EXHIBIT 10.(aa)


 


EMPLOYMENT AGREEMENT


 


This
Agreement (“Agreement”) made as of this 15th day of  February, 2005, between DUSA Pharmaceuticals,
Inc. (the “COMPANY”) having offices at 25 Upton Drive, Wilmington,
Massachusetts 01887 and Gary Talarico, currently residing at  8 Baer Court, Morristown, New Jersey 07960 (“Talarico”).


 


NOW
THEREFORE, in consideration of the mutual covenants and promises, the parties
agree as follows:


 


1.                                       Employment:  The
COMPANY hereby employs Talarico effective February 16, 2005 and he hereby
accepts such employment as of such date as the Vice President, Sales of the
COMPANY.  Talarico agrees to work on a
full-time basis and to devote his best efforts and spend as much time and
attention as is necessary to manage the sales activities of the COMPANY.
Talarico shall report to the President and Chief Operating Officer of the
COMPANY.  Talarico agrees to abide by the
COMPANY’s Business Code of Ethics and Senior Officers Code of Ethics as in
force from time to time.


 


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


 


A.           Be responsible for the management of  all sales activities and sales employees,
including without limitation, management of foreign sales and distribution
relationships of the COMPANY;


 


B.             Establish strong lines of communication with all key
sales representatives, regional sales managers, and independent sales
representatives and build an open, positive, highly motivated team with a
customer-focused attitude;


 


C.             Effectively manage all aspects of budget and reporting
of sales activities in order to meet financial objectives;


 


D.            Work with the COMPANY’s management team to establish
annual sales goals and budgets;


 


E.              Provide thoughtful and objective input to the
President and Chief Operating Officer and other members of the management team;
and


 


F.              Be
responsible for any additional activities assigned by the President and Chief
Operating Officer, from time to time, which are within Talarico’s expertise.


 


3.                                       Remuneration:  The
COMPANY will pay to Talarico an initial base salary equal to One Hundred
Seventy-five Thousand Dollars ($175,000) per annum at intervals consistent with
the COMPANY’s administrative practices, from time to time.  This base salary shall be reviewed by the
Board of Directors of the COMPANY from time to time, not less than on an annual
basis, beginning in January, 2006; provided, however, that during his tenure with
the COMPANY, Talarico’s base salary, and the potential maximum amount of his
commission shall not be reduced assuming the COMPANY’s sales targets are
achieved (although it is understood that the tiers and commission schedule
shall likely change on no less than an annual basis depending on the COMPANY’s
needs) unless mutually agreed upon by the parties, in writing.


 





















 


In addition, you shall
receive a sign-on bonus in the amount of Fifteen Thousand Dollars ($15,000)
which shall be payable in the first payroll after the effective date of your employment.
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, Talarico may be
entitled to commissions of up to an additional One Hundred Fifty Thousand
Dollars ($150,000) based on the sales targets to be set by DUSA.  The Kerastick® unit
sales targets, together with the commission to be earned per Kerastick® and the applicable range (tiers) of actual volume sales
achieved for calendar year 2005 are set forth on the quarterly schedules
attached to and made a part of this Agreement as Schedule A. Commissions shall
be earned on a per unit sale basis of each Kerastick® at
the rate set forth opposite the appropriate sales volume achieved (by Tier);
provided, however that Talarico must be employed by the COMPANY at the end of
each quarter in order to be eligible to receive any commissions for such
quarter.  Commissions shall be calculated
on a year-to-date basis at the end of each fiscal quarter and shall be
cumulative from January 1, 2005 through the end of the quarter for which the
commission calculation is being performed. 
Commissions earned in prior quarters will be deducted from the current
quarter calculation.  DUSA may hold back
up to Twenty percent (20%) of the commissions earned in any quarter, provided,
however, that at the end of the third fiscal quarter of any year, DUSA will
reexamine Talarico’s volume achievement and may reduce such hold back.  For 2005, DUSA agrees to award commissions to
you in the amount of at least Twenty-five Thousand Dollars ($25,000).  The Board may award additional cash bonuses
to Talarico 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 his employment.


 


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: 
Talarico will operate primarily from his home office. Talarico
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 promote and sell the COMPANY’s products.


 


5.                                       Benefits: Talarico 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 COMPANY from time to time, subject to applicable eligibility
rules thereof.


 


6.                                       Stock Options: Talarico shall be entitled to participate in
the 1996 Omnibus Plan, which includes a stock option plan, and any subsequent
stock purchase and bonus or incentive plans that the COMPANY shall from time to
time make available to its officers and employees, subject to applicable
eligibility rules thereof.  Management of
the COMPANY agrees to recommend to the Compensation Committee that Talarico be granted
options for up to Thirty Thousand (30,000) shares of the COMPANY’s common stock
pursuant to the vesting and other provisions of the Plan with the exercise
price of being based upon the closing price of the Company’s shares on the
NASDAQ Stock Market at the close of business on his full day of employment.


 


7.                                       Vacation: Talarico 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 COMPANY, having regard to its operations. Talarico shall be
entitled to carry over up to two (2) weeks of unused vacation from one (1)
calendar year into the following calendar year, so long as such a vacation
policy is consistent for all employees.


 


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8.                                       Expenses:


 


A.                                   All
reasonable travel and other expenses incident to the rendering of services by
on behalf of and in promoting the interests of the COMPANY shall be paid by the
COMPANY, including but not limited to an automobile allowance in the amount of
Six Thousand ($6,000.00) per year, plus mileage reimbursement at rates set by
the Internal Revenue Service for travel relating to business of the
COMPANY.  If such expenses are paid in
the first instance by Talarico, the COMPANY agrees that it will reimburse him
therefore upon presentation of appropriate statements, vouchers, bills and
invoices as and when required by the COMPANY to support the reimbursement
request.


 


9.                                       Confidential Information:


 


A.
Talarico 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 COMPANY. 
As used herein, “confidential information” means any information
(whether clinical, financial, administrative or otherwise), written or oral,
(including without limitation, any formula, pattern, device, method, plan,
process, or compilation of information) which (i) is, or is designed to be,
used in the business of the COMPANY 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 COMPANY an
opportunity to obtain an advantage over competitors who do not know or use
it.  Talarico 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 the COMPANY
(except to consultants or other agents or representatives of the COMPANY who
are similarly bound to the COMPANY 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 COMPANY any
such confidential information or any property or material which relates thereto.


 


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


 


C.                                     (i)                                     Talarico
shall promptly disclose to the COMPANY 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 COMPANY 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 COMPANY, shall at all times and for all purposes be
regarded as acquired and held by in a fiduciary capacity for, solely for the
benefit of, the COMPANY.


 


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


 


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


 


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


 


(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 COMPANY, 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 COMPANY, but without
charge for services beyond the salary paid to him by the COMPANY, execute all
assignment or other instruments required to transfer and assign to the COMPANY
(or as it may direct) all inventions, and all patents and applications for
patents, copyrights or applications for registration of copyrights, covering
such inventions or otherwise required to protect the rights and interests of
the COMPANY;


 


(e)                                  testify
in any proceedings or litigation as to all such inventions and if such
testimony is required subsequent to a termination of his employment, Talarico
shall be compensated at a reasonable hourly rate for his time; and


 


(f)                                    in
case the COMPANY 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 Talarico prior to his employment or consultancy with the COMPANY;


 


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


 


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


 


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


 


E.                                      If
Talarico ‘s employment is terminated by the Company, Talarico shall not,
without the express prior written consent of the COMPANY, 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 COMPANY’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 Talarico
has disclosed to the COMPANY, in writing, all the known facts relating to such
work or activity and has received a release, in writing from the COMPANY, 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 of five percent (5%) or less of the outstanding shares of
stock of any corporation either (i) listed on a national securities


 


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exchange or (ii) having
at least 100 stockholders shall not make Talarico a “stockholder” within the
meaning of that term as used in this paragraph, so long as Talarico has no
participation in the management of such corporation.  Nor shall Talarico solicit or hire, directly
or indirectly, any employee of the COMPANY for a period of two (2) years after
the date of termination of his employment to perform any such activities for
his own benefit or the benefit of any new employer.


 


F.                                      In
the event of a breach or threatened breach of this Section 9, Talarico agrees
that the COMPANY shall be entitled to injunctive relief in a court of appropriate
jurisdiction to remedy any such breach or threatened breach as Talarico
acknowledges that damages would be inadequate and insufficient.


 


10.                                 Termination of Employment:


 


A.                                   The
COMPANY 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) Talarico ‘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) Talarico ‘s conviction in a court of
law of a crime or offense, which conviction would prevent Talarico from
effective management of the COMPANY or materially adversely affect the
reputation of the COMPANY, as determined by the Board in its sole discretion,
exercising its reasonable judgment, or (iii) Talarico ‘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
COMPANY.  In the event of a termination
for cause, Talarico 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 COMPANY to
terminate Talarico’s employment, at will, with or without good cause.


 


B.                                     If
Talarico’s employment is terminated by the COMPANY without cause (which shall
include by way of example, and not limitation, a reduction of Talarico’s base
salary or potential maximum commission without his agreement, or a material
reduction in the scope of his current duties and responsibilities), the COMPANY
shall:


 


(i)                                     pay
Talarico a severance allowance equivalent to six (6) month’s of his then
current base salary, payable in six (6) equal installments on the first business
day of each of the six (6) months following the date of such termination;


 


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


 


(iii)                               As
a condition to receiving the severance payment and post-employment benefits,
Employee agrees to sign a release of any employment law related claims.  The release will be signed at the time of
termination of employment.


 


C.                                     Termination
upon Death: Talarico’s employment with the COMPANY will cease and this Agreement
will terminate without further compensation if Talarico 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,
Talarico’s estate shall be paid any commissions earned or cash bonus to which
he would have been entitled under Paragraph 3 above. Likewise, Talarico ‘s
beneficiaries as designated by him to the COMPANY shall


 


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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:
Talarico will provide the COMPANY with two (2) months’ advance notice, in
writing, of his resignation from the COMPANY.


 


11.                                 Change of Control: If Talarico ‘s employment is terminated
by the COMPANY without cause (which shall include by way of example, and not
limitation, a reduction of Talarico’s base salary or potential maximum
commission without his agreement, or a material reduction in the scope of his
current duties and responsibilities) upon the consummation of a “change in
control” as defined herein or at any time within three (3) years following such
consummation, Talarico shall receive, within five (5) days after such
termination from the COMPANY or its successor, a lump sum payment equal to
three (3) times his base salary during the last fiscal year in which Talarico
is associated with the COMPANY (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 COMPANY 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 COMPANY is or becomes the beneficial owner, directly or
indirectly, of securities of the COMPANY representing twenty percent (20%) or
more of the combined voting power of the COMPANY’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 COMPANY 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 COMPANY 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 COMPANY are sold or transferred to
another person or entity.


 


12.                                 Indemnification:  The
COMPANY will, to the extent permitted by the laws of the State of New Jersey,
indemnify Talarico 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 COMPANY.  Such indemnification will include such
expenses as attorneys fees, judgments, fines and amounts awarded or agreed to
in settlement, provided that Talarico 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 Employment: Talarico
represents and warrants to the COMPANY that none of the duties or obligations
for which he is responsible under this Employment Agreement breaches, or will
cause him to breach in the future, any restrictive covenant or confidentiality
obligation under any former employment agreement.


 


14.                                 Assistance in Litigation: 
Talarico shall upon reasonable notice, furnish such information and
proper assistance to the COMPANY as it may reasonably require in connection
with any litigation in which it is, or may become, a party either during or
after employment.


 


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15.                                 Provisions Operating Following Termination:  Notwithstanding any termination of Talarico’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.


 


16.                                 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:                              Gary
Talarico


8 Baer
Court


Morristown,
New Jersey 07960


 


To:                              DUSA
Pharmaceuticals, Inc.


25
Upton Drive


Wilmington,
Massachusetts 01887


Attention:
Robert F. Doman


 


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.


 


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


 


18.                                 Benefit of Agreement: 
This Agreement shall inure to the benefit of and be binding upon the
heirs, executives, administrators and legal personal representatives of
Talarico and to and upon the successors and assigns of the COMPANY,
respectively.


 


19.                                 Entire Agreement: 
This Agreement constitutes the entire agreement between the parties
hereto with respect to the terms and conditions of employment of Talarico and
cancels and supersedes any prior understandings and agreements between the
parties to this Agreement, including, but not limited to a certain Consulting
Agreement dated November 30, 2004.  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.


 


20.                                 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.


 


21.                                 Amendments and Waivers: 
Any provision of this Agreement may be amended or waived only with prior
written consent of the COMPANY and Talarico.


 


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


 


	
   

  	
  DUSA
  Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F.
  Doman

  	
   

  
	
   

  	
   

  	
  Robert F. Doman,
  President and

  	
   

  
	
   

  	
   

  	
  Chief Operating
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary Talarico

  	
   

  
	
   

  	
   

  	
  Gary Talarico

  
	
   

  	
   

  
	
   

  	
  Dated: 

  	
  2/15/05

  	
   

  
							



 


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