EX-10.B: MASTER SERVICE AGREEMENT DATED 10/4/2001



 



Exhibit 10(b)



Note: Certain portions of this document have been marked “[c.i.]” to indicate
that confidential treatment has been requested for this confidential
information. The confidential portions have been omitted and filed separately
with the Securities and Exchange Commission.



MASTER SERVICE AGREEMENT



This Master Service Agreement, (the “Master Agreement”) effective June 15th
2001 (the “Effective Date”), is made by and between DUSA Pharmaceuticals, Inc.,
with corporate offices located at 25 Upton Drive, Wilmington, Massachusetts
01887 (hereinafter “DUSA”) and Therapeutics Inc., with corporate offices
located at 4180 La Jolla Village Drive, Suite 255, La Jolla, California 92037
(hereinafter “THERAPEUTICS”).


WHEREAS, DUSA and THERAPEUTICS desire to enter into this Master Agreement to
provide the terms and conditions upon which DUSA may engage THERAPEUTICS from
time-to-time for the purpose of managing the clinical development of DUSA’s new
products in the field of dermatology, and other related services or projects by
executing individual Work Orders (as defined below) specifying the details of
the service and the related terms and conditions.


NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by each party, DUSA and THERAPEUTICS agree as
follows:



	1.	 	Definitions
	 
	(a)	 	“FDA” as used herein shall mean the United States Food and Drug
Administration
	 
	(b)	 	“Good Clinical Practices” shall mean Good Clinical Practices as defined
by the FDA.
	 
	(c)	 	“IND” as used herein shall mean an Investigational New Drug Application.
	 
	(d)	 	“IRB” as used herein shall mean the board(s) established pursuant to 21
CFR Part 56 for the purpose of reviewing clinical investigations.
	 
	(e)	 	“Investigator” as used herein shall mean a licensed physician who is a
qualified clinical investigator willing and able, and engaged to conduct a
clinical investigation of the Study Drug as set forth in a Protocol.
	 
	(f)	 	“NDA” as used herein shall mean a New Drug Application, or foreign
equivalent.
	 
	(g)	 	“Phase I Clinical Study” as used herein shall mean those human clinical
studies on sufficient numbers of persons that are designed to establish
that a product is safe for its intended use and to support its continued
clinical testing.
	 
	(h)	 	“Phase II Clinical Study” as used herein shall mean those human clinical
studies on sufficient numbers of persons that are designed to establish
the safety and efficacy of a product for its intended use.
	 
	(i)	 	“Phase III Clinical Study” as used herein shall mean an expanded human
study of a level necessary for submission to, and approval for marketing
of a product by, the FDA of an NDA.



 







 





	(j)	 	“Protocol” as used herein shall mean particular clinical testing
procedures and conditions for the clinical evaluation of the Study Drug or
Study Device, from time to time, during the Term.
	 
	(k)	 	“Services” as used herein shall mean the services to be provided to DUSA
by THERAPEUTICS pursuant to a Work Order (as defined in Section 2).
	 
	(l)	 	“Study” as used herein shall mean the clinical research provided for in a
Protocol.
	 
	(m)	 	“Study Drug” as used herein shall mean Levulan® PDT/PD or other drug
being tested in a Study for which THERAPEUTICS is providing Services and
related drug materials as described in a Protocol.
	 
	(n)	 	“Study Device” as used herein shall mean the BLU-UTM brand device or other
device being tested in a Study as described in a Protocol.
	 
	2.	 	Work Orders, Nature of Work
	 
	(a)	 	Work Orders The specific details of each project under this Master
Agreement (each “Project”) shall be separately negotiated and specified in
writing on a Work Order in a form substantially similar to that attached
to this Master Agreement as Exhibit 1. Each Work Order will include, as
applicable, the Protocol, scope of work, timeline, budget and payment
schedule and such other terms as shall be agreed upon by the parties. The
terms of this Master Agreement shall be automatically incorporated into
the terms of any Work Order. This Master Agreement and each Work Order,
independent from other Work Orders, constitute the entire agreement for a
Project. To the extent any terms or provisions of a Work Order conflict
with the terms and provisions of this Master Agreement, the terms and
provisions of this Master Agreement shall control, unless otherwise
expressly set forth in the Work Order.
	 
	(b)	 	Change Orders Any material change in the details of a Work Order shall
require a written amendment to the Work Order called a Change Order, which
shall be in a form substantially similar to that attached to this Master
Agreement as Exhibit 2. Each Change Order shall detail the requested
changes to the applicable task, responsibility, duty, budget, timeline or
other matters. A Change Order will only become effective upon the
execution of the Change Order by both parties.
	 
	(c)	 	Transfer of Obligations Notwithstanding any other provision of this
Master Agreement, and in addition to any other specific responsibilities
of THERAPEUTICS which are set forth herein, pursuant to 21 CFR Part
312.52, DUSA may, from time to time, transfer and THERAPEUTICS may assume
all or some of the specific obligations of DUSA as “Sponsor” under the
Federal Food, Drug, and Cosmetic Act (“Act”). A description of such
obligations to be transferred to THERAPEUTICS will be provided in each
Work Order. It is agreed that the same description and extent of
obligations 



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	 	 	transferred will be included in Section #13 of any applicable
INDs filed on Form FDA 1571. THERAPEUTICS agrees to carry out diligently
all transferred obligations. Unless otherwise required by the terms of
any Work Order, or any applicable law, rule or regulation, any and all
interaction or communication with the FDA shall be conducted exclusively
or as directed by DUSA, with the cooperation and assistance of
THERAPEUTICS as requested by DUSA from time to time and at DUSA’s cost and
expense.
	 
	(d)	 	Performance of Services. THERAPEUTICS agrees to use commercially
reasonable efforts to diligently perform, and to cause its employees,
officers, permitted subcontractors and representatives to diligently
perform the Services in accordance with the terms and conditions of this
Master Agreement and each Work Order. Such efforts may include, without
limitation, implementing reasonable procedures such as bonuses and other
incentives for timely completion of the Services. HOWEVER, THERAPEUTICS
MAKES NO OTHER REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SERVICES,
EXPRESS OR IMPLIED, AND THERAPEUTICS SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE SERVICES TO BE PROVIDED HEREUNDER.
	 
	3.	 	Term and Termination
	 
	(a)	 	This Master Agreement shall commence on the Effective Date and shall have
an initial term of two (2) years (the “Initial Term”), unless earlier
terminated as provided herein. The Initial Term will be automatically
renewed for additional one year term(s), unless either party notifies the
other not less than ninety (90) days prior to the end of the Initial Term,
or any subsequent term that such party does not wish to renew this Master
Agreement.
	 
	(b)	 	DUSA may terminate this Master Agreement or any Work Order for any reason
upon ninety (90) days prior written notice to THERAPEUTICS.
	 
	(c)	 	If either party believes a termination is necessary to protect the safety
or welfare of the Study subjects, then such party shall have the right to
terminate the applicable Work Orders on notice to the other party.
	 
	(d)	 	Either party may terminate this Master Agreement, or any Work Order, upon
written notice to the other party, if the other party materially breaches
this Master Agreement, or such Work Order, and such party fails to cure
said breach within ninety (90) days after receipt of written notice from
the non-breaching party outlining the breach and its intention to
terminate.
	 
	(e)	 	DUSA and THERAPEUTICS agree to discuss, cooperate and coordinate all
activities being undertaken by THERAPEUTICS upon termination of this
Master Agreement to 



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	 	 	insure patient safety, continuity of treatment and
compliance with applicable local, federal and/or state laws, regulations
and ordinances.
	 
	(f)	 	Upon termination of this Master Agreement or any Work Order, THERAPEUTICS
will, at DUSA’s written request, promptly provide DUSA with a copy of all
records relating to the Project’s performance and all periodic reports
and/or patient records, maintaining confidentiality.
	 
	(g)	 	Should DUSA choose to terminate a Work Order prior to completion, for any
reason, other than THERAPEUTICS’ material breach of this Master Agreement,
insolvency or bankruptcy, DUSA agrees to pay THERAPEUTICS:




	 	(i)	 	all reasonable direct fees earned hereunder for Services
performed up to the effective date of termination in accordance with
the terms of a Work Order being terminated, and
	 
	 	(ii)	 	all non-cancelable costs incurred in connection with any Work
Order being terminated to the date of termination.




	(h)	 	In the event a Work Order is terminated by DUSA before conclusion by
reason of any uncured material breach by THERAPEUTICS pursuant to Section
3(d) above, any third party pass-through costs associated with terminating
the Work Order, e.g. Investigator fees or patient enrollment costs, will
be:




	 	(i)	 	borne by THERAPEUTICS if attributable to THERAPEUTICS’
material breach of its obligations under the Master Agreement or
Work Order and previously paid to THERAPEUTICS;
	 
	 	(ii)	 	borne by DUSA if not previously paid to THERAPEUTICS; or
	 
	 	(iii)	 	negotiated between DUSA and THERAPEUTICS if neither of the above.




	(i)	 	Notwithstanding anything to the contrary herein, and in addition to any
other obligations of DUSA hereunder, at the expiration of this Master
Agreement or upon termination of this Master Agreement by DUSA for any
reason other than uncured material breach by THERAPEUTICS pursuant to
Section 3(d) above, DUSA shall pay to THERAPEUTICS,
(i) if such expiration or termination occurs within two years after the
Effective Date, including at the end of the Initial Term, an amount equal
to [c.i.] the Minimum Monthly Fee (as defined herein) in effect for the
month immediately preceding such expiration or termination, (ii) if such
expiration or termination occurs more than two years, but less than or
equal to three years, from the Effective Date, an amount equal to [c.i.]
the Minimum Monthly Fee in effect for the month immediately preceding
such expiration or termination, or (iii) if such expiration or
termination occurs more than three years from the Effective Date, an
amount equal to [c.i.] the Minimum Monthly Fee in



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	 	 	effect for the month immediately proceeding such expiration or
termination if DUSA did not provide written notice to THERAPEUTICS of
such expiration or termination at least six months in advance thereof.
	 
	(j)	 	Sections 3, 4(c), 4(d), 4(f), 7, 8, 9, 11, 12, 13, 14, 23, 24, 25, 26 and
28 shall survive any expiration or termination of this Master Agreement.
	 
	4.	 	Compensation
	 
	(a)	 	For purposes of this Master Agreement, the term “Minimum Monthly Fee” for
a particular month shall mean an amount no more than [c.i.] and no less
than [c.i.], and shall be determined based on the factors listed on
Exhibit 3 hereto. The Minimum Monthly Fee shall be set forth in monthly
invoices from THERAPEUTICS that contain the basis for the calculation
thereof based on the factors set forth on Exhibit 3.
	 
	(b)	 	Beginning on the Effective Date and every month thereafter during the
term of this Master Agreement, DUSA shall pay to THERAPEUTICS the greater
of the following:




	 	(i)	 	The Minimum Monthly Fee for that month; or
	 
	 	(ii)	 	Amounts due under all Work Orders, plus the following costs
(related to the factors set forth on Exhibit 3):




	 	 	 	(x)	 [c.i.] of General Corporate Support; and
	 
	 	 	 	(y)	 [c.i.] of Program Management & In-Licensing.




	(c)	 	DUSA shall pay the following bonuses to THERAPEUTICS if, at any time
during or after the term of this Master Agreement, DUSA initiates the
first Phase III Clinical Study of a Study Drug (“Phase III Bonus”) or
receives approval of an NDA for a Study Drug (“NDA Bonus”) with respect to
each dermatology indication for which THERAPEUTICS provided Services as
clinical development lead; provided that the Work Order governing such
Services was not terminated by DUSA pursuant to Section 3(d) for uncured
breach by THERAPEUTICS. The amount of the Phase III Bonus and NDA Bonus
payable to THERAPEUTICS, if any, is dependent on the level of clinical
testing for which THERAPEUTICS provided Services for a particular
indication, as set
forth in the following table. If THERAPEUTICS provides Services for more
than one level of clinical development for a particular indication, the
amount of the Phase III Bonus and/or NDA Bonus payable to THERAPEUTICS,
if any, shall be the greatest amount indicated in the following table for
the level of clinical testing for which THERAPEUTICS provided Services.
It is the parties’ intention that THERAPEUTICS shall be eligible for the
Phase III Bonus and the NDA Bonus only with respect to dermatology indications for which THERAPEUTICS provided Services as clinical



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	 	 	development lead. Each Work Order shall specify whether or not
THERAPEUTICS will be eligible for such bonuses for the Services to be
performed thereunder.




	 	 	 	 	 	 	 	 	 
	 	 	PHASE III	 	NDA
	SERVICES	 	BONUS	 	BONUS
	
	 	
	 	

	Phase I Clinical Study
	 	 	[c.i.]	 	 	 	[c.i.]	 
	
	
	
	

	Phase II Clinical Study
	 	 	[c.i.]	 	 	 	[c.i.]	 
	
	
	
	

	Phase III Clinical Study
	 	 	[c.i.]	 	 	 	[c.i.]	 




	(d)	 	If, by April 1, 2002, THERAPEUTICS completes Services under a Work Order
that establishes feasibility for ALA PDT in acne, onychomycosis or warts,
as determined by DUSA in good faith, and DUSA elects to continue clinical
development or otherwise make an additional significant investment with
respect to such indication, then DUSA shall pay THERAPEUTICS [c.i.].
	 
	(e)	 	THERAPEUTICS will be eligible for annual performance bonuses of up to
[c.i.] of all amounts paid by DUSA to THERAPEUTICS for employee labor
costs associated with projects not related to an NDA research and
development program (e.g., DUSA’s FDA required long-term AK tracking
study), pursuant to Sections 4(a) and (b) for the immediately proceeding
year, based on milestones and other criteria to be mutually agreed upon by
the parties.
	 
	(f)	 	DUSA shall make any bonus payment required hereunder within 30 days after
the occurrence of the event triggering the obligation to make the bonus
payment.
	 
	(g)	 	On the Effective Date and on each anniversary of the Effective Date
during the term of this Master Agreement, DUSA shall either (i) issue to
THERAPEUTICS a number of unregistered shares of DUSA’s common stock (the
“Shares”) equal to the greater of (a) 5,000 Shares, as adjusted for stock
splits, recapitalizations and the like, unless the aggregate value of such
Shares based on the closing price of DUSA common stock on the NASDAQ
National Market or then current principal national securities exchange on
which its common stock is listed (the “Closing Price”) on the date of
issuance is greater than [c.i.], in which case the number of Shares having
an aggregate value of [c.i.] or (b) [c.i.] divided by the Closing Price on
the date of issuance, or (ii) pay THERAPEUTICS
the cash equivalent of the number of Shares as determined in (i) above,
based on the Closing Price on the date of issuance, up to a maximum of
[c.i.]. The decision whether DUSA will issue Shares pursuant to (i)
above or pay cash pursuant to (ii) above shall be at DUSA’s sole
discretion. The Shares will be issued to THERAPEUTICS as a private
placement based upon customary representations THERAPEUTICS shall make to
DUSA as set forth in Exhibit 4 attached hereto. THERAPEUTICS
acknowledges that the Shares will be subject to significant restrictions



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	 	 	on transfer and THERAPEUTICS will not be able to sell or otherwise
dispose of the Shares without registration or an opinion of legal counsel
to the Company that the Shares may be sold or transferred in a
transaction exempt from registration.



5.     Work Order Compensation (a) Unless otherwise agreed in a particular Work
Order, the following shall apply with respect to all payments by DUSA for
Services under a Work Order:



	 	(i)	 	THERAPEUTICS will be compensated for its Services, itemized
expenses, and pass-through costs, net of discounts, incurred in the
performance of the Services pursuant to the budget and payment
schedule set forth in each respective Work Order.
	 
	 	(ii)	 	All taxes (and penalties thereon) imposed on any payment by
DUSA to THERAPEUTICS shall be the responsibility of THERAPEUTICS.
	 
	 	(iii)	 	THERAPEUTICS will submit monthly invoices to DUSA which
shall contain an itemized accounting for fees, expenses and
pass-through costs related to a Work Order.
	 
	 	(iv)	 	THERAPEUTICS will invoice DUSA promptly upon achievement of
agreed to milestones (if other than monthly) for payment of
Services.
	 
	 	(v)	 	Invoices shall be payable by DUSA within thirty (30) days
after receipt by DUSA (late payments should be subject to interest
at a rate equal to the lesser of 2% per month or the maximum rate
permitted by applicable law).




	(b)	 	If any portion of an invoice is disputed, then DUSA shall pay the
undisputed amounts as set forth in the preceding sentence and the parties
shall use good faith efforts to reconcile the disputed amount as soon as
practicable. THERAPEUTICS shall maintain adequate accounting records for
all receipts and disbursements of supplies and monies directly related to
any Work Order. DUSA shall be permitted to audit these records at
reasonable business hours upon reasonable notice to THERAPEUTICS.
	 
	(c)	 	It is the parties’ expectation that the budget for any Work Order
relating to Services to be provided by THERAPEUTICS in the nature of a
contract research organization shall be based upon the rates and fees set
forth on Exhibit 5 hereto.
	 
	6.	 	Personnel
	 
	(a)	 	The Services with respect to each Project shall be performed by
THERAPEUTICS under the direction of the person identified as the Project
Manager in the applicable Work Order. THERAPEUTICS will perform its
Services in a professional, workmanlike and timely manner and will ensure
that the personnel or subcontractors it uses to perform the 



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	 	 	Services are
appropriately trained and qualified. DUSA shall be entitled in good faith
to request that the Project Manager be removed and replaced with a new
Project Manager, and THERAPEUTICS shall make best efforts to honor such
request.
	 
	7.	 	Confidentiality
	 
	(a)	 	Any confidential information (“Confidential Information”) of a party
(“Discloser”) acquired by another party (“Recipient”) under this Master
Agreement or any Work Order, including, without limitation, the results of
any Study or Project, shall not be disclosed to any third party who does
not have a need to know such Confidential Information for purposes of
performing Recipient’s obligations under this Agreement or any Work Order,
without the prior written authorization from Discloser. Recipient shall
use the Confidential Information only for the purpose of fulfilling its
obligations under this Master Agreement or any Work Order. Recipient
represents and warrants that it has obtained or will obtain agreements
with its employees and agents (including subcontractors) to maintain the
confidentiality of all Confidential Information as provided herein.
THERAPEUTICS agrees, on behalf of itself, and on behalf of its employees,
agents, subcontractors and any entity controlled by, controlling or under
common control with THERAPEUTICS, not to publish or present the results of
any research or other project without DUSA’s prior written approval.
	 
	(b)	 	The obligations of Recipient with regard to Confidential Information
shall continue for a period of ten (10) years from the date that such
Confidential Information is acquired by Recipient.
	 
	(c)	 	The obligations of Recipient regarding the confidentiality and
nondisclosure of information as provided in this section shall not apply
to information that is:




	 	(i)	 	already known to Recipient as shown by its prior written
records without prior disclosure from Discloser;
	 
	 	(ii)	 	becomes publicly available through no fault of Recipient;
	 
	 	(iii)	 	received from a third party which has the legal right to
disclose it to Recipient; or
	 
	 	(iv)	 	required by law to be disclosed; provided that Recipient
notifies Discloser in writing of its intention to disclose
Confidential Information with sufficient time to
allow Discloser to seek a protective order or file an application
for confidential treatment as may be permissible.




	(d)	 	Recipient acknowledges that the disclosure of Confidential Information
without Discloser’s expressed permission may cause Discloser irreparable
harm and that the breach or threatened breach of nondisclosure provisions
of this Master Agreement may 



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	 	 	entitle Discloser to seek injunctive relief,
in addition to any other legal remedies that may be available.
	 
	8.	 	Ownership and Inventions.
	 
	(a)	 	All materials, documents and information, programs and suggestions of
every kind and descriptions provided by DUSA to THERAPEUTICS or to
Investigators and all data or reports generated by Investigators
participating in a DUSA-sponsored Study or prepared by THERAPEUTICS in
connection with the Services performed hereunder shall be the sole and
exclusive property of DUSA.
	 
	(b)	 	THERAPEUTICS shall retain and preserve one (1) copy only of all such
property of DUSA for a period of two (2) years after the NDA has been
approved or a Project discontinued. At the end of such two (2) year
period, THERAPEUTICS may destroy all such material upon giving DUSA
written notice of its intent to do so at least thirty (30) days prior to
destruction. Failure of DUSA to respond to such notice within the thirty
(30) day period shall be evidence of DUSA’s acquiescence in the
destruction of such material.
	 
	(c)	 	All rights, title and interest in and to any and all data, discoveries
or inventions arising pursuant to this Master Agreement and/or Work Order
shall be owned solely and exclusively by DUSA regardless of inventorship.
THERAPEUTICS will disclose promptly to DUSA or its nominee any and all
inventions, discoveries, improvements and modification, conceived or
reduced to practice by THERAPEUTICS or any Investigator or at any Study
site arising from the Services to DUSA pursuant to this Master Agreement
or any Work Order and relating to such Services. THERAPEUTICS agrees to
assign all its interest therein to DUSA or its nominee and, whenever
requested to do so by DUSA, THERAPEUTICS will execute any and all
applications, assignments or other instruments and give testimony which
DUSA shall deem necessary to apply for and obtain patent letters in the
United States or any foreign country or to otherwise protect DUSA’s
interests, therein, at DUSA’s sole cost and expense, including the payment
of THERAPEUTICS’ standard rates therefor.



These obligations shall continue beyond the termination of this Master
Agreement and shall be binding upon THERAPEUTICS’ assignees, administrators,
subcontractors and other legal representatives.



	9.	 	Access to Records



THERAPEUTICS will permit representatives of DUSA and/or any authorized
regulatory authorities to have access at reasonable times to
clinical/laboratory facilities at THERAPEUTICS’ premises for the purpose of
observing performance of the Services and/or reviewing resulting data.


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	10.	 	Adverse Experience Reporting



Pursuant to any Protocol attached to any Work Order, THERAPEUTICS agrees
throughout the duration of this Master Agreement, to promptly notify DUSA of
any information concerning any serious or unexpected event or injury, and the
severity thereof, associated with the clinical uses, studies, investigations or
tests, whether or not determined to be attributable to any Study Drug or Study
Device.



	11.	 	Publications



Project results may not be published or publicly disclosed to, in whole or in
part, by THERAPEUTICS or its affiliates without the prior express written
consent of DUSA.



	12.	 	Indemnification
	 
	(a)	 	DUSA agrees to indemnify, defend and hold harmless THERAPEUTICS, its
respective officers, trustees, affiliates, agents, servants and employees
and independent contractors (hereafter collectively referred to as
“Indemnitees”) from and against any and all loss, cost (including the
reasonable costs of providing medical care), claims, actions, liability
and/or suits (including reasonable attorneys’ fees) suffered or incurred
by an Indemnitee as a result of (i) bodily injury to a patient in any
Study being conducted pursuant to this Master Agreement or any Work Order
directly caused by administration of a Study Drug or Study Device, or (ii)
DUSA’s negligent performance of the obligations required under this Master
Agreement or any intentional or reckless misconduct by DUSA, except to the
extent that any such loss, cost, claims, actions, liability and/or suits
is caused by




	 	(i)	 	the negligence or intentional or reckless misconduct of any
Indemnitee;
	 
	 	(ii)	 	failure to adhere to Good Clinical Practices by any Indemnitee; or
	 
	 	(iii)	 	failure by any Indemnitee to follow a Protocol.




	(b)	 	THERAPEUTICS agrees to provide DUSA with prompt notice of any such claim
or action. In the event the aforesaid indemnity is invoked, DUSA shall
have the right, but not the obligation, to manage and control the defense
and settlement of any and all such actions and lawsuits, and shall have
the right to select and engage counsel of its own choice. THERAPEUTICS
shall cooperate fully with DUSA in the defense of any and all
actions and lawsuits. No Indemnitee shall be entitled to compromise or
settle any such claim, action, suit or judgment without prior written
approval of DUSA.
	 
	(c)	 	THERAPEUTICS agrees to indemnify, defend and hold harmless DUSA, its
parents, subsidiaries and affiliates, as well as the officers, directors,
employees and agents of each, against and in respect of any and all
losses, costs (including the reasonable costs of providing medical care),
claims, actions, liability and/or suits (including reasonable 



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	 	 	attorneys’
fees) suffered or incurred by DUSA resulting from THERAPEUTICS’ negligent
performance of the obligations required under this Master Agreement or any
Work Order, or from any intentional or reckless misconduct, including any
negligent failure on the part of THERAPEUTICS to honor THERAPEUTICS’
financial obligations to any subcontractor of THERAPEUTICS.
	 
	(d)	 	DUSA agrees to provide THERAPEUTICS with prompt notice of any such claim
or action. In the event the aforesaid indemnity is invoked, THERAPEUTICS
shall have the right, but not the obligation, to manage and control the
defense and settlement of any and all such actions and lawsuits, and shall
have the right to select and engage counsel of its own choice. DUSA shall
cooperate fully with THERAPEUTICS in the defense of any and all actions
and lawsuits. No Indemnitee shall be entitled to compromise or settle any
such claim, action, suit or judgment without prior written approval of
THERAPEUTICS.
	 
	(e)	 	DUSA shall, at the request of THERAPEUTICS or an Investigator, execute
and deliver to the Investigator a letter setting forth DUSA’s obligations
to the Investigator under sub-paragraph (a ).
	 
	13.	 	Force Majeure and Delays



In the event either party shall be delayed or hindered in or prevented from the
performance of any act required hereunder by reasons of strike, lockouts, labor
troubles, inability to procure materials, failure of power or restrictive
government or judicial orders, or decrees, riots, insurrection, war, acts of
God, inclement weather or other similar reason or cause beyond that party’s
control (not including the inability of a party’s software to perform
data-dependent calculations properly), then performance of such act (except for
the payment of money owed) shall be excused for the period of such delay;
provided, however, if such delay continues in excess of eight (8) weeks, either
party may terminate the affected Work Order(s) without penalty under any Work
Order, except that DUSA shall be obligated to pay THERAPEUTICS (a) all
reasonable direct fees earned under this Master Agreement or the terminated
Work Order(s) up to the effective date of termination in accordance with the
terms of the terminated Work Order(s), (b) all reasonable non-cancelable costs
incurred in connection with the terminated Work Order(s) to the dated of
termination, and (c) the payment described in Section 3(i) of this Master
Agreement.



	14.	 	Notices



Whenever any notice is to be given pursuant to this Master Agreement, it must
be in writing using first class certified mail, return receipt requested,
nationally recognized overnight carrier, or facsimile, postage prepaid to the
addresses set forth below:


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	THERAPEUTICS:	 	
Therapeutics, Inc.
	
	
	
	

	 	 	
4180 La Jolla Village Drive, Suite 255
	
	
	
	

	 	 	
La Jolla, CA 92037
	
	
	
	

	 	 	
Attn: Daniel Piacquadio, President
	
	
	
	

	DUSA:	 	
DUSA Pharmaceuticals, Inc.
	
	
	
	

	 	 	
25 Upton Drive
	
	
	
	

	 	 	
Wilmington, MA 01887
	
	
	
	

	 	 	
Attn: Paul Sowyrda
	
	
	
	

	 	 	
Vice President, Product Development and Marketing



Such notice shall be effective five days after deposit if sent by mail, the
next business day if sent by overnight carrier and upon receipt of electronic
confirmation of delivery if sent by facsimile.



	15.	 	Legal Compliance



THERAPEUTICS shall perform all work under this Master Agreement and any Work
Order in conformity with all applicable federal, state and local laws and
regulations including but not limited to the Act and the regulations
promulgated pursuant thereto, as amended from time to time, and with the
standard of care customary in the contract research organization industry. For
purposes of DUSA providing the FDA with certification pursuant to Section
306(k) of the Act, THERAPEUTICS warrants that no person (including
Investigators, sub-investigators or any other person working under the
supervision of THERAPEUTICS) performing Services pursuant to this Master
Agreement or any Work Order has been debarred or convicted of crimes pursuant
to Sections 306(a) and (b) of the Act. THERAPEUTICS agrees to notify DUSA
immediately upon THERAPEUTICS’ learning of the occurrence of any such
debarment, conviction, or inquiry relating to a potential debarment, of any
person performing Services pursuant to this Master Agreement or any Work Order
and agrees that said person shall be immediately prohibited from performing
Services under this Master Agreement or any Work Order.


DUSA represents that it shall not request THERAPEUTICS to perform assignments
or tasks that violate any applicable law or regulation.



	16.	 	Regulatory Inspections



If any governmental or regulatory authority conducts or gives notice to
THERAPEUTICS of its intent to conduct an inspection of THERAPEUTICS or at any
study site or take any other regulatory action with respect to the Services
provided under this Master Agreement or any Work Order, THERAPEUTICS shall (a)
cooperate with DUSA and reasonably act to obtain the
cooperation of any Investigators; (b) provide DUSA prior notice of any
inspection or other regulatory action; (c) allow DUSA the right to be present
at any such inspection. DUSA shall have primary responsibility of preparing
any responses which may be required; and the sole opportunity to challenge any
order of a regulatory or governmental activity affecting its IND,


12







 




NDA, or any
Project. If THERAPEUTICS has attempted to comply with the provisions of this
Paragraph but is nevertheless required by a governmental or regulatory
authority to comply with their demand or request, then compliance by
THERAPEUTICS shall not cause a breach of this Master Agreement.



	17.	 	Insurance



Each of THERAPEUTICS and DUSA represents that it maintains and will continue in
force during the Initial Term or any renewal term of this Master Agreement, at
its sole cost and expense, the insurance listed below. Each party shall
provide to the other certificates of insurance evidencing the insurance
required hereunder and will provide prompt written notice to other party prior
to any cancellation of such coverage or material change in such coverage.



	 	(i)	 	Worker’s Compensation and Occupational Disease Disability
insurance as required by the laws of the state(s) in which Services
are to be performed;
	 
	 	(ii)	 	Comprehensive Automobile Liability insurance for vehicles
furnished by such party or used by such party in the performance of
this Master Agreement or any Work Order with bodily injury and
property damage limits of $1,000,000 each occurrence, combined
single limit;
	 
	 	(iii)	 	Commercial General Liability insurance with bodily injury
and property damage limits of $1,000,000 each occurrence, aggregate
combined single limit;
	 
	 	(iv)	 	Excess Liability insurance with limits of $2,000,000 per
occurrence/aggregate combined single limit which shall be excess of
the coverages described in Paragraphs 17(ii) and (iii) above; and
	 
	 	(v)	 	With respect to DUSA only, clinical trials liability
insurance in the amount of $20,000,000 combined single limit.




	(b)	 	To the extent permitted by law, the insurance set forth above as well as
any other coverages agreed to be purchased hereunder shall contain waivers
of subrogation and/or rights of recovery as to claims against the other
party.
	 
	(c)	 	THERAPEUTICS shall be identified as an additional insured under DUSA’s
clinical trials liability insurance described in sub-paragraph (v) above.
	 
	(d)	 	THERAPEUTICS and DUSA agree that with regard to this Master Agreement,
the insurance coverage to be provided hereunder shall be considered as
primary insurance
and not contributory with any similar instance which the other party
and/or its employees and agents may maintain on their own behalf.



13







 





	18.	 	Assignment



This Master Agreement and each Work Order may not be assigned by either party
without the other’s prior written consent, which consent shall not be
unreasonably withheld; provided, however, that DUSA may assign this Master
Agreement without consent to any successor in interest by merger,
consolidation, recapitalization, or sale of substantially all of its assets or
a majority of the control of its common stock.



	19.	 	Independent Contractors



For purpose of this Master Agreement, the relationship between the parties is
that of an independent contractor and neither party shall have the authority to
bind or act on behalf of the other party without its prior written consent.
Nothing contained in the Master Agreement shall be construed to create the
relationship of principal and agent or employer and employee between DUSA and
THERAPEUTICS, or their respective employees, servants, agents or independent
contractors.



	20.	 	Relationship with Investigators



If a particular Work Order obligates THERAPEUTICS to contract with an
Investigator(s) or investigative site then any such contract shall be on a form
mutually acceptable to THERAPEUTICS and DUSA, and any material changes to such
form shall require prior approval by DUSA. DUSA will be responsible for
promptly reviewing, commenting on and/or approving such form contracts and
proposed changes.



	21.	 	Advertising



THERAPEUTICS shall not issue any information or statement to the press or
public relating to the results of any Study without the prior written consent
of DUSA. Neither party shall use the name or trademarks of the other party in
any announcement, publication or promotional material or in any form of public
distribution without the prior written consent of the other party, except as
required by applicable law, any court or administrative order or any Work
Order.



	22.	 	THERAPEUTICS Representations



THERAPEUTICS represents that (a) it has the right and authority to enter into
this Master Agreement and to perform the Services required pursuant to each
Work Order; (b) the person executing this Master Agreement has the authority to
do so; and (c) THERAPEUTICS is not a party to any existing agreement or
arrangement that would prevent THERAPEUTICS from entering into this Master
Agreement or would adversely affect THERAPEUTICS’ performance
under this Master Agreement. These representations will also apply with
respect to the execution of each Work Order by THERAPEUTICS.


14







 



	23.	 	Severability



If any provision of this Master Agreement or any Work Order shall be deemed
void in whole or in part for any reason whatsoever, the remaining provisions
shall remain in full force and effect.



	24.	 	Estoppel



The waiver or forbearance by either party or the failure by either party to
claim a breach of any provision of this Master Agreement or Work Order shall
not be deemed to constitute a waiver or estoppel with respect to any subsequent
breach or with respect to any provision thereof.



	25.	 	Applicable Law



This Master Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.



	26.	 	Descriptive Heading



The descriptive heading of the Master Agreement sections are inserted for
convenience only and shall not control or affect the meaning or construction of
any provision hereof.



	27.	 	Binding Effect



The Master Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns. THERAPEUTICS shall not have
the right to assign the Master Agreement or any of the rights or obligations
hereunder without the prior written consent of DUSA, provided that such consent
shall not be unreasonably withheld.



	28.	 	Entire Understanding



This Master Agreement and each Work Order represents the entire understanding
of the parties with respect to the subject matter hereof. Any modification to
this Master Agreement or any Work Order must be in writing and signed by both
parties.


IN WITNESS WHEREOF, the parties hereto have executed this Master Agreement on
the day and year written below.



	 	 	 	 	 	 
	DUSA Pharmaceuticals, Inc.	 	
Therapeutics Inc.
	 
	By:	 	 	By: 	 

	 	
	 	 	

	 	
Paul Sowyrda	 	 	
Daniel Piacquadio
	 	Title:  Vice President, Product

Development and Marketing	 	 	
Title: President



15







 




EXHIBIT 1



SAMPLE

Work Order ____



This Work Order (“Work Order”) is entered to and becomes, upon execution by
both parties below, a part of the Master Services Agreement (the “Master
Agreement”) between such parties dated June 1, 2001, and sets forth the
specific terms and conditions relating to the Services listed below:



	1.	 	Scope of work.



Attached hereto and incorporated herein as a part of this Work Order is a
project description for Levulan® identified as the Proposal, THERAPEUTICS
Project Number “               ” dated                .


The Project description shall also include any attachments including the
Protocol entitled: “                                   ” and supplement thereto specifically
referenced in the project description, and any amendments that are agreed to by
the parties in writing.


THERAPEUTICS shall conduct the Services required by the project description and
any amendments thereto. Except as otherwise provided by this Work Order,
THERAPEUTICS shall follow the procedures and methodology, and shall observe and
comply with the schedules, specified in the project description and any Change
Orders thereto.



	2.	 	Study Period.



{Insert starting and ending dates.} The Project will commence on                 and be
completed on                     .


Services currently requested for warts include:



		
	 	     (a) Investigator selection to the extent required
	 
	 	     (b) Subject recruitment
	 
	 	     (c) Monitoring
	 
	 	     (d) Management of statistical analysis
	 
	 	     (e) Clinical report summary



 







 







	3.	 	Project Budget / Fees and Expenses. See attached budget {Attach budget to
this document.}




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Fee Basis:
	 	 	 	 	 	Hourly Services	 	Rate:	 	$	 	 
	 	 
	 	 	
	 	 	 	 	 	 	 	 	 	 	 	
	 
	 	 
	 	 	 	 	 	Fixed Price	 	Total Fee:	 	$	 	 
	 	 
	 	 	
	 	 	 	 	 	 	 	 	 	 	 	
	 
	 	 
	 	 	 	 	 	Time and Materials	 	Estimated Fee:	 	$	 	 
	 	 
	 	 	
	 	 	 	 	 	 	 	 	 	 	 	
	 



Upon completion of the Services under this Work Order, will THERAPEUTICS be
eligible to receive the bonuses provided for in Section 4(c) of the Master
Agreement (check one of the following):


                       YES


                       NO


4.      Payment Terms and Payment Schedule {Insert specific description of payment
schedule, or you can attach it and refer to it in this section.}


In any event, total payments under this Work Order shall not exceed
US$     without DUSA’s prior written approval.



	5.	 	THERAPEUTICS Personnel



THERAPEUTICS has assigned a full staff who are appropriately trained
individuals with experience in conducting and managing the Services that are
described in this Work Order.


         Names of people assigned and hourly rates (if applicable):



	 	 	 
	Title	Name	Rate
	Project Manager

	
	
	
	

	Clinical Operation Manager

	
	
	
	

	Data Manager

	
	
	
	

	Statistician

	
	
	
	

	Medical Writer





	6.	 	Work Authorization



THERAPEUTICS’ execution and return of one copy of this Work Order and any
attachments hereto shall constitute authorization for THERAPEUTICS to conduct
the Study or Services described herein.


2







 


IN WITNESS WHEREOF, the parties hereto have caused this Work Order to be
executed by their respective authorized representatives to be effective as of
the date last below written.



	 	 	 	 	 	 
	DUSA Pharmaceuticals, Inc.	 	
Therapeutics Inc.
	 
	By:	 	 	By:	 

	 	
	 	 	

	Name:	 	 	
Name:
	 	
	 	 	

	Title:	 	 	
Title:
	 	
	 	 	

	Date:	 	 	
Date:
	 	
	 	 	




3







 




EXHIBIT 2



CHANGE ORDER FORM




	 	 	 	 	 	 	 	 	 
	Change Order Number:	 	 	 	Date Completed:	 	 	 	 
	
	
	
	

	Client:	 	
DUSA

Pharmaceuticals,

Inc.
	 	Work Order

Reference:	 	 	 	 
	
	
	
	

	Client Contact

requesting

modification:	 	 	 	Project

Identification

and/or Number(s):	 	 	 	 
	
	
	
	

	Date of Client
request to
modify Work Order:	 	 	 	Does this change the
overall timeline?
	 	YES
	 	NO
	
	
	
	

	Original Cost:	 	
US $
	 	Revised Cost:
	 	US $



Description of Modification: {Insert specific description, or attach detail and refer to it in this section.}


AGREED TO, ACKNOWLEDGED, AND ACCEPTED BY:



The parties have caused this Change Order to be executed under seal in duplicate by their duly authorized
representatives, and entered into as of the date of the last party below to execute.



	 	 	 	 	 	 
	DUSA Pharmaceuticals, Inc.	 	
Therapeutics Inc.
	 
	By:	 	 	By:	 

	 	
	 	 	

	Print Name:	 	 	
Print Name:
	 	
	 	 	

	Title:	 	 	
Title:
	 	
	 	 	

	Date:	 	 	
Date:
	 	
	 	 	




 







 




EXHIBIT 3



FACTORS FOR CALCULATION OF MINIMUM MONTHLY FEE




	 	 	 
	TITLE	 	RATE
	
	 	

	General Corporate Support	 	
[c.i.]. Estimate based upon [c.i.]
	 
	Project Administrator	 	
Project Administrator @ [c.i.], approval
to hire [c.i.] THERAPEUTICS employee for
DUSA projects at this level, estimated
salary range [c.i.]. Fee due from
[c.i.]
	 
	Consultant Support	 	
General consultative services for
program support e.g. medical consultant,
etc., [c.i.]. Fee due only if service
is utilized.
	 
	Project Manager/Monitor	 	
Project manager/monitor @ [c.i.],
approval to hire [c.i.] THERAPEUTICS
employees for DUSA projects at this
level, estimated salary range at this
level, estimated salary range [c.i.].
Fee due from [c.i.]
	 
	Program Management & In-Licensing	 	
Piacquadio’s services at the rate of
[c.i.] if requested by DUSA thereafter
in writing at least 90 but no more than
120 days in advance, allocation includes
coverage for DUSA dermatology
development program management and
responsibility for in-licensing of new
technology or products.



 







 




EXHIBIT 4

Representations and Warranties for Stock Issuances



         Representations and Warranties of the Undersigned. To induce the Company
to make this stock grant, the undersigned hereby represents and warrants to the
Company that:


                  (a) the undersigned, if an individual, has reached the age of majority in
the jurisdiction in which he resides, is a bona fide resident of the
jurisdiction contained in the address set forth on the signature page of this
Representation Letter, is legally competent to execute this Representation
Letter, does not intend to change residence to another jurisdiction and is not
a resident of Canada;



                  (b) the undersigned, if an entity, is duly authorized to execute this
Representation Letter and this Representation Letter, when executed and
delivered by the undersigned, will constitute a legal, valid and binding
obligation enforceable against the undersigned in accordance with its terms;
and the execution, delivery and performance of this Representation Letter and
the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate or other necessary action on the part of
the undersigned;



                  (c) the Shares being granted hereby are being acquired by the undersigned
for investment purposes only, for the account of the undersigned and not with
the view to any resale or distribution thereof, and the undersigned is not
participating, directly or indirectly, in a distribution of such Shares and
will not take, or cause to be taken, any action that would cause the
undersigned to be deemed an “underwriter” of such Shares as defined in Section
2(11) of the Act;



                  (d) the undersigned has had access to all materials, books, records,
documents and information relating to the Company which the undersigned has
requested, and has been able to verify the accuracy of the information
contained therein;



                  (e) the undersigned acknowledges and understands that investment in the
Shares involves a high degree of risk, including without limitation, the risks
set forth in the Company's filings with the Securities and Exchange Commission
from time to time;



                  (f) the undersigned acknowledges that the undersigned has been offered an
opportunity to ask questions of, and receive answers from, officers of the
Company concerning all material aspects of the Company and its business, and
that any request for such information has been fully complied with to the
extent the Company possesses such information or can acquire it without
unreasonable effort or expense;



                  (g) the undersigned has such knowledge and experience in financial and
business matters that the undersigned is capable of evaluating the merits and
risks of an investment in the Company and can afford a complete loss of his
investment in the Company;



                  (h) the undersigned has not relied upon any representations or other
information (whether oral or written) from the Company, other than as set forth
herein and no oral or written representations have been made or oral or written
information furnished to the undersigned or its advisors, if any, in connection
with the Stock Grant for the Shares;



                  (i) the undersigned recognizes that no governmental agency has passed upon
or endorsed the merits of the issuance of the Shares or made any finding or
determination as to the fairness of this transaction;



                  (j) the undersigned is not receiving the Shares as a result of or
subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting to which the public
was invited;



 







 



                  (k) the undersigned is an “Accredited Investor” as that term is defined in
Section 501(a) of Regulation D promulgated under the Act. Specifically the
undersigned is (check appropriate item(s)):



                           (i) a bank as defined in Section 3(a)(2) of the Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Exchange Act; an insurance company as
defined in Section 2(13) of the Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) of (d) of the Small
Business Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000, an employee benefit plan within the
meaning of the Employment Retirement Income Security Act of 1974, if the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association, insurance
company, or registered investment advisor, or if the employee benefit plan has
total assets in excess of $5,000,000, or if a self-directed plan, with
investment decisions made solely by persons that are Accredited Investors;



                           (ii) a private business development company as defined in Section
202(a)(22) of the investment Advisers Act of 1940;



                           (iii) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring Shares, with total assets in excess of $5,000,000;



                           (iv) a director or executive officer of the Company;



                           (v) a natural person whose individual net worth, or joint net worth with
that person’s spouse, at the time of his or her purchase exceeds $1,000,000;



                           (vi) a natural person who had an individual income (not including his or
her spouse’s income) in excess of $200,000 in 1998 and 1999 or joint income
with his or her spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching such income level in 2000;



                           (vii) a trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring Shares, whose purchase is directed by a
person having such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks entailed in the
purchase of Shares; or



                           (viii) an entity in which all of the equity owners are Accredited
Investors. (If this alternative is checked, the undersigned must identify each
equity owner and provide statements signed by each demonstrating how each is
qualified as an Accredited Investor.)



(l)  the undersigned certifies that the representations set forth herein
concerning the undersigned are true and correct as of the date hereof.


2







 



EXHIBIT 5




GUIDELINES FOR CERTAIN BUDGETS




	 	 	 	 
	PROJECT	 	RATES
	
	 	

	Program Management	 	
Included in program Management &

In-Licensing Fees (see above)
	 
	Project Initiation Fees
	 	

	 	Protocol Development:	 	
[c.i.] depending on complexity

	 	Protocol amendments	 	
Billed at hourly rate

	 	
CRF Creation:
	 	
[c.i.] depending on complexity

	 	
CRF Assembly:
	 	
[c.i.] plus [c.i.] above [c.i.] sites

	 	
Subject Recruitment Package:	 	
[c.i.] plus [c.i.] above [c.i.] sites
	 
	Project Implementation Fees	 	
Project Management: [c.i.] for up to the
first [c.i.] trial sites, each
additional site @ [c.i.]
	 
	 	 	
Medical Monitoring: [c.i.] for up to the
first [c.i.] trial sites, each
additional site @ [c.i.]
	 
	 	 	
PI Monitoring: Set up and study closure
[c.i.], trial site visits @ [c.i.] plus
travel.
	 
	 	 	
Data Management & Statistical Management
billed @ [c.i.]
	 
	 	 	
Study Analysis & Report Writing @ [c.i.]
	 
	 	 	
Medical Consultative services at [c.i.]
	 
	 	 	
Project management billed from [c.i.]
	 
	 	 	
Medical monitoring billed for [c.i.]
	 
	Other Fees	 	
Consulting Services (Phase I studies,
etc.) & Trial site related fees billed @
[c.i.]
	 
	 	 	
Approved expenses (FEDEX, reproduction,
clinical supplies, cell phone,
out-of-pocket expenses: actual and
reasonable in accordance with DUSA
policies etc.) billed @ [c.i.]



 

 

2