EXHIBIT
10(u)


 


EMPLOYMENT AGREEMENT


 


This Agreement (“Agreement”) made as of this 23rd day of June, 1999,
between DUSA Pharmaceuticals, Inc., a New Jersey corporation (the “Corporation”)
and Scott L. Lundahl (“Lundahl”), who resides at 4 Morris Street, Lexington,
Massachusetts 02173:


 


NOW, THEREFORE, in consideration of the covenants and promises
contained herein and in accordance with the terms and conditions set forth in
this Agreement, the parties mutually agree as follows:


 


1.                                       Employment:  The Corporation hereby employs Lundahl and he
hereby accepts such employment as the Vice President, Technology of the
Corporation. Lundahl agrees to devote his full time and best efforts to
evaluate and develop proprietary devices and light source technology for the Corporation.  Lundahl shall report to the Chief Operating
Officer of the Corporation or other executive officer of the Corporation as
determined by the Corporation's Board of Directors.


 


2.                                       Duties and Responsibilities:  Notwithstanding any language contained herein
to the contrary, Lundahl's responsibilities (by way of example and not by way
of limitation) shall include:


 


A.                                   Management of the
development of all devices and light sources for use with the Corporation's
drug products;


 


B.                                     Evaluation
of devices and light source products and other technologies for licensing or
purchase by the Corporation;


 


C.                                     Supervision and
hiring of technical employees as may be authorized.


 


D.                                    any
additional responsibilities assigned by the Chief Operating Officer or Chief
Executive Officer of the Corporation, from time to time.


 


3.                                       Remuneration:  The Corporation shall pay to Lundahl an
initial base salary equal to $151,250 per annum at intervals consistent with
the Corporation’s administrative practices, from time to time.  His base salary shall be reviewed by the
Board, from time to time, not less than on an annual basis, beginning in
January, 2000.  Any salary increases
shall be determined by, and shall be made at the sole discretion of the Board.
Following the end of each fiscal year, the Board may award a cash bonus to
Lundahl in an amount up to 30% of Lundahl's current base salary for such year,
as determined by the Board in its sole discretion.  For purposes of awarding the total amount of
such bonus, mutually agreeable performance objectives will be set at the
beginning of any calendar year during Lundahl's employment.  The Board may award annual cash bonuses above
30% of then current base salary for outstanding performance.


 


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All salary and other payments and allowances outlined in this Agreement
shall be subject to such withholding taxes and deductions as may be required by
law.


 


4.                                       Place of Employment:  As Vice President, Technology, Lundahl shall
operate from the Corporation's offices located in Massachusetts.  Lundahl acknowledges, however, that there
will be domestic and international travel required on a regular basis.  Such travel is understood to be necessary in
order to effectively conduct his responsibilities for the Corporation and so
that Lundahl may remain in the forefront of technological developments.


 


5.                                       Benefits: 
Lundahl will be entitled to participate in the medical, disability,
life, and other insurance benefit plans or pension, profit sharing, or 401K
plans which may be made available to the officers and employees of the
Corporation from time to time, subject to applicable eligibility rules thereof.


 


6.                                       Stock Purchase and Bonus Plans:  Lundahl shall be entitled to participate in
the 1996 Omnibus Plan, as amended, and any subsequent stock purchase and bonus
or incentive plans that the Corporation shall from time to time make available
to its officers and employees, subject to applicable eligibility rules thereof.


 


7.                                       Vacation: 
Lundahl shall be entitled to four (4) weeks of vacation during each year
of employment, to be taken at a time or times acceptable to the Corporation,
having regard to its operations.  Lundahl
shall not be entitled to carry over any unused vacation from one (1) calendar
year into the following calendar year, so long as such a vacation policy is
consistent for all employees.


 


8.                                       Expenses: All reasonable travel and other
expenses incident to the rendering of services by Lundahl on behalf of and in
promoting the interests of the Corporation shall be paid by the Corporation,
including but not limited to an automobile allowance in the amount of $6,000
per year.  If such expenses are paid in
the first instance by Lundahl, the Corporation agrees that it will reimburse
Lundahl therefor upon presentation of appropriate statements, vouchers, bills
and invoices as and when required by the Corporation to support the
reimbursement request.


 


9.                                       Confidential Information:


 


A.                                   Lundahl understands
that in the performance of his services hereunder he may obtain knowledge of “confidential
information”, as hereinafter defined, relating to the business of the
Corporation.  As used herein, “confidential
information” means any information (whether clinical, financial, administrative
or otherwise), written or oral, (including without limitation, any formula,
pattern, device, plan, process, or compilation of information) which (i) is, or
is designed to be, used in the business of the Corporation or results from its
research and/or development activities, or (ii) is private or confidential in
that it is not generally known or available to the public, or (iii) gives the
Corporation an opportunity to obtain an advantage over competitors who do not
know or use it.  Lundahl shall not, without
the written consent of the Board, either during the term of his employment or
thereafter, (a) use or disclose any such confidential information outside of


 


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the Corporation (except to consultants or other agents or
representatives of the Corporation who are similarly bound to the Corporation
by confidentiality obligations), (b) publish any article with respect
thereto, (c) except in the performance of his services hereunder, remove or aid
in the removal from the premises of the Corporation any such confidential
information or any property or material which relates thereto.


 


B.                                     Upon the
termination of his employment with the Corporation, all documents, records,
notebooks and similar repositories of or continuing information concerning the
Corporation, or its products, services or customers, including any copies
thereof, then in Lundahl’s possession or under his control, whether prepared by
Lundahl or others, will be left with or immediately returned to the Corporation
by Lundahl.


 


C.                                     (i)                                     Lundahl shall
promptly disclose to the Corporation any and all prescription drug products,
devices, machines, methods, inventions, discoveries, improvements, processes,
works or the like (all of which are referred to herein as “inventions”) which
he may invent, conceive, produce, or reduce to practice, either solely or
jointly with others, at any time (whether or not during work hours) during his
employment hereunder.


 


(ii)                                  All such inventions
which in any way relate to the products manufactured, sold or used by the
Corporation or to any methods, processes or apparatus used in connection with
the manufacture of such products or treatment of disease or conditions, or in
either case which are or may be or may become capable of use in the business of
the Corporation, shall at all times and for all purposes be regarded as
acquired and held by Lundahl in a fiduciary capacity for, solely for the
benefit of, the Corporation.


 


(iii) With respect to all such inventions,
Lundahl shall:


 


(a)                                  treat all information
with respect thereto as confidential information within the meaning of, and
subject to paragraph 9 above;


 


(b)                                 keep complete and
accurate records thereof, which records shall be the property of the
Corporation;


 


(c)                                  execute any
application for letters patent of the United States and of any and all other
countries covering such inventions, and give to the Corporation, its attorneys
and solicitors all reasonable and requested assistance in preparing such
application;


 


(d)                                 from time to time,
upon the request and at the expense of the Corporation, but without charge for
services beyond the salary paid to him by the Corporation, execute all
assignments or other instruments required to transfer and assign to the
Corporation (or as it may direct) all inventions, and all patents and
applications for patents, copyrights or


 


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applications for registration of copyrights, covering such inventions
or otherwise required to protect the rights and interests of the Corporation;


 


(e)                                  testify in any
proceedings or litigation as to all such inventions; and


 


(f)                                    in case the
Corporation shall desire to keep secret any such invention, or shall for any
reason decide not to have letters patent applied for thereon, refrain from
applying for letters patent thereon.


 


D.                                    Notwithstanding any
of the foregoing in this section, information, whether confidential or
proprietary or not, shall be exempt from the above confidentiality provisions
if said information:


 


(i)                                     is known to
Lundahl prior to his employment or consultancy with the Corporation and not
otherwise covered by confidentiality obligations to the Corporation;


 


(ii)                                  is in the public
domain on the date of employment;


 


(iii)                               becomes public at any
time through no fault of Lundahl; or


 


(iv)                              is or becomes readily
available from third parties who have no confidentiality obligations to the
Corporation.


 


E.                                      If Lundahl's
employment is terminated by Lundahl, Lundahl shall not, without the express
prior written consent of the Corporation, directly, or indirectly, during the
term of this Agreement or for a period of one (1) year after its termination,
render services, or engage in activity including but not limited to, the
activities enumerated in Section 2 hereof or any similar activity, for any
company which relates to the development or sale of photodynamic therapy (“PDT”)
or photodetection (“PD”) products directly competitive (i.e., medically or
therapeutically) with the Corporation's products or compounds or mixtures
thereof, whether alone or as a partner, officer, director, employee or
shareholder of any other corporation, or as a trustee, fiduciary, consultant or
other representative of any other activity. 
This restriction shall not apply if Lundahl has disclosed to the
Corporation, in writing, all the known facts relating to such work or activity
and has received a release, in writing from the Corporation, to engage in such
work or activity.  The making of passive
and personal investments and the conduct of private business affairs shall not
be prohibited hereunder.  Ownership by
Lundahl of five percent (5%) or less of the outstanding shares of stock of any
corporation either (i) listed on a national securities exchange or (ii) having
at least 100 stockholders shall not make Lundahl a “stockholder” within the
meaning of that term as used in this paragraph, so long as Lundahl has no
participation in the management of such corporation.


 


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10.                                 Termination of Employment:


 


A.                                   The Corporation may
terminate this Agreement at any time, with or without cause on sixty (60) days
prior written notice.  For purposes of
this Agreement, cause shall mean (i) Lundahl’s physical or mental disability or
other inability to perform the duties of his job for any reason for a period in
excess of six (6) consecutive months, (ii) Lundahl's conviction in a court of
law of a crime or offense, which conviction would prevent Lundahl from
effective management of the Corporation or materially adversely affect the
reputation of the Corporation, as determined by the Board in its sole
discretion, exercising its reasonable judgment, or (iii) Lundahl's malfeasance
or misconduct such as fraud, embezzlement, dishonesty, acts of moral turpitude,
or a felony conviction, or for other good cause materially detrimental to the
Corporation.  In the event of a
termination for cause, Lundahl shall be paid his base salary, pro rated to the
date of termination.  Nothing contained
herein shall be interpreted to impair or otherwise affect the right of the
Corporation to terminate Lundahl's employment, at will, with or without good
cause.


 


B.                                     If Lundahl’s
employment is terminated by the Corporation without cause, the Corporation
shall:


 


(i)                                     pay Lundahl a
severance allowance equivalent to twelve (12) month’s then current base salary,
payable as a lump sum, within sixty (60) days following the date of such
termination;


 


(ii)                                  pay to Lundahl within
two (2) weeks of the date of termination all outstanding vacation pay and any
earned but unpaid salary or bonuses to the date of such termination and
reimburse Lundahl for any business expense incurred by him up to and including
the date of such termination following provision by Lundahl of all applicable
and necessary receipts.


 


C.                                     Termination upon
Death:  Lundahl’s employment with the
Corporation will cease and this Agreement will terminate without further
compensation if Lundahl dies. Upon his death, his estate will be entitled to
any Corporation paid death benefit in force at the time of such death.  In addition, Lundahl's estate shall be paid
any cash bonus to which he would have been entitled under Paragraph 3 above.
Likewise, Lundahl’s beneficiaries as designated by him to the Corporation shall
be entitled to receive the benefits, if any, described in Paragraphs 5 and 6
above, and will be entitled to exercise any vested but unexercised stock
options that were held by him at the time of his death, subject to the terms
and conditions of such options.


 


D.                                    Resignation:  Lundahl will provide the Corporation with two
(2) months’ advance notice, in writing, of his resignation from the
Corporation.


 


11.                                 Change of Control: If Lundahl's employment
is terminated by the Corporation without cause upon the consummation of a “change
in control” as defined herein, Lundahl shall receive, within five (5) days
after such termination from the Corporation or its successor, a lump sum
payment equal to three (3) times his base salary during the last fiscal year in
which Lundahl 


 


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is associated with the Corporation (including any amounts due as
severance under Paragraph 10B.(i) of this Agreement).  For the purposes hereof, “change in control”
shall mean a change in control of a nature that would be required to be
reported in response to Item 5 of Schedule 14D promulgated pursuant to Section 14
of the Securities Exchange Act of 1934, as amended (the 1934 Act”), whether or
not the Corporation is then subject to such reporting requirements; provided
that, without limitations, such a change in control shall be deemed to have
occurred if (i) any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Corporation is or becomes the
beneficial owner, directly or indirectly, of securities of the Corporation representing
twenty percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities and thereafter the Board adopts a resolution to the
effect that, for the purposes of this Agreement, a change in control of the
Corporation has occurred; such ownership shall be defined pursuant to Rule
13d-3 of the 1934 Act and includes mergers or acquisitions whereby an outside
party has in excess of twenty percent (20%) of the combined voting power; (ii)
when the Corporation merges or consolidates with any other person or, entity
other than a subsidiary and, upon consummation of such transaction own less
than fifty percent (50%) of the equity securities of the surviving or
consolidated entity; or (iii) a substantial portion of the assets of the
Corporation are sold or transferred to another person or entity.


 


12.                                 Indemnification:  The Corporation shall, to the extent
permitted by the laws of the State of New Jersey, indemnify Lundahl against any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, that arises as a consequence of his duties as
an employer and officer of the Corporation. 
Such indemnification will include such expenses as attorneys fees,
judgments, fines and amounts awarded or agreed to in settlement, provided that
Lundahl acted legally and in good faith, or reasonably believed that his
actions were legal and performed in good faith. 
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendre shall not, of itself,
create a presumption that his actions were illegal or not performed in good
faith.


 


13.                                 Representation Concerning Prior Agreements:  Lundahl represents and warrants to the
Corporation that none of the duties or obligations for which he is responsible
under this  Agreement breaches, or will
cause him to breach in the future, any restrictive covenant or confidentiality
obligation under any prior agreement.


 


14.                                 Provisions Operating Following Termination:  Notwithstanding any termination of Lundahl’s
employment with or without cause, any provision of this Agreement necessary to
give it efficacy shall continue in full force and effect following such
termination.


 


15.                                 Notices: 
Any notice to be given in connection with this Agreement shall be given
in writing and may be given by personal delivery, by certified mail, postage
prepaid, or by facsimile transmission, so long as receipt of such transmission
is available, addressed to the recipient as follows:


 


	
  To:

  	
   

  	
  Scott L. Lundahl

  	
   

  	
  To:

  	
   

  	
  D. Geoffrey Shulman, MD,

  
	
   

  	
   

  	
  4 Morris Street

  	
   

  	
   

  	
   

  	
  FRCPC, President

  
	
   

  	
   

  	
  Lexington, Massachusetts 02173

  	
   

  	
   

  	
   

  	
  DUSA Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  USA

  	
   

  	
   

  	
   

  	
  25 Upton Drive

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Wilmington, MA 01887

  



 


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or to such other address or individual as may be designated by notice
by either party to the other.  Any notice
given by personal delivery shall be deemed to have been given on the day of
actual delivery and, if made or given by certified mail, on the third day,
other than a Saturday or Sunday following the deposit thereof with the U.S.
Postal Service.


 


16.                                 Governing Law:  This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey.


 


17.                                 Benefit of Agreement:  This Agreement shall enure to the benefit of
and be binding upon the heirs, executives, administrators and legal personal
representatives of Lundahl and to and upon the successors and assigns of the
Corporation, respectively.


 


18.                                 Entire Agreement:  This Agreement constitutes the entire
agreement between the parties hereto with respect to the terms and conditions
of employment of Lundahl and cancels and supersedes any prior understandings
and agreements with respect to Lundahl's employment between the parties to this
Agreement.  There are no representations,
warranties, forms, conditions, undertakings or collateral agreements expressed,
implied or statutory between the parties hereto other than as expressly set
forth in this Agreement.  The parties
acknowledge that certain agreements between the Corporation and Lumenetics,
Inc. in which Lundahl is a principal shareholder exist and are not affected by
this Agreement.


 


19.                                 Severability:  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision of any other jurisdiction but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.


 


20.                                 Amendments and Waivers:  Any provision of this Agreement may be
amended or waived only with prior written consent of the Corporation and
Lundahl.


 


IN WITNESS WHEREOF, the parties have duly executed this Agreement.


 


	
  ATTEST:

  	
  DUSA PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Nanette Mantell

  	
   

  	
  By:

  	
  /s/ D. Geoffrey Shulman

  
	
   

  	
   

  	
  D. Geoffrey Shulman, MD, FRCPC

  
	
   

  	
   

  	
  President

  
	
  WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Scott L. Lundahl

  
	
   

  	
  Scott L. Lundahl

  



 


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