the Light Sources; nor shall any provision of
this Agreement be deemed to restrict DUSA's right to exploit any DUSA IP in
Light Sources for use outside the Field and outside the United States. Nothing
in this Agreement shall be deemed to grant Schering any rights of ownership in
DUSA IP.
ARTICLE 8 INDEMNIFICATION
Indemnification of Schering. DUSA shall indemnify Schering
Indemnitees with respect to Claims relating to the Light Sources in accordance
with Sections 18.2 and 18.3 of the MDS Agreement, to the same extent as if the
Light Sources were Collaboration Products.
ARTICLE 9 TERM AND TERMINATION
9.1 Term. The term of this Agreement shall commence on the
Effective Date and shall continue until the earlier of (i) expiration of the MDS
Agreement or such time as Schering is no longer selling or otherwise
distributing any Collaboration Product under the MDS Agreement for which the
Light Source is being used, or (ii) termination of the MDS Agreement. The
parties agree that a breach of this Agreement which has not been cured within
such time as an opportunity to cure is permitted [c.i.] of [c.i.] for purposes
of [c.i.] of [c.i.].
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9.2 Effects of Expiration or Termination.
9.2.1 Accrued Obligations. Expiration or termination
of this Agreement for any reason shall not release any Party hereto from any
obligation or liability which, at the time of such termination, has already
accrued to the other Party or which is attributable to a period prior to such
termination nor preclude either Party from pursuing all rights and remedies it
may have hereunder or at law or in equity with respect to any breach of this
Agreement.
9.2.2 Termination of the MDS Agreement by Schering.
In the event Schering terminates the MDS Agreement pursuant to any provision of
Section 19.3 therein, Schering shall reimburse DUSA [c.i.] and [c.i.] to [c.i.]
and [c.i.] through the end of the Termination Period (as defined hereinafter)
for the Light Sources that are, or required to be, the subject of a Firm Order
under Section 3.3 above (the "Trailing Light Sources"). For purposes of this
Section 9.2.2, "Termination Period" shall mean, with respect to the Trailing
Light Sources, the effective date of termination pursuant to MDS Agreement.
9.3 Survival. Articles 1, 5, 8, 9 and 10 and Sections 2.4, and 2.5
shall survive expiration or termination of this Agreement for any reason. Except
as otherwise provided in this Article 9, all rights and obligations of the
parties under this Agreement shall terminate upon expiration or termination of
this Agreement for any reason.
ARTICLE 10 MISCELLANEOUS
10.1 Governing Law. This Agreement and any dispute arising from
the performance or breach hereof shall be governed by and construed and enforced
in accordance with, the laws of the State of New York, U.S.A., without reference
to conflicts of laws principles. Any legal action arising under this Agreement
shall be brought in the U.S. District Court for the Southern District of New
York. The U.N. Convention on the Sale of Goods shall not apply to this
Agreement.
10.2 Force Majeure. Nonperformance of any Party 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. In such event Schering or DUSA, as the case
may be, shall immediately notify the other Party of such inability and of the
period for which such inability is expected to continue. The Party giving such
notice shall thereupon be excused from such of its obligations under this
Agreement as it is thereby disabled from performing for so long as it is so
disabled and [c.i.] thereafter. To the extent possible, each Party shall use
reasonable efforts to minimize the duration of any force majeure.
10.3 No Implied Waivers; Rights Cumulative. No failure on the part
of DUSA or Schering to exercise and no delay in exercising any right under this
Agreement, or provided by
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statute or at law or in equity or otherwise, shall impair, prejudice or
constitute a waiver of any such right, nor shall any partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
10.4 Independent Contractors. Nothing contained in this Agreement
is intended implicitly, or is to be construed, to constitute DUSA or Schering as
partners in the legal sense. No Party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other Party or to bind any other Party to any contract, agreement or
undertaking with any third Party.
10.5 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been sufficiently
given if personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or overnight express courier service
(signature required), prepaid, in each case to the respective address specified
below, or such other address as may be specified in writing to the other parties
hereto:
Schering: Schering AG
D13342
Berlin, Germany
Attn: Head, Center of Dermatology
with a copy to: Schering AG
D13342
Berlin, Germany
Attn: Legal Department
DUSA: DUSA Pharmaceuticals, Inc.
25 Upton Drive
Wilmington, MA 01887
Attention: President and Chief Executive Officer
Facsimile No.: (416) 363-6602
with a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Kenneth A. Clark, Esq.
Facsimile No.: (650) 493-6811
10.6 Assignment. This Agreement shall not be assignable by either
Party to any third
Initials ____
<PAGE> 18
party hereto without the written consent of the other Party hereto; either Party
may assign this Agreement without the other Party's consent to an entity that
acquires substantially all of the business or assets of the assigning Party (or
that portion thereof to which this Agreement relates), in each case whether by
merger, acquisition, or otherwise the acquiring Party assumes this Agreement in
writing or by operation of law.
10.7 Affiliate Assignment. Schering may assign any of its rights
or obligations under this Agreement in any country to any of its Affiliates;
provided, however, that such assignment shall not relieve Schering of its
responsibilities for performance of its obligations under this Agreement. Such
assignment shall be made in writing and signed by both Schering and the
assignee, with Schering to promptly deliver a copy of such assignment to DUSA,
and the assignee shall expressly agree to be bound by the terms and conditions
of this Agreement.
10.8 Modification. No amendment or modification of any provision
of this Agreement shall be effective unless in writing signed by all parties
hereto. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by all parties.
10.9 Severability. If any provision hereof should be held invalid,
illegal or un-enforceable in any jurisdiction, the parties shall substitute
therefor a valid, legal and enforceable substitute provision that most nearly
reflects the original intent of the parties and all other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible. Such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of such provision in
any other jurisdiction. In the event a Party (the "Asserting Party") seeks to
avoid a provision of this Agreement based upon an assertion that such provision
is invalid, illegal or unenforceable, then the other Party (the "Non-Asserting
Party") shall have the right to terminate this Agreement [c.i.] written notice
to the other Party, unless such assertion is eliminated and cured within such
[c.i.] period.
10.10 Publicity. Neither Party shall originate any written
publicity, news release or other announcement or statement relating to the
announcement or terms of this Agreement (collectively, a "Written Disclosure"),
without the prompt prior review and written approval of the other Party, which
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, either Party may make any public Written Disclosure it believes in
good faith based upon the advice of counsel is required by applicable law, rule
or regulation or any listing or trading agreement concerning its or its
Affiliates' publicly traded securities; provided, however, that such Written
Disclosure shall minimize to the extent possible the financial information
disclosed, and that prior to making such Written Disclosure, the disclosing
Party shall provide to the other Party a copy of the materials proposed to be
disclosed and provide the receiving Party with an opportunity to promptly review
the Written Disclosure. Notwithstanding the foregoing, the Parties shall agree
upon a press release to announce the execution of this Agreement, together with
a corresponding Question & Answer outline for use in responding to
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<PAGE> 19
inquiries about the Agreement; thereafter, Schering and DUSA may each disclose
to third parties the information contained in such press release and Question &
Answer outline without the need for further approval by the other.
10.11 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and all of which
together, shall constitute one and the same instrument.
10.12 Headings. Headings used herein are for convenience only and
shall not in any way affect the construction of or be taken into consideration
in interpreting this Agreement.
10.13 No Implied Licenses. Except as expressly provided in this
Agreement, nothing herein shall be construed as granting to either Party , by
implication, estoppel or otherwise, any license or other right in or to any
property of the other Party.
10.14 No Third Party Beneficiary Rights. Nothing herein shall be
construed as granting any third-Party beneficiary rights to any third-Party.
10.15 Export Laws. Notwithstanding anything to the contrary
contained herein, all obligations of DUSA and Schering are subject to prior
compliance with U.S. and foreign export regulations and such other U.S. and
foreign laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the governments of
the U.S. and foreign jurisdictions. DUSA and Schering shall cooperate with each
other and shall provide assistance to the other as reasonably necessary to
obtain any required approvals.
10.16 Entire Agreement. This Agreement, Guaranty, Promissory Note,
Security Agreement, and the MDS Agreement, together with all the Exhibits hereto
and thereto, constitute the entire agreement, both written or oral, with respect
to the subject matter hereof, and supersede all prior or contemporaneous
understandings or agreements, whether written or oral, between DUSA and Schering
with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in duplicate originals as of the dates written
below.
DUSA PHARMACEUTICALS, INC. SCHERING AKTIENGESELLSCHAFT
By: /s/ D. Geoffrey Shulman By: /s/ Klaus Pohle
_____________________________ ____________________________
Name: D. Geoffrey Shulman, M.D., FRCPC Name: Prof. Klaus Pohle
___________________________
Title: President and Chief Executive Officer
Title: Vice Chairman of the
Board of Executive
Directors
By: /s/ Hans Maier
___________________________
Name: Dr. Hans Maier
_________________________
Title: Head of Center of
Dermatology
<PAGE> 20
EXHIBIT 1.4.1
DUSA PATENT RIGHTS
[C.I.]
<PAGE> 21
Initials ____
<PAGE> 22
EXHIBIT A
SPECIFICATIONS
DUSA PHARMACEUTICALS MODEL 4170 BLU-U(R)
(DUSA Confidential Information)
[c.i.]
Initials ____
<PAGE> 23
EXHIBIT 3.3
INITIAL FORECAST
[c.i.]
Initials ____
A-19
<PAGE> 1
Exhibit 10.4
GUARANTY
THIS GUARANTY, dated as of November 22, 1999 (as amended, modified or
supplemented from time to time, this "GUARANTY"), is made by Schering AG, a
German corporation, having offices at D13342, Berlin, Germany (together with its
successors and assigns, "GUARANTOR"), in favor of DUSA Pharmaceuticals, Inc., a
New Jersey corporation, having executive offices at 25 Upton Drive, Wilmington,
MA 01887 (together with its successors and assigns, the "COMPANY").
RECITALS
A. The Company and Guarantor have entered into a certain Marketing,
Development and Supply Agreement of even date herewith (as amended, modified or
otherwise supplemented from time to time, the "MDS AGREEMENT") pursuant to which
the Company and Guarantor will collaborate on the development and
commercialization of certain Collaboration Products utilizing aminolevulinic
acid HCl (Levulan(R)) for use in the Field, all on the terms and conditions set
forth in the MDS Agreement.
B. Use of Collaboration Products within the Field requires certain
Light Sources (as defined in the Light Source Agreement). The Company has
engaged a third party to manufacture such Light Sources, and the Company and
Guarantor have entered into a certain Light Source Agreement of even date
herewith (as amended, modified or otherwise supplemented from time to time, the
"LIGHT SOURCE AGREEMENT") pursuant to which the Company will provide an adequate
supply of Light Sources.
C. The Company is willing to lease the Light Sources to certain
physicians and/or physician practices (each, a "LESSEE") for use with
Collaboration Products within the Field, and the Guarantor is willing to promote
the Light Sources and solicit, on the Company's behalf, Lessees to enter into
equipment Leases for those Light Sources.
D. In order to induce the Company to enter into each Lease, Guarantor
has agreed to execute and deliver this Guaranty.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and other benefits accruing to
Guarantor, the receipt and sufficiency of which are hereby acknowledged,
Guarantor agrees with the Company as follows:
1. Capitalized terms used but that are not otherwise defined in
this Guaranty have the meanings given to them in the MD&S Agreement or in the
Light Source Agreement, as applicable.
2. As used in this Guaranty, the following terms have the following
meanings:
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled
<PAGE> 2
"Bankruptcy," as now or hereafter in effect, or any successor thereto.
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday or a day on which banking institutions are
authorized by law or other governmental action to close in New York, New York.
"COST OF GOODS" has the meaning set forth in the Light Source
Agreement.
"EVENT OF DEFAULT" has the meaning specified in the applicable
Lease.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, or
foreign government or any subdivision, agency, instrumentality, authority,
department, commission, board or bureau thereof or any federal, state, local or
foreign court, tribunal or arbitrator.
"INDEBTEDNESS" of any Person means: (a) any liability of any
Person (i) for borrowed money (including the current portion thereof), or (ii)
under any reimbursement obligation relating to a letter of credit, bankers'
acceptance or note purchase facility, or (iii) evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation), or (iv)
for the payment of money relating to a lease that is required to be classified
as a capitalized lease obligation in accordance with generally accepted
accounting principles, or (v) for all or any part of the deferred purchase price
of property or services (other than trade payables), or (b) any liability of
others described in the preceding clause (a) that such Person has guaranteed,
that is recourse to such Person or any of its assets or that is otherwise its
legal liability or that is secured in whole or in part by the assets of such
Person.
"LEASE" means the form of equipment lease agreement attached
hereto as Exhibit 1, as the same may be modified from time to time by Company
subject to the terms hereof, and entered into between DUSA and an End User with
respect to one or more Light Sources.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"PERSON" means any individual, corporation, partnership,
limited liability corporation or company, joint venture, trust, Governmental
Authority, unincorporated association or any other entity or organization.
3. Guarantor irrevocably and unconditionally guarantees to the Company
(a) the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of rental payments under each Lease until the Lessee
under such Lease has paid in full an aggregate of the Company's Cost of Goods
for the Light Source in rental payments and (b) the Cost of Goods for each Light
Source held in the Company's inventory and not subject to a Lease [c.i.] of its
acceptance into the Company's inventory (collectively, the "GUARANTEED
OBLIGATIONS"). This Guaranty and the Guaranteed Obligations shall terminate on
the [c.i.] of the [c.i.] to an End User of a Light Source, and thereafter
Guarantor shall have no further obligations with respect to the Guaranty and
Guaranteed Obligations.
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<PAGE> 3
If any Lessee cancels a Lease before making aggregate rental payments
under the Lease equal to or exceeding the Guaranteed Obligations, Guarantor
shall promptly pay to the Company the difference between (i) the Guaranteed
Obligations with respect to such Lease and (ii) the aggregate of rental payments
paid by the Lessee under such Lease until such time as the Light Source [c.i.]
to the Company's [c.i.] for [c.i.]; provided, however, that Guarantor's
obligation to make payment under this Guaranty shall not apply if the Lessee
does not [c.i.] under, or [c.i.], the Lease as a [c.i.] of a [c.i.]. If
Guarantor has made a payment under this paragraph with respect to a Light
Source, and the Company subsequently leases that same Light Source, the Company
will reimburse Guarantor up to the amount Guarantor has paid under this
paragraph with respect to such Light Source with any rental payments the Company
subsequently receives for such Light Source.
Guarantor understands, agrees and confirms that the Company may enforce
this Guaranty up to the full amount of the Guaranteed Obligations against
Guarantor without proceeding against any other guarantor or other person,
against any security for the Guaranteed Obligations, or under any other guaranty
covering all or a portion of the Guaranteed Obligations.
4. Additionally, Guarantor unconditionally and irrevocably, guarantees
the payment of any and all Guaranteed Obligations to the Company, whether or not
due or payable by the obligor thereon, upon the occurrence in respect of any
Event of Default by a Lessee, and unconditionally and irrevocably, promises to
pay such Guaranteed Obligations to the Company, on demand upon the Company
providing evidence reasonably satisfactory to Guarantor of such Event of
Default, in lawful money of the United States of America.
If an Event of Default occurs under a Lease, the Company will use
reasonable efforts to collect rental payments under such Lease [c.i.] under this
Guaranty, provided that, the foregoing will not be construed as requiring the
Company to [c.i.] and [c.i.] against a [c.i.] its rights under this Guaranty.
5. The liability of Guarantor under this Guaranty is exclusive and
independent of any security for or other guaranty of the obligations of any
Lessee under a Lease whether executed by Guarantor, any other guarantor or by
any other person, and the liability of Guarantor under this Guaranty will not be
affected or impaired by (i) any direction as to application of payment under a
Lease by any person, provided that any such application is for the timely
payment under another Lease to which this Guaranty applies, (ii) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other person as to the obligations of any Lessee under any Lease, (iii)
any payment on or in reduction of any such other guaranty or undertaking with
respect to a Lease or (iv) any dissolution, termination, any payment made to the
Company on the indebtedness which the Company repays to any Lessee pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and Guarantor waives any right to the deferral or
modification of its obligations under this Guaranty by reason of any such
proceeding.
6. The obligations of Guarantor under this Guaranty are independent of
the obligations of any other guarantor or any Lessee, and a separate action or
actions may be brought and
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<PAGE> 4
prosecuted against Guarantor whether or not action is brought against any other
guarantor or any Lessee and whether or not any other guarantor of any Lessee or
any Lessee is joined in any such action or actions.
7. Guarantor hereby waives notice of acceptance of this Guaranty and
notice of any liability to which it may apply, and waives promptness, diligence,
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liabilities, suit or taking of other action by the Company against, and any
other notice to, any party liable thereon.
8. The Company may at any time and from time to time without the
consent of or notice to (provided the Company's action is not a material change
with respect to the terms herein, the Guaranteed Obligations, the Lease, or any
security therefor) Guarantor, without incurring responsibilities to Guarantor,
without impairing or releasing the obligations of Guarantor under this Guaranty
upon or without any terms or conditions and in whole or in part (but, in each
case, in accordance with the relevant document for a specific transaction as
described below):
(i) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, in each case in a manner that is not material,
and the guaranty made by this Guaranty will apply to the Guaranteed Obligations
as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those under this Guaranty)
incurred directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst, provided that, any net proceeds derived therefrom are applied
first to offset the Guaranteed Obligations;
(iii) exercise or refrain from exercising any rights against
any Lessee or others or otherwise act or refrain from acting;
(iv) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those under this
Guaranty) incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Lessee to creditors of such Lessee;
(v) modify the Lease as necessary to comply with requirements
of third- party payors for health services provided by Lessees;
(vi) apply any sums by whomsoever paid or whomsoever realized
to any liability or liabilities under a Lease of any Lessee regardless of what
liabilities of such Lessee remain unpaid; and/or
(vii) consent to or waive any breach of, or any act, omission
or default under, any Lease or any of the instruments or agreements referred to
therein, or otherwise amend,
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<PAGE> 5
modify or supplement any Lease or any of such other instruments or agreements.
9. No invalidity, irregularity or unenforceability of all or any part
of the Guaranteed Obligations or of any security therefor will affect, impair or
be a defense to this Guaranty, and this Guaranty will be primary, absolute and
unconditional notwithstanding the occurrence of any event or the existence of
any other circumstances which might constitute a legal or equitable discharge of
surety or guarantor except payment in full of the Guaranteed Obligations.
10. This Guaranty is a continuing one, and all liabilities to which it
applies or may apply under the terms hereof will be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of the
Company in exercising any right, power or privilege under this Guaranty will
operate as a waiver thereof; nor will any single or partial exercise of any
right, power or privilege under this Guaranty preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies expressly specified in this Guaranty are cumulative and not
exclusive of any rights or remedies which the Company would otherwise have. No
notice to or demand on Guarantor in any case will entitle Guarantor to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Company to any other or further action in any
circumstances without notice or demand. It is not necessary for the Company to
inquire into the capacity or powers of any Lessee or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers will be guaranteed by this Guaranty.
11. Any Indebtedness of any Lessee now or hereafter held by Guarantor
is hereby subordinated to the Indebtedness of such Lessee to the Company. Prior
to the transfer by Guarantor of any note or negotiable instrument evidencing any
Indebtedness of a Lessee to Guarantor, Guarantor shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination.
12. (a) Guarantor waives any right (except as may be required by this
Guaranty or by applicable statute and cannot be waived) to require the Company
to: (i) proceed against any Lessee, any other guarantor of any Lessee or any
other party; (ii) proceed against or exhaust any security held from any Lessee,
any other guarantor of any Lessee or any other party; or (iii) pursue any other
remedy in the Company's power whatsoever. Guarantor waives, to the extent
permitted by applicable law, any defense based on or arising out of any defense
of any Lessee, any other Guarantor, any other guarantor of the Company or any
other party other than payment in respect of the Guaranteed Obligations or that
the Guaranteed Obligations are not yet due and payable, including, without
limitation, any defense based on or arising out of the disability of any Lessee,
any other guarantor of any Lessee or any other person, or the unenforceability
of the Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any Lessee other than payment in
respect of the Guaranteed Obligations. The Company may, at its election,
foreclose on any security held by the Company by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or exercise
any other right or remedy the Company may have against any Lessee or any other
party,
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<PAGE> 6
or any security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid. In such case, Company will equitably apply proceeds received to Guarantor,
to the extent the Guarantor has made payment under such Lease.
(a) Guarantor waives, to the extent permitted by applicable
law, all presentments, demands for performance, protests and notices, including,
without limitation, notices of nonperformance, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty, and notices of entering into
new Leases (unless otherwise specified herein or in the Light Source Agreement).
Guarantor agrees that the Company has no duty to advise any Guarantor of
information known to it regarding circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations.
(b) Until such time as the Guaranteed Obligations have been
paid in full in cash, Guarantor hereby waives all rights of subrogation which it
may at any time otherwise have as a result of this Guaranty (whether
contractual, under section 509 of the Bankruptcy Code, or otherwise) to the
claims of the Company against any Lessee or any other guarantor of the
Guaranteed Obligations and all contractual, statutory or common law rights of
reimbursement, contribution or indemnity from any Lessee or any other guarantor
which it may at any time otherwise have as a result of this Guaranty.
13. If and to the extent that Guarantor makes any payment to the
Company or to any other person pursuant to or in respect of this Guaranty, any
claim which Guarantor may have against any Lessee by reason thereof will be
subject and subordinate to the prior payment in full of the Guaranteed
Obligations with respect to such Lessee to the Company.
14. Guarantor hereby agrees to pay the Company, all reasonable
out-of-pocket costs and expenses of the Company in connection with the
enforcement of this Guaranty (including, without limitation, the reasonable fees
and disbursements of counsel employed by the Company).
15. This Guaranty is binding upon Guarantor and its successors and
assigns, and will inure to the benefit of the Company and its successors and
assigns; provided, however, that Guarantor may not assign or delegate its rights
and obligations under this Guaranty without the prior written consent of the
Company, which consent will not be unreasonably withheld.
16. Each of this Guaranty and the other Transaction Documents is the
result of negotiations among, and has been reviewed by, the Guarantor, the
Company and their respective counsel. Accordingly, this Guaranty and the other
Transaction Documents will be deemed to be the product of all parties hereto,
and no ambiguity may be construed in favor of or against Guarantor or the
Company.
17. Neither this Guaranty nor any of its provisions may be changed,
waived, discharged or terminated except with the written consent of the Company
and Guarantor.
18. (a) Guarantor shall remit payment of any Guaranteed Obligations
[c.i.] of receipt of demand, including supporting documentation, from the
Company. All such payments must be
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<PAGE> 7
made by bank wire transfer of immediately available funds to an account
designated by the Company. All Guaranteed Obligations and all payments made
under this Guaranty must be made in United States of America dollars. Any
payments due from Guarantor which are not paid by the date such payments are due
under this Guaranty will bear interest to the extent permitted by applicable law
at the [c.i.] publicly announced by [c.i.] on [c.i.] on the date such payment is
due, [c.i.], computed on the basis of a 360 day year and the actual number of
days elapsed. The applicable interest rate will be adjusted each time there is a
change in the [c.i.] announced by [c.i.]. The foregoing provisions will in no
way limit any other remedies available to the Company against Guarantor.
(b) If any interest paid under this Guaranty is deemed to be
in excess of the then legal maximum rate, then that portion of the interest
payment representing an amount in excess of the then legal maximum rate will be
deemed to be a payment of Guaranteed Obligations, or if no Guaranteed
Obligations are then outstanding, such excess will be returned to Guarantor.
19. Guarantor represents and warrants that:
(a) it is a duly organized and validly existing corporation in
good standing under the laws of its jurisdiction of formation and has the
corporate power and authority to own its property and assets and to transact the
business in which it is engaged or presently proposes to engage;
(b) it has the corporate power and authority to execute,
deliver and carry out the terms and provisions of this Guaranty and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Guaranty;
(c) it has duly executed and delivered this Guaranty and this
Guaranty is a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and general principles of equity;
(d) the execution and delivery by Guarantor of this Guaranty
and the performance and consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate the charter documents of Guarantor, or
any judgment, order, writ, decree, statute, rule or regulation applicable to
Guarantor; (ii) violate any provision of, or result in the breach or
acceleration of, or entitle any other Person to accelerate (whether after the
giving of notice or lapse of time or both), any material mortgage, indenture,
agreement, instrument or contract to which Guarantor is a party or by which it
is bound; or (iii) result in the creation or imposition of a Lien upon any
property, asset or revenue of such Guarantor or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization or approval applicable to Guarantor, its business or operations,
or any of its assets or properties;
(e) Guarantor acknowledges that an executed (or conformed)
copy of the form of Lease has been made available to its principal executive
officers and such officers are familiar with the contents thereof;
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<PAGE> 8
(f) no order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority, or any subdivision
thereof, is required to authorize or is required as a condition to (i) the
execution, delivery and performance by Guarantor of this Guaranty, or (ii) the
legality, validity, binding effect or enforceability of this Guaranty;
(g) there are no actions, suits are proceedings pending or, to
the knowledge of the Guarantor, threatened with respect to Guarantor which
question the validity or enforceability of this Guaranty, or of any action to be
taken by Guarantor pursuant to this Guaranty; and
(h) as of the date of this Guaranty, (i) Guarantor has
received consideration which is the reasonable equivalent value of the
obligations and liabilities that Guarantor has incurred to the Company under
this Guaranty; (ii) Guarantor has capital sufficient to carry on its business
and transactions and all business and transactions in which it is about to
engage and is solvent and able to pay its debts as they mature; (iii) Guarantor
owns property having a value, both at fair valuation and at present fair salable
value, greater than the amount required to pay its debts; and (iv) Guarantor is
not entering into this Guaranty with the intent to hinder, delay or defraud its
creditors.
20. All notices, requests, demands, instructions or other
communications to or upon Guarantor or the Company under this Guaranty must be
in writing and mailed or delivered to each party at its telecopier number or its
address set forth below (or to such other telecopy number or address as the
recipient of any notice has notified the other parties in writing). All such
notices and communications will be effective (a) when sent by Federal Express or
other overnight service of recognized standing, on the Business Day following
the deposit with such service; (b) when mailed, by registered or certified mail,
first class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; and (c) when delivered by hand, upon delivery; and
(d) when telecopied, upon confirmation of receipt.
Company: DUSA Pharmaceuticals, Inc.
25 Upton Drive
Wilmington, MA 01887
Attn: D. Geoffrey Shulman
Fax: 978-657-9193
Guarantor: Schering AG
D-13342
Berlin, Germany
Attn: Head, Center of Dermatology
With copy to: Schering AG
D-13342
Berlin, Germany
Attn: Legal Department
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<PAGE> 9
21. If claim is ever made upon the Company for repayment or recovery of
any amount or amounts received in payment or on account of any of the Guaranteed
Obligations and the Company repays all or part of said amount by reason of (i)
any judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including any Lessee), then in such event Guarantor agrees that any such
judgment, decree, order, settlement or compromise will be binding upon
Guarantor, notwithstanding any revocation hereof or other instrument evidencing
any liability of any Lessee, and Guarantor will be and remain liable to the
Company under this Guaranty for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by the Company.
22. Should [c.i.] occur [c.i.] and not be [c.i.] within any applicable
[c.i.] this Guaranty shall [c.i.] and [c.i.].
23. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE CREDITORS
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
CONFLICTS OF LAWS PRINCIPLES. ANY LEGAL ACTION BETWEEN THE GUARANTOR AND THE
COMPANY UNDER THIS GUARANTY MAY BE BROUGHT IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK.
24. Nothing herein shall be construed as granting any third-party
beneficiary rights to any third-party.
25. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
The undersigned has executed this Guaranty as of the date first above
written.
SCHERING AKTIENGESELLSCHAFT
By: /s/ Klaus Pohle
Name: Prof. Klaus Pohle
Title: Vice Chairman of the Board of
Executive Directors
By: /s/ Hans Maier
Name: Dr. Hans Maier
Title: Head of Center of Dermatology
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<PAGE> 10
Accepted and
agreed as of the
date first above
written:
DUSA Pharmaceuticals, Inc.
By: /s/ D. Geoffrey Shulman
________________________________
Name: D. Geoffrey Shulman, MD. FRCPC
Title: President and Chief Executive
Officer
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<PAGE> 11
EXHIBIT 1
FORM OF LEASE
-11-
<PAGE> 12
EQUIPMENT LEASE
This Equipment Lease (this "LEASE"), dated as of _____________, is made by and
between DUSA Pharmaceuticals, Inc., a New Jersey corporation (the "LESSOR"), and
__________________ (the "LESSEE").
1. Lessor hereby leases to Lessee and Lessee hereby leases from
Lessor one BLU-U(TM) light device, having a serial number of
______________________ (the "LIGHT SOURCE"), upon the terms
and conditions set forth in this Lease.
2. This Lease will have a term beginning on the date hereof and
ending on the date specified by either Lessor or Lessee giving
the other party [c.i.] that it desires to terminate this
Lease.
3. The rent for the Light Source under this Lease (the "Rent") is
[c.i.] per month payable on the [c.i.] of the month. The Rent
for any period which is less than a calendar month will be
prorated on a daily basis. The first monthly installment of
Rent is due and payable by the Lessee to the Lessor on the
date that the Light Source is delivered to the Lessee. Rent
shall be delivered to [____].
4. Lessee shall use the Light Source solely for medical treatment
of humans in conjunction with Levulan(R) and the Kerastick(TM)
applicator, or as the Lessor may otherwise expressly authorize
in the conduct of its business and in a careful and proper
manner, and shall not part with possession of or enter into
any sublease or assignment with respect to the Light Source
without the prior written consent of the Lessor. Lessee shall
not transport, or cause to be transported, the Light Source to
a different location without the Lessor's consent.
5. Lessor, at its own cost and expense, shall keep the Light
Source in good repair, condition and working order, subject to
normal wear and tear, and shall furnish or cause to be
furnished any and all parts and labor required for such
purposes. However, Lessee shall promptly notify Lessor of the
need for maintenance of the Light Source as indicated by the
Light Source itself.
6. From and after the date of this Lease, Lessor will, at its
sole cost and expense, keep and maintain policies of insurance
on the Light Source against damage by fire, windstorm, water,
flood, and boiler and machinery and against loss or damage by
other risks and perils now embraced by the so-called
"all-risk" endorsement in the amount of the full replacement
value of the Light Source.
7. This Lease incorporates the terms and conditions set forth on
the back of this page, which are made a part of this Lease by
this reference. The Lessee has read and understood these terms
and conditions.
The Lessor and the Lessee have executed this Lease as of the date first
above written.
DUSA Pharmaceuticals, Inc.
By: ___________________________
Name:
Title:
Address:_______________________
_______________________
Attn:___________________________
Facsimile No.: ___________________
[Lessee]
By: ____________________________
Name:
Title:
Address:________________________
________________________
Attn: ________________________
Facsimile No.:__________________
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<PAGE> 13
1. The Light Source will initially be located at Lessee's address
set forth in the signature block hereof and may be removed
from such location upon Lessee's compliance with the
following: (a) Lessee shall provide Lessor with 30 days prior
written notice of its intent to move the Light Source and the
place where the Light Source is to be moved and (b) Lessee
shall, before relocating such items, execute and deliver to
Lessor such documents and instruments as Lessor may reasonably
require.
2. Lessee shall not make any alterations to the Light Source
without the prior written consent of the Lessor.
3. All parts which are added or that become attached to the Light
Source will immediately become the property of the Lessor and
will be deemed to be incorporated in the Light Source and
subject to the terms of this Lease as if originally leased
hereunder.
4. Lessor hereby assumes and shall bear the entire risk of direct
loss and damage to the Light Source from any and every cause
whatsoever, except for willful or malicious acts, or gross
negligence by the Lessee. Notwithstanding the foregoing,
Lessor will not incur any liability to Lessee for any loss of
business, loss of profits, expense or any of the damages
resulting to the Lessee by reason of any delay caused by any
non-performance, defective performance or breakdown of the
Light Source, nor will Lessor at any time be responsible for
personal injury or the loss or destruction of any other
property resulting from the Equipment.
5. In the event of any loss, theft or damage of any kind
whatsoever to the Light Source, Lessee shall give prompt
written notice to the Lessor of such loss, theft or damage and
Lessor shall, at Lessee's option, either (a) at Lessor's
expense, place the Light Source in good repair, condition and
working order or (b) terminate this Lease.
6. Lessee shall keep the Light Source free and clear of all
levies, liens, encumbrances and charges or other judicial
process of every kind whatsoever and shall pay all license
fees, registration fees, assessments, charges, permit fees and
taxes which may now or hereafter be imposed on the leasing,
renting, possession or use of the Light Source, excluding all
taxes on or measured by Lessor's income.
7. Title to the Light Source will at all times during the term of
this Lease remain in Lessor. Lessee will cooperate with
Lessor, and take any action deemed necessary by Lessor to
enable Lessor to file, register or record this Lease or any
UCC-1 financing statement in such offices as Lessor may
determine and wherever required or permitted by law for the
protection of Lessor's title to the Light Source.
8. The occurrence of any of the following events constitutes an
event of default (an "EVENT OF DEFAULT") by Lessee under this
Lease: (a) Lessee fails to pay when due any Rent owing to the
Lessor [AND SUCH FAILURE CONTINUES FOR __ DAYS BEYOND THE DATE
DUE] or (b) Lessee fails or neglects to perform, keep or
observe any term, provision, condition or covenant contained
in this Lease [and such failure remains unremedied for [__]
days following Lessee's receipt of written notice of such
failure from the Lessor].
9. Upon the occurrence and during the continuance of an Event of
Default, Lessor at its election may do one or more of the
following: (a) declare all unpaid Rent or other amounts owing
under the Lease immediately due and payable and recover such
amounts; (b) with or without notice, demand or legal process,
retake possession of the Light Source (Lessee hereby
authorizes and empowers Lessor to enter upon the premises
wherever the Light Source may be found) and retain the Light
Source or re-lease the Light Source; and (c) pursue any other
remedy permitted at law or in equity.
10. Upon termination of this Lease, Lessee shall return the Light
Source and any additions thereto to the Lessor in good repair,
condition and working order, ordinary wear and tear resulting
from the proper use thereof excepted, by delivering the Light
Source at Lessor's cost and expense to such place as the
Lessor designates to the Lessee.
11. All notices, requests, demands and other communications under
this Lease must be in writing and must be delivered by hand,
sent by facsimile or sent by a nationally recognized overnight
delivery service to the addresses of the Lessor and the Lessee
set forth below their signatures or to such other address as
either party may designate to the other in writing in
compliance with this paragraph 11.
12. Lessee will not sell, assign, transfer, pledge, sublease,
encumber or otherwise dispose of the Light Source. All rights
of the Lessor under this Lease may be assigned, pledged,
mortgaged, or otherwise transferred or hypothecated, either in
whole or in part, without affecting the obligation of Lessee
under this Lease so long as the transferee assumes Lessor's
obligations under this Lease.
13. This Lease will be governed by and construed in accordance
with the laws of the State of New York, without giving effect
to principles of conflicts of laws.
14. This Lease may not be changed or terminated orally. All prior
agreements, understanding, representations,
<PAGE> 14
warranties and negotiations, if any, are merged into this
Lease. Each provision of this Lease will be severable from
every other provision of this Lease for the purpose of
determining the legal enforceability of any specific
provision.
<PAGE> 1
Exhibit 10.5
DUSA PHARMACEUTICALS, INC.
SECURED LINE OF CREDIT PROMISSORY NOTE ("NOTE")
[$1,000,000.00] November 22, 1999
New York, New York
FOR VALUE RECEIVED, DUSA Pharmaceuticals, Inc., a New Jersey
corporation ("COMPANY"), promises to pay to Schering AG, a German corporation
("HOLDER") or its assigns, the principal sum of One Million Dollars
($1,000,000.00) in lawful money of the United States, or such lesser amount as
is equal the outstanding principal amount hereof, which unpaid principal and
other amounts, if any, payable under this Note will be due and payable on the
earlier of (i) twelve (12) months from the date of the first Advance (as defined
hereinafter) received by Company hereunder, (the "MATURITY DATE"), or (ii) when,
upon or after the occurrence of an Event of Default (as defined below), such
amounts are declared due and payable by Holder or made automatically due and
payable in accordance with the terms hereof. This principal amount of this Note
will not bear interest.
THE OBLIGATIONS DUE UNDER THIS NOTE ARE SECURED BY A SECURITY AGREEMENT
(AS AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, THE "SECURITY
AGREEMENT"), DATED AS OF THE DATE HEREOF, AND EXECUTED BY COMPANY IN FAVOR OF
HOLDER. ADDITIONAL RIGHTS OF HOLDER ARE SET FORTH IN THE SECURITY AGREEMENT.
The following is a statement of the rights of Holder and the conditions
to which this Note is subject, and to which Holder, by the acceptance of this
Note, agrees:
1. DEFINITIONS. As used in this Note, the following capitalized terms have the
following meanings:
(a) "ADVANCE" has the meaning specified in Section 2.
(b) "AFFILIATE," with respect to any Person, means (i) any director,
officer or employee of such Person, (ii) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person, and (iii) any Person beneficially owning or holding 5% or more of
any class of voting securities of such Person or any corporation of which such
Person beneficially owns or holds, in the aggregate, 5% or more of any class of
voting securities The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. The term "Affiliate" when used in this Note without
reference to any Person means an Affiliate of Company.
<PAGE> 2
(c) "COMPANY" means the corporation initially executing this Note and
any Person which succeeds to or assumes the obligations of Company in accordance
with this Note.
(d) "EQUIPMENT" has the meaning set forth in the Security Agreement.
(e) "EVENT OF DEFAULT" has the meaning given in Section 6 of this Note.
(f) "HOLDER" means the Person specified in the introductory paragraph
of this Note together with its successors and assigns.
(g) "INDEBTEDNESS" means the aggregate amount of, without duplication
(i) all obligations for borrowed money, (ii) all obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations to pay the
deferred purchase price of property or services (other than accounts payable
incurred in the ordinary course of business determined in accordance with GAAP),
(iv) all obligations with respect to capital leases, (v) all obligations created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (vi) all reimbursement and other
payment obligations, contingent or otherwise, in respect of letters of credit
and similar surety instruments; and (vii) all guaranty obligations with respect
to the types of Indebtedness listed in clauses (i) through (vi) above.
(h) "LIEN" means, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, capital lease or other
title retention agreement, or any agreement to provide any of the foregoing, and
the filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.
(i) "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business, assets, operations, prospects or financial or other condition of
Company; (ii) the ability of Company to pay or perform the Obligations in
accordance with the terms of this Note and the other Transaction Documents and
to avoid an Event of Default, or an event which, with the giving of notice or
the passage of time or both, would constitute an Event of Default, under any
Transaction Document; or (iii) the rights and remedies of Holder under this
Note, the other Transaction Documents or any related document, instrument or
agreement.
(j) "OBLIGATIONS" means all loans, advances, debts, liabilities and
obligations, howsoever arising, owed by Company to Holder of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), now existing or hereafter arising under or
pursuant to the terms of this Note and the other Transaction Documents,
including, all fees, charges, expenses, attorneys' fees and costs and
accountants' fees and costs chargeable to and payable by Company hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code
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<PAGE> 3
(11 U.S.C. Section 101 et seq.), as amended from time to time (including
post-petition interest) and whether or not allowed or allowable as a claim in
any such proceeding.
(k) "PERMITTED LIENS" means: (i) Liens for taxes or other governmental
charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith, provided provision is made to the reasonable
satisfaction of Holder for the eventual payment thereof if subsequently found
payable; (ii) Liens of carriers, warehousemen, mechanics, materialmen, vendors,
and landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith, provided provision is made to the reasonable
satisfaction of Holder for the eventual payment thereof if subsequently found
payable; (iii) deposits under workers' compensation, unemployment insurance and
social security laws or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or to secure
statutory obligations of surety or appeal bonds or to secure indemnity,
performance or other similar bonds in the ordinary course of business; and (iv)
Liens in favor of Holder.
(l) "PERSON" means an individual, a partnership, a corporation
(including a business trust), a joint stock company, a limited liability
company, an unincorporated association, a joint venture or other entity or a
governmental authority.
(m) "SECURITY AGREEMENT" has the meaning set forth above.
(n) "SUBSIDIARY" means (i) any corporation of which more than 50% of
the issued and outstanding equity securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation is at the time
directly or indirectly owned or controlled by Company, (ii) any partnership,
joint venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of such
partnership, joint venture or other association is at the time directly or
indirectly owned and controlled by Company, and (iii) any other entity included
in the financial statements of Company on a consolidated basis.
(o) "TRANSACTION DOCUMENTS" means this Note and the Security Agreement
entered into by the Company and Holder as of the same date.
2. ADVANCES. Holder will advance funds to Company (each, an "ADVANCE") from time
to time on and after the date of this Note and prior to the Maturity Date, in an
aggregate principal amount not exceeding $1,000,000.00, to fund Company's
purchase of Light Sources as may be purchased in response to Firm Orders placed
by the Holder within [c.i.] of the first Advance made pursuant to this Note.
Each Advance shall be in an amount equal to the invoice or invoices for
Equipment attached to the notice of Advance in the form attached as Exhibit A,
provided that the amount of each such Advance, together with all previous
Advances, does not exceed $1,000,000.00. Holder shall fund each Advance within
[c.i.] after receipt of a properly completed notice of Advance. For each
Advance, Holder will deposit U.S. dollars in immediately available funds to the
following account of Company: [c.i.], or to such other account as Company may
from time to time
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<PAGE> 4
designate in writing to Holder. Holder will keep a record of Advances and
repayments in the form attached as Exhibit B.
3. PREPAYMENT. Upon [c.i.] prior written notice to Holder, Company may prepay
this Note in whole or in part; provided that any such prepayment will be applied
first to the payment of expenses due under this Note and then, if the amount of
prepayment exceeds the amount of all such expenses, to the payment of principal
of this Note.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company represents and warrants to
Holder that:
(a) Due Incorporation, Qualification, etc. Company (i) is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation; (ii) has the power and authority to own, lease and
operate its properties and carry on its business as now conducted; and (iii) is
duly qualified, licensed to do business and in good standing as a foreign
corporation in each jurisdiction where the failure to be so qualified or
licensed could reasonably be expected to have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by Company of
each Transaction Document and the consummation of the transactions contemplated
thereby (i) are within the power of Company and (ii) have been duly authorized
by all necessary actions on the part of Company.
(c) Enforceability. Each Transaction Document executed by Company has
been duly executed and delivered by Company and constitutes a legal, valid and
binding obligation of Company, enforceable against Company in accordance with
its terms, except as limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and general principles of equity.
(d) Non-Contravention. The execution and delivery by Company of the
Transaction Documents and the performance and consummation of the transactions
contemplated thereby do not and will not (i) violate the Articles of
Incorporation or Bylaws of the Company or any material judgment, order, writ,
decree, statute, rule or regulation applicable to Company; (ii) violate any
provision of, or result in the breach or the acceleration of, or entitle any
other Person to accelerate (whether after the giving of notice or lapse of time
or both), any material mortgage, indenture, agreement, instrument or contract to
which Company is a party or by which it is bound; or (iii) result in the
creation or imposition of any Lien upon any property, asset or revenue of
Company (other than any Lien arising under the Transaction Documents) or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization or approval applicable to Company, its business
or operations, or any of its assets or properties.
(e) Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority or other
Person (including, without limitation, the shareholders of any Person) is
required in connection with the execution and delivery of the Transaction
Documents by Company and the performance and consummation of
-4-
<PAGE> 5
the transactions contemplated thereby.
(f) No Violation or Default. Company is not in violation of or in
default with respect to (i) its Articles of Incorporation or Bylaws or any
material judgment, order, writ, decree, statute, rule or regulation applicable
to it; or (ii) any material mortgage, indenture, agreement, instrument or
contract to which it is a party or by which it is bound (nor is there any waiver
in effect which, if not in effect, would result in such a violation or default),
where, in each case, such violation or default, individually, or together with
all such violations or defaults, could reasonably be expected to have a Material
Adverse Effect.
(g) Litigation. No actions (including, without limitation, derivative
actions), suits, proceedings or investigations are pending or, to the knowledge
of Company, threatened against Company at law or in equity in any court or
before any other governmental authority which if adversely determined (i) would
(alone or in the aggregate) have a Material Adverse Effect or (ii) seeks to
enjoin, either directly or indirectly, the execution, delivery or performance by
Company of the Transaction Documents or the transactions contemplated thereby.
(h) Other Regulations. Neither Company nor any of its Subsidiaries is
subject to regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or to any federal or state statute
or regulation limiting its ability to incur Indebtedness.
(i) Governmental Charges and Other Indebtedness. Company has filed or
caused to be filed all tax returns which are required to be filed by it. Company
has paid, or made provision for the payment of, all taxes and other levies,
assessments, fees, claims or other charges imposed by any governmental authority
which have or may have become due pursuant to said returns and all other
Indebtedness, except such taxes, levies, assessments, fees, claims or other
charges or Indebtedness, if any, which are being contested in good faith and as
to which adequate reserves (determined in accordance with generally accepted
accounting principles) have been provided or which could not reasonably be
expected to have a Material Adverse Effect if unpaid.
(j) Judgments. Neither Company nor any of its properties is subject to
any material judgment, order, writ, decree, statute, rule or regulation, or any
material mortgage, indenture, agreement, instrument or contract which could
reasonably be expected to have a Material Adverse Effect.
(k) Notice. Company hereby waives notice of presentment of this Note
and waives promptness, diligence, demand or payment, protest, or notice of
dishonor or nonpayment, suit, or taking of any other action by the Company
against, and other than notice to, any party liable thereon.
5. CERTAIN COVENANTS. While any amount is outstanding under the Note, without
the prior written consent of Holder:
(a) Liens. Company will not create, incur, assume or permit to exist
any Lien on
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<PAGE> 6
or with respect to any of the Collateral, except for Permitted Liens.
(b) Asset Dispositions. Neither Company nor any of its Subsidiaries may
sell, lease, transfer, license or otherwise dispose of (collectively, a
"TRANSFER") any of the Collateral, except Transfers in the ordinary course of
its business (i) consisting of Transfers of the Collateral as contemplated by
the Marketing, Development and Supply Agreement, dated the date hereof, between
the Company and Holder, and the Light Source Agreement, dated the date hereof,
between Company and Holder, and (ii) consisting of sales of worn-out or obsolete
equipment.
6. EVENTS OF DEFAULT. The occurrence of any of the following constitutes an
"EVENT OF DEFAULT" under this Note and the other Transaction Documents:
(a) Failure to Pay. Company fails to pay when due any principal payment
on the due date or any other payment required under the terms of this Note or
any other Transaction Document on the date due; or
(b) Breaches of Covenants. Company or any of its Subsidiaries fail to
observe or perform any covenant, obligation, condition or agreement contained in
this Note or the other Transaction Documents and such failure is not remedied
[c.i.] after the date Company receives written notice thereof from Holder; or
(c) Representations and Warranties. Any representation, warranty,
certificate, or other statement (financial or otherwise) made or furnished by or
on behalf of Company to Holder in writing in connection with this Note or any of
the other Transaction Documents, or as an inducement to Holder to enter into
this Note and the other Transaction Documents, is false, incorrect, incomplete
or misleading in any material respect when made or furnished; or
(d) Voluntary Bankruptcy or Insolvency Proceedings. Company or any of
its Subsidiaries (i) applies for or consents to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a substantial part of
its property, (ii) is unable, or admits in writing its inability, to pay its
debts generally as they mature, (iii) makes a general assignment for the benefit
of its or any of its creditors, (iv) is dissolved or liquidated, (v) becomes
insolvent (as such term may be defined or interpreted under any applicable
statute), (vi) commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it, or (vii) takes any action for the purpose of effecting any
of the foregoing; or
(e) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for
the appointment of a receiver, trustee, liquidator or custodian of Company or
any of its Subsidiaries or of all or a substantial part of the property thereof,
or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Company or any of its Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now or hereafter
in effect are commenced and an order for relief entered or such proceeding is
not dismissed or discharged [c.i.] of commencement; or
-6-
<PAGE> 7
(f) Transaction Documents. Any Transaction Document or any material
term thereof ceases to be, or be asserted by Company not to be, a legal, valid
and binding obligation of Company enforceable in accordance with its terms or if
the Liens of Holder in any of the Collateral cease to be or shall not be valid,
first priority perfected Liens or Company asserts that such Liens are not valid,
first priority and perfected Liens.
(g) Related Documents. Any material breach of the Marketing Development
and Supply Agreement or Light Source Agreement, provided such breach has not
been cured within the time afforded for such cure.
7. RIGHTS OF HOLDER UPON DEFAULT. Upon the occurrence or existence of any Event
of Default (other than an Event of Default, referred to in Sections 6(d) and
6(e)) and at any time thereafter during the continuance of such Event of
Default, Holder may, by written notice to Company, declare all outstanding
Obligations payable by Company under this Note to be immediately and payable
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained in this Note or in the
other Transaction Documents to the contrary notwithstanding. Upon the occurrence
or existence of any Event of Default described in Sections 6(d) and 6(e), [c.i.]
and [c.i.], all outstanding Obligations payable by Company under this Note
[c.i.] become [c.i.] due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived, anything
contained in this Note or in the other Transaction Documents to the contrary
notwithstanding. In addition to the foregoing remedies, upon the [c.i.] or
[c.i.] of any Event of Default, Holder may exercise any other right power or
remedy granted to it by the Transaction Documents or otherwise permitted to it
by law, either by suit in equity or by action at law, or both.
8. SUCCESSORS AND ASSIGNS. Subject to the restrictions on transfer described in
Section 10 below, the rights and obligations of Company and Holder of this Note
will be binding upon and benefit the successors, assigns, heirs, administrators
and transferees of the parties.
9. CONSTRUCTION. Each of this Note and other Transaction Documents is the result
of negotiations among, and has been reviewed by Company, Holder and their
respective counsel. Accordingly, this Note and the other Transaction Documents
will be deemed to be the product of all parties hereto, and no ambiguity may be
construed in favor of or against Company or Holder.
10. WAIVER AND AMENDMENT. No provision of this Note may be amended, waived or
modified without the prior written consent of Company and Holder.
11. ASSIGNMENT BY COMPANY. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, in
whole or in part, by Company without the prior written consent of Holder.
12. NOTICES. Any notice, request or other communication required or permitted
hereunder must be in writing and will be deemed to have been duly given if
personally delivered or mailed
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<PAGE> 8
by registered or certified mail, postage prepaid, or by recognized overnight
courier or personal delivery at the respective addresses of the parties as set
forth in the Security Agreement. Any party hereto may by notice so given change
its address for future notice under this Note. Notice will conclusively be
deemed to have been given when received.
13. PAYMENT. Payment shall be made in lawful tender of the United States of
America.
14. EXPENSES; WAIVERS. If action is instituted to collect this Note, Company
promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
15. GOVERNING LAW. This Note and all actions arising out of or in connection
with this Note shall be governed by and construed and enforced in accordance
with the laws of the State of New York, U.S.A., without reference to the
conflicts of laws principles. Any legal action arising under this Note may be
brought in the United States District Court for the Southern District of New
York.
Company has caused this Note to be issued as of the date first written above.
DUSA PHARMACEUTICALS, INC.
a New Jersey corporation
By: /s/ D. Geoffrey Shulman
--------------------------------------
Name: D. Geoffrey Shulman, M.D. FRCPC
Title: President and Chief Executive
Officer
-8-
<PAGE> 9
EXHIBIT A
Notice of Advance
Schering AG
- ------------------
- ------------------
[date]
Re: Request for Advance
Ladies and Gentlemen:
The undersigned, DUSA Pharmaceuticals, Inc., a New Jersey corporation
("COMPANY"), refers to the Secured Line of Credit Promissory Note, dated as of
November __, 1999 (the "NOTE"), made by Company to Schering AG (the "HOLDER"),
and hereby gives you notice, pursuant to Section 2 of the Note, that the
undersigned hereby requests an Advance under the Note, and in that connection
attaches the following invoice for Equipment. Capitalized terms used herein and
not defined shall have those meanings ascribed to such terms in the Note unless
the context clearly indicates otherwise.
Company hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Advance:
(a) the representations and warranties of Company contained in the
Transaction Documents are and will be true and correct in all material respects,
before and after giving effect to the proposed Advance and to the application of
the proceeds thereof, as though made on such date, except to the extent that
such representations and warranties expressly relate do an earlier specified
date, in which case such representations and warranties must have been true and
correct in all material respects as of the date when made;
(b) no Event of Default has occurred and is continuing, or would result
from such proposed Advance the application of the proceeds thereof; and
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<PAGE> 10
(c) the amount of all Advances outstanding as of the date of this
request is $ .
Very truly yours,
DUSA Pharmaceuticals, Inc.
By:________________________________
Name:
Title:
-10-
<PAGE> 11
EXHIBIT B
Advances and Payments of Principal
<TABLE>
<CAPTION>
DATE OF NOTATION AMOUNT OF ADVANCE AMOUNT OF PRINCIPAL MADE BY
PAID OR REPAID
<S> <C> <C> <C>
</TABLE>
-11-
<PAGE> 1
Exhibit 10.6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, modified or otherwise supplemented
from time to time, this "Security Agreement"), dated as of November 22, 1999, is
executed by DUSA Pharmaceuticals, Inc., a New Jersey corporation ("Debtor"), in
favor of Schering AG, a German corporation ("Secured Party").
RECITALS
A. Debtor has executed a Secured Line of Credit Promissory Note
dated the date in the principal amount of $1,000,000.00 in
favor of Secured Party (the "Note") pursuant to which Secured
Party will make Advances from time to time to Debtor for the
purpose of purchasing Equipment.
B. In order to induce Secured Party to extend the credit
evidenced by the Note, Debtor has agreed to enter into this
Security Agreement and to grant Secured Party the security
interest in the Collateral described below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
1. Definitions and Interpretation. When used in this Security Agreement, the
following terms have the following respective meanings:
"COLLATERAL" has the meaning given to that term in Section 2
hereof.
"EQUIPMENT" means the light sources from time to time
purchased by Debtor with the Advances under the Note, including without
limitation, the BLU-U(TM) Light Source, together with the stand
supporting such light source.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York from time to time.
All capitalized terms used but not otherwise defined in this Security
Agreement have the respective meanings given to them in the Note executed
between the Debtor and Secured Party as of the same date herewith. Unless
otherwise defined in this Security Agreement or the Note, all terms used in this
Security Agreement and defined in the UCC have the meanings given to those terms
in the UCC.
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<PAGE> 2
2. Grant of Security Interest. As security for the Obligations, Debtor hereby
grants to Secured Party a security interest in all right, title and interests of
Debtor in, to and under all of the following, whether now existing or hereafter
from time to time acquired (collectively and severally, the "Collateral"):
(a) all Equipment; and
(b) any and all additions and accessions to and proceeds thereof,
including, without limitation, insurance, condemnation, requisition or similar
payments.
3. Representations and Warranties. Debtor represents and warrants to Secured
Party that:
(a) Debtor is the owner of the Collateral (or, in the case of
after-acquired Collateral, at the time Debtor acquires rights in the Collateral,
will be the owner thereof) and that no other Person has (or, in the case of
after-acquired Collateral, at the time Debtor acquires rights therein, will
have) any right, title, claim or interest (by way of Lien or otherwise) in,
against or to the Collateral, other than Permitted Liens.
(b) Secured Party has (or in the case of after-acquired Collateral, at
the time Debtor acquires rights therein, will have) a first priority perfected
security interest in the Collateral, except for Permitted Liens.
(c) Debtor's chief executive office, principal place of business and
the place where Debtor maintains its records concerning the Collateral are
located at the address set forth in Section 8(a).
4. Covenants Relating to Collateral. Debtor shall:
(a) perform all acts that may be necessary to maintain, preserve,
protect and perfect the Collateral, the Lien granted to Secured Party therein
and the priority of such Lien, except for Permitted Liens;
(b) not use or permit any Collateral to be used (i) in violation of any
provision of any Transaction Document, (ii) in violation of any applicable law,
rule or regulation, or (iii) in violation of any policy of insurance covering
the Collateral;
(c) pay promptly when due all taxes and other governmental charges, all
Liens and all other charges now or hereafter imposed upon or affecting any
Collateral;
(d) without 30 days' prior written notice to Secured Party, not change
Debtor's name or place of business (or, if Debtor has more than one place of
business, its chief executive office);
(e) procure, execute and deliver from time to time any endorsements,
assignments, financing statements and other writings reasonably deemed necessary
or
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<PAGE> 3
appropriate by Secured Party to perfect, maintain and protect its Lien under
this Security Agreement and the priority thereof and to deliver promptly to
Secured Party all originals of Collateral consisting of instruments;
(f) appear in and defend any action or proceeding which may affect its
title to or Secured Party's interest in the Collateral;
(g) keep separate, accurate and complete records of the Collateral and
to provide Secured Party with such records and such other reports and
information relating to the Collateral as Secured Party may reasonably request
from time to time; and
(h) except as permitted under the terms of the Note, not surrender or
lose possession of (other than to Secured Party), sell, encumber, lease, rent,
or otherwise dispose of or transfer any Collateral or right or interest therein,
and to keep the Collateral free of all Liens except Permitted Liens.
5. Authorized Action by Agent. Debtor hereby irrevocably appoints Secured Party
as its attorney-in-fact and agrees that Secured Party may perform (but Secured
Party will not be obligated to and will incur no liability to Debtor or any
third party for failure so to do) any act which Debtor is obligated by this
Security Agreement to perform, and to exercise such rights and powers as Debtor
might exercise with respect to the Collateral, including the right to (a)
collect by legal proceedings or otherwise and endorse, receive and receipt for
all dividends, interest, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Collateral; (b) enter into any
extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Collateral; (c) insure, process and preserve the Collateral;
(d) make any compromise or settlement, and take any action it deems advisable,
with respect to the Collateral; (e) pay any Indebtedness of Debtor relating to
the Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required under this Security Agreement; provided,
however, that Secured Party shall not exercise any such powers prior to the
occurrence of an Event of Default and may exercise such powers only during the
continuance of an Event of Default. Debtor agrees to reimburse Secured Party
upon demand for any reasonable costs and expenses, including attorneys' fees,
Secured Party may incur while acting as Debtor's attorney-in-fact under this
Security Agreement, all of which costs and expenses are included in the
Obligations. It is further agreed and understood between the parties hereto that
such care as Secured Party gives to the safekeeping of its own property of like
kind constitutes reasonable care of the Collateral when in Secured Party's
possession; provided, however, that Secured Party will not be required to make
any presentment, demand or protest, or give any notice and need not take any
action to preserve any rights against any prior party or any other person in
connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. Debtor will be deemed in default under this Security
Agreement upon the occurrence and during the continuance of an Event of Default.
Upon the occurrence and during the continuance of any such Event of Default,
Secured Party will have the rights of a secured creditor under the UCC, all
rights granted by this Security Agreement
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<PAGE> 4
and by law, including the right to: (a) require Debtor to assemble the
Collateral and make it available to Secured Party at a place to be designated by
Secured Party; and (b) prior to the disposition of the Collateral, store,
process, repair or recondition it or otherwise prepare it for disposition in any
manner and to the extent Secured Party deems appropriate and in connection with
such preparation and disposition. Debtor hereby agrees that [c.i.] notice of any
intended sale or disposition of any Collateral is reasonable.
7. In Furtherance of Security Interest.
(a) Duration of Security Interest. Secured Party's security interest in
the Collateral will continue until the payment in full and the satisfaction of,
or termination of, all Obligations, whereupon such security interest will
terminate. Secured Party, upon payment in full and the satisfaction of the
Obligations, shall execute such further documents and take such further actions
as may be necessary to effect the release and/or termination contemplated by
this Section 7(a), including duly executing and delivering to Debtor termination
statements for filing in all relevant jurisdictions.
(b) Possession of Collateral. Except as set forth in this Security
Agreement, so long as no Event of Default has occurred and is continuing, Debtor
may remain in full possession, enjoyment and control of the Collateral (except
only as may be otherwise required by Secured Party for perfection of its
security interest therein) and to manage, operate and use the same and each part
thereof with the rights and franchises appertaining thereto; provided, however,
that the possession, enjoyment, control and use of the Collateral is at all
times be subject to the observance and performance of the terms of this Security
Agreement.
(c) Further Assurances. Debtor will, at its own expense, make, execute,
indorse, acknowledge, file and/or deliver to Secured Party from time to time
such lists, descriptions, and designations of the Collateral, warehouse
receipts, receipts in the nature of warehouse receipts, bills of lading,
documents of title, vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral and other property and rights covered by the
security interest granted hereby, which Secured Party reasonably deems advisable
or appropriate to perfect, preserve or protect its security interest in the
Collateral.
8. Miscellaneous.
(a) Notices. Except as otherwise provided in this Security Agreement,
all notices, requests, demands, consents, instructions or other communications
to or upon Debtor or Secured Party under this Security Agreement must be or in
writing and mailed or delivered to each party at its address set forth below (or
to such other address as the recipient of any notice shall have notified the
other in writing). All such notices and communications will be effective (a)
when sent by Federal Express or other overnight service of recognized standing,
on the Business Day following the deposit with such service; (b) when mailed, by
registered or certified mail, first class postage prepaid and addressed as
aforesaid through the United States Postal Service, upon
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<PAGE> 5
receipt; and (c) when delivered by hand, upon delivery.
Secured Party: Schering AG
D13342
Berlin, Germany
Attn: Head Center of Dermatology
Debtor: DUSA Pharmaceuticals, Inc.
25 Upton Drive
Wilmington, MA 01887
Attn: President and Chief Executive Officer
Telecopier No.: (416) 363-6602
(b) Nonwaiver. No failure or delay on Secured Party's part in
exercising any right under this Security Agreement will operate as a waiver
thereof or of any other right nor will any single or partial exercise of any
such right preclude any other further exercise thereof or of any other right.
(c) Amendments and Waivers. This Security Agreement may not be amended
or modified, nor may any of its terms be waived, except by written instruments
signed by Debtor and Secured Party. Each waiver or consent under any provision
hereof will be effective only in the specific instances for the purpose for
which given.
(d) Assignments. This Security Agreement will be binding upon and inure
to the benefit of Secured Party and Debtor and their respective successors and
assigns; provided, however, that Debtor may not sell, assign or delegate rights
and obligations under this Security Agreement without the prior written consent
of Secured Party.
(e) Cumulative Rights, etc. The rights, powers and remedies of Secured
Party under this Security Agreement are in addition to all rights, powers and
remedies given to Secured Party by virtue of any applicable law, rule or
regulation of any governmental authority, any Transaction Document or any other
agreement, all of which rights, powers, and remedies are cumulative and may be
exercised successively or concurrently without impairing Secured Party's rights
under this Security Agreement. Debtor waives any right to require Secured Party
to proceed against any Person or to exhaust any Collateral or to pursue any
remedy in Secured Party's power.
(f) Payments Free of Taxes, Etc. All payments made by Debtor under this
Security Agreement shall be made by Debtor free and clear of and without
deduction for any and all present and future taxes, levies, charges, deductions
and withholdings. In addition, Debtor shall pay upon demand any stamp or other
taxes, levies or charges of any jurisdiction with respect to the execution,
delivery, registration, performance and enforcement of this Security Agreement.
Upon request by Secured Party, Debtor shall furnish evidence satisfactory to
Secured Party that all requisite authorizations and approvals by, and notices to
and filings with, governmental authorities and regulatory bodies have been
obtained and made and that all
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<PAGE> 6
requisite taxes, levies and charges have been paid.
(g) Partial Invalidity. If at any time any provision of this Security
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Security Agreement nor the legality, validity
or enforceability of such provision under the law of any other jurisdiction
shall in any way be affected or impaired thereby.
(h) Expenses. Debtor shall pay on demand all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by Secured
Party in connection with custody, preservation or sale of, or other realization
on, any of the Collateral or the enforcement or attempt to enforce any of the
Obligations which is not performed as and when required by this Security
Agreement.
(i) Headings. Headings in this Security Agreement and each of the other
Transaction Documents are for convenience of reference only and are not part of
the substance hereof or thereof.
(j) Plural Terms. All terms defined in this Security Agreement or any
other Transaction Document in the singular form have comparable meanings when
used in the plural form and vice versa.
(k) Construction. Each of this Security Agreement and the other
Transaction Documents is the result of negotiations among, and has been reviewed
by, Debtor, Secured Party and their respective counsel. Accordingly, this
Security Agreement and the other Transaction Documents will be deemed to be the
product of all parties hereto, and no ambiguity may be construed in favor of or
against Debtor or Secured Party.
(l) Entire Agreement. This Security Agreement, MD&S Agreement, Light
Source Agreement, Stock Purchase Agreement, Guaranty, and Promissory Note,
together with all the Exhibits thereto, constitute the entire agreement, both
written or oral, with respect to the subject matter hereof, and supersede all
prior or contemporaneous understandings or agreements, whether written or oral,
between Debtor and Secured Party with respect to such subject matter.
(m) Other Interpretive Provisions. References in this Security
Agreement and each of the other Transaction Documents to any document,
instrument or agreement (a) includes all exhibits, schedules and other
attachments thereto, (b) includes all documents, instruments or agreements
issued or executed in replacement thereof, and (c) means such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
modified and supplemented from time to time and in effect at any given time. The
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Security Agreement or any other Transaction Document refer to this
Security Agreement or such other Transaction Document, as the case may be, as a
whole and not to any particular provision of this Security Agreement or such
other Transaction Document, as the case may be. The words "include" and
"including" and words of similar import when used in this Security Agreement or
any other Transaction Document may not be construed to be limiting or exclusive.
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<PAGE> 7
(n) Governing Law. This Security Agreement and all actions arising out of or in
connection with this Security Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, U.S.A., without
reference to conflicts of laws principles (except to the extent governed by the
UCC). Any legal action arising under this Note may be brought in the United
States District Court for the Southern District of New York.
Debtor has caused this Security Agreement to be executed as of the day
and year first above written.
DUSA PHARMACEUTICALS, INC.
BY: /s/ D. Geoffrey Shulman
------------------------------
NAME: D. Geoffrey Shulman,MD,FRCPC
TITLE: President and Chief
Executive officer
AGREED:
SCHERING AG
BY: /s/ Klaus Pohle
-------------------------------
NAME: Prof. Klaus Pohle
TITLE: Vice Chairman of the Board
of Executive Directors
BY: /s/ Hans Maier
------------------------------
NAME: Dr. Hans Maier
TITLE: Head of Center of Dermatology
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<PAGE> 1
Exhibit 99.1
[DUSA LOGO]
INNOVATION IN PHOTODYNAMIC THERAPY
DUSA PHARMACEUTICALS, INC.
FOR RELEASE AT 2:00 A.M. NOVEMBER 23, 1999
SCHERING AG AND DUSA SIGN LEVULAN(R)PDT
DERMATOLOGY AGREEMENT
BERLIN, GERMANY; WILMINGTON, MASSACHUSETTS, USA; NOVEMBER 23, 1999 - Schering AG
and DUSA Pharmaceuticals, Inc. (NASDAQ NMS: DUSA) today announced that they have
entered into a marketing and development agreement which grants Schering
exclusive marketing and distribution rights for Levulan(R) (aminolevulinic acid
HCl) Photodynamic Therapy/Photodetection (PDT/PD) for dermatology indications in
the US, Europe and the rest of the world (except Canada). The drug will be
supplied by DUSA on a worldwide basis.
Under the terms of the agreement Schering will pay DUSA milestone and other
payments totaling $23.75 million upon signing, regulatory approval and first
commercial sale, plus a $6.25 million equity investment. The agreement also
includes research funding by Schering on new dermatology indications and
pre-paid royalties following FDA approval of up to three additional dermatology
indications. For product supply DUSA will receive a combined royalty/supply fee
based upon sales levels.
"DUSA is delighted to have Schering as its dermatology marketing and development
partner", said Dr. Geoffrey Shulman, President and Chief Executive Officer of
DUSA. "Schering has a long lasting tradition and expertise in the field of
dermatology. We are very pleased that Schering has chosen DUSA's Levulan(R) PDT
for AKs as the initial product for their new U.S. Dermatology Business Group's
marketing efforts in the US."
Dr. Vita, CEO and Chairman of the Board of Executive Directors of Schering AG,
emphasized: "This agreement is a first milestone in our strategy to establish
our presence in the US dermatology market. We are confident that Levulan(R) PDT
will become the dermatologists` first choice therapy for AKs. In accordance with
our growth strategy to expand our presence and become a global player in the
dermatology business, we also plan to market our existing dermatological
products in the U.S. and we are in the process of identifying further
cooperation projects".
Subject to final FDA approval, Schering plans to introduce the Levulan(R)
Kerastick(TM) for the treatment of Actinic Keratoses (AKs), a common
sun-induced, pre-cancerous skin condition. In conjunction with Schering's
marketing and sales efforts, DUSA is responsible for supplying to physicians its
BLU-U(TM), a non-laser blue light source that activates the Levulan(R) topical
solution to selectively kill the AKs.
<PAGE> 2
Actinic Keratosis is a common skin condition caused by excessive sun exposure,
especially in fair-skinned individuals. Approximately 4 million people are
treated for AKs in the U.S. every year. DUSA has successfully completed two
Phase III studies of Levulan(R) PDT for AKs of the head and scalp at a total of
16 U.S. study sites. The combined results of these studies showed that over 90%
of the AK lesions had cleared after one or two Levulan(R) PDT treatments
compared to 25% clearing in the placebo control group. DUSA filed a New Drug
Application (NDA) with the U.S. Food & Drug Administration (FDA) in July 1998
and received an approvable letter in June 1999. On November 5, 1999, an FDA
Advisory Panel made recommendations for product labeling and Phase IV clinical
studies. The U.S. market introduction is planned by Schering through its U.S.
affiliate, Berlex Laboratories, Inc., during the first half of 2000, subject to
the FDA granting of final marketing approval.
Schering and DUSA believe that the Levulan(R) PDT system will provide the first
standardized, physician-applied, easy-to-use selective approach to the treatment
of AKs. Currently, the two most common treatments for AKs are cryosurgery with
liquid nitrogen and topical 5-fluorouracil cream (5-FU). While these treatments
can work well, liquid nitrogen, which is often painful and non-selective, can
cause scarring and pigmentation problems in some patients. 5-FU leads to good
cosmetic results in the end, but the twice-daily treatment may cause redness and
irritation frequently, making compliance difficult for the 4-6 week treatment
regimen. Alternatively, the side effects profile for Levulan(R) PDT showed a
well-tolerated burning, stinging discomfort during the light treatment; there
were no other significant treatment-related side effects and no systemic
photo-sensitivity.
Schering AG is a research-based pharmaceutical company focusing its activities
on four business areas: diagnostics, gynaecology, therapeutics for disabling
diseases, e.g. multiple sclerosis and oncology, and dermatology. Being a pioneer
in dermatology for 50 years with a strong market position in Europe, Asia and
Latin America, Schering intends to become a global dermatology player by
entering the US market. Schering's dermatology franchise covers a broad spectrum
of indications, such as eczema, psoriasis, acne, mycosis and medical skin care.
R&D activities focus on anti-inflammatory and immunological approaches in atopic
dermatitis, contact dermatitis, psoriasis and disabling skin diseases as well as
acne.
The company has been focusing its research, search and development (R&S&D)
activities on special indications. Schering is continually acquiring, developing
and exploring innovative therapies in the dermatology field. With its R&S&D
concept, Schering is securing innovation and a promising product pipeline. Using
new ideas, Schering aims to make a recognized contribution to medical progress,
and strives to improve the quality of life.
Schering is represented by more than 140 subsidiaries and affiliated companies
and has a workforce of over 21,800 employees. Group sales in
<PAGE> 3
1998 were over DM 6.4 billion (3.3 billion Euro), of which 85 percent were
achieved outside of Germany.
DUSA Pharmaceuticals, Inc. is a development stage pharmaceutical company engaged
primarily in the development of Levulan(R) Photodynamic Therapy (PDT) and
Photodetection (PD) for multiple medical indications. PDT and PD utilize
light-activated compounds such as Levulan(R) to induce a therapeutic or
detection effect. DUSA is a world leader in topically or locally applied PDT and
PD. The Company is incorporated in New Jersey, with offices in Wilmington, MA,
Valhalla, NY, and Toronto, Ontario.
Except for historical information, this news release contains certain
forward-looking statements that involve known and unknown risk and
uncertainties, which may cause actual results to differ materially from any
future results, performance or achievements expressed or implied by the
statements made. These forward-looking statements relate to the production by
DUSA of Levulan(R) on a world-wide basis, receipt of future milestone payments,
royalties and supply fees, introduction of the Levulan(R) Kerastick(TM) and
BLU-U(TM) system during the first half of 2000 and the belief that the system
will provide a new treatment approach. Such risks and uncertainties include, but
are not limited to final approval of Levulan(R) PDT by the FDA and the
world-wide health regulatory authorities, DUSA's and Schering's dependence upon
the timing of the launch of Levulan(R) PDT and their ability to develop a market
for the products, and other risks identified in DUSA's SEC filings from time to
time.
FOR FURTHER INFORMATION CONTACT:
DUSA PHARMACEUTICALS, INC. -
D. Geoffrey Shulman, MD, President & CEO or Shari Lovell, Director, Shareholder
Services Tel: 416.363.5059 Fax 416.363.6602 or visit www.dusapharma.com
SCHERING AG CORPORATE COMMUNICATIONS -
CONTACT FOR BUSINESS MEDIA
Pia-Maria Gorner Tel.: +49 30 468 15296 Fax +49 30 468 16646
CONTACT FOR SCIENTIFIC MEDIA
Frank Richtersmeier Tel.: +49 30 468 17661 Fax +49 30 468 16710
CONTACT FOR INVESTORS AND ANALYSTS
Hong Chow Tel.: +49 30 468 12838 Fax +49 30 468 16646
CONTACT FOR INVESTORS AND ANALYSTS / USA
Joanne Marion Tel. 973 276 2164 Fax 973 276 2005
WEB SITE: HTTP://WWW.SCHERING.DE
