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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
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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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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
EXHIBIT 1.4.1 DUSA PATENT RIGHTS
EXHIBIT 1.9 SPECIFICATIONS
EXHIBIT 3.3 INITIAL BINDING FORECAST
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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 ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("DUSA"), and Schering
AG, a German corporation, having offices at 13342 Berlin, Germany ("Schering").
BACKGROUND
▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ 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). ▇▇▇▇ has engaged a third party to
manufacture such Light Sources.
▇. ▇▇▇▇ 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.
▇. ▇▇▇▇ 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.
▇. ▇▇▇▇▇▇▇▇ 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.
▇. ▇▇▇▇▇▇▇▇ 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
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 ▇▇▇▇▇▇▇▇, 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, ▇▇▇▇ 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 ▇▇▇▇▇▇▇▇, 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.
▇▇▇▇▇▇▇▇ agrees to promote and offer Light Sources for lease from DUSA only to
End Users. ▇▇▇▇▇▇▇▇'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.
▇▇▇▇ 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 ▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇. 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 ▇▇▇▇▇▇▇▇'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.]. ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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
Initials ____
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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 ▇▇▇▇▇▇▇▇'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. ▇▇▇▇▇▇▇▇
agrees to reasonably cooperate with and assist ▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇ ▇ ▇▇▇▇ 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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▇▇▇▇▇▇▇-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 ▇▇▇▇▇▇▇▇ (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,
▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇.
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.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1050
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
10.6 Assignment. This Agreement shall not be assignable by either
Party to any third
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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 ▇▇▇▇▇▇▇▇ 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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inquiries about the Agreement; thereafter, ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
_____________________________ ____________________________
Name: ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., FRCPC Name: ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇
___________________________
Title: President and Chief Executive Officer
Title: Vice Chairman of the
Board of Executive
Directors
By: /s/ ▇▇▇▇ ▇▇▇▇▇
___________________________
Name: ▇▇. ▇▇▇▇ ▇▇▇▇▇
_________________________
Title: Head of Center of
Dermatology
20
EXHIBIT 1.4.1
DUSA PATENT RIGHTS
[C.I.]
21
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EXHIBIT A
SPECIFICATIONS
DUSA PHARMACEUTICALS MODEL 4170 BLU-U(R)
(DUSA Confidential Information)
[c.i.]
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EXHIBIT 3.3
INITIAL FORECAST
[c.i.]
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A-19